Zac Goldsmith, the Election Finance Laws and Gaming

Channel 4 News has run an expose on campaign spending by MPs in May's general election. Zac Goldsmith (Con, Richmond Park) did not acquit himself well during an interview with Jon Snow, and now the Electoral Commission has announced that it will investigate his expenses. Channel 4's expose seems like an effort to replicate the Telegraph's exposure of MPs improper expense claims. And there are similarities between the two: unrealistic caps on payment (in MPs' salaries and for election advertising) led MPs and candidates to game the system by finding ways around the caps. Both were a fertile ground for legalistic interpretations of rules. And once legalistic interpretations had become commonplace, as they seem to have done, it became easy to use them to explain increasing deviations from the 'spirit' of the law--as difficult as such a spirit is to define in any meaningful sense.

The problem with the election funding scandal is that it's nearly impossible to articulate administrable rules about election spending that can be both predictable and fair. Less experienced candidates (with fewer advisers willing to help them find loopholes) will inevitably suffer, and more experienced candidates (with resources to spend on coming up with creative interpretations of the rules) will benefit. The real winners are election lawyers.

One solution is the one followed by the United States, where election spending cannot be limited because of principles of Free Speech in the First Amendment but where elections are very expensive. That leads to its own problems in terms of rent seeking by candidates' donors, who ask for political favours (or at least face time) in exchange for their contributions of money (as well as time and influence). Some political scientists speculate that the entire political economy of the United States may be broken because of this problem. But there are other ways of dealing with these issues.

Bruce Ackerman and Ian Ayres have made two really neat proposals. The first, as a response to the US Supreme Court's decision in Citizens United v. FEC, would prohibit all companies with federal contracts from making any donations to political campaigns. Since most large corporations have some contracts with the federal government, it would force all of them to make a decision about whether to eliminate the appearance of impropriety by either foregoing the donations of the profits from such contract. The second (even neater) proposal would allocate $50 in patriot dollars to each voter, which would be contributed to a campaign anonymously through an ATM. Voters could also contribute their own money in addition to the amount allocated, but they would have to contribute that money anonymously as well. Thus, there would be no way for a candidate to know who had contributed to his/her campaign, and the adverse influence of campaign contributions on the political process would be limited, if not eliminated entirely. Corporate and other large contributions would be diluted with (substantial) federal funding, and it would be impossible for a legislator to grant any political favours to large contributors, as no contributors could prove that they had contributed.


The application to the British problem is not entirely clear, but there is one. First, the system in the United States emphasizes the provision of information (including advertising); the system in the United Kingdom emphasizes the need for candidates to have an equal opportunity to gain office. But that equality seems illusory when wealthy people, with access to legal advice and the ability to spend a great deal of money on durable goods (like Goldsmith's famous tricycles and coats) can find ways around necessarily brittle rules on expenditures. One important question, which should be asked, is whether there is more demand for information during campaigns, or whether the market for information is currently saturated. That, of course, depends on the quality of the information being provided and on other largely indeterminate factors. But it seems like there ought to be a place for more debate, unconstrained by artificial campaign finance limits. Government funding is one way around the problem, which is frequently adopted in European countries; a market system (financed by the government) is another one, and that might be more administrable than any of the alternatives.