Why liberals are scared of SCOTUS and you should be too.

I think campaign finance is of the highest importance, though it's also tedious and disappointing to analyze. One important thing to understand is how and when campaign contributions affect the outcomes of elections.


The common misunderstanding is that the function of democracy is exclusively proactive, that, individually or in aggregate, voters will make rational, informed decisions in their best interest. But elections also serve a reactive role, to modify the incentives for those who rule as they rule. The distinction is subtle but important. If I reduce the security of voters' property rights, I will be voted out of office, so I won't do that no matter to what party I belong or why I feel I was elected.

The same goes for campaign contributions. There is a proactive role: if I am a wealthy hedge fund manager and I am not burdened with generous intentions, I will contribute to exactly the politicians (or, more accurately the political institutions) I feel are most likely to give me the best outcomes. But there is also the reactive role: if I am a politician and I know that hedge fund managers are unlikely to buy ads for me after I raise taxes on the wealthy, then I'm going to be marginally less likely to do that relative to a world free of hedge fund managers.

So whether or not they ask for it, any politician who has ever received contributions from any interest, has had their incentives shifted by the campaign contributions they receive. This is why Wall-Street's heavy financial support of Obama during the 2008 crisis after which new regulation of Wall Street would be legislated, made my stomach turn.

Absent any campaign contributions, the interests of the voters are the primary source of incentives for politicians, both as politicians run for office and as they govern. Campaign contributions significantly alter these incentives because they come (at least disproportionately) from a very specific group of people, the economic elite.

As I understand it, the primary role of a political system is to control in whose interest the political elite govern. Or, to set up a network of incentives for the rulers. To the extent that we want the economic elite to be more empowered than the majority of americans, things like the Citizens United ruling are a good thing. But to the extent that we believe every american should be equally empowered, it is a failure. Even more so, it is a failure that results in a vicious circle of failure. As the economic elite are given more weight to affect the incentives of politicians, policy is more likely than before to solidify and augment the power of this very elite.

Just to take one example, Sheldon Adelson, whose annual income is roughly $7 billion*, has said he is willing to donate something like $100 million to the presidential race this year ( McCain/Palin's total 2008 direct budget was $85 million). As long as he is able to affect the political landscape such that whoever wins lowers his overall tax rate by 1.5% of his income, he gets a complete return on his investment in just one year. And this may be done by donating to someone who supports such a tax policy, or by incentivizing the opposition to do so in the hopes of getting his money the next time around.


Anyway, this is why liberals are scared. Because while deregulation and lower taxation may be painted in terms favorable to individual liberties in general, they disproportionately favor the liberties of individuals who have a whole lot already.


*In the original post, I referred to Adelson's net worth as being taxable and equal to $3.4 billion. That was incorrect on multiple levels. Thanks goes to Patrick for spotting the error.