Wednesday, November 7, 2007

Capitalism, Supercapitalism, and How Laws Are Made

Tyler Cowan has a brief review of Reich's new book, Supercapitalism. The links (here, here, and here) are especially interesting.

The common thread here reaches back into the McCain-Feingold campaign finance legislation and questions about free speech vs. representing the public interest.

I always like to start from first principles: Legislators need to be informed about the legislation that's pending. So we immediately see the necessity for what the Constitution calls "redress of public grievances," but which you and I would now call "lobbying." Let me restate: Lobbying is good. Lobbying is essential.

But we obviously have one of those pesky dynamic systems problems with lobbying. If private entities (people, interest groups, NGOs, or [gasp!] corporations) can lobby legislators, then they can support the legislators that agree with their point of view. Unfortunately, all support ultimately involves money. Political support solely involves the wielding of economic power. (Note the distinction between "supporting" a candidate and voting for him. Support involves somebody telling some number of other people, "You should vote for this guy." How many people that message reaches is a direct function of how much economic capital is placed behind the message.)

Now, the folks on one side of an issue may easily have more money than the folks on the other side, and this is where things get dicey. There are clearly cases where the side with the most money doesn't represent the public interest. So, to the extent that political support influences elections, the possibility for lobbying dollars to be applied contrary to the public interest exists. Many paragraphs to state the obvious--that's the problem with arguing from first principles.

So we can say that it would be good if we could separate lobbying from political support. Can we?

McCain and Feingold thought we could, and bullied Congress and the President into pretending to believe it. But it's pretty clear that all it's done is to cause the political support to be funnelled into more byzantine, less transparent channels than before. The principal result is a further professionalization of politics. I would never attempt to raise money for an issue without hiring an army of lawyers. The possibility of accidentally doing something criminal is just too high. Hence, money goes where the professional apparatus already exists. Notice what happens: Fewer groups get more money, so fewer viewpoints get represented. Again, self-selection rears its ugly head.

Is there another way to decouple political support from lobbying? I can't think of one. It's likely that the task is impossible without incurring deleterious unintended consequences.

Another approach (which McCain-Feingold also addresses) is to make the coupling of support and lobbying transparent. This doesn't remove the coupling, but it can devalue the support. If a legislator takes money from a chemical company and then votes for a law that shields companies from pollution torts, the ability to run an ad that says, "United Evil Chemicals financed 50% of Joe Blow's current election campaign in exchange for him poisoning puppies!" will (somewhat) deter Joe Blow from acting against the public interest. But the problem here is that transparency is fiendishly complicated because of soft money. M-F tries to address this not through additional transparency measures but through restrictions on soft money financing. But the money just pops up again through 527 groups. Promoting transparency by restricting the money is a fool's errand. McCain-Feingold is therefore hopelessly flawed.

Here's an outlandish idea: Let's find a way to put lobbying transactions on the public record. It's the ultimate form of transparency. If private entities are going to comment on public policy, let them do so in public. Want to know if your congresscritter is way too cozy with Big Widget? Find out how much time he's spending with them and what they're saying to him. If you don't like the answer, throw the bum out.

Of course, this isn't very easy to implement either. If a senator invites his 10-year-old daughter's best friend's parents over to dinner and they happen to mention that they think that something really needs to be done about health care, do they have to put the dinner on the record?

Maybe the right answer is that any conversations with a legislator with anybody other than an immediate family member are public record. After all, those jokers didn't stop that much short of that for corporations when they did Sarbanes-Oxley. What's good for the goose...

No comments: