Crony Capitalism, Media and Campaign Finance Reform

Harvard Law Professor Lawrence Lessig claims that campaign finance is the "gateway problem" facing the US political economy today in the sense that it must be solved before substantive progress can be made on any of the other major problems facing the nation today. The accompanying figure summarizes the argument in his (2011) Republic, Lost(Twelve):

Candidates or issues with the most financial support usually win as depicted in the diagram by the cycle from Politicians to Media to Electorate to Politicians. To get that money, incumbents extort (Lessig's term) it from big business, whose lobbyists collect and deliver the money while drafting future legislation (top two arrows in the figure, between $6 and $220 for each $1 spent on lobbying and political campaigns).

Would this system continue if the public ever got a clear choice between honest and corrupt government? Not likely.

What prevents the public from getting such a clear choice?

Commercial broadcasting (and secondarily other commercial media) would likely lose money if they provided more information to help voters make more intelligent choices when voting. There are at least two reasons for this:

• Major advertisers have substantial budgets for lobbying and political campaigns. Any attempt by a media outlet to expose the favors an advertiser might get from government could easily convince advertiser(s) to choose other advertising outlets. Loss of advertising can lead to slower growth than competitors and eventually to bankruptcy or to purchase by a competitor whose editorial policies are more pleasing to more advertisers.

• If the electorate had access to better information on candidates and issues, candidates who spent less money on advertising would have a greater chance of winning. This in turn could lead to less money being spent overall on political campaigns.

Media scholar Robert W. McChesney has discussed the threats to democracy posed by the consolidation of ownership of the media begun in the 1980s under President Reagan and the substantial elimination of investigative journalism from broadcast media in the 1990s.¹ The major media conglomerates today constitute an oligopoly that has had substantial success in getting government help in stifling creativity and competition.² Two of the five primary media conglomerates have major financial interests in nuclear power, which gives them an inherent conflict of interest in reporting on anything that impacts on the nuclear industry and national defense.³

McChesneyand Nichols (2010) Death and Life of American Journalism(Nation Books) outlines proposals for improving democracy by subsidizing investigative journalism. They note that the Post Office Act of 1792 established subsidies for newspapers to inform and invigorate political discourse. This has since been perverted into a subsidy for advertising, which in many cases provides negative (i.e., fraudulent) information.⁴

In sum, the current system of political corruption in the US rests on three legs:

1. Control of the media through ownership and through control of advertising budgets.

2. Political campaign contributions.

3. Lobbying.

Lessig's proposed solution to the current corrupt system includes "democracy vouchers" that would return to each taxpayer the first $50 in taxes they pay in a form that they could only spend on a political campaign (candidate or initiative) of their choice. The amount $50 would be indexed to cover the entire cost of the last election. Candidates and issues would be eligible for those funds only if they accepted at most $100 from any one individual. The paucity of investigative journalism could be addressed by allowing "democracy vouchers" to be contributed to organizations focusing on investigative journalism in lieu of political candidates or issue campaigns.

Spencer Graves