How not to address political corruption

Among your weekend reading, don’t miss Mike Steketee’s piece in the Drum this morning on public funding of elections. He gets it, much better than most people who write about this popular but misunderstood topic:

In the words of the report of a parliamentary inquiry, getting taxpayers to pick up the tab “removes the necessity or temptation to seek funds that may come with conditions imposed or implied” and “it may relieve parties from the constant round of fundraising so that they can concentrate on policy problems and solutions”.

As it turned out, less true words have seldom been spoken. Thanks particularly to the Independent Commission Against Corruption in NSW, where the Wran government was the first to introduce public funding in 1981, we now know just how successfully politics has been cleaned up.

It’s remarkable that anyone could ever have believed this rationale, much less continue to believe it with the weight of 30 years of evidence against it. Expecting public funding to reduce corruption is a bit like setting up a welfare system for gangsters in the hope that they will feel less need to rob banks.

The psychology of crime doesn’t work that way, and nor does the psychology of politics. No matter how much you’ve got, you can always convince yourself that you need more. Even that you’re entitled to it.

The argument for public funding implicitly assumes that the cost of running an election campaign is a constant, and therefore if more comes in from one source of funding then less will be required from others. But in reality parties spend as much money as they can get: primarily, as Steketee points out, on television advertising that makes little or no contribution to intelligent decision-making.

Moreover, because commercial television in Australia is a tight cartel – a cartel legislatively preserved by the same politicians who are the conduit for the money – it’s an easy matter to raise prices so as to absorb any extra money in the system.

Some of the issues are specific to Australia, but campaign funding is a problem worldwide. Government has become so powerful and pervasive that it’s worth a lot of money to a lot of people to be able to influence its policies. Inevitably enough, those who have the most to gain tend to be those with deep pockets in the first place. In an age when most politicians have left political principle well behind, ready buyers meet willing sellers.

Banning private donations altogether appeals to many people, but quite apart from the free speech implications of the idea, it’s hard to imagine that it could ever be made to work. Even if individuals, companies and trade unions can be prevented from giving money and other favors to political parties, they will still be able to advance their own political positions. And regardless of what the law says, we know they will co-ordinate tactics to support like-minded politicians (as revealed in the current investigation of Wisconsin governor Scott Walker).

Putting more public money into the system just encourages mercenary attitudes, taking us further and further away from the idea that parties might refuse to bargain for particular donations as a matter of principle. As I said last year, “If the incentive structure is wrong to start with, increasing the amounts of money involved isn’t going to help.”

It’s not that hard to devise measures that, while not eliminating corruption, would greatly reduce it. Enforce prompt disclosure of all campaign contributions above a low threshold; issue additional licenses for commercial TV to break up the existing cartel; most importantly, in the words of Mark Latham, “shrink the scope of government and downsize politics” so there is less incentive for buying politicians in the first place.

The problem is that none of those measures are in the interests of the politicians who would have to implement them. And as Steketee says, “no party ever makes a change to laws governing elections if it does not think it gives it an advantage over its opponents.”

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