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The Independent Institute

Does Money Corrupt?

Lawmakers are pushing for campaign-finance reform. The current system is so corrupt that money often trumps the public interest, they say. Is that really the case?

Not likely, says Tufts University economist Jeffrey Milyo in The Independent Review, even though the notion that money corrupts politics is common.

Critics claim money “perverts” democracy in three ways, says Milyo: Campaign contributions buy legislative favors; campaign spending buys elective office; and popular anger over the role of money in politics turns ordinary citizens off from politics.

Support for these claims is easy to find.

In most elections, for example, the candidate who spends the most money wins. Further, most political action committees give heavily to incumbents, who usually vote as the PACs like. Also, voter turnout has dropped as campaign spending has risen.

Case closed? No way, says Milyo. “Most academic experts would agree that it is very difficult to find consistent and convincing evidence that interested money buys either elections or policy favors.”

Studies find, for example, that most campaign contributions have no effect on who wins the election. Other studies show that neither a candidate’s wealth nor the amount in his campaign war chest deters challengers.

So, “It is not surprising that there is little evidence that PAC contributions influence the roll-call voting behavior of legislators,” said Milyo.

Also, he said, relatively little money flows into political campaigns. During 1995-96, for instance, contributions to federal candidates and parties totaled $2 billion—roughly one-third the amount given during the same period to the United Way.

Studies of giving by major corporations, meanwhile, suggest that their gifts to charity are about 10 times as great as their donations to political causes.

“If campaign contributions were the functional equivalent of bribes,” said Milyo, “we might expect much more money to flow into political campaigns.”

Milyo also challenges the popular notion that public disgust with campaign finance explains falling voter turnout.

If it does, Milyo wrote, “We might expect that individuals with more cynical views on campaign finance, party politics, and government would be less likely to vote.”

But they aren’t. A recent poll by the League of Women Voters finds that nonvoters hold views very similar to those of voters.

Of course, Milyo said, it’s possible that “Because interested money flows primarily to incumbent officeholders, the dramatic increase of campaign spending may have reduced the competitiveness of elections and thereby lowered voter turnout.”

But that’s unlikely. For one, “Congressional elections have actually become more competitive as campaign spending has jumped,” wrote Milyo. “House races have become closer, incumbents have drawn down their war chests, defeats have increased, and the proportion of unopposed incumbents has dropped.”

Further, while turnout does correlate with closeness, “In large elections, the probability of casting a decisive vote, even in a close election, remains negligible. Consequently, changes in the expected closeness of an election should not have a significant and direct effect on turnout.”

The reason it seems otherwise, said Milyo, is that greater electoral competition causes greater spending, which in turn boosts turnout. How? First, a close race leads candidates to search harder for funds. Second, a close race makes donors more willing to give.

Because donations are used to buy campaign ads, wrote Milyo, “Voter interest is piqued in districts bombarded with numerous advertisements.” The result? Greater voter turnout.