A Real Contribution to the Campaign Finance Debate: A Review of James C. Miller's Monopoly Politics

Free Speech & Election Law Practice Group Newsletter - Volume 3, Issue 3, Winter 2000

February 1, 2000

Andrew Siff

Monopoly Politics
By James C. Miller III.
Published by Hoover Press 1999. Paperback, 147 pages.

Proponents of campaign finance regulation often argue their case in terms of the need to end "corruption", get money out of politics and reduce the influence of "special interests". Opponents of further regulation respond with arguments focusing on First Amendment jurisprudence and the partisan nature of campaign finance proposals currently before Congress. Thus far advocates for more regulation have better sound bites, but their opponents have sounder arguments. Unfortunately, many of these arguments are comprehensible only to those with a true understanding of the realities of modem politics and esoteric First Amendment concepts such as "issue advocacy", "express advocacy", and "soft money." Not many Americans understand what is entailed in running a modem political campaign. And the vast majority of legislators and reporters, who may understand the intricacies of modem campaigning, cannot get their minds around the constitutional aspects of the debate.

James C. Miller's new book, Monopoly Politics is a valuable contribution to the campaign finance debate if for no other reason than because it rescues citizens from the mindless, feel-good sound bites of so-called "reformers" and the complicated constitutional analysis of their opponents. The book analyzes the campaign finance debate in terms that are easy to understand and accurately portray what is at issue. Miller does this by comparing commercial and political markets and explaining why competition is the highest and most noble ideal in both. Miller then proceeds to measure the merits of the current campaign finance system and recent proposal to alter it with the neutral and easy to comprehend yardstick of how well they promote competition in political markets.

Miller's mode of analysis first reveals the many flaws with existing campaign regulations and illustrates how the current system favors incumbents. And he is less than sanguine that meaningful changes to make the system more competitive will be enacted because the people with the power to open up the system, incumbent politicians, have the least incentive to do so. Miller's thorough research reminds readers that the current campaign finance system (enacted in the wake of Watergate) passed through Congress only because a majority of members felt that it enhanced their ability to get re-elected The media pundits not only fail to mention the anti-competitive nature of the existing system, but also portray anti-competitive amendments to it, such as the McCain/Feingold bill, as laudable "reform". Fortunately, instead of just complaining about how horrible the current system is and mindlessly echoing the reform proposals that are currently en vogue (a la Elizabeth Drew in the Corruption of American Politics), Miller analyzes why people succumb to the false notion that more regulation of donors, contributors, and candidates will improve the system. He does not mindlessly assail all regulation of the political process. Rather, he distinguishes salutary regulations that foster competition such as prohibitions on vote buying and vote fraud, and laws ensuring the secrecy of the ballot, from anti-competitive laws and regulations that further entrench incumbents, such as contribution limits, disclosure requirements, and the franking privilege. Such analytic distinctions enable Miller to make many thoughtful and practical insights into the system and proposed changes to it.

For example, Miller points out that the fashionable idea of ending party soft money makes no sense when the political system is analogized to commercial markets. As Miller explains, political parties are essentially like commercial franchises that seek to develop favorable name recognition to encourage consumers to buy their product line. Just as no consumer has time to assess the qualities of every product they want or need to buy, voters do not have time to fully analyze every local, state and federal candidate on the ballot. Thus, voters, like consumers, rely on the "brand name" associated with the product to help them make their decision. To the extent consumers have a favorable view of a certain brand name, they will have a favorable view of their product line. And, just as different commercial brands have the greatest interest in being competitive with the product line put out by their competitors, political parties have the greatest interest in placing before the voters good candidates with good ideas. Following this analysis one can see why eliminating party soft money, which constitutes the resources parties use to develop their brand name, will not only hurt voters by impairing the value of party labels as information cues, but will also hurt the competitive process by weakening the entities with the greatest interest in ensuring that every incumbent politician faces a serious challenger. Furthermore, when one recognizes the fact that all existing soft money ban proposals do nothing to the resources of the Democratic Party's alter ego, the labor unions, the soft money bans currently being pushed amount to the commercial equivalent of prohibiting advertising by all competitors of Ford Motors while allowing Ford to continue to advertise as much as it wants. In commercial markets such a proposal would not even be taken seriously, but in political markets this anti-competitive idea has passed the House of Representatives and appealed to a majority of the Senate.

In addition to demonstrating that the most popular proposals being pushed by so-called "reformers" would tilt the American political system even more in favor of incumbents generally and one party specifically, Miller illustrates how some ideas accepted by just about everyone, not just radical reformers, serve to inhibit competition in the political process. Perhaps the most provocative assertion Miller makes is that disclosure inhibits competition. Since the Federal Election Campaign Act became law it has been accepted that the public has a right to know who is giving how much to whom. In Congress no one thinks twice about the merits of disclosure. According to Miller, this is because disclosure serves as a powerful tool that incumbents can use to frighten potential contributors into not supporting challengers. Disclosure of contributions is an effective substitute for disclosure of the ballot unless we assume a world in which citizens provide financial support to candidates for whom they do not vote. Miller seems to have a valid point. An incumbent can get from the FEC a list of every person and group who contributes to his opponent. This could cause some repeat players in the political arena, such as executives of highly regulated businesses, not to support a challenger they like out of fear that they will be punished if the incumbent survives. Miller's analysis is supported by the fact that over 80% percent of PACs formed by commercial entities support incumbents regardless of party affiliation. Miller's challenge to re-evaluate the merits of disclosure is just one of several refreshingly novel arguments that Monopoly Politics injects into the campaign finance debate.

While Miller's thorough review and analysis of campaign regulations enables him to make powerful and important insights into the existing system and proposals to change it, this same single-mindedness creates a few flaws in Miller's work. He is so focused on ensuring a competitive system that he occasionally loses sight of other important values. For instance, Miller advocates direct democracy through the Internet to ensure that political markets are more responsive. While politicians may be more responsive if we had national ballot initiatives, the experience of many states shows that direct democracy leaves much to be desired. And this would be a fundamental reordering of the compound, representative republic that the Framers created. There is a value to the representative system and the way in which it requires ideas to percolate and go through many filters before becoming law. Although the time for reflection that our current process allows does not always ensure wise legislation, it does permit many bad ideas to be exposed and discredited before they become the law of the land.

Also, Miller's support of term limits ignores the immense value of experience in Congress. Contrary to popular myth, being a good legislator is like being a good attorney in that it requires time and experience to learn the trade. The nation would be injured if good legislators with considerable expertise in areas such as foreign relations, intelligence, armed services and other complex areas were removed from public service for no other reason than a desire to get new faces in Congress. If many of Miller 's other proposals were adopted and candidates were still able to continually win re-election, voters should be allowed to send them back for as long as they want. For just as in commercial markets, in politics there are those rare monopolies that result from offering a product or service so superior to those of competitors that even in the absence of any improper anti-competitive practices people will always prefer it.

Finally, Miller makes one analytic error in his book. Of course, it is a salute to his knowledge of the subject and the effort that went into his book that there is only a single misstatement of fact. Almost every other book on campaign finance has more mischaracterizations than accurate observations. But the minor error is worth noting only because it reinforces Miller's correct observation that the campaign finance proposals currently before Congress are only going to make things worse. On page 125, Miller states that McCain/Feingold does not really do anything to the arm of the Democratic Party commonly referred to as organized labor. He states that the legislation, "would require unions to inform their members that they may apply for a refund of dues devoted to political activities (in keeping with the Supreme Court's decision in Beck)." This is not true, at least in the iteration of McCain/Feingold currently before the Senate. The bill does not codify the Supreme Court's Beck decision, rather it eviscerates the ruling.

It must be remembered that the Beck decision affirmed an appellate court decision holding that non-union workers forced to pay agency fees to a labor union in a closed-shop state as a condition of employment were entitled to a refund of all portions of their dues that were not necessary for the union's role as sole bargaining representative and contract negotiator. The appellate court held and the Supreme Court affirmed that this meant that these non-union members could get a refund for all activities the union used their money for except collective bargaining and contract negotiation. This encompassed not just political activity, but also money the union gave to charities, to support another union's strike and overhead related to such activities. The refund allowed under Beck is for more than political activity. McCain/Feingold would shrink the scope of the available refund to just political activity. And, like Beck, this provision would only allow refunds for non-union members forced to pay union dues. Moreover, the most recent version of McCain/Feingold, S. 1593, does not require the unions to inform non-union members forced to pay agency fees of their right to get a refund. Thus, if anything, the so-called Beck provision in the current iteration of McCain/Feingold scales back the rights set forth in Beck and leaves the unions in a better position than they are today to utilize non-voluntary dues to further their political and social agenda. Of course, given the many changes that have been made to the McCain/Feingold bill over the years, Miller can hardly be faulted for failing to hit a constantly moving target. The bill may likely have morphed yet again by the time this review is published.

Despite the above criticisms, Monopoly Politics is a must read for citizens trying to get their arms around the campaign finance debate and for policymakers sincerely interested in ensuring that our political process is open and competitive. Miller should be commended for challenging the conventional wisdom of a campaign finance reform agenda that is so popular with good-government goo goos and the mindless mass media pundits. His thoughtful work adds a great deal to the discussion of this most important topic.

* Andrew Siff is Vice Chairman for Publications of the Free Speech and Election Law Practice Group.