Democracy’s Money Problem

Cash Rules

How we pay for democracy.

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The title of Julia Cagé’s The Price of Democracy will prompt Americans to think of the obscene cost of their elections. The amount spent on the 2020 federal races is said to have been a staggering $14 billion (more than twice the price tag for 2016). State elections consumed close to $2 billion. Almost 90 percent of the House candidates who spent the most money ended up winning.

Cagé, a French economist affiliated with the elite university Sciences Po in Paris, has plenty of critical things to say about campaign finance in the United States, but her main point goes further. Democracy, she writes, is never free—not in the United States, and not in the rest of the world. But we have yet to figure out who should pay for what in a system founded on the notion of political equality.

In The Price of Democracy, Cagé offers us a deeply researched account of how states regulate campaign finance. Comparing countries as varied as India and Belgium, she finds that even the seemingly more egalitarian democracies have failed to do so successfully. In response, she proposes an attractive alternative that puts the financial responsibility for democracy squarely in the hands of citizens: a publicly funded voucher scheme that allows individuals to support their preferred candidates and parties, combined with severe restrictions on all private donations.

Democracy, of course, has never been free. The ancient Athenians constructed complicated sortition machines through which officeholders were chosen by lot; they also built an amphitheater for an assembly in which thousands of citizens could participate. They even thought that ordinary people who took part in politics should be paid, much to the outrage of the anti-democratic philosophers, who deemed democracy the most expensive political system around—even if the annual expenditure for the assembly was roughly the same as the amount needed to feed the horses of the 1,000-strong Athenian cavalry.

Today, the costs of democracy range from those of the actual machinery of voting to the transportation of mail-in ballots to the maintenance of party organizations and political campaigns. In most democracies, taxes ultimately pay these costs, which was also the case in ancient Athens. In the contemporary US, by contrast, election laws and a number of fateful Supreme Court decisions since the 1970s allow corporations to play a large part in financing politics and the ultra-wealthy to dominate campaigns through “dark money.” But the glaring inequality of the US system is hardly unique. As Cagé reminds her readers, “radiant Dorian Europe” (the reference is to the Oscar Wilde character) should not feel reassured by “the very existence of Gray America.” For, in Western Europe, donations are also highly concentrated among the wealthiest: In France and the UK, 10 percent of “megadonors” account for more than two-thirds of the total given. And in countries where corporate donations are allowed, companies play an obviously unsavory role. In Germany, for instance, the auto industry and the cigarette maker Philip Morris spend lavishly on the largest center-left and center-right parties; the tobacco giant also sponsors party conventions and “summer parties” in Berlin, expenditures that largely go unnoticed.

True, many democracies offer public funding to political parties, but at the same time they set very weak limits on private contributions. Less obviously, in countries that seemingly put the financing of politics directly into the hands of the people—offering tax deductions for citizens who spend generously on their system of self-rule, so to speak—the effect is highly skewed: Since the wealthier pay much more in taxes, they disproportionately benefit from such schemes.

Cagé emphasizes the injustice of a situation in which the poor end up subsidizing the political preferences of the rich, who tend to be much more conservative when it comes to economic policies. Though money will not reliably buy every election (a fact that Democrats were reminded of in South Carolina, Maine, and other states last year), the system overall will skew toward the interests of those who contribute the most.

Cagé illustrates these glaring inequalities with the example of her home country. There, the average donation of the poorest 10 percent of citizens is 23 euros; meanwhile, the wealthiest 10 percent receive 29 million euros in tax relief. For his 2017 presidential bid, Emmanuel Macron raised 16 million euros, half of which came from just 800 donors; a million originated in Paris’s grand bourgeois 16th Arrondissement, another in the Seventh, and another million was given by French citizens living in the UK. (Only 370,000 euros were transferred from the US.) As Cagé points out, it is as if the North Atlantic democracies had reinstituted property qualifications for political participation: You get one vote, but some get to vote again (and again) with their wallets, a situation reminiscent of the 1820 French election law in which the richest could literally vote twice.

Cagé observes that neither the traditional social democratic parties nor the self-declared left-populist upstarts have ever really addressed these inequalities—and sometimes, she argues, they have made things worse. Under Tony Blair, who cuddled up to British finance in the hope that its riches would help pay for an expanded welfare state, the Labour Party became more reliant on large private donations than on membership fees. (This tendency was reversed under Jeremy Corbyn but is once again on the rise under a new leadership that is desperate to distance itself from the socialist “Corbyn project.”) Italy’s left-leaning Five Star Movement railed against the corruption of what its founder, the comedian turned people’s tribune Beppe Grillo, referred to as la casta of professional politicians. It successfully campaigned for the abolition of public funding for parties, but the result has been to push more private dark money into politics. (The party, claiming that it is really a “movement,” has refused to follow legal transparency requirements and does not publish the names of those who donate more than 5,000 euros.) Five Star also made a big show of having its deputies contribute their salaries to worthy causes, but the money was likely still pocketed by Grillo’s self-declared virtuous amateurs.

In France, Jean-Luc Mélenchon’s France Insoumise, another left-wing antiestablishment party, could hardly be less transparent about its own finances. Its only answer to the question of whether its deputies hand over a portion of their official salary to the party is “Ask Jean-Luc!” (Communists used to hand over all of it and got a compensatory payment from the party in return.) And in the United States, lest we forget, many Democratic candidates who declare their opposition to a politics dominated by Wall Street have opted out of public financing to rake in private donations (albeit many small ones). This includes everyone from Barack Obama to Bernie Sanders, and who can blame them? Had Sanders, for example, stuck with public funding in 2016, he would’ve had $10 million for the primaries; instead he raised $228 million and spent all but $5 million of it.

What is the alternative to a situation in which private funding is winning the battle of ideas and, almost always, the battle at the polls? Cagé, like a number of US constitutional lawyers, has a concrete proposal: Citizens should receive individual vouchers, which they may distribute incrementally or all at once to the parties and candidates of their choice, with the possibility of contributing cash up to a strict limit in addition (a commonly cited figure is $250). All larger donations, and thus the opportunity for corporations to buy themselves a political voice, would be prohibited. New parties would also face an initial hurdle to qualify for receiving such vouchers: They would need to raise funds from a sufficient number of citizens or prove they have nontrivial support in the polls. Unused vouchers would be distributed according to the last election outcome (which is how funding in many countries is already decided today).

There are several advantages to this scheme. It would be a significant, if still imperfect, check on the political uses of concentrated wealth—what even mainstream social scientists in the US no longer hesitate to call oligarchic tendencies. Less obviously, it would strengthen the open and dynamic character of at least some existing democracies. Newcomers could get real support, even in the middle of an election cycle. Losers—let’s say, traditional parties—would lose less if their supporters wanted to punish them in an election but not see them wiped from the political map: Think of left-leaning French citizens who wanted to sanction the Socialist Party for François Hollande’s less than glorious presidency but still maintain an effective alternative to Macron.

While the amounts involved might seem tiny, being able to contribute something could also provide individual citizens with a feeling of efficacy in a democracy. This sense of increased participation would be even stronger, of course, if such a scheme forced politicians to engage with a wider range of voters than they are able to in the US, where Congress members are said to spend four or more hours every day soliciting donations from the affluent, making them seem more like telemarketers for a particular segment of the population than representatives of all their constituents. During his first term, Obama hosted 321 fundraising events, up from 80 for Ronald Reagan and 173 for George W. Bush.

What numbers do we talk about when we talk about vouchers? Cagé’s suggestion is a seven-euro “Democratic Equality Voucher” for every voter. This hardly adds up to an outrageous sum; it is roughly what the German state contributes annually just to the foundations associated with political parties, which among other things are supposed to develop policy and further civic education. (Whether they really do that, or simply reinforce the power of traditional parties, is a legitimate question.) In the US, people like Yale Law School professor Bruce Ackerman and Congressman Ro Khanna have suggested “democracy coupons” worth $100, provided in $20 increments, or “democracy dollars” in $50 amounts, stored in a special credit card account.

There is a serious question about whether the political spending decisions of individual citizens should be made public. Businesses might not respond well when their workers are on record giving funds to an anticapitalist party; alternatively, they might pressure their employees to donate to a particular candidate. But on the matter of how to distribute the funds, Cagé puts forward an elegant solution: Governments should use tax returns to deploy each person’s democracy vouchers, possibly giving special credits to the millions who earn so little that they do not pay income tax at all (which means, concretely, at least half the eligible voters in many countries). This would also prevent anyone from buying up vouchers at a premium or even at face value, in the way that privatization vouchers were amassed by savvy investors in Central Europe in the 1990s. Also, there would have to be a way to erase the information after a short period, so as not to transform such a voucher scheme into a system of open voting.

Is the voucher scheme a political fantasy? One such reform was actually implemented for local elections in Seattle. Citizens received vouchers in the mail; alas, many of them thought the envelopes contained junk and tossed them away; others left them lying around and forgot to contribute their democracy dollars. Pessimists about the political capacities of ordinary people will feel vindicated by the fact that only 3.3 percent of Seattle residents who received vouchers used them. Like other ideas from what one might be tempted to call the democracy innovation industry, vouchers are no panacea. Scholars of campaign finance speak of the “hydraulic power” of money: Block one channel and it will find another. An admirable reform in Brazil significantly reduced corporate donations, yet corporations still found ways to use WhatsApp to spread disinformation, which helped Jair Bolsonaro win his election. In the US, when money for candidates was limited by law, it went to parties instead; when it could no longer go to parties, it went to super PACs; and so on.

Critics of the private financing of politics often conflate different issues. One concern is corruption, which even a conservative Supreme Court recognizes as grounds for restrictions (although Chief Justice John Roberts and his colleagues understand corruption in the narrowest possible sense of a quid pro quo, not as the more general dependency on a donor class that can set, and limit, the political agenda). Another issue is equality of opportunity to influence politics, which is distinct from corruption: A self-financed billionaire—as Donald Trump kept emphasizing during his first campaign—arguably cannot be corrupted; but if only oligarchs have a shot at office, political equality is violated.

Cagé’s proposal is likely to reduce dependence on the donor class, and it can certainly be justified as a step in the direction of equality of political opportunity. But those with more time, and especially those with more power due to their position in corporations (or trade unions, for that matter), would still exert more influence than poor, stressed, and generally underinformed citizens. The Kochs of this world would still fund libertarian think tanks, and the Murdochs would still do, well, what the Murdochs do. As scholars who study campaign finance have argued, a lot more would have to change structurally for equality of opportunity to become real; and the cost to democracy—in particular, the cost of restricting the liberty of political expression for the well-off—may well be too high.

Cagé sees the difficulty and includes a further reform proposal, arguing that parliaments should reserve a certain proportion of their seats for manual workers or members of the “precariat.” She notes that the representation of the working class within the halls of government has declined precipitously since the end of World War II. In her scheme, a third of the French National Assembly would be filled with “social representatives,” addressing the problem that, currently, fewer than 3 percent of parliamentary deputies have working-class backgrounds. (The number is 2 percent in the US and 5 percent in the UK, where, earlier in the postwar period, it had been as high as 20 percent.)

Cagé’s idea for parliamentary quotas is somewhat in tension with her demand for what she terms, following the French historian Pierre Rosanvallon, a “permanent democracy,” which is to say a dynamic, open process in which citizens and representatives constantly interact. After all, who should decide exactly which categories of people are currently underrepresented and, when society changes, how representative assemblies should be divided anew? These are not knock-down objections, of course, but compared with her detailed proposal for Democratic Equality Vouchers, the scheme for representation based on occupation feels more tentative and lacks the proper backup in democratic theory.

Still, Cagé’s book is an important contribution that tackles one of the root problems of democracies in the West. She offers a truly comparative perspective—not just across countries from Canada to India but also across time, with many fascinating details from 19th-century electioneering (which at times was even more expensive and obscene than what we witness today). Cagé wears her learning and statistical acumen lightly; rather than evoking dry social science, her prose veers into the sarcastic and witty, especially when it comes to commenting on the antics of “King Macron.” This is often amusing; behind it, though, is a justified indignation in the face of a democratic world that too often proves to be not that democratic after all.

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