“Campaign-Finance Law, the State of Nature, and the Nirvana Fallacy”

I have written this response to Derek Muller at the Library of Law and Liberty. It begins:

One cannot fault Professor Derek Muller, whose work I admire and respect, for taking a hard libertarian line against campaign-finance regulation in his Liberty Forum essay. After all, that misguided approach is built into the prompt of the question posed by Law and Liberty’s editors:

“Should a democracy through concerns about corruption in politics and equality in participation determine the formation of political opinions through regulations or should campaign regulation be guided by the principle of the free formation of opinion that emerges spontaneously in society?”

Let us try reframing the question this way: Should a democratic society, one committed to both free economic markets and principles of political equality, allow those with great economic power—power they have accrued thanks to state-conferred benefits—to use it to protect their already privileged economic positions?

I confess I laughed aloud when I read the Law and Liberty prompt and its reference to “opinion that emerges spontaneously in society.” This assumes the existence of some state of nature, an unregulated world untouched by government, in which all of us develop “opinions” about politics, “opinions” presumably leading to votes for candidates and ballot measures, which would emerge out of unfettered discussion and deliberation but for the government’s interference through burdensome, unnecessary, and unconstitutional campaign-finance regulation.

The idea here is that, without limits on how much money people can give to candidates and spend on elections, the invisible hand of the political process would work, consistent with the vision of the Founders, to give us a blissful democracy in which the separation of powers (and I presume federalism), brilliantly inserted into the Constitution by the Framers, would serve as the sole check on government abuse and misalignment between politicians’ pursuits and the popular will.

Whether this state of nature actually existed at any point in history is doubtful. In any case it certainly does not describe the state of politics in the 21st century United States. The question as posed by Law and Liberty commits the “Nirvana fallacy”: it compares current conditions to an idealized time that has never existed.

Rather than a state of nature, the current United States is one in which laws facilitate the accumulation and protection of wealth, for some much better than others, for the “haves” much more than the “have-nots.” It is no state of nature that allows hedge-fund managers, for example, to pay much lower taxes than they otherwise would thanks to the carried interest loophole. Indeed, legal systems strongly protecting private property rights are themselves a form of regulation, albeit regulation that lines up with the ideological predispositions of those who call themselves libertarians.

In this system of representative democracy coupled with unlimited personal wealth, individuals—hedge-fund managers, casino moguls, oil magnates, or others—can use their very large wealth, accumulated with the help of state laws and protections, to try to influence politics and policy. One way of doing so is by directing some of those economic resources to candidates and campaigns. During each election season candidates, parties, and outside groups spend literally billions of dollars on political activity aimed at tens of millions of American voters, much of the money destined for television, radio, and now Internet advertising aimed at turning out supporters and swaying the least informed voters. An 18th century salon it is not.

The notion that there is such a thing as “free formation of opinion” emerging spontaneously outside of the structure of government regulation and protection of property rights is incorrect. So, too, is Law and Liberty’s underlying assumption that campaign laws aimed at preventing corruption or promoting political equality simply “determine” public opinion. I am aware of no proof of such determinacy and Professor Muller offers none.

– See more at: http://www.libertylawsite.org/liberty-forum/campaign-finance-law-the-state-of-nature-and-the-nirvana-fallacy/#sthash.yP3fhLpb.dpuf


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