Small Donors and Political Polarization

I’ve published what I’m sure will be a controversial essay in the Yale Law Journal Forum on the small-donor revolution in campaign financing.  Up until now, reformers have characterized this development in glowing, unqualified terms: as a way to “reclaim” our republic, a development that “significantly enhance[s] the quality of democracy in the United States,” one that promises to “restore citizens to their rightful pre-eminent place in our democracy.”  That’s because advocates see small donations as serving the values of equality, anti-corruption, and increased political participation.

But there is strong evidence that small donors also fuel the ideologically more extreme tendencies, rather than the more centrist ones, in American politics.  The principal aim of this essay is to push for greater discussion and debate about this issue, which requires confronting potential tradeoffs between the equality, anti-corruption, and participation benefits of small-dollar contributions and their tendency to further fuel political polarization.  This essay also includes original analysis of the types of candidates who benefited most from small donations in the 2018 election cycle.

The question whether small-donor financing accentuates political polarization is particularly urgent because the most important campaign-finance reform proposals are now based on small-donor financing.  The election-reform bill the Democratic House passed as soon as it was seated, H.R. 1, includes a new campaign-finance system that would provide $6 in matching public funds for every $1 candidates for the House receive in small-dollar contributions (defined as contributions up to $200).  Thus, a $200 donation to a candidate for the House would be matched with $1200 in public funds.

I’ll include a brief initial excerpt, below, from this essay.  Given the importance of the pending H.R. 1 bill, I’ll do a couple subsequent posts with more specific concerns I want to flag about the particular choices H.R. 1 makes about how to structure a small-donor based system of campaign-finance reform.

From the essay:

In an initial flush of romantic enthusiasm, social media and the communications revolution were thought to herald a brave new world of empowered citizens and unmediated, participatory democracy. Yet just a few years later, we have shifted to dystopian anxiety about social media’s tendencies to fuel political polarization, reward extremism, encourage a culture of outrage, and generally contribute to the degradation of civic discourse about politics. But when it comes to the campaign-finance side of democracy, the internet and the communications revolution are still being celebrated as an unalloyed good. The time has come to ask harder questions about this disconnect between how we view the internet’s effects on public discourse and its effects on fundraising. . . .

Small-donor financing is part of the general trend toward using the communications revolution to bypass traditional intermediaries in politics and enhance direct modes of citizen participation. … Part I describes the ways in which the communications revolution is reshaping our privately financed campaign system. Part II then presents the evidence to date that suggests small donors tend to fuel more ideologically extreme candidates. Finally, Part III identifies specific aspects of H.R. 1’s design that ought to be discussed more widely. Put most broadly, the question posed here is whether the concerns that have emerged about the internet and democracy should suddenly disappear when it comes to fundraising, or whether we need to reflect more on how those same concerns might also apply to the internet’s empowerment of small donors. . . .

The design of a democratic system seeks to realize a number of different values. Most regulations of the political process, including those styled as political “reforms,” actually implicate tradeoffs and conflicts among these values. Yet the staunchest advocates of reform typically present their preferred reforms as unmitigated goods and frequently fail to recognize or confront the reality of these tradeoffs. Advocates so focused on the one dimension of a problem that most concerns them can develop tunnel vision that obscures the costs of their reforms along other dimensions of democracy. Small-donor financing has burst onto the national scene as a major force only in the last few years, which makes the current unbridled enthusiasm for it understandable but potentially troubling, to the extent we ignore the full range of consequences of turning it into the exclusive basis for using public funds to finance elections.

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