Future of campaign finance: the multi-billion dollar

enterprise.
With a price tag of six billion dollars, the recent United Stateselection season set a record for the
most expensive election of alltimes, and re-launched the global debate on campaign finance.
Thecomplex relationship between money and democracy has sparked controversysince the
beginnings of democracy in ancient Greece, when the firstincidents of vote buying were reported,
and has continued to do so eversince. Are private money and democracy fundamentally
incompatible, ordoes private 'finance have a role to play in fostering politicalengagement? Although
arguments can be made for both sides, several keyreforms can be implemented across die globe.
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Public vs. Private Finance: The Ongoing Debate
The concept of "one person, one vote" is one of the fundamental tenets of democracy, if not the most
important one. However, as University of Missouri professor Jeff Milyo points out in his study of
campaign finance, this concept does not always ensure perfect representation of each individual's
stake in a certain political issue. The protection of water resources, for example, may be
of particular concern to a certain minority; but if the issue is brought to general election, the
concerned minority will not receive a share of the vote that reflects its direct interest in the issue. In
this context, campaign financing by individuals can be viewed not as a form of vote-buying, but
instead as a way for concerned minorities to voice their opinion on a topic of direct interest to
them.
This was to a large extent the rationale behind the well-publicizedUS Supreme Court decision in
Citizens United vs. Federal ElectionCommission. In 2010, Citizens United attempted to publicize a
videocritical of Hillary Clinton, which the Federal Election Commissiondeclared a violation of
legislature restricting corporate financing ofpolitical elections. The case was taken to the Supreme
Court, whichdecided in a 5-4 ruling that Citizens United and other corporations wereentitled to
independent political spending under the freedom ofexpression protections provided in the First
Amendment. Although USpresident Barack Obama called the decision, "a green light to a
newstampede of special interest money in our politics," proponents ofthe decision argued that it was
more compatible with democracy than thepublic funding alternative.
In Europe, government funds are provided to political parties in exchange for full disclosure of
campaign expenditures, which has been flaunted as the best way to level the playing field between
incumbents and challengers. However, a recent study by the think tank IDEA revealed that most
citizens were opposed to using government funds to subsidize political parties. Although no
extensive study has been conducted on the topic, there is evidently potential for the incumbent
government to restrict funding in order to maintain its advantage. In Russia, for example, the
incumbent party is allowed to campaign on state-sponsored official tours, whereas spending caps
for other parties place a limit on the amount of campaigning they are able to undertake.
As a last argument in favor of private financing, a recent study published by Policy Analysis
indicated a strong correlation between restrictions on private funding and lower levels of
political competition. Limiting the amount of money that can be donated to a political party is often
more harmful to https://www.youtube.com/channel/UCOffdjWV4n63voF5kW7-HgA the challenger
than the incumbent, as the challenger typically needs more funds to increase its public prevalence.

Looser financial regulations could therefore have a positive impact on the number of political
options available to citizens. On the other hand, the large funds amassed by the
incumbent government through private financing over several elections may also create a deterrent
effect, preventing the creation of new parties. In the United States, the funds that would be
necessary for a third-party to challenge the Democratic or Republican parties arguably contribute
to the maintenance of the bipartisan system.
The main argument against private financing directly comparesindividual contributions to bribing.
Can a donator as generous asSheldon Adelson, the business magnate who contributed over $34
millionUSD to the Romney campaign, really expect nothing in return for hislarge expenses? It may
simply be that legislators and privatecontributors have similar ideological positions and interests.
Theconcept of bribery implies that politicians change their policies tosuit contributors, but it may be
that politicians' positionsattract donors, not vice versa.
Overall, a closer look at the importance of campaign financing, reveals that private money may not
actually influence political outcomes to the extent envisaged by the public. The Sunlight Foundation
reported very low rates of returns for many of the major contributors to the US election season in
2012. For example, American Crossroads, the super PAC backing the Republicans, only saw 1.29%
of its spending result in the desired political outcome. Smaller funds that focused on key issues
or local elections, such as Women Vote, were those that observed the highest rates of return.
Similar points cannot necessarily be made for other countries, however, as contributors to the
Venezuelan and Brazilian elections experienced significantly higher rates of return.
Enforcing Transparency
Whether or not private finance actually plays an important role in influencing elections, various
reforms exist that can broadly be agreed upon to improve the regulations surrounding political
finance. Transparency requirements enable citizens, local watchdogs, and international NGOs to
supplement the role of the state and prevent any bias on the part of the incumbent government.
This is particularly important for less economically developed democracies, which may have limited
resources to audit financial spending. Surprisingly, more than 25 percent of democracies that
require full disclosure of campaign funding still do not have a requirement for this information to be
made public.
Well-established democracies, however, still have room for improvement in this area. Transparency
should be more strongly emphasized in local and smaller level races as well as nation
wide campaigns. Legislature on the funding of national elections is extensive and well-enforced,
both in North America and in Europe. However, research conducted by the Center for Public
Integrity suggests that it is in more local elections that private money presents the potential
for swaying policy. For example, a study by the Institute of Governmental Studies at Berkeley found
a close correlation between campaign contributions and the price of telecommunication contracts in
the United States, the high volatility of which had previously been inexplicable. Transparency
reforms have been focused on the more widely publicized and more closely scrutinized national
elections, but root level races should in no way be forgotten.
One final point to take into account when developing transparency norms is the existing landscape
of political finance. For example, candidate funding is the area more closely monitored in the
United States, where private financing is the norm, whereas in Germany it is spending that is
reviewed at the end of the year, as the public sector provides most of the initial funds. The
motivation in both cases remains the same and allows civil society and international groups to
be involved in the auditing process, in order to ensure it exists elsewhere than on paper.

Non-Existent Law: Strengthening State Capacity

The other key issue plaguing political finance regulation is the gap between theory and practice. In
newer democracies in particular, the priority should not be to introduce new legislation but to
ensure that the existing legislation is actually being enforced. Although this reasoning may appear
self-evident, this problem plagues campaign finance in many newer democracies, particularly in
Africa and Oceania. In a study conducted by an Oxford research consortium, only 43% of
candidates running for office in Nigeria were aware that spending limits existed on their
campaigns. Although the Nigerian government operates an auditing depatanent, only 40% of the
respondents actually had their accounts examined by an official. To quote Pinto-Duschinsky,
"political finance suffers from too many rules, too little enforcement."
Likewise, existing legislature should be re-examined to check for potential loopholes. In India, for
example, strict limits are in place on direct cash donations but goods donations, such as smuggled
alcohol contributions, have become a common way to contribute to parties in heated elections.
Similar loopholes exist in more economically developed democracies. In the United States, the 2010
Supreme Court decision mentioned earlier introduced a distinction between hard money, or
in other words money donated directly to a politician's campaign, and soft money, or money used to
promote a cause that may or may not be associated with a particular politician. Limits on hard
money are carefully observed, but soft money is much more loosely monitored. Although a
distinction should be made between the two types of contributions, this is a potential loophole that
could develop into a problem in the future.
Integrating Cultural Context Into Reforms
Finally, the cultural context and conception of the state should be taken into account when
introducing reforms. The role of government is envisaged differently in the United States and
Europe, a fact that is reflected in political finance regulations. Since its creation, the United States
has developed a system of checks and balances through the division of powers and the federal
system. This serves to limit the size of the government in contrast to European countries. In
Europe, governments tend to have much more power once appointed, as they are directly chosen
by a majority parliament and therefore unlikely to face deadlock from the legislative. The difference
extends beyond institutional design--United States citizens are significantly more opposed to the
idea of large government than Europeans. In a survey conducted by Pew Research in 2012, 56% of
United States respondents said they valued the "freedom to pursue life goals without
state interference" over "the state [guaranteeing] that nobody is in need." Only 35% of Western
Europeans responded likewise.
These different conceptions of the state have developed over centuries and influence approaches to
political financing regulation. For example, it is no surprise that Norway, a country with
universal health coverage and a wide social safety net, should sponsor political campaigns through
the public sector. Although Europe allows individuals to impact the political process through private
funding, this is restricted both directly and indirectly much more significantly than in the Americas:
for example, France places a limit of 4,600 on individual contributions, which is a very different
situation from the $30,800 limit placed on individual party contribution in the United
States. However, 86% of European countries provide some sort of public funding to political
campaigns, in contrast to 27% of countries in Oceania. These differences in the conception of
democracy mean that there is no perfect solution in terms of private political finance. Principles
of effectiveness and transparency should instead be implemented while taking into account these
different conceptions of the state.

Large-scale, radical transformations to campaign finance are difficult to pass through. In the United
States, for example, a move to a more public system of finance would require an amendment to
the constitution and therefore the approval of two-thirds of Congress and three fourths of the
states. Reform is therefore likely to move on a slow, case-by-case basis, but that does not mean it is
impossible or unnecessary. In a poll conducted by Associated Press, 83 percent of United States
citizens expressed themselves in favor of limits on contributions by corporations and unions. French
and German citizens have expressed similar dissatisfaction with the state of public funding. The key
is to ensure that the reforms that take place are implemented in a realistic and balanced manner
that takes into account the global experience with campaign finance.
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SARAH FELLAY is a staff writer for the Harvard International Review.
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