To Get the Money Out of Politics, Take Politics Out of the Money

We hear endless lamentations about how corrupt our political process has become; that special interest groups with wealthy anonymous donors fund the campaigns of politicians who in-turn endorse legislation which favors these groups. For the most part, it's true. Where many "Clean Government" advocacy groups go wrong in my view is that they believe that taking "money out of the politics" will solve the problem. I believe that approach will only breed more corruption. Rather, we have to strike at the root of the problem which is trillions in special favors granted to powerful organizations.

Money Is Not the Root Cause of Political Corruption

Let's just get this one out of the way right up front. Money is simply a medium of exchange. By definition, it cannot be a root cause of anything. Money does not get hung up on walls for people to adore (Greek restaurants notwithstanding), it is exchanged for something else. Certainly, money is abundantly used in politics, but if you want to end corruption, you have to discover what the money is being exchanged for.

Money Is Buying Special Favors

I think most people will agree that the money is buying favorable treatment which benefits special interest groups such as trade associations, influential corporations, or [insert your favorite corrupt organization here]. And the numbers prove it, as this WaPo article describes how spending a few hundred thousand in lobbying can reap windfalls in the millions -- and that's just for one company. Trade associations, which represent the key sectors of our economy such as energy and finance, spend millions worth of influence to gain billions in favorable treatment like subsidies, trade protection, bailouts and tax benefits.

The granddaddy example of all is the financial industry. They invested about $2.5 billion in political influence over a 20-year period and received $700 billion in 2008 bailouts alone. Even Bernie Madoff couldn't bring himself to promise a 29,000 percent return on investment. You got to hand it to those Wall Street boys, they know where to put their money: in Washington D.C.

Money Can Only Buy What's for Sale

It's important we understand that money can only be used to purchase what is for sale. This is exactly why "getting money out of politics" will not solve the root problem and quite possibly will make it worse: Special favors, which today are bought by money, will still exist, still be available, still be sought after, and most importantly will still be obtained by those who desire its benefits. After all, who believes that an instrument with a 29,000 percent return on investment will no longer be pursued if dollars can't be used to obtain it?

The Ability to Grant Special Favors is the Root Cause of Political Corruption

Most of us want to remove corruption from politics, and it's pretty clear that even if we could somehow have "clean" elections that are free of financial influence, the root causes of corruption (special favors worth trillions) would still remain, and therefore, so would corruption itself. Money is not the problem. The ability to influence (or control) special favors is the root cause of corruption, so let's go after that.

You Can't Sell Power You Don't Have and You Can't Buy What's Not Available

Simply put: Take away the special favors, and there is nothing for money to buy. When there are no favors to buy, no money will be spent. More importantly, there will be no reason to pursue special favors because they simply do not exist. Easier said than done, of course. Today's current corrupted state is the product of decades of incremental power building and we're going to need a principled stance along with decades of hard work to dismantle the Rube Goldberg political corruption machine that's been built.

No Free Ride: No Favors, No Subsidies, No Protection, No Bailouts

A principle that most of us can agree on is what I call the "No Free Ride" rule. Any special favors for a specific type of industry should be either repealed or tabled indefinitely. And in my view, the only way to approach this is with complete equality: No industry exceptions. Period. And of course the converse applies: No law should punish a specific industry either. Remember, as soon as you pass laws to help or hurt a specific industry, you open the floodgate of money gushing in to control or influence those laws.

Let a Million Garage Startups Bloom

Complimenting the No Free Ride rule would be the Garage Startup rule: Repeal legislation that makes it harder to start a company in your garage and pass legislation that makes it easier. It's precisely because the early tech industry was free of crony capitalism that let companies like HP and Apple start in their garage. For the most part, that same freedom in that industry still exists. At the same time, it would be ludicrous to think you could start a bank in your garage. The day you will see zero corruption in Wall Street will be the day I can start a hedge fund in my bedroom.

If We Want the Money out of Politics, Take Politics out of the Money

Our government is corrupted because millions in campaign contributions control hundreds of billions in special favors. For as long as the special favors exist, powerful organizations will seek their benefits. Today they use money to buy their influence, but if you outlaw that, they will simply use other means. The only way to structurally reduce corruption is to remove the trillions in special favors that corruption seeks to control.