The Other Inequality

Suddenly, economic inequality is hot. Before Occupy Wall Street, no one was talking  about it. Now Democrats have decided that it's an issue for the midterm elections. It featured prominently in the recent State of the Union address. Increasing the minimum wage now looks like an issue with legs.

Any politician who really wants to ride a populist wave over the next few years, though, needs to start talking about the Other Inequality. I mean political inequality, the fact that rich people and big businesses have more political power than everyone else.

Electorally, the Other Inequality has the potential to be a big, big issue. According to a 2011 CBS News poll, large and growing majorities feel alienated from the government: 80% believe Congressmen are primarily interested in serving special interests rather than the people they represent, 75% believe large corporations have too much influence, and 66% (including 67% of independents and 44% of Republicans) believe the rich benefit the most from government policies. Other polls have shown similar results.

But political inequality is not just an issue in itself-- it's also a sort of meta-issue. There is a long list of problems that people think cannot be solved because someone is too powerful: oil companies, pharmaceutical companies, Wall Street, AIPAC, and on and on. We won't make much progress on a lot of individual issues, including economic inequality, until we address the meta-issue by reducing the disproportionate influence of the rich on American politics.

To be sure, the rich have advantages in the political process that are not going to disappear: they can own media outlets, fund think tanks, and, for the foreseeable future, fund super-PACs to buy negative advertising.

But the main reason for the power of money in Washington is that members of Congress always desperately need campaign contributions. They spend, in fact, more time raising money than they do legislating. Probably, they therefore spend more time talking to the rich than to their own constituents, getting a distorted picture of what most people are thinking.

The solution, clearly, is public financing of campaigns. What? Oh, sorry, I must have dozed off for a minute there. There's nothing like the mention of campaign financing to do that. We need a policy that:

1. Reduces the importance of the rich in financing political campaigns,
2. Increases average citizens' feeling that their voice matters, 
3. Doesn't put people to sleep.

There are two basic approaches. One is for the government to match small donations, perhaps with the proviso that the candidate turn down large donations. But I think this approach  fails the second test above. A match makes donating more attractive, but my guess is that we would still end up with only a small minority contributing. The goal, instead, should be to have most people contributing, so that they feel they are a part of the process rather than onlookers. And a match also fails the third test above: it's a little too far removed to get excited about.

What passes these tests is some system  in which the government pays the first, say, $50 of everyone's political contribution, so that everyone can contribute up to $50 without incurring any personal cost. Both Ackerman and Ayres and Lessig have proposed versions of such a plan where the government issues vouchers to citizens, and, at considerably less length, I proposed a version using refundable tax credits here.

Essentially, we are giving everyone $50 to spend as they please on influencing elections. It's a lot more personal and participatory than matching funds. You'd expect nearly everyone to contribute the full amount, but you'd still expect people to be somewhat selective about whom they're giving their money to.

When you do the arithmetic, the results are startling. If every adult in the U.S. contributes $50, it totals to about $12 billion per year in political contributions. Say $8 billion to be conservative. Over a two-year election cycle, that's $16 billion. Suddenly, the hundreds of millions spent by the Koch brothers and Sheldon Adelson look beside the point. (Total spending on Federal elections in 2012 was a mere $7 billion, itself a record high.)

It's a bit difficult to take in how big a change in American politics this would be. Politicians' fate not in the hands of big contributors? Every citizen a contributor? It's astonishing how much we've come to take it for granted that the moneyed few will dominate our politics.

Some 2016 presidential candidate, Republican or Democratic (but almost certainly Democratic), could ride this issue a long way. Does anyone know a future Democratic candidate who needs to shake a reputation for being too much of a Washington insider and too well connected to rich donors?

There is no more important issue.