Political Parties, Public Funding and Unintended Consequences

As has been discussed previously on this blog and elsewhere, party finance reform – notably an increase in public funding – is an increasingly popular response to the myriad of financial challenges that political parties face in the 21st century. The advantages and disadvantages of state funding have been discussed at length by academics, practitioners and politicians alike, with perhaps the biggest ‘pro’ being that it provides the opportunity to rid (or at the very least limit) politics of the undue influence of so-called special interests and wealthy donors. Michael Koss takes this argument a step further by showing that an increase in state funding becomes more likely ‘the more the discourse on political corruption identifies state funding as a remedy against corrupt practice in party politics’. Whilst these arguments are undoubtedly (at least to me) fascinating, what is also interesting about party funding reform – and, indeed, reform more generally – is the unintended consequences that are thrown up when reform occurs.

An example of this forms the basis of a new study by Harvard based PhD candidate Andrew B. Hall. In a study of five state legislatures – Arizona, Connecticut, Maine, Minnesota and Wisconsin – which have strong public funding programmes, or ‘clean election laws’ (the name is, perhaps, instructive of the motivation for implementing said reforms), Hall came up with three key findings. Firstly, as expected (and intended), public funding reduced the financial advantage of incumbent politicians. Secondly, and also as expected (and intended), public funding made elections more competitive. Finally, there was also an unintended consequence, the increase in public funding makes polarization in the state legislature worse. That is to say, legislation that introduces a robust public funding regime creates a disadvantage for moderate party candidates. The reason for this is that individual donors and what Hall calls ‘access oriented interest groups’, donate money in different ways and for different reasons.

The work brings to mind that of Iain McMenamin who shows that, in terms of business financing of political parties, ‘money is multi-lingual’. Donations can be either ideological or pragmatic (for a review of McMenamin’s 2013 book, see here). Ideological donations are donations to a specific party which holds some form of ideological affinity with the donor, whereas pragmatic donations are given without any notion of political affiliation, just to the party which is perceived to hold the most power. In the American context, Hall shows that we can understand ‘access oriented interest group’ donations as largely falling into the latter category which, intentionally or not, tends to favour more moderate candidates. Individual donations, however, fall into the former category, which tends to favour polarising candidates. This is because, unlike pragmatic interest groups, individual donors are much less likely to spread their donations across candidates of different parties, to ensure some form of influence (perceived or otherwise). Individual donors are much more likely to donate to those for whom they have a strong ideological affiliation, who also tend to be on the polarised end of the political spectrum. Therefore, funding reform which introduces significant state subsidy, limits donations from ‘access oriented interest groups’ and privileges individual donations, increasing polarisation in the state senate.

The findings also represent a much larger discursive point when engaging with corruption more generally. There often exists an unspoken dichotomy between acceptable and unacceptable influence. That individual donations are a positive sign of a functioning and vibrant democracy despite the fact that they may lead to ‘a polarized, and probably less functional politics’. Whereas special interest donations (from ‘access oriented interest groups’) tend to represent everything that is wrong with modern democracy and some sort of pervasive, shadowy, Bilderberg-esque influence over politicians – who have little interest in actual, y’know, public service preferring to make as much money from politics as possible before retiring to a cushy job in the private sector. The reality, of course, as these findings show is a little more complicated than this – no reform is perfect, democracy is messy and a trade-off will have to occur.

Beyond this is also the notion that donations are almost intrinsically corrupt if the group donating – or indeed the person being donated to – represents something that one does not agree with. There often seems to be a fairly thin line between what represents a corrupting influence and what does not and that line tends to be drawn alongside some form of normative political judgement. One man’s lobbyist (yuck!) is another man’s advocacy group (hooray!).

This was further shown by reports at the end of 2014 that a new study had tried to answer the question of whether power actually corrupts. One of the lab experiments is described by a co-author of the study as follows:

“Participants played what is called a dictator game. The dictator, referred to as the “leader” in the experiment, could decide how to apportion a sum of money between himself or herself, and his or her team. They had to make choices between serving the greater good – doing what’s right for public welfare by increasing the team’s payout – or serving oneself, thereby increasing the leader’s payout but destroying public welfare.”

The problem here is that the act of selfishness, and to a certain extent hypocrisy, is being (mis)taken to be a necessarily corrupt act. Furthermore, not serving the greater good is also seen as representative of a corrupt act. A person in a position of power (who I may or may not agree with) acting selfishly and not serving the greater good is not necessarily committing a corrupt act, just as a special interest group (who I might not agree with) donating a large sum of money to a politician (who I might not agree with) does not necessarily represent a position of undue influence. That is not to say that the action (or exchange) is desirable, but it is to say we should be wary about screaming (insert expletive of choice) corruption whenever we are presented with something that we disagree with.

To return to the study to hand. The work of Andrew Hall is interesting for two reasons. Firstly, it shows us that, at least in the context of the USA, an increase in state funding (at the expense of private funding) leads to certain interesting and unintended consequences. However, American politics is nothing if not exceptional, so I would be curious to see if these findings hold up in other contexts – particularly in the advanced industrial democracies of Western Europe. Secondly, the work of both Hall and McMenamin raises broader theoretical questions about what should – and  should not – be considered an illegitimate, or indeed corrupt, exchange. It is by engaging with this literature and building on it ourselves that we can draw these lines in an ever sharper way.

Sam Power

University of Sussex

Corruption rumours again surface in Swaziland

Swaziland doesn’t appear in the western news that often, but when it does it’s rarely for the ‘right’ reasons. And, once again, that’s been the case in recent days. In similar fashion to a celebrity whose life is plagued by narcotics and alcohol abuse, the Swazi government continues to frame itself as a victim of circumstance rather than being responsible for its own demise. On New Year’s Day the country’s textile industry suffered a serious blow when the USA, a major recipient of textile exports from Swaziland, decided to withdraw its trade agreement with the nation (see here).

The reasons behind such aggressive action are to do with the non-compliance of the government in establishing legal sanctions protecting its labourers. Although Prime Minister Barnabas Dlamini states that the country will not suffer as a result, the predicted outcome is a loss of over 17,000 jobs, a devastating blow to a population of approximately 1million, which is already suffering from a high unemployment rate. Ironically, the King has also recently authorised a project worth US$90million, to build an oil storage facility in the country (see here). He proudly stated that it would “have a 90 million litre fuel capacity to last Swaziland 90 days. It [will also] store 42 million litres of diesel and 38 million litres of petrol and result in the creation of at least 300 jobs”. The tender for this project was not open, and neither was it approved by parliament. The contract has been given to the South African company, Kantey & Templer Consulting Engineers, which was also contracted to build a new airport in the country. Naturally, rumours of malpractice and patronage have begun to circulate amongst the political elite. What interests the monarch has with Kantey & Templer have yet to be uncovered. Such extravagance is viewed as unnecessary, particularly at a time when the nation will most likely require such funds to deal with the inevitable unemployment crises.

Quite what is going on here is not clear.  But it is something that certainly merits further attention as Swaziland struggles to keep its economic head above water.