Faughnan Home | Contact
Info | Site Contents | Search
rev: 01 Nov 2004
This document began in 1996 with a somewhat idealistic proposal: Voluntary Mandated
Sharing. Times change, and in 1999 I added a grimmer and more practical alternative: the
politician as public corporation. The latter seemsmore in keeping with the times.
Campaigns need money. Powerful people need good things. Both needs can be satisfied by
transforming politicians into publicly owned corporations. After meeting standard
accounting requirements, a politician would be sold through an IPO. The usual futures and
options markets would develop. Standard reporting and accounting regulations and SEC
enforcement would apply. Cheaters would be delisted, and thus be effectively removed from
There are several advantages to this approach:
- There are no constitutional issues.
- It's very simple.
- It's honest and transparent.
- It would bring in so much money that other forms of funding and bribery would become
irrelevant. Federal, and some state and city politicians, would be all multi-millionaires.
- We would not need public financing of elections. Politics would no longer be limited to
- The market would demonstrate a politicians' commitment to his/her owners through the
share price. This would be visible for all to see.
- At election time voters would know what a politician stood for, by knowing who the major
- Politicians would no longer need salaries or pensions.
- Politicians would not need to spend all their time raising money -- bending laws, and
selling their souls in order to get elected. They would be available to govern.
- Corporations and wealthy individuals would be able to buy and sell politicians more
efficiently. Efficiency is good for the economy.
- Powerful individuals and corporations would have their necessary
control of the political process.
Getting elected in America takes lots of money. The money comes from powerful (wealthy)
people and corporations. Their money comes with strings attached, and if they don't get
what they paid for, they don't pay any more. Politicians who won't play the game don't
stay politicians. It's a cruel Darwinian process of irresistible corruption. Honest
politicians loathe it, but the voting public remains unconcerned and inattentive.
Those of us who do worry about corruption in American politics consider campaign
finance reform to be the most important item on the national agenda. We need to
address this before we can make progress on our better known problems: racism, poverty,
the tax code, entitlements, etc.
The problem is that American law and custom makes it very hard to regulate political
donations. I wonder if the following proposal, called "voluntary mandated
sharing" (VMS, need a catchier name), might be constitutional. It could be tried
first at the local or state level. The goal of this proposal is not to save money, but
rather to make it more expensive to "buy" a politician, and to generally reduce
the influence of wealthy forces.
This proposal has 3 parts.
- A neutral agency is needed, patterned after the Federal Reserve. This appointed panel,
perhaps made of "distinguished jurists and citizens" decides who's playing the
following game and who's not.
- Changes in the Federal Matching Funds program. This program provides public financing to
politicians who follow the current (weak) rules. Even Ross Perot took matching funds this
year. I'd change the program to include a base payout (independent of matching) as well as
a matching payout; this makes it more desireable. BUT, to be eligible, politicians have to
participate in ....
- VMS: voluntary mandated sharing. In the reformed program to get matching funds you must
agree to this program. Assume than A, B, and C are 3 candidates for a senate seat. Philip
Morris gives $240,000 to politician A. Under the program A gets to keep a percentage of
that -- say 50%. The remainder goes into a general pool, that is shared equally between A,
B, and C. So, A gets $120,000 + 120,000/3 = $160,000. Politicians B and C both get
120,000/3 or $40,000 (of course their donations are similarly distributed). All of them
get matching funds plust a fixed fund amount from the matching funds.
All three parts are critical. Part 2 means that politicians will participate
voluntarily in the program -- hence no need for constitutionally shaky restrictions. Part
1 means that cheating is hard -- if the Elections Board rules a candidate is cheating,
they are out of the pool and get no matching funds. Part 3 is the key.
The VMS means that when Philip Morris wants to help out pol A, they're also helping out
her competition. Pol A has less incentive to do deals, because not only are they losing
some of the money, but (much more importantly), their opponent is gaining money. In fact,
some challengers might opt to do not fund raising at all! They'd concentrate on
communicating with the electorate, and work from their opponents funds and the matching
funds program. They could spend their time campaigning or working. In some races we'd see
a quick spiral to the bottom -- donors are less interested in buying a politician (now
much riskier with less return), and some candidates would opt out of fund raising all
I've received some feedback to an early draft of this proposal. Here's a summary of the
feedback and my responses.
- Politicians won't bother to use the program, because the incentives are
- That may be true, particularly at the national level. However those who opt out of the
program will not receive matching funds. That's a lot of money; even Ross Perot took them
this year. Also, I suggest increasing incentives by providing a flat non-matching grant
from public funds. If one of two candidates opted out, the participating candidate would
get matching funds and the grant. We could even increase the incentive by providing
_double_ matching funds and _two_ grants to the candidate who's willing to participate
(since the other candidate won't have them).
- The program won't save money, it just makes it MORE expensive to "buy" a
- I agree. Since my primary goal is not to save money, I consider this a
"feature", not a "bug". In economic terms, a politician's favor is a
"good" like any other. As Ben points out, the net politician purchase is the
difference between what the politician gets and what his/her opponents get. Thus, the
politician has become much more costly. Many buyers will invest their monies in cheaper
areas, like marketing, product development, etc.
Also, in addition to making politicians more costly, this process also provides
substantial resources to challengers who cannot raise funds by conventional means. If my
opponent has 30 million dollars, and I have 10 million dollars, I can still put up a
pretty decent fight. OTOH, if my opponent has 10 million dollars, and I have 100,000
dollars, it's no contest.
- Citizen contributions will also have less weight, so their inflluence will also be
- I agree, and I'm ok with that. Citizen weight should be applied by votes, not dollars.
By funding challengers the mandatory sharing proposal will give citizens more choices.
Citizens can save their money for important local causes and charity.
- Does money really influence politicians, or is it simply that corporations support
those who favor their biases? (ie. the politician would make the choices they make even
- I think both things happen. Judging from the rest of humanity, I think money makes a
VERY big difference in how politicians think. Why should they be better than doctors and
professors and everyone else? I'm a doctor (and I've been a faculty person), and I can
assure you that money influences what doctors believe. In medical education we go to some
lengths to try to limit the influence of pharmaceutical corporations, far beyond any
suggested political reform, and they are still too influential.
On the other hand, I also think that the current system exerts severe selection pressure.
Only those politicians who can muster financial support from the trial lawyers (Clinton),
or Philip Morris (Dole), are going to win and win again.
Either way, money buys and selects politicians. I want to make them more costly to
acquire, and to increase the ability of challengers to face incumbents.
- Isn't corruption a necessary compromise between true
democracy and the wishes of the powerful?
- This "feedback" is my own, and, not surprisingly, I find it the most
persuasive. Imagine that we dramatically reduced corruption in the American political
system through campaign finance reform and other measures. Imagine that the economic elite
had no more influence over political decision making than the average citizen. Would this
be tolerated? Perhaps American democracy works because it is not perfect. It gives the
powerful a greater voice than the average person, and in turn for a greater voice the
powerful are also willing to allow the people a democratic voice. We may argue over the
amount of additional power the wealthy acquire by buying politicians, but perhaps we
cannot risk eliminating it all together.
- Jan 9, 1999: Public Corporation Alternative.
- April 19, 1998: Revision 1.
- Nov 28, 1996: Voluntary Mandated Sharing.
Author: John G. Faughnan. The
views and opinions expressed in this page are strictly those of the page author. Pages are
updated on an irregular schedule; suggestions/fixes are welcome but they may take weeks to
years to be incorporated. Anyone may freely link to anything on this site
and print any page; no permission is needed for citing, linking, printing, or
distributing printed copies.