A Systemic Problem

The Northern League scandal, which followed a similar case in another party, shows that corruption has no ideological barriers and affects all parties. While individuals are of course to blame, the problem is systemic, and without systemic reforms the same mistakes will occur in the future. Unfortunately, the debate over reforms so far has been a mix of demagoguery and opportunism. It’s hard to believe politicians who are embedded in the system will be able to carry out reforms.

In this respect, Mario Monti’s technocratic government has a chance, since it is not composed of career politicians. However, in order to be truly technocratic, the government must study campaign financing all across the world. We will offer here a first glimpse into the American system, not because we believe Italy should think of it as a model system, but because it’s a well-known case.

The premise, although not very popular, is that politics is expensive. In 2008, Barack Obama spent $760 million on his campaign. That may seem huge at first, but we should keep in mind that companies spend way more on advertising for ordinary products. In 1999, Gillette spent $300 million on the advertising campaign for a new razor. A president is certainly more important than a razor!

However, cost is not the real problem; the cost-benefit ratio is. If ad money helps citizens choose the best candidates, then there is nothing wrong with it, since the cost of a bad government is much higher. But if mediocre politicians survive, even a few euros are a waste. In other words, the focus should not be on how much money is spent but on the effects this money produces, especially when it comes to the efficiency and the representativeness of the political system.

Another point to keep in mind is that campaign financing should not rely only on the free market. This may sound strange, given that both countries believe in the free market. However, the market can be efficient only if individuals influence each other only through price. If Bill Gates likes red ties more than blue ties, the price of red ties is likely to increase, but we can still buy blue ties. This isn’t the case in politics, as the majority imposes its choices on the minority. If Bill Gates decides to finance the campaign of a candidate, thus increasing his or her chances of winning, he also affects our freedom of choice.

The second reason why the free market is not 100 percent efficient is that what drives politics is not the quest for the best candidate but the goal of winning, which explains why campaign expenses, like soccer player salaries, have recently skyrocketed.

There is another reason why the escalation in campaign spending is happening: it influences politicians. The average American politician participates in more than 500 fund-raising events every year, and it’s hard to believe that those politicians will not be influenced by them.

A laissez-faire approach does not work in politics. While there must be rules and public funding, the risk is that they both end up protecting the interests of political parties, instead of promoting a more efficient and just electoral system. If we want elections to be true competitions, new parties should have a chance to be part of the system.

For this reason, we agree with the “matching funds” system American legal scholar Larry Lessig outlines in his recent book, Republic, Lost: How Money Corrupts Congress—and a Plan to Stop It. In this system, individuals can donate up to $100 to candidates, while public contributions amount to double the amount of what each candidate was able to put together. No other campaign contributions are allowed. This way, while campaign expenses are kept under control, competition is not only preserved but increased. Big spenders and parties have less influence on politicians. While Italian parties are not likely to approve this proposal, it’s possible there will be some consensus about it in the Parliament. Lessig suggests that a constitutional convention may approve his reform. In Italy, a technocratic government may be enough.