Mr. Speaker, the government is proposing to further regulate political fundraisers by requiring leaders and ministers to file a bunch of reports every time they hold one. To be clear, the names of donors and the amounts they give are already published. The bill would simply require more reports on where and when these donors attend gatherings.
Before we judge the merits of the proposal, let us go back to first principles and ask why restrictions on political fundraising exist at all. There is only one reason we restrict those donations. It is to prevent people from turning money into power. Political power is zero sum. There is only so much of it to go around. If a donor gets more, everyone else has less.
Why would donors be willing to pay for political power in the first place? The answer is the return on investment. Large-scale donors almost invariably want something in return for the money they invest in politics. Usually they want a grant, an interest-free loan, a contract, or a regulation or protective tariff to stop their competitors. They believe that the donation will help them get the government's assistance, and they calculate that the advantage gained is vastly bigger than the donation necessary to get it.
As an example, just yesterday we learned that the largest corporate donor to the Ontario Liberal Party gave the party $480,000, in exchange for which it got $160 million in government handouts. What a return on an investment. The company got three hundred times what it paid the party, smashing all stock market investing records set by Warren Buffett and John Pierpont Morgan.
Monied interests that donate are not, therefore, giving, at least in many cases. They are buying. They expect something in return. Will a bill that requires the publication of events they attend, events for which their donations are already reported and made public, prevent that from happening? Of course not. We are seeing that right now.
Monied interests have found other ways than just donations to purchase influence: paid lobbyists; massive, unregulated third-party advertising campaigns, in which tens of millions of dollars were invested in helping this government get elected in the last election; and gifts to the Prime Minister in the form of paid vacations or exorbitant speaking fees by organizations that had vested interests in how the then-leader of the Liberal third party would vote in the House of Commons.
If these restrictions on donations have not thus far been successful in getting money out of politics, at stopping people from converting their dollars into power, then how can we put an end to this tawdry practice? The answer is that we need to get government out of the economy. Government has become such a dominant part of the economy that those who wish to make money need the favour of government decision-makers to do it, so they invest in political influence to get that favour.
Nobel prize winning economist James Buchanan called it public choice theory. He wrote:
However, when governmental machinery directly uses almost one-third of the national product, when interest groups clearly recognize the “profits” to be made through political action, and when a substantial proportion of all legislation exerts measurably differential effects on the separate groups of the population, an economic theory can be of great help in pointing toward some means through which these conflicting interest may be ultimately reconciled.
His public choice theory has been described as political theory without the romance.
According to William Shughart, public choice theory “transfers the rational actor model of economic theory to the realm of politics.” Where people act rationally in a market economy, investing in order to get a return, Dr. Buchanan found that government-run economies have the exact same kind of calculated trade-offs: people investing in politics in order to get rich.
Socialists often decry corporate profiteers who make money in the private sector. As a solution, they believe in replacing the private sector with ever bigger government. However, when government replaces private business, what happens to these profiteers? Do these rapacious, capitalist vultures transform into selfless doves? When socialism replaces the free market, does it simultaneously remove all greed from human DNA? Do people stop wanting to make money? Of course not. In fact, the only thing that changes is the way they make money.
The way one makes money in a government economy is by winning the favour of the political decision-makers who allocate the resources. Instead of selling things people agree to buy, one buys the politicians who control the money. If all the money is in the great vault of the state, profiteers work at buying or renting the keys to that vault. They donate to politicians who give them subsidies. They offer luxurious vacations to prime ministers in exchange for grants to their foundations. They hire lobbyists to convince governments to shut down their competitors with more regulation and tariffs.
As Buchanan wrote:
The individual who seeks short-run pleasures through his consumption of “luxury” items sold in the market is precisely the same individual who will seek partisan advantage through political action.
In the book Welfare for the well-to-do, economist Gordon Tullock put it this way: “Today the individual who works hard and thinks carefully in order to make money in the market will also work hard and think carefully in order to use the government to increase his wealth. Thus, we should anticipate that effort and ingenuity would be put into using the government for gain, and if we look at the real world, we do indeed see such activities.”
The larger government becomes, the more we can expect profit-seekers to turn their money into power and to turn that money back into yet more money.
We see the evidence. In 2014, the last full year of the Conservative government, when government spending was on the decline, lobbyists registered 14,000 interactions with designated public office holders. Last year, there were 23,000 lobbyist interactions with designated public office holders, which is a 79% increase in just three years.
Why is it that businesses, unions, and others are spending so much more on lobbyists? The answer is that there is so much more money in the government to be had. Businesses, to see a return on investment, believe that if they invest in a lobbyist they can get more of that government money. The two fastest growing sectors in our economy are now government and lobbyists, which are two sectors that grow hand in hand.
There has been a payoff. Bombardier invested in lobbyists and got $400 million in interest-free loans from the government. Private equity funds and investment bankers that have invested in lobbyists secured a $15-billion infrastructure bank to protect their investments in megaprojects. Some tech companies have invested in lobbyists, and they have been able to secure a brand new billion-dollar corporate welfare fund that will create so-called superclusters. Money, of course, will go to the best lobbied-for firms.
Big government leads to more lobbying elsewhere as well. Strategas Research Partners produced a graph showing the correlation between U.S. government spending as a share of GDP and the amount corporations have spent on lobbying in Washington. In 2000, federal spending in the U.S. was about 19% of GDP, and there was about $2 billion of lobbying. By 2009, government spending had grown to 25% of GDP, and lobbying had nearly doubled, in inflation-adjusted terms, to $4 billion. More money in the government in Washington means more money spent on lobbyists to get that money in Washington.
When government decides who gets what, business buys a larger share of government. Who wins when that happens? Well, of course, it is those with money. They can hire lobbyists, promise future jobs to politicians, make donations, and schmooze with officials. The working class, by contrast, can afford to do none of these things. They are too busy trying to keep their heads above water, raise their children, and pay their bills to have the means to accumulate and leverage political influence.
Great big government brings economic oligarchs. It concentrates wealth in the state and in the hands of those most able to control the state: a privileged class of modern-day aristocrats.
If we want monied interests to stop pouring money into politics, we must remove the economic power of politicians to reward them for doing so, and that is done by reinstating the free market, a free market in which business makes money by pleasing customers, rather than a government-run economy in which business makes money by pleasing politicians; a free market economy in which people get ahead by having the best product, rather than a government-run economy in which people get ahead by having the best lobbyists; a free market economy in which people put their minds to work investing in products and services people would voluntarily buy with their own money, rather than one in which we put our best minds to work winning the favour of powerful politicians with the keys to the vault of the state; a free market economy based on a meritocracy, not a government-run economy based on an aristocracy.
If the government really wants to put an end to the excesses of money in politics, it must have the humility to surrender control of large parts of the economy over which it has no business being involved.