Chremacracy

This chapter studies how Indian politics is becoming a chremacracy—a system in which big money rules supreme. In 2018, the already shady party finances system took a quantum leap towards absolute chremacracy when the Modi government introduced electoral bonds, an instrument that allows individuals, corporations, and other legal entities such as trusts and associations anonymously to channel unlimited amounts of money to political parties. Under this new measure, anyone is allowed to buy tax-free bearer bonds for specified amounts via the state-owned State Bank of India (SBI) and then deposit them into the registered bank accounts of political parties. Like political violence, the organized secrecy over money irreversibly distorts the spirit and institutions of electoral democracy. The misallocation of resources that results from poorly regulated campaign spending ensures that elections and governments are captured by special interests. Ultimately, the grip of private money on electoral politics is detrimental to the quality of representation as it skews the field of available choices, and a system of free choice is gamed into one of prompted selection.

Party fragmentation and campaign spending: A subnational analysis of the German party system

Party finance allows elucidating parties’ behaviour in differing political and institutional contexts, yet only a few studies investigate expenditure patterns. Given that campaign activities are central for parties to fulfil their core functions in representative democracy, this study seeks to explain why parties invest in electoral campaigns to different degrees. We argue that high party fragmentation reinforces parties’ focus on electoral races in election years, a mechanism we refer to as the ‘campaign concentration effect’. By contrast, in less fragmented systems, parties invest more in campaigning on a continuous basis. A subnational analysis of the German party system between 2009 and 2017 provides evidence for this effect. Our results imply that growing party fragmentation nurtures parties’ efforts to succeed in elections, which is likely to intensify parties’ orientation towards short yet capital-intensive campaigns.

Gauging (Perceived) Corruption

Chapter 3 aims to gauge both the reality of, as well as public opinion on, the central issue of corruption. It investigates public opinion on corruption among elected officials, source of corruption, effectiveness of laws and regulations in mitigating corruption, support for campaign finance reforms, etc. The data strongly suggest that people think corruption is rampant despite limited evidence that quid pro quo corruption is anything more than a minor problem. This fundamental attitude has not changed much in the wake of the Citizens United decision. Furthermore, they believe the problem is mostly intractable and that most of the commonly proposed reforms of the campaign finance system will not work. Nevertheless, they still support these reforms. Moving from simple descriptive data to more associational analyses, this chapter also explores the effect of campaign finance laws on campaign spending and then the effect of both on corruption attitudes. The results are not what the Court would have expected.

Perceived Corruption and Trust in Government

Chapter 4 examines the relationship between perceptions of corruption and trust in government. The analysis begins by reviewing variation in levels of trust over time, and proceeds to an estimation of the relationship between perceptions of corruption and trust, as posited by the Court. This chapter also tests the Court’s assumption that states with more substantial campaign finance regulations will evince greater trust in government. Finally, it examines the related notion—implicitly suggested by the Court’s teleology—that lower levels of campaign spending are likely to be associated with greater trust in government. The data are not consistently supportive of this line of reasoning. After accounting for endogeneity, the empirical model shows that perceived corruption does not have a significant impact on trust in government.

What Do Americans Know about Campaign Finance?

Chapter 2 establishes a baseline by reviewing public opinion concerning money and politics, pre– and post–Citizens United, focusing on what Americans know about money in politics and campaign spending. On the one hand, given that citizens are typically not well informed about politics, it should come as no surprise that they do not know all that much about candidate spending or campaign finance. On the other hand, the public is not completely off base with respect to its sense of money in politics, and this basic intuition is perhaps even sharper in the post–Citizens United era. The data suggest that while Americans know a little bit about campaign finance, there is no systematic correlation between the regulatory environment of the state and how much people in that state know about campaign finance.

Perceived Corruption and Political Participation

Chapter 5 shifts the focus to the final—and perhaps most important—element of the Court’s behavioral model: political participation. Adopting a broad and comprehensive scale of political participation that includes both voting as well as other forms of engagement, it first estimates the relationships between attitudes toward corruption and trust on participation. The data offer little support for the notion that those who see more corruption and those who are less trusting of government are less likely to participate. Equally important, campaign finance regulations and campaign spending have a minimal influence on political participation. In fact, increased spending appears to coincide with slightly more participation.

How Do Campaign Spending Limits Affect Elections? Evidence from the United Kingdom 1885–2019

In more than half of the democratic countries in the world, candidates face legal constraints on how much money they can spend on their electoral campaigns, yet we know little about the consequences of these restrictions. I study how spending limits affect UK House of Commons elections. I contribute new data on the more than 70,000 candidates who ran for a parliamentary seat from 1885 to 2019, and I document how much money each candidate spent, how they allocated their resources across different spending categories, and the spending limit they faced. To identify the effect on elections, I exploit variation in spending caps induced by reforms of the spending-limit formula that affected some but not all constituencies. The results indicate that when the level of permitted spending is increased, the cost of electoral campaigns increases, which is primarily driven by expenses related to advertisement and mainly to the disadvantage of Labour candidates; the pool of candidates shrinks and elections become less competitive; and the financial and electoral advantages enjoyed by incumbents are amplified.