What If the Law Required Campaign Contributions to Be Kept Secret?

It is said in politics that sunlight is the best disinfectant. But maybe it's causing the cancer of corruption in our system to grow.

The private voting booth seems natural to today's voters. But to bygone generations, casting one's ballot publicly seemed the obvious approach. How could citizens trust the ultimate tally if they couldn't monitor the individual inputs? Alas, transparency had an unintended consequence: it made vote-buying easy. If John Smith offered George Cooper a barrel of whiskey to vote for Sam Brown, he could verify that he was getting his money's worth. Under a secret ballot, he could still offer the barrel of whiskey. But it made no sense: what incentive did George have to keep his word if he secretly supported another candidate? Vote buying became difficult.

In an intriguing paper published at Yale Law School more than a decade ago, Ian Ayres and Jeremy Bulow argued that the same logic applies to campaign contributions. Presently, our intuition is that transparency and disclosure are the best policies. But what if, like our counterparts in early America, we're just enabling a kind of vote buying, whereby legislators know exactly who is bankrolling their campaigns, and skewer their behavior toward special interests as a result? What if less transparency would be as effective for us as it was for them?

"We can harness similar benefits by creating a 'donation booth': a screen that forces donors to funnel campaign contributions through blind trusts," they wrote. "Like the voting booth, the donation booth would keep candidates from learning the identity of their supporters... A system of blind trusts would make it harder for candidates to sell access or influence because they would never know which donors had paid the price."

There is an obvious objection. It was reasonably simple to implement a secret ballot. But campaign contributions? What if it proved impossible to actually keep their provenance secret? What's to stop me from whispering to Joe Legislator, "You're going to see $10,000 show up in your campaign account a week from now. It's from me." That would be the worst of all worlds: gone would be the transparency of the current system, and politicians would still know who to keep happy!

After studying the issue, however, Larry Lessig concludes in his essential book Republic, Lost that anonymity is in fact possible to maintain. Citing "Voting with Dollars: A New Paradigm for Campaign Finance" by Bruce Ackerman and Ian Ayres, he writes that "the two critical elements are, first, an anonymous donation booth, which takes in contributions and then divides those contributions into random amounts, which it then passes along to the candidates;" that solves the "expect this amount on this day" problem; "and two, the right to revoke any contribution once made. It is this second element that does most of the work: for even if you watched me make the contribution to your campaign, I would still have an opportunity to revoke that contribution the next day. Once again, you're free to trust me when I say I haven't revoked it. But just as with vote buying, the need for trust will severely weaken the market."

Lessig concludes that anonymity would be maintained, and that this system ought to be tried -- I concur, and would love to see a state government experiment with it -- but curiously, he thinks that the reform would fail despite its technical efficacy. "My concern with this solution is not whether it would actually work. It would, in my view, for the architecture is genius. My concern instead is about whether it would be perceived to work," he writes. "For, if the core problem that dependence corruption creates is the perception among voters that 'money buys results in Congress,' then fighting that perception requires a system that the voters would understand, and believe. Yet we live in a nation where people don't even believe that voting machines are counting ballots accurately. To imagine the public understanding the brilliance of the anonymous donation booth, and believing that, in fact, there is no way for large contributors to prove they've made (and haven't revoked) a contribution, is, I believe, unrealistic. The mechanics are too complex; the sources of suspicion are too great."

I disagree. The core idea behind the reform strikes me as quite simple. Indeed, Lessig is able to summarize it in just two clauses. Plus it wouldn't be hard to improve on a status quo wherein voters already perceive corruption; even if we move from a reality where there is vote buying and the perception of it to a reality where there is just the perception that's an improvement.

Finally, I can imagine simple tweaks to the "donations booth" plan that would strengthen its actual and perceived effectiveness. For example, imagine a rule whereby a politician would be awarded a sizable cash reward for ratting out a donor who tried to get around the secrecy rule on a contribution above a certain amount, so that pols would be incentivized to report illegal donations; and donors, who would face a penalty if caught, would be incentivized to make sure their contributions remained absolutely confidential. It would also be very easy to run regular stings to test whether or not lawmakers were reporting illegal donations, as would be required.

Lessig points to one failed experiment of this sort. In Dade County, Florida, a blind trust was set up to fund judicial elections. "The funds were solicited from all practicing members of the bar in Dade County, and the funds were distributed on a pro-rata basis to each 'qualified' judicial candidate in the county," he writes. "The trust failed soon after it was adopted due to (i) a lack of attorney participation (donations), and (ii) criticism that the fund distributed funds to all qualified judicial candidates, thereby disallowing attorneys from directing contributions to particular candidates." That confounding variable is unfortunate. I'd be curious to know what would've happened if the anonymous donations could've been directed to particular candidates.

We have no way of knowing for sure whether these blind trusts would work, but they strike me as promising on paper, and worth testing in a municipality, county, or state, where damage done by the change would be limited and successes could be emulated. "Its biggest danger is that it might work too well: without substantial public funding, it could severely limit the amount of money contributed to campaigns, at least if the contributions were for the purpose of influencing legislation," Lessig writes. Were that the outcome, it would be a valuable bit of knowledge to have gained.