David R. Henderson  

Ralph Nader and Campaign Finance

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At the event I was at on Saturday, Ralph Nader gave an excellent speech. I had seen him speak at UCLA in 1974 and I was unimpressed both by his content and by his delivery. His speech on Saturday was very good on both. I particularly liked:
1. His quick hit on the bailout. He pointed out that back in the 1970s, there was a big debate in Congress about whether to lend approximately ["approximately" because I don't remember the exact number and the exact number doesn't matter] $250 million to Boeing. Contrast that with 2008 when the Bush administration lent about 1,000 times that much [in nominal terms] to major corporations.
2. His criticism of Congress for abdicating its power to declare war. This part was particularly impassioned. Great line: "The framers never thought that Congress would give up its authority and so they didn't include a remedy in the U.S. Constitution." He pointed out that Congress is the first branch of government and advocated setting up "First Branch" organizations with full-time staffers in every Congressional district.
3. His proposal to persuade [no, really, it was clear that he wasn't advocating force] rich people to donate money to fund such projects. He showed a lot of numeracy here, something he sometimes doesn't do when considering risks.

Both in his talk and in other comments earlier in the morning from various leftists, the Supreme Court came under strong attack for its recent decision on corporations spending money to influence elections. He had already said that we should hit up rich people to help our political battles. Yet he hadn't addressed whether rich people should be allowed to give money to candidates. So in Q&A, I shot up my hand up and, in a room of 30 people in which I was three feet away and had said, essentially, "Amen, brother" after many of his points, it was hard for him to ignore me. That was helped by the fact that I had shared my notes with him and his aide from the morning session so that he could know "where people were coming from." He'd also made a critical but somewhat affectionate remark during his speech, looking at me, about economists not being good at predicting, but that that was understandable for those living in mellow Monterey.

I looked at him and the audience.

David Henderson: I'm going to ask you a question where I think we might have some common ground and I want to see if we do, but I need to lay out the background so that everyone understands my question. In 1968, Eugene McCarthy ran as an antiwar candidate in the Democratic primaries and did well. That helped lead to Lyndon Johnson's resignation. At the time, he was helped by six major contributors. ["You mean Stewart Mott?" asked Nader.] Yes, plus five others. Each of them gave an amount that, adjusted for inflation, was over $500,000 in today's dollars. [I checked that just now in John Lott's book, Freedomnomics, and can't confirm it but I think it's true.] In 1974, the Federal Election Campaign Act limited such contributions to $1,000. If we had had that same law in 1964, almost no one in this room would have ever heard of Eugene McCarthy. It's because of that law that so many Senators have to spend so much of their time dialing for dollars. So my question to you is whether you will join me in calling for repeal of that 1974 law.

Ralph Nader: I don't think corporations should be allowed to give to campaigns.

[Of course, corporations have been unable to do that since 1907 when the Tillman Act, named after racist South Carolina senator Ben Tillman, prohibited it. That law was not overturned by the Supreme Court, more's the pity.]

Henderson: That's not what I asked you. Stewart Mott gave as an individual. Should he have been allowed to?

Nader: We should have public financing of elections where each taxpayer can check off and give up to $300 a year. [He had in mind expanding the system we now have where the taxpayer "gives" out of Treasury money, not out of his own money.]

Henderson: But go back to 1968. Would you have banned Stewart Mott from making that contribution?

Nader: I would have prevented him from spending that on his own campaign, but not on McCarthy's campaign.

Note: for those who attended and remember the stricture we're under, yes, I did get Ralph's permission to quote from the speech and the Q&A.

It wasn't all I wanted, but it was a step. As my friend Francois Melese said when I told him the above story, take Ralph Nader, make him 20 years younger, and put him in law school where he takes a good law and economics program, and I think he would have substantially different views.

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COMMENTS (8 to date)
The_Orlonater writes:

Excellent post.

Bruce Bartlett writes:

Nader was pretty libertarian back before he became famous. He even wrote an article for The Freeman.

I think the government loan was to Lockheed, not Boeing.

David R. Henderson writes:

Thanks, Orionator.

David R. Henderson writes:

@Bruce Bartlett,
Thanks. That was my mistake in reporting, not Ralph's. I think I read his Freeman article years ago--I think he wrote it in the early 1960s. I think it was on how you can fight city hall.

John Samples writes:


I don't think Ralph made much of a first step. Notice he would prohibit Mott from spending on his own campaign but not from giving to McCarthy. The rationale for preventing Mott would presumably be to prevent inequality of influence over voters or electoral outcomes. The reason to prevent Mott from giving to McCarthy would be to prevent President McCarthy from owing Mott a favor and hence to prevent quid pro quo corruption. Ralph is actually endorsing a much more restrictive standard for campaign finance than the current quid pro quo rationale. If government had the power to enforce equality of influence, it could limit or prohibit almost all political activity. For this reason, the Supreme Court prevents legislatures from using equality as a reason for regulating campaign finance, the Roberts Court more than most.


RL writes:


When you say that Nader claimed he would prevent Mott from donating large sums to Mott's own campaign, but not to McCarthy's, it is unclear: did you take Nader to be claiming: "I would prevent everyone from donating to his own campaign but not to the campaigns of others" or did you take him to mean, "I would prevent rich people from donating to campaigns that I believe are against the public interest, but not to campaigns that I believe are in the public interest?"

Both positions are fundamentally incoherent. The first leads immediately to a form of political donation log-rolling; the second leads to a political elite determining who is and is not a legitimate candidate. But they are different positions. Which do you think Nader was advocating?

David R. Henderson writes:

@John Samples,
A first step is, by definition, a step, not the whole distance.
I'm pretty sure he meant the former.

Steve writes:

Ralph thinks he has more solutions than he does and his positions line up too cleanly with a known ideology--that hurts his credibility a bit.

But the guy is a machine and he's a lot smarter than most economics professors. Hands down.

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