Posted 3:13 PM by Robert

All in the Family

The enviably clever Virginia Postrel, among others, does not share the conventional wisdom's "follow the money" approach to understanding influence acquisition and, at the extreme, corruption. I agree for some reasons perhaps worth considering as Congress lurches towards additional campaign finance restrictions. (Of course, Ms. Postrel may attach nuances to her disagreement with the conventional wisdom that varies considerably from what is presented here. She is more than capable of expressing her own take.)

The phrase "follow the money" is beloved by pseudo-tough journalists and their putative prey but figurative (sometimes, actual) drinking buddies. Journalists brandish the phrase to convince their audiences that they commune with a “hard headed,” “no-nonsense” type who knows “what really matters,” and who can be trusted to “get to the bottom” of the political concern of the moment. “Feisty,” “savvy,” and “down to earth” clutter the introductory remarks offered by their friends on public speaking occasions (and they DO like to speak). Such journalists are, for example, especially thick at the New York Times and the Washington Post - the rattle of pebbles on the shore under the receding wave of Watergate-era nostalgia.

Politicians (including government bureaucrats and other functionaries) love the phrase, the approach it connotes and the journalists who wield it, because politicians are acutely aware that they are NOT primarily motivated by the drive to acquire money personally. The politician rests comfy knowing such journalists assure the public that the politician is under constant and careful watch by the hard-headed, no-nonsense, feisty, savvy, down-to-earth journalist who has what it takes to follow the money, but also knowing that when the money trail is followed it generally leads to a cul-de-sac on which no politician has built even so much as a vacation home.

But politicians are also generally highly materialistic. They are obsessed with money – but it is generally other people’s money. The political system allows politicians to direct and regulate the way other people spend their "own" money. The system also allows politicians to direct the government’s spending of money it either acquires from taxpayers or simply creates.

In general, politicians personally traffic in forms of consideration entirely other than money: information, power, influence, prestige, sex and fame being some of the more common. Politicians within the Federal Beltway, for example, do not generally bribe each other with cash. No. They instead offer untraceable influence on agency and Congressional action. They dangle access to media time and approval (nothing beats a puff piece when you’re down). They dole out choice and valuable facts, sometimes but not always in the form of "leaks." While studies do not appear to be publicly available, Washington reputedly has the most developed delivery system for high quality, at-home sexual services in the nation – perhaps the world. Someone is using it.


By way of example, consider that the Supreme Court is staffed in part by politicians (in the generalized sense in which I am using the term) known as law clerks, who are assigned to the various Justices for one or two years. These clerks are normally fresh from law school and a one-year stint as a law clerk on a lower court. They write at least the first or early drafts of many Supreme Court opinions, and have a substantial ability to influence and introduce ideas and approaches of the Court (but, of course, they have no vote). Many of those ideas and approaches can come from the law professors who recommended the clerk to the Court, professors with whom the clerks often maintain an active relationship and deeply wish to please to advance a future academic career. A Supreme Court decision can determine ownership of many billions of dollars - even occupancy of the White House. The very real role of such law clerks and their professors in influencing (read, "lobbying") the Court towards a result desired by these unpaid "lobbyists" is not obviously more benign than the role of a paid lobbyist attempting to influence Congress or a regulatory agency on behalf of, say, a commercial interest group. Nor are they obviously more benign than most solicitations for campaign funds, even after giving effect to any implied purchase of influence. In helping to place a clerk on the Court, the professor also obtains influence. By cultivating influential professors, the Justices obtain flattering law review commentary, among other benefits. The clerks enjoy their brief, direct influence and hope for a good academic position when they leave the Court for their own professorships. The friendships, agendas and utilities imbedded in the relationships among the clerks, law professor and the Justices are mostly non-monetary - but that doesn't make them benign or democratic. All of these people have chosen to work for much less money than they might have otherwise have earned. Instead, they are receiving and prefer to receive non-monetary compensation? Prestige, power, friendship. Sometimes, maybe sex. What is left out of this system of course is the voters.

To the extent monetary relationships can be effectively limited in politics (if that could be done), the role of non-monetary relationships will likely be increased. The Court is not essential to the above example. Any regulatory agency or Congressional committee or caucus has its own analogous "micro political climate" which largely omits ordinary voters. Personal bribes, whether monetary or non-monetary, are equally destructive. Monetary bribes are properly prohibited. It is hard to see why it is a good thing for the political system to increase the influence of insiders positioned to engage in non-monetary relationships to advance often-concealed personal agendas. In fact, carried not so far, the whole model comes to resemble Versailles.

Of course, the election process is one place where money comes to the surface. Elected politicians want money to purchase advertising time and otherwise finance their campaigns. But the amounts involved in elections are tiny compared to the sums traded through the political system. Even for the President, a few hundred million dollars in money gets you elected – and the opportunity to affect the direction of trillions of dollars through non-monetary trades. No wonder there’s a fuss going on.

When I was just starting out many years ago, a wily friend advised me that in any transaction in which I became involved it was worthwhile from time to time to quietly retire to a private room and ask myself whether the deal made financial sense for all of the parties. If it didn’t, then I should ask myself “Where are the girls?” Of course, he was using “girls” in its most general sense, as including “boys,” “fame,” “media approval” and, of course, the delirious and irresponsible pleasure of spending other people’s money. Politics is mostly about such off-balance-sheet “girls” – and both the politicians and journalists know it.

The phrase “follow the money” is a joke on the outsiders, the fools – that is, the voters. A more accurate phrase would be something like “follow the utility.” But use of “utility” in this context would require educating a public apparently determined to see a politician’s craving for power as somehow different in kind from a businessman’s craving for money. Too, if through some accident of fate the public actually somehow WERE to become educated, a lot more than one inside joke would be in danger of blowing up.

It disturbs most people to tell them that economic laws and incentives existed and applied before there was money, exist and apply independently of money, and will continue to exist and apply if money ever ceases to exist. To cite only one example of many, for decades Daniel Patrick Moynihan was savagely criticized by those deeply disturbed by his observations that the economic incentives of the welfare system were dissolving the African-American family. Today, the major political parties vie for bragging rights to the success of the 1996 welfare reform laws which were based on exactly those observations (and, ironically, passed over Senator Moynihan’s objections).

To the extent it relies on non-monetized transactions, politics resembles the family – a rather demonic family, perhaps. Some of the better economists have for quite a while now turned their attentions to the application of economic laws to non-monetized transactions. Family structure has been explored brilliantly by Gary Becker, an effort largely justifying his Nobel Prize in economics. Other economists, such as George Stigler, have explored the capture of regulatory agencies by the very interests groups they regulate – an exploration involving recognition of non-monetized political transactions. But the non-monetary trafficking that goes on within the Beltway and other political nodes throughout the world deserves a lot more attention. Such attention is required at an intellectual level – but is even more essential and dangerous as education of the PUBLIC.

The First Amendment is a hardy weed with much capacity for growth. Who knows, maybe one day the political parties will vie to claim credit for a REAL political reform bill that accepts the interaction of the monetary and non-monetary aspects of the political system, just as the 1996 welfare reform bill finally capitulated to Senator Moynihan’s insights.

Such reform would, of course, bear no similarity to the unconstitutional political aneurysm now bulging from the Capitol’s major artery. We may just have to wait for the stroke and work with whatever is left.