The Price of Everything (25 page)

Direct vote buying died in the United States when the introduction of the secret ballot made it impossible for politicians to check whether voters were delivering their vote as promised. Still, the practice of purchasing political power has stayed with us forever. Buying votes was first replaced by the equally dubious tactic of paying voters who supported the opposing party to stay home on Election Day. More recent techniques are more sophisticated. The objective of the transaction is, however, not unlike that in São Tomé and Príncipe. The key distinction from the small African archipelago is the higher price of American voters.

Mark Hanna, the nineteenth-century Republican kingmaker and senator from Ohio, famously said: “There are two things that are important in politics. The first is money, and I can’t remember what the second one is.” More than a century later, despite many laws passed to reduce the influence of money in politics, in 2008, the campaign of Barack Obama spent a record $730 million—mostly in campaign ads—to win the presidency. That amounts to almost $10.50 for each of the voters who supported him at the polls. And Republican John McCain spent only about $5.60 for each one of his.

This might not seem too different from the price of voters in rural São Tomé and Príncipe. But the direct comparison is misleading. Many of Obama’s voters would have voted for him for free. The cost of convincing the uncommitted was much higher. A study of elections to the House of Representatives from 1972 through 1990 found that an additional $100,000 worth of campaign spending, in 1990 dollars, increased an incumbent’s share of the vote by only a tenth of a percentage point, on average. Challengers, who were less known and benefited more from campaign exposure, could buy 0.3 percent of the total vote for this amount. Correcting for inflation, this would mean that in the 2008 House election, the price of gaining an additional vote was about $212 for a challenger and $640 for an incumbent.

 

 

SUPPORTERS OF PRIVATE
financing of political campaigns claim the purchase of political influence in the United States is very different from buying votes. Politicians use money to provide voters with information needed to reach a decision. TV ads are meant to convince voters that a candidate is the best and most viable—or that her rival is unworthy. If it looks as if the candidate with the most money always wins, it’s because good candidates are good at drawing campaign contributions. And if politicians vote the way their financial donors would want them to, it’s because they agree with them anyway.

This defense doesn’t fit reality, unfortunately. American campaign strategists deploy sophisticated marketing techniques rather than cold cash. They stroke voters’ biases rather than pay them. They seduce rather than buy. But their objective too is to get as many voters as possible to ignore their self-interest and vote for them. I admit that governance in the United States is better than in São Tomé and Príncipe. There are more institutional checks on power. Despite occasional bursts of antigovernment vitriol, government is still considered mostly a legitimate institution.

By contrast, vote buying in São Tomé and Príncipe delegitimizes democracy in the eyes of voters. Politicians who pay for a vote won’t feel constrained by policy commitments. Voters who took politicians’ cash won’t waste time keeping an eye on the quality of governance. Social scientists who have studied political institutions in the developing world argue that the ability of the rich to buy the votes of the poor contributes to poor countries’ unshakable poverty, hindering redistributive policies. São Tomé and Príncipe has had already two coups since its first free elections in 1991. It is in 111th place out of 180 in Transparency International’s corruption perceptions index—alongside kleptocracies such as Egypt and Indonesia.

But both political cultures rely on the purchasing of power. The key differences are the way power is bought and its price. In the United States votes are much more expensive. In a way, the difference between the forms of payment for elections in the United States and São Tomé and Príncipe and replicates the difference between corruption and its rich cousin, lobbying. Big firms in rich countries prefer lobbying—the use of money to persuade politicians to change the law—because it has more permanent effects. But it is too expensive for smaller firms in poor countries, which instead turn to corruption: using money to sway bureaucrats to ignore the law.

The United States may rank ninety-two rungs above São Tomé and Príncipe on Transparency International’s corruption perception index. But it is unlikely those surveyed by the corruption watchdog took into account the $3.5 billion spent by industries in 2009 to lobby Congress and the White House to tailor laws more to their liking. They probably rarely think about the 1,447 former federal government employees—including 73 ex-members of Congress—hired by financial institutions to lobby Congress and influence the debate over the reform of financial regulation in 2009 and 2010. The finance, insurance, and real estate industry alone spent $467 million lobbying in 2009. Banks were lavishing so much money on Congress that House leaders started putting vulnerable freshmen on the Financial Services Committee so they could raise enough money to defeat their challengers.

The difference between the tactics used to wield political influence in São Tomé and Príncipe and in the United States has little to do with virtue and much to do with strategy. Indeed, economists have proposed that countries evolved from bribery to lobbying as growing firms reacted to increasing demands for bribes from a growing number of bureaucrats by switching to lobbying, which was more cost-effective because it could be used to change laws rather than just sway those who enforced them.

Businesses practice both, depending on where they are. In 2010 German carmaker Daimler AG was caught spending tens of millions bribing government officials in at least twenty-two countries, including China, Russia, Thailand, and Greece, to win government contracts over the course of a decade. In Turkmenistan, it gave a government official a $300,000 armored Mercedes-Benz S-Class as a birthday present. In the rich world, Daimler behaves differently. From 2001 to 2009 it spent more than €4 million in campaign donations in Germany. In the United States, where until 2007 it owned Chrysler, its Political Action Committee has spent almost $1 million in each of the past few election cycles. In 2007, when it sold Chrysler, it spent $7 million lobbying members of Congress.

Though a politician who demands a bribe is breaking a law while one demanding a campaign contribution is not, to the layman the difference can appear subtle. In fact, campaign contributions can be just as valuable to a politician as cold cash under the table. A study of how members of Congress reacted to campaign-finance legislation in 1989, which barred them from pocketing their leftover campaign funds when they retired, concluded that lawmakers valued their seat at anything from $300,000 to $20 million, depending on their outside wealth, age, tenure, and seniority in Congress.

Reform left 159 lawmakers with a stark choice: to retire before the 1992 election and keep their stash or to run for reelection. Comparing the campaign funds of those who decided to run against those who quit, economists concluded that a fifty-three-year-old lawmaker with $50,000 in the bank would relinquish his or her seat for $800,000. A representative of the same age with savings of $2 million would not give it up for less than $11.8 million.

The object of this comparison is not merely to underscore that political power can be bought and sold in the richest nation on earth just as it can in one of the poorest. The broader point is that the political cultures in rich and poor nations, different as they may be, are the product of similar evolutionary dynamics. The political norms and institutions codify how each society “resolved” the challenge of how to distribute power in the market for influence. The resulting set of written and unwritten rules came out of evaluations of their political efficiency. If a behavior became entrenched in a nation’s political culture, it is because it was deemed to be worth the price.

In Britain, vote buying emerged as a necessary tool for a new moneyed merchant class to challenge the political power of the landed aristocracy. In São Tomé and Príncipe it was a response to the discovery of oil, which increased the profitability of political power. Daimler chooses its tools to fit the environment. The Daimler executives in charge must have deemed a $300,000 Mercedes to be a reasonable price for whatever they wanted in Turkmenistan. Evidently, so did the Turkmen government official. And though it probably wasn’t a good deal for Turkmenistan, it was consistent with its political culture.

In the United States, by contrast, it would not be a good trade. In fact, Daimler had to pay $185 million in fines and disgorgement of profits to the Justice Department and the Securities and Exchange Commission for violating the Foreign Corrupt Practices Act. Yet had Daimler chosen a more subtle technique to influence Turkmenistan’s politics, chances are they would have gotten away with it.

“Culture”
—
as in political culture—is a broad concept, deployed to describe all sorts of customs, conventions, and collective behaviors that operate within societies. It includes modes of dress, dancing styles, and music. It includes the stories we use to shape our collective identities. There are the beliefs and the rituals—religious or otherwise. There are the rules—the institutions and the taboos. Culture includes a pierced twentysomething with purple hair banging a guitar onstage. And it includes the norms and institutions that determine how power is exercised and transferred.

A common, and in my view accurate, critique of economists’ worldview is that it often ignores how culture affects our choices—positing people as calculating, self-involved creatures oblivious to any notion of “social good.”
Homo economicus
is expected to approach life as a string of cost-benefit analyses, evaluating the prices involved in each decision to maximize his individual well-being. Margaret Thatcher, the former British prime minister known for a fondness for the market that led her to battle labor unions, privatize state-run companies, and slash public spending on social programs, articulated this view succinctly: “There is no such thing as society,” she said. “There are individual men and women, and there are families.”

Thatcher was wrong, of course. Humans are about as social as animals come. We depend on society—on others—for our very survival. For society to emerge we had to subsume some of our self-interest into the collective interests of the tribe. Culture helps us with that. It codifies acceptable forms of behavior. It determines the price lists of penalties and rewards to fit the patterns of conduct sanctioned by the clan. Culture sets our personal cost-benefit analysis within the collective price system of society.

Culture affects the price of parking in front of a fire hydrant, the value of prayer, the risks of tax evasion, and the rewards of corruption. Voting, in a democracy, makes little sense to the individual voter. It costs time and effort and yields nothing, personally. The likelihood of a single vote determining a big election is so small that the act is about as sensible as tipping a taxicab driver one will never see again. It’s the equivalent of throwing money away. Still, we do it. It is a cultural artifact.

In the United States, the daughters of immigrants from more “liberal” countries have been found to be more likely to work than the daughters of immigrants from more “conservative” countries where women stay at home to care for husband and kids. This is regardless of how much they can earn or how much they might need the money.

Collective notions of propriety often determine individual calculations about the price of any given choice. Fines are supposed to be effective deterrents. Who likes losing money? But an experiment at a handful of day-care centers in Israel found that imposing a small fine on parents who picked up their kids late actually worsened tardiness. Before, tardy parents had borne the burden of shame, knowing they had broken the rules. When the day-care center replaced this burden with a small fine, being late became much more affordable.

Cultural preferences affect many prices. Prices in Japan are still about 40 percent higher than the average across the industrial nations of the Organization for Economic Cooperation and Development, after accounting for exchange-rate fluctuations. This reflects economic constraints, to some extent. Japan is a small, mountainous country with lots of people, little energy, and scarce arable land. But culture too has a hand in its prices. The high price of food in Japan, for instance, can be attributed mostly to political norms rooted in Japan’s rural past.

In Japan, legislative districts in the countryside are much more sparsely populated than those in cities—giving rural voters more clout. It can take three times as many votes to win a seat in the legislature from an urban district as from one in the countryside. The political might of rural Japanese puts a premium on protecting farmers with tariff barriers against competition from imported agricultural products. The cost is that city dwellers have to pay top yen for their food.