Salmon: When Hedge Funds Lobby

NEW YORK (Reuters Blogs) -- Back in 2000, Warren Buffett published "a fanciful thought experiment" in the New York Times, showing just how cheap it was to buy the U.S. government:

Soft money contributions jumped from $86 million in the 1992 election cycle to an expected $360 million in the current one. That's a growth rate worthy of Silicon Valley: 20% annually.

And the game has barely started. For most supplicants, cost still lags ridiculously far behind value. American business spends $200 billion a year on advertising to influence consumers. In many industries -- communications, tobacco, banking, pharmaceuticals and insurance among them - political influence can sometimes be of similar commercial importance. It also matters critically to such professionals as lawyers, doctors, and teachers...

Suppose that a reform bill is introduced, raising the limit on individual contributions to federal candidates from $1,000 to, say, $5,000 but prohibiting contributions from all other sources, among them corporations and unions. These entities could still encourage their employees, stockholders, or members to contribute personally, but could do no more -- a ban, incidentally, that applied to them until the "soft money" dodge was introduced in 1978. Such a bill would be far from a panacea for all campaign finance ills, of course, but it would at least be a start. Why should this bill stand a chance in a Congress enraptured with the status quo? Well, just suppose some eccentric billionaire (not me, not me!) made the following offer: If the bill was defeated, this person -- the E.B. -- would donate $1 billion in an allowable manner (soft money makes all possible) to the political party that had delivered the most votes to getting it passed. Given this diabolical application of game theory, the bill would sail through Congress and thus cost our E.B. nothing (establishing him as not so eccentric after all).

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