Balkinization: Chile's New Idea

Chile's New Idea

Ian Ayres

Bruce Ackerman and Ian Ayres

The big election in the United States shouldn't entirely eclipse a fascinating experiment that just finished in Chile on October 30. For the first time anywhere, campaign contributors to nationwide municipal elections are able to give their money through a "secret donation booth."

Under the new system, contributors go into a donation booth installed at one of the national bank branches. They pull a curtain shut, and use a computer screen to anonymously allocate money to the candidate or party of her choosing. Like the secret ballot, the secret donation booth can dramatically deter political corruption. It is much harder for contributors to bribe politicians when they can never find out whether the bribe was paid.

But there is a glaring weakness in the Chilean system. Contributors are given the choice of whether they want to give anonymously or publicly. As a consequence, corruptible candidates can simply insist that contributors refuse to use the donation booth and give their money publicly.

There is always the chance that voters will reward candidates who publicly reject this gambit, and promise only to accept money cleansed through the donation booth. But this doesn't seem too likely. It hasn't stopped Republican candidates in the U.S. from taking lots of money from Haliburton; or Democrats, from trial lawyers.

Still the Chilean system has the seeds of a truly great idea. Consider, for example, a system that mandates immediate public disclosure of all campaign contributions and the identity of the contributors, but then gives the contributors five days to request an anonymous refund. Call this the "secret refund booth." The contributor would have the option of privately asking for a refund from the electoral commission. The commission would regularly pool all the requests together for particular candidates, deduct the total refund amount from each candidate's bank account, and distribute the appropriate amounts.

The system is relatively simple to implement in any country that already has mandatory disclosure laws. Donors can keep on giving in the traditional way, and campaigns can keep on reporting to the public as they always have. But special interest patterns are disrupted once funders are free to request refunds anonymously from the election commission.

This simple reform provides the anti-corruption benefits of both disclosure and anonymity rules. Voters get to see a complete and accurate list of everyone who may be trying to influence the candidate, but the candidate cannot be sure that any individual donor has actually handed over the money.

Corruption is doubly deterred. The public can smoke out and punish candidates who take dirty money and, as with the secret voting booth, candidates will be never be sure how any contributor has actually behaved.

Instead of the Chilean system of disclosure or anonymity, this is a system of disclosure and anonymous refunds. While disclosure and anonymity serve as very different tools in the fight against political influence-peddling, our system uses both of them for the same larger end. On the one hand, the public will know just as much as the candidate about the identity of contributors. But on the other hand, the secret refund booth will make it impossible for the candidate to reward big givers who would otherwise insist on special influence.

Chile has made one small step forward, but not enough to make a big difference. But with just one step, we may make a great leap forward in campaign finance reform.

You can learn a lot more about the benefits of anonymous contribution in our book:
Voting with Dollars: A New Paradigm for Campaign Finance.

New York Times columnist, Nicholas Kristof discusses Chile's innovation here (post #661).

Posted 9:45 AM by Ian Ayres [link]