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The Secret Refund Booth

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II. Symmetry, RefinedA. Mandatory DisclosureIII. The Second-Best Case for the Refund BoothThe Secret Refund BoothBruce Ackerman* & Ian Ayres**1In Voting with Dollars,2 we urged progressives to move beyond thetired mantras of the campaign reform movement – including the holy-of-holies that demands mandatory publicity for all contributions. Though itsappeal to transparency is attractive, mandatory publicity promises muchmore than it delivers. To be sure, it enables the general public to learn who contributed howmuch to whom by consulting the information provided by the FederalElections Commission (FEC). But very few ordinary people take advantageof this opportunity. Mandatory publicity provides transparency in name only(TINO, rhymes with RINO3) – informational equality is provided de jure,but not de facto, and that’s a big difference. At the same time, TINO does nothing to change each candidate’sinformation about her own contributor base. Though constituents mayremain ignorant, Candidate Sarah Smith is perfectly aware that John Doe hasjust given her X thousand dollars, and she remains free to reciprocate by1 Alex Aleinakof, Emma Coleman, William Corbett, Vicki Jackson, Greg Klass, Sanju Misra, Salvador Valdes-Prieto and audience members at Georgetown provided helpful comments.2 BRUCE ACKERMAN & IAN AYRES, VOTING WITH DOLLARS: A NEW PARADIGM FOR CAMPAIGN FINANCE (2002).3 RINO, Republican In Name Only, pronounced “rhino”: a traditional Republican, as seen in right profile.1advocating positions that are in Doe’s interests. Though TINO promises toput candidates and constituents on the same informational playing field, itactually creates radical asymmetries, which politicians regularly exploit onbehalf of special interests. Despite the cries of self-righteousness fromgenerations of reformers, their heavy investment in TINO has made themapologists for a system in which special interests win a sustained, andappreciative, response from the political class through the expenditure ofvast sums of money.There is a better approach: rather than praise the virtues of asuperficial transparency, it’s more sensible to create a “veil of ignorance” onindividual contributions, depriving both politicians and the general public ofreliable information. Once politicians can’t know who gave them how much,they can’t reward big givers with political favors. The veil of ignoranceserves the cause of good government better than superficial transparency,liberating politicians to elaborate a conception of the public good that willappeal to the broad majority of their constituents. To operationalize the veil of ignorance, Voting with Dollars proposedthe creation of a “secret donation booth.”4 Donors could give as much asthey liked (up to a high statutory maximum), but they could only give it to a4 BRUCE ACKERMAN & IAN AYRES, VOTING WITH DOLLARS: A NEW PARADIGM FOR CAMPAIGN FINANCE 6(2002).2blind trust, operated on each candidate’s behalf by the FEC. The agencywould keep secret the names of donors who had given substantial amounts:if Doe gave $5000 to Candidate Smith’s account, the FEC wouldn’t providethis information either to the candidate or the public. It would simply tellSmith (and the public) the aggregate amount that had accumulated in heraccount, allowing her to write checks on this sum for her campaign. Since itwould no longer be possible for Smith to determine whether Doe was a biggiver or a small fry, it would no longer make sense for her to skew herpolitical conduct to favor Doe’s special interests. The secret donation boothdelivers a level playing field – the candidates and their constituents arerelative equals behind the veil.5Our initiative took a great leap forward when Chile became the firstcountry to introduce a secret donation booth in political elections.6 Incontrast to our proposal, Chile provides its largest donors with the option of5 As we explain below, no system generates perfect symmetry; we only claim that our approach generates “relative” equality behind the veil. See infra Part II. This is not the place to explore the philosophical foundations of our approach, but its relationship to some Rawlsian ideas should be obvious. See especially, JOHN RAWLS, A THEORY OF JUSTICE 196-201 (1971) (suggesting the use of different kinds of “veils of ignorance” at different stages of the lawmaking process).6 Chile Law 19,884 and its modifications. In the 1970’s, ten different American states experimented with anonymous contributions in the context of judicial elections, following a suggestion by the Code of Judicial Conduct that a judicial “candidate should not be informed of the names of his contributors, unless he is required by law to file a list of their names.” E. Wayne Thode, Reporter's Notes toCode of Judicial Conduct 99 (1973); Stuart Banner, Note, Disqualifying Elected Judges from Cases Involving Campaign Contributors , 40 STAN. L. REV . 449, 473 n.130 (1988) (the ten adopting states were Arkansas, Nebraska, North Dakota, South Carolina, South Dakota, Tennessee, Utah, Washington, West Virginia, and Wyoming).3donating anonymously or fully disclosing their contribution. ..7 Butotherwise, the scheme operates in the way we envision, and it successfullysurvived its first real-world test in municipal elections of Oct. 30, 2004.8 Aspractical experience accumulates, other countries will begin paying more7 The Chilean reform is the brainchild of Salvador Valdes-Prieto, an MIT-trained economist at Chile’s Centro de Estudios Publicos (Center for Public Studies), available at http://www.cepchile.cl/, who helped shepherd it through the legislative process. The law distinguishes between three sizes of donations, which we’ll call small, intermediate and large. Small donations are less than 20 Unidad de Fomento (UF). (1 UF is approximately $34, so contributions below $680 are essentially unregulated). These donations are not tax deductible and neither anonymous nor disclosed. Intermediate donations are contributions above 20 UF but below pre-specified amounts, varying from $51,000 (or the lesser of 10% of spending limit) for presidential candidates to $20,000 (or the lesser of 10% of spending limit) for mayoral candidates. It is these donations must be made


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