Polly does the static fallacy again

The coalition agreement promised \”limiting donations and reforming party funding in order to remove big money from politics\”. Sir Christopher Kelly was duly asked to find a solution, which he did back in November. Donations would be capped at £10,000 per individual, Labour must sign up trade union members as individual subscribers and the state would contribute more. This formula produced the most equal outcome for all parties, with sacrifices evenly distributed and a strong incentive to recruit more party members. State funds could be allocated per vote cast in elections, though Helena Kennedy\’s Power Inquiry came up with something better: voters could tick a box on their ballot paper to allocate their share of state funding to a party of their choice.

That might well be the most equal outcome for extant parties. But this is to commit the usual lefty fallacy of assuming that such matters are static. It\’s a fundamental misunderstanding of how markets work. And yes, of course, politics is indeed a market.

The prime mover in markets is not in fact competition. It is, rather, the possibility of competition. And that possibility of competition relies upon the ease of entry (and exit) in the market.

It doesn\’t for example, matter that Google has 99.9999% of the search market (not that it does of course), only that Google act as if someone is about to enter the market with a new search engine and thus eat their lunch.

It is the same with political parties. If we assume that there will, forevermore, be two and a half UK political parties then state funding is just fine. But if we think properly, and assume that it is the possibility of a new party emerging which keeps those two and a half even vaguely straight, then state funding is the worst possible answer. For it makes that entry (and also that exit) that much more difficult. We\’re entrenching monopoly positions rather than doing what we ought to, which is ease entry requirements so as to undermine those monopoly positions.

There is also the clinching argument: why in fuck should more of our money be extorted from us to pay for bastard scum politicians?

A question to which there is no answer, is there?

24 thoughts on “Polly does the static fallacy again”

  1. Of course there is a very ineffective market in UK politics because FPTP makes the success of a new party very hard.

    In countries with PR established political parties – powerful ones which were in Government can go out of existence. (As has happened in Denmark).

    I don’t quite understand how anyone can support free markets and FPTP.

  2. Except Proggies don’t want new political parties. They want a small number of institutional parties that can be easily controlled by the Progressive Network. So anything that entrenches the two-and-a-half and excludes competitors is a Good Thing.

    It is important to remember that Progressivism is an essentially “conservative” doctrine in the sense of resisting genuine change, which is why it diametrically opposes the dynamism of the marketplace. They have spent nigh two hundred years building up the Progressive “shadow government”; the last thing they want is any new structures that are not subject to it.

  3. Actually, does not ‘money for votes cast’ help the smaller parties?

    If every vote gets you some money, your potential voters have an extra incentive to vote for you, even if you will never win a particular seat.

    And by definition this cap on donations and vote subsidy system would level the playing field. The big parties would struggle to replicate their current income if the big hitters of donations of wealthy individuals and unions were removed. It takes a lot of £10Ks to make a single £1m donation.

    I don’t like the idea of my tax pound going to political parties, but if it can get this stench of corruption that surrounds all political parties nowadays, then maybe its the lesser of two evils.

    You also have the benefit that the parties would then be dependent on the vote money for funding, and it would be politically quite hard to raise the amount per vote. So over time, their funding would drop, relative to the economy, and earnings, if not RPI. Hoist on their own petard I think.

  4. “Actually, does not ‘money for votes cast’ help the smaller parties?

    If every vote gets you some money, your potential voters have an extra incentive to vote for you, even if you will never win a particular seat.”

    Jim, under FPTP, that is a good point.

    However, “it would be politically quite hard to raise the amount per vote”.


    On balance, this is a terrible, dangerous and evil idea.

  5. Since political parties are fundamentally anti-democratic institutions, and thus had no official constitutional status for most of our history, it is thus worth contemplating the fact that there is no “solution” to this problem; the system is broken.

    The purpose of parties is to deny the will of the people- if there is such a thing- which is what democracy is supposed to be. At least it says that on the tin. The representative form of demcoracy is not democratic at all, or at least only democratic in a marginal, trivial sense. The form of democracy we have been lumbered with has been engineered over time- particularly the past two centuries- to ensure that politics is dominated by special interests. The people who built it were not fools. They knew damned well that presenting a nominally democratic system could ensure the public’s compliance to the diktats of concentrated interests- “you voted for it, didn’t you?” while effectively stifling any real represenation of the public will on any issue. It is the most effective implementation of centralist authoritarianism ever invented.

    You can’t fix any of it by tinkering in this manner. Nobody with any power wants to fix it. They want their own interests represented and opposing interests excluded. Hence for instance, Progressive front groups routinely criticise the government for listening to “lobbyists” while ruthlessly lobbying the government themselves.

    “Representative” democracy is just a game of Fuck The Football. We are the football, by the way.

  6. Ian B – it’s a combination of party politics and the whips that does the real damage to democracy. And the fact that being a politician is a career in itself. I imagine that most MPs want to get a ministerial post – very few of them are content to be back-benchers. And you will not get a post if you do not follow the party line slavishly, which means that very few ever vote for what they truly believe on any issue.

  7. Which is why we’re not going to get anywhere until it’s generally recognised that the only way forward is to abolish the legislature.

  8. There is also the clinching argument: why in fuck should more of our money be extorted from us to pay for bastard scum politicians?

    Not just that, but your money paying for politicians you disagree with. Indeed, in the cases of former party members, parties that you have deliberately turned away from because they no longer appeal to you.

    They aren’t going to “remove big money” from politics, they are just changing the origin of the “big money”. When this “big money” is purloined from the taxpayer state purse, they won’t have to worry about appealing to anyone’s politics, let alone the unions or rich people.

    And the smaller parties will remain disadvantaged by the Kelly proposals, IIRC, entrenching the big three.

    What party leaders are really saying is that they don’t want to have policies (including giving ordinary members more of a say in party policies) that might actually appeal to potential members. Toynbee doesn’t address the huge decline in party membership – to be fair to Sir Christopher Kelly he did, but he felt it unlikely that there would be sufficient new subscriptions even if political parties changed their ways. But sufficient for what?

    There are some 46m electors in the UK. A quid from a quarter of them every year for five years adds up to £57.5m – hardly small beans. If a supposedly mainstream political party can’t get this kind of money in that way I suggest it doesn’t deserve to be given the money from the public purse.

  9. “The answer to Tim’s purportedly unanswerable question is: because if we don’t give the politicians the money they’ll get it from donors instead, and the inferior decisions that will induce them to make will be much more expensive for us.”

    You genuinely believe that if they stop directly accepting money from vested interests they’ll stop pandering to them?

    Seems a staggeringly naive point of view to me.

    But then the whole idea seems ridiculous to me:

    “Yep, you caught us, we’re corrupt, greedy liars who couldn’t give a shit about the “little people”. But if you give us even more of your money we’ll behave ourselves. We promise.”

    Not a snowball’s chance in hell.

  10. It won’t help the smaller parties. I’ll bet a pound to a pinch of shit that there will be a lower limit on it. You will need to get a certain number of votes before you qualify for any money. Their excuse will be the BNP. Who could possibly argue that a nasty “far right” group shouldn’t get the money. That will nicely stop any small party breaking up their er.. party.
    Sod the lot of them. Let them come begging for scraps.

  11. SE
    They don’t want anybody but them to get the money. The BNP is the big bad bogeyman that they will use for this purpose.

    “We have to set a lower limit on who gets the money, otherwise the BNP will get some. Do you want the BNP to be state funded? Racist Nazi bigot!”

  12. Yes, the proposal is that state funding will be available only to parties with at least two sitting MPs (or the equivalent in devolved assemblies). However, the cap on donations will apply only to those same parties. So UKIP will be no worse off.

    Andrew: it would be naive to think that state funding would turn politicians overnight into paragons of virtue. But even more naive to think that the present funding system doesn’t make them worse.

  13. This article’s not about funding for political parties, per se, is it? If just the Tory party was short of dosh Polly’d be dancing a jig round her Tuscan garden. No, it’s the Labour Party that’s in dire financial straits.
    Now here’s a curious thing.
    Bearing in mind the hoards of rabid lefties infesting the Graun’s comment sections, the sheer numbers of wealthy media & arts luvvies singing Labour’s praises, the millions of public sector workers with jobs supposedly at stake. If the Labour party is indeed the only thing standing between us & the end of civilisation as we know it, what’s the problem? Isn’t the core ideal of socialism from each according to his means? Surely for a matter as important as the funding for the people’s champions…….. let’s stop talking pennies. How about a hundred quid a head. Average. Staunch socialist like Poll should be good for ten grand, surely? She’s making a living singing their praises. Now’s the time to give some back. Our music heroes with millions in the bank? £100k wouldn’t be missed would it? They spend that on cars.
    £100 a head. Yearly. Hardly excessive for a cause so vital. Is it? Million supporters. That’s 300 mil for the next election.
    If it’s that important of course…….

  14. The interesting thing is that this is directly antipodal to the currently popular political philosophy of “levelling up”; that is, wherever there is hegemony, you must aid the underdog. Surely therefore, the less successful a party has been in the past, the more funding it should get.

    There does not seem to be any logical principle- I’m being serious here, not facetious- to scale political funding with previous success. It means that inevitably the ruling party will have the most money to spend on their next campaign, leading obviously to a positive feedback effect. Where would the Labour Party have been a century ago, with all funding going to the hegemonic Tories and Liberals? Nowhere.

    I’d like to see somebody try to justify this.

  15. I agree that it seems unfair to give the ruling party a funding advantage over the opposition party, but I can’t see a good way round it.

    I don’t know about a century ago, but the Labour Party would have had no special problem today under the proposed rules if they enjoyed the financial support of unions. Because the proposals would allow a Trade Union to donate to a political party under exactly the same terms as it does now, if that party is too small to qualify for state funding. (Otherwise members have to opt in to paying the donation, so that the Union is merely collecting individual donations.)

  16. There is an approach that resolves your first problem. Nothing, of course, solves your second.

    The resolution to the first problem is to base the funding on current opinion, rather than past opinion.

    You can’t quite manage *current* – but how about people ticking a box when they register to vote, and the party of their choice gets £5 or £10. If you don’t tick a box, then no-one gets anything.

    As I’ve put it many times, it’s the SDP problem. Imagine Michael Foot’s Labour getting funding based on votes cast for MPs who are now in the SDP, and the SDP getting nothing.

  17. PaulB…most historians would say that the Labour Party was enabled to grow because of the then compulsory union levy…all those miners, steel-workers and weavers contributing 1s per week. Now they have the choice they tend to not want to fund the Labour Party. I think you are really confused here, unless you would like a mechanism to force funding to currently-minoritarian parties.

  18. “Andrew: it would be naive to think that state funding would turn politicians overnight into paragons of virtue. But even more naive to think that the present funding system doesn’t make them worse.”

    I must be incredibly naive then as I don’t, for a single second, think that anything would change at all.

    Except for the manner of bribe.

    People are either willing to change laws, regulations, etc for money or they’re not.

    And in politics they always are. And regardless of how they’re funded in the future, they always will be. It’s the nature of the beast.

  19. diogenes: the Labour Party gets about 86% of its donations from Trade Unions. But the Kelly report proposes to require an opting-in system for affiliation fees to make donations from Trade Unions exempt from the cap. I suppose that would reduce the percentage considerably.

    Comments are enabled on my site. I’ve not censored any yet.

  20. Andrew: under the proposed regulations, donations would be capped at £10,000. Don’t you think that £10k buys rather less influence than £1m?

  21. PaulB: I’d imagine it would. But what I was trying to say was that the £1m will still find its way to them, just through different means. For example, cushy jobs for themselves and family members when they leave politics.

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