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Why limiting expenditure on elections is a VERY bad idea

Satwant  Kalkat has been insisting, during a recent discussion, that expenditure limits must be imposed in elections. I'm assembling this post so that he doesn't make the claim that I'm hastily rejecting his argument. Hopefully this will also persuade others.

Satwant's views:

I am also in support of liberty but that should not result in hijacking of system, which is being done today, and will surely not end by simple disclosure of expenditure.  

No honest person can come forward when he has no surplus money, only rich can contest.  Honest people remain away as there is no sense in wasting crores.  Also, watching of spending to asertain whether it is black or white money is not that simple.

I am opposed to expenditure because it discourages, rather bars, honest people from contesting.  And when one is spending he will recover these expenses, naturally, through unfair means.  I am also not in favour of any limits on expenditure but for banning it.  What if rigorous disclosers result in expenditure of crores?  Can it be questioned why the candidate has spent so much when emoluments of a legislature are far below?  

My response

Since I've written at great length on this already, let me simply cut and past as much of that material as I can readily find on google. 

My responses to Satwant

I’m fully opposed to any limits on expenditure on elections on practical and fundamental grounds. Let there be RIGOROUS disclosure and accountability.

a) Let people spend WHATEVER they want in an election. Let there be freedom. Any attempt to block liberty is going to fail. It will lead to black money and crime.

b) What is your problem is someone spends crores so long as it is white money? Why do you say: “when emoluments of a legislature are far below?” Why? If is white money what’s the issue?
The point is that if you RESTRICT liberty to spend you are violating the fundamental principles of liberty. The ability to spend as much as someone wants is a fundamental freedom of expression.
Second, I’ve explained that it is impractical to restrict anyone from spending what they want. That will simply lead to underhand expenditure.

Now, other writings

Myth that money wins elections:

Myth 2: Money wins elections

The second myth relates to money. We know that many parties spend crores of rupees in elections. Accordingly I was recently told: “You require at least 2 crores to fight a parliament election.” True, most corrupt parties do such things but why should we copy these corrupt gangsters? Aren’t we different? We believe in integrity. We do not break the law, even though we disagree with it (I strongly disagree with limits on electoral expenses). We must therefore stick with the Rs. 25 lakhs expense limit prescribed for parliamentary elections. Raising this amount is far easier than raising Rs. 2 crores, particularly for outstanding liberals with good networks.
Then there is the belief that money buys electoral results. It is thought that basti wallahs sell their votes for “Rs.250/- cash, a packet of Biryani and a sachet of country arrack”. But the reality is that voters take money from whosoever gives it to them, but then vote (in the quiet secrecy the polling booth) for the candidate they actually believe in. I know of a politician who disbursed Rs.35 lakhs in slum areas in Mumbai in a single night but lost the election! In any event, bribing every voter can be astonishingly expensive, costing over Rs. 30 crores per constituency! No one spends that much in any election.
At the broader level, I question why even Rs. 25 lakhs is really necessary. Some reflection will show that electoral results depend primarily on the following four things.
a) The message. While the average voter is not interested in the details of policy, he wants to know what the proposed policies will mean for him. A well-tailored campaign can make a great difference, and that does not mean throwing money around.
b) Time spent talking to the electorate. Good candidates spend a lot of time in their constituencies to build networks of supporters.
c) Quality and commitment of the candidate. Good candidates speak coherently and demonstrate commitment to their constituents’ interests.
d) Credibility of the bid. The Indian voter is highly strategic and doesn’t waste his vote on independent candidates or on ill-prepared ‘one-man political parties’. He wants to know that the candidate he will vote for has a genuine chance of becoming a part of government.
While money can facilitate these things, it is not the key driver of success. If liberals do their homework and work as a team, then even Rs. 25 lakhs won’t be needed to win. Ask the Janata Party which trounced the corrupt Congress of 1977. Or ask the Telugu Desam of 1982, or Asom Gana Parishad of 1985. Many of these parties were formed weeks before elections and barely spent any money, but won huge majorities.
Now: Extract from BFN (also published here)

let us explore how well or otherwise the very idea of limits sits in relation to our freedoms. Is this limit of Rs.25 lakhs, or any limit at all, compatible with freedom? And the answer is to be a resounding ‘No’, for the following reasons:

  • As a general rule, a citizen in a free country can spend any money he wants to, on any legal activity. There are no limits on how many shirts a person can buy, or how many advertisements he can take to sell his product. Contesting elections is a legal activity, indeed a basic obligation of citizens. Therefore, limiting expenditure on elections is wrong on first principles. Freedom of expression and belief also calls for scrapping election expense limits.
  • There is nothing stopping us from supporting a religion of our choice. Similarly, free peoples are entitled to support political parties with unlimited funds if these parties represent their views. If a party becomes ‘rich’ through this process, and is able to spend more at the time of elections, that is unexceptionable, since it represents a genuine support base. We are talking of a democratic ‘market’ for policy here. I should be free to support liberal political parties should I find any!
  • Those who seek to limit expenditures possibly do not trust in their own judgement as voters. For trying to block expenditures would imply that Indian voters are influenced purely by the number of advertisements put out by a candidate. This view completely denies that policies matter. And yet we know that the Indian voter is clever enough to take unsolicited ‘bribes’ from all rich candidates but vote only for the one he or she believes in.The critical thing is to ensure complete secrecy of the ballot. Expenditure on campaigns is never a real issue. And so long as substance and policies also play a role in the minds of voters, we have nothing to fear.
  • We must either have a free democracy or have none at all. All this intellectual posturing and putting arbitrary limits smacks of statism and the dictatorship of the elites. Let’s get out of this paternalistic frame of mind and start respecting people’s choices!
  • On a practical note,expenditure limits create incentives to lodge fraudulent accounts of electoral expenses, thus destroying the sanctity of the laws of the land. Today, almost all candidates in India, particularly those from the large political parties, exceed the expenditure limits by a vast margin, in the order of ten times or more than the expenditure limit, even as they continue to sign off on false statements of accounts. The question is, are we adult enough to live with reality? Do we want the truth, or do we want to deliberately pull wool over our eyes?
  • There is a practical example that can ease some of our artificially inflated worries about expenditure limits. The US experience clearly shows that money can’t buy electoral victory. US presidential campaigns allow unlimited amounts of money to be raised and spent, so long as these amounts are fully declared. Ross Perot spent over $65 million of his own money in 1992 but got absolutely nowhere. This clearly shows us that throwing money at voters is not good strategy, without substance. The Indian voter is not the same as the American voter, but we must not presume that our ‘masses’ are fools.
In brief, there are very good reasons why expenditure limits for political purposes need to be abolished. And at the same time, our extremely weak mechanisms to account for political expenditures need to be significantly beefed up. Stringent requirements on the verifiable disclosure of expenditures will force political parties and candidates to stop using tons of black money in elections. If clean money is used to promote political ideas or candidates, then we really have nothing to fear. Good ideas need to be sold too. Even the outstanding ideas of freedom that this book is promoting cannot reach everyone in India for free. If a political party wants to preach freedom, it will have to write and print brochures; people will need to be physically met with and spoken to. Even preaching freedom is not free! 
Now for other useful information.
In USA the idea of imposing election limits was proposed by the socialist Teddy Roosevelt
The Supreme Court struck down limits on spending and limits on the amount of money a candidate could donate to his or her own campaign in Buckley v. Valeo (1976). [Source]
The limitations on campaign expenditures, on independent expenditures by individuals and groups, and on expenditures by a candidate from his personal funds were found to be constitutionally infirm in that they placed severe restrictions on protected expression and association, yet lacked any compelling countervailing government interest necessary to sustain them. [Source]
And so, who criticised this? None other than the socialist John Rawls. The idea of LIBERTY is paramount. There can't be any limit on what one spends on one's elections.
Yes, there must be DISCLOSURE and TRANSPARENCY. That is a key point.
Recently, in The US Supreme Court also struck down limits on expenditure by corporations.
The US was FOUNDED on the concept of liberty. Let India be free, not constrained in any way.

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