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AMERICAN ENTERPRISE INSTITUTE CAMPAIGN FINANCE AND THE 2016 ELECTION: REMARKS FROM LAWRENCE LESSIG INTRODUCTION: KEVIN A. HASSETT, AEI REMARKS AND CONVERSATION: LAWRENCE LESSIG, HARVARD LAW SCHOOL MODERATOR: NORMAN J. ORNSTEIN, AEI 12:00 PM – 1:00 PM FRIDAY, NOVEMBER 13, 2015 EVENT PAGE: http://www.aei.org/events/campaign-finance-and-the-2016-election- remarks-from-lawrence-lessig/ TRANSCRIPT PROVIDED BY DC TRANSCRIPTION – WWW.DCTMR.COM KEVIN HASSETT: Hi. I’m Kevin Hassett, director of economic policy studies here at the American Enterprise Institute. And the title of this event is “Campaign Finance in the 2016 Election: Remarks from Lawrence Lessig.” Lawrence is an extremely distinguished professor of law at Harvard Law School. He has written widely on a zillion issues, always very thought provoking. He very often might be a little bit further to the left of me, but as someone who has clerked with Posner and Scalia and anticipates every objection I have to his argument before I raise it. And I was really startled and intrigued to see that Larry decided to run for president in a very unique and thought-provoking way. And he’s become extremely – or has been for many years extremely focused on issues of campaign finance, an issue that from my days on the McCain campaign, something that I’ve been fairly familiar with. As an economist, I could say that I’ve never written about campaign finance because it’s too difficult an issue for me. The last paper I remember is by Steve Coat (sp), in 2004, where he proved to me that I should take it seriously because campaign finance limits in Coat’s model, which was published in the American Economic Review, can be – (inaudible). They can make everybody better off because you can get into this sort of contest where I have to give money because you’re giving money and so on, and so there’s this negative externality associated with it. But connecting this sort of general principle that campaign finance reform and campaign finance limits could in principle serve the common good with the real-world functioning of the way our political system works is something that, you know, I’ve not seen economists do, but it’s been a focus of Larry’s inquiry for many years and indeed of his presidential campaign. And so what we’re going to do today is that Larry is going to make a presentation to us about what he thinks we ought to do to fix our political system in this regard. And our expectation is that those remarks will last until about 12:25 p.m. or 12:30 p.m., at which point, my colleague, Norm Ornstein, will come up and moderate a conversation with Larry. And so I hope you’ll all join me in thanking Larry for coming and welcoming him to AEI. (Applause.) LAWRENCE LESSIG: Yes. I’m not Kevin. So thank you. It’s really wonderful to be back. I was here about a decade ago I think talking about network neutrality before it was called network neutrality, but I’m glad to be here talking about this. The first problem – we continue to have technical problems. OK. So no matter what I do, people say that I’m talking about campaign finance reform, and I want to start by saying I don’t want to talk about campaign finance reform. Instead, I want to talk about something that’s kind of near and dear to the hearts of people here. I want to talk about a fact that we need to find a way as a political culture to acknowledge, and that fact is this – that at the center, at the core of our democracy, there is a hole where the framers intended there to be a Congress; that instead of being a Congress, there is a failed institution crippled and corrupted, incapable of governing. One could say it’s even worse than it looks. And we need to find a way to talk about and address that fundamental problem if we’re going to have any way to think about solving the problems that we as a nation need to solve. Now, I’ve been for many years pushing the idea that the failure here is tied intimately to the way we’ve allowed money to evolve inside of our political process. In this sense, I’ve said money is a root of the problem. And by that I mean, if we think of cause in a very causian (ph) way, if the cause is the part of the problem that you can actually fix, then money is the cause of this problem. And today I want to extend that just a bit by saying it’s money-plus, and talk a little bit about what the plus part is, but it’s money and this plus part because this is the part we could actually do something about. And if we did something about it, we could address this crippled and corrupted institution at the core of our democracy. So I’m going to talk in three parts. I’m going to say, number one, how we should think about how money is working inside of the system; number two, what its effect is; and number three, how it relates to what is the obsession of people here in the beltway to, quote, “polarization” in our political process. OK. First, how does it work? The idea I want you to understand – I want to create this term and let you use it, and that’s the idea of Tweed-ism – Tweed-ism, which I derive from maybe the most important political philosopher of the 19th century, Boss Tweed, who famously said, quote, “I don’t care who does the electing as long as I get to do the nominating.” Now what Tweed was evoking in this description of power was a pretty obvious understanding of the way in which this two-stage process would constrain those who move through to election because the dynamic of knowing you need the nomination of someone is enough to make that someone the determinant in how you make your decisions. This is what I mean by Tweedism (sp): any end stage process where there’s an effective filter because the Tweeds control the critical stage in that process with the consequence that should be obvious of producing a system that’s responsive to these Tweeds and maybe only, right? So think, for example, about Texas in 1923 when they had a law passed in 1923 which explicitly said, in the Democratic primary only whites could vote so blacks were excluded from that primary, creating this two-stage process, the whites in the first stage and everyone who at least could register in the second stage, with the obvious consequence – we all see this, right? – of producing a democracy responsive to whites only. Or think about the explosion of protests in Hong Kong that happened literally just a year ago, responding to a law proposed by the Chinese government for the selection of the governor in Hong Kong. This law said the ultimate aim is the selection of a chief executive by universal suffrage upon nomination by a broadly representative nominating committee in accordance with democratic procedures. That nominating committee was to be 1,200 citizens from Hong Kong, which means, out of about seven million, is about 0.2 percent of Hong Kong. That’s a very tiny number, right? Look, there it is, very, very small. If you think about it relative to the whole population, that’s 0.2 percent. Point zero two percent is the committee that selects the candidates that the rest of Hong Kong gets to vote among. And what the protesters said is that that committee would be biased, that filter would be biased because the 0.2 percent would be dominated by a pro-Beijing business and political elite with the consequence obviously of producing a democracy responsive to China only. OK. These examples are pretty obvious. I think there’s not much controversy of that dynamic in those examples. So this is the one I want to focus on. Think about America today. We take it for granted that campaigns will be privately funded in America. But funding is its own contest. We could say funding is its own primary. It takes time. The academic literature estimates that members of Congress and candidates for Congress spend anywhere between 30 and 70 percent of their time dialing for dollars, calling people to raise the money they need to get back to office or to get their party back into power. B.F. Skinner gave us this image of the Skinner box, where any stupid animal could learn which buttons it needed to push to get the sustenance it needed. This is a picture of the modern American congressperson. As the modern American Congressperson learns the buttons he or she must push to get the sustenance here she needs to succeed in her or his campaign. It is a process that takes time and it has an effect. As they do this, they develop a sixth sense, a constant awareness about what they do might affect their ability to raise money, to become, in the words of the “X Files” shape-shifters as they constantly adjust their views in light of what they know will help them to raise money, not in issue one to 10 but on issues 11 to 1,000. Leslie Byrne, a Democrat from Virginia, describes that when she came to Congress, she was told by a colleague, quote, “always lean to the green.” And, to clarify, she went on, you know, he was not an environmentalist.