02/23/2015 03:23 pm ET Updated Apr 25, 2015

An Under-Examined Angle on Money-in-Politics: 'Winner-Take-All' Elections

It doesn’t matter whether your politics lean right or left, there is a broad understanding among the American people that there’s too much money in American politics and that the dependence on their donors to provide that money leaves elected officials without the autonomy to properly represent their constituents.

But why?  This system of corruption has many root causes, but one question that bugged me is: Why are elections so damned expensive in the first place?  What is it, specifically, about America, which is causing our Congressional races to run into the millions and our presidential campaigns to run into the billions?

There are a few reasons, but one of the under-examined ones is the way we elect officials. We often tend to accept the way we conduct elections in the United States as the only way to choose elected representatives.  However, our system, “single-member district,” is but one of many ways.

In single member district, only one representative per district gets all the power -- hence the term “winner-take-all.”  It is simple, which is about all that can be said for it, but it has a number of defects. It tends to produce non-competitive districts, either on purpose, through gerrymandering, or simply by the factors of geography and changing demographics over time.  It creates “statistically wasted” votes. But one of the most tangible problems is that it resembles what, in game theory, is known as a “dollar auction.”

A dollar auction goes like this: An auctioneer volunteers to auction off a dollar bill -- with the following rule: the two highest bidders must pay the highest amount they bid.  The first bidder bids $0.05, believing doing so will earn him $0.95 net. A second bidder bids $0.10 -- the second bidder’s action earns him $0.90 net; and the first bidder loses $0.05… unless he bids $0.15 and gets a profit of eighty cents.  There is no end to this game -- even when the bid is $0.95, the second-highest bidder would bid $1.00 for a net zero profit, rather than suffer a net $0.90 loss -- and the bid would go to $1.05, because a $0.05 loss is preferable to a $0.95 loss!

This was proposed by the economist Martin Shubik to illustrate the paradox -- the absurdity -- that compels rational people to collectively make irrational decisions. Which, come to think of it, also describes American politics.

Let’s leave that aside for a moment, we’ll come back to that later.  

Now, any marketing or salesperson will tell you that you have diminishing returns the more you exhaust your market.  Targets and goals immediately achievable, the “low hanging fruit,” provide the best returns for the least investment.  But as you make more sales, the market shrinks (because people who just bought a widget aren’t in the widget market anymore.) The smaller the market gets, the less persuadable the market gets -- the harder you have to work to make your sale, the more it will cost.  There comes a point at many businesses where the effort of making one more sale is more expensive than the expected return from that sale.  

Our winner-take-all system produces a two-party dominated system; like the dollar auction, there are only two bidders.  Also like the dollar auction, only one person will win.

Unlike the dollar auction, however, the winner is the one who gets the most votes. In most elections, this is non-competitive, but in the ones that are, in the ones where power could shift, it is not about getting as many votes as you can to the polls -- because that won’t do it.  It is about getting those last few voters -- the ones that end up putting you one vote ahead of your opponent.

In short, victory in a close election relies upon being able to reach and persuade the voters who are the hardest to reach -- who are at the longest end of the long tail -- who cost the most in advertising and outreach and time. And it is always better to spend one more nickel and win than having been a nickel short.  

This has resulted in a political culture not only of raising money but “spending to zero.”  There is no prize for second place, so there is no wisdom in not raising as much as possible and not spending every cent.

It is true that television advertising is expensive, and the rising costs of advertising have been responsible for the constant need to raise money, but part of those rising costs are simply due to the demand generated by a system in which the only rational action is to maximize the amount of money your election costs.

Rational people. Irrational outcomes.

Now, obviously, this is not a problem which can be solved overnight -- though I’ll continue to sing the praises of other styles of voting (STV, MMP) that produce less crazy, more representative results to anyone who will listen.  

The first step -- triage, if you will -- in solving this problem is passing statutory reform in the way we fund elections.  Elections might still be needlessly expensive but the source of the fund doesn’t have to come from a very limited elite of crony capitalists and special interests.

Legislation like the Government By the People Act, or the American Anti-Corruption Act go a long way to addressing corruption and get a Congress started working -- just working -- again. But they are not cures. They are more akin to the “meatball surgery” of a battlefield hospital. They will not solve the problem -- but they will make the problem solvable.