How’s that title for alliteration?

On his blog today, Tyler Cowen repeats a standard mistake made by many, including many in the media, about political contributions by U.S. corporations. With the tag line, “Which firms give the most to politicians?,” Tyler links to a site that lists the contributions made by various groups. Put aside the fact, which one of his commenters pointed out, that only two of the top ten are firms and the rest are labor unions.

Beyond that problem, there’s an even more important problem: it’s illegal for U.S. corporations to donate to individual politicians and it has been so since 1907. Here’s what economist Jeffrey Milyo wrote on it in The Concise Encyclopedia of Economics:

Consider that large firms spend ten times as much on lobbying as their employees spend on campaign contributions through PACs, as individuals, or in the form of unregulated contributions to political parties (i.e., soft money). I mention employee contributions because, contrary to the sloppy reporting that appears regularly in U.S. newspapers, corporations in the United States do not contribute to political campaigns: they are prohibited from doing so and have been so prohibited since 1907. When you read that Enron has given X million dollars to candidates, what that really means is that people who identify themselves as Enron employees have given X million dollars of their own money.

When I gave $1600 to Ron Paul’s campaign in the last election cycle, I identified myself, because I was required to do so by law, as an employee of the U.S. Navy. By the same methodology that attributes individual contributions to employers, that means that the U.S. Navy gave $1600 (plus, I would guess, hundreds of thousands of dollars contributed by other U.S. Navy employees) to Ron Paul. That’s absurd.

It is true that corporations often have Political Action Committees that bundle individual employee contributions and send them to candidates and it’s probably true that many of these employees feel pressured to give. So it’s not as if the fingerprints of these corporations are not on some of the contributions. But I know a number of people who gave close to the maximum contribution ($2300) to individual candidates and who did it out of conviction rather than out of any perceived felt pressure.