Electoral Bonds and the Make-Believe Idealist World

Marx had a belief.

That once the common people take over the reigns of power, there would be no need for any state governing machinery. People would operate the society for the benefit of all.

Marx and Engels maintained that the poverty, disease, and early death that afflicted the proletariat (the industrial working class) were endemic to capitalism: they were systemic and structural problems that could be resolved only by replacing capitalism with communism. Under this alternative system, the major means of industrial production—such as mines, mills, factories, and railroads— would be publicly owned and operated for the benefit of all. Marx and Engels presented this critique of capitalism and a brief sketch of a possible future communist society in Manifesto of the Communist Party (1848), which they wrote at the commission of a small group of radicals called the Communist League. (Source: Britannica)

He became a hero for almost half the world's population and led to revolutions that created some of the most powerful states in the history of mankind.

He may have been a creative and evocative writer, but he was a rather foolish human being. And an even worse knower of human instinct.

Equality is a curse in any society. It is a product of a dictatorial mind that wants to paint everything the same way.

His way.

The human mind searches for greater power, money, and assets. To curb and push that endeavor into an assembly line mechanism is to kill society.

That is why the socialist and communist societies are the most corrupt.

A society that is not mature enough to face the reality of distinctive human experiences and manifestations usually becomes a victim of large-scale violence at some point.

The communist societies were very typically immature in terms of confronting reality.

The way things are emerging in the overall political funding debate, and the stances of the judiciary, one can see the same immaturity in the stands of the main protagonists who think they know.

Do they?

Electoral Bonds in India

These days there is a lot of discussion around the illegality and the corruption from the Electoral Bonds. As the election is approaching and the Indian Supreme Court has pushed for details to come out, this issue is quite hot.

Let us first understand what these are and what is the truth.

The electoral bonds were started in India by the Bharatiya Janata Party in 2017.

The reason why these bonds were introduced was to reform political finance by eliminating the use of cash.

Supporters argued that the system would bring transparency and reduce the influence of black money in politics. However, critics raised concerns about the anonymity of donations, stating that it made the system opaque and allowed for potential misuse by the ruling party to influence donors.

In 2020, the Supreme Court refused to put a stay on the Electoral Bonds.

The Supreme Court on Friday turned down a plea for interim stay on electoral bonds. The top court directed the political parties asking them to furnish details of money received through electoral bonds and identity of the donors by May 30. The details of donation received by the political parties have to be submitted in sealed cover. The court said the Election Commission of India will keep the record of the money received through electoral bonds by the political parties. The Supreme Court also directed the finance ministry to reduce window of purchasing electoral bonds from 10 days to five days in April-May. The court further said it would examine in detail the changes made in law and ensure that balance does not tilt in favour of any party. (Source: "No stay on electoral bonds, Supreme Court seeks donor details from partiesthe " / Hindustan Times)

The Supreme Court of India struck down the electoral bond scheme in 2024, ruling it unconstitutional and a violation of citizens' rights. The court ordered the State Bank of India to stop issuing these bonds and disclose all details, including unique codes linking donors to political parties, just before the country's general election.

This is the picture that emerged from the opening up of the data.

Ok, now that we are where we are, let us understand the situation.

The Tughlaquesqe Indian Supreme Court

There was this ruler Mohammad Bin Tughlaq. He was the Sultan of Delhi during Medieval India, and earned the moniker "wise fool" due to his ambitious yet often unsuccessful administrative reforms. Despite being an ambitious and experimenting ruler, many of his policies backfired, leading to chaos and discontent among his subjects.

You will see the Supreme Court judgment and pronouncements betray that kind of mentality.

When the case came up in the Supreme Court again in 2024, the Court took a strange and interesting turn. It came up with its own wisdom.

"Curbing black money is not a sufficient justification to anonymise the identities of donors and the details of the contributions in the electoral bonds scheme."

And it used the Constitution provisions as well to push their point.

The Supreme Court has observed that the purpose of curbing black money is not a sufficient justification to anonymise the identities of donors and the details of the contributions in the electoral bonds scheme. A Constitution Bench of the Supreme Court held that the anonymous electoral bonds scheme violated the right to information of a voter guaranteed under Article 19(1)(a) of the Constitution and struck down the same as unconstitutional. (Source: "Electoral Bonds Not The Only Way To Curb Black Money, There're Alternative Means Which Are Less Restrictive : Supreme Court" / Livelaw)

When the government argued that the argument for the electoral bonds was that it helped curb the black money, the court judgment authored by CJI DY Chandrachud noted that the "purpose of curbing black money is not traceable to any of the grounds under Article 19(2)."

So curbing the black money should not be a goal for the government?

And as far as anonymity is concerned, the information IS available. With the State Bank of India from where the electoral bonds were bought.

It is just that the public did not have it.

Is that enough of a reason to use this half-cooked argument to completely close this route?

To understand the complete idiocy of the Court's argument - and I am trying my best to state it as nicely as I can given the level of arguments and reality - let us check the change in the situation pre-Electoral Bonds, during the Electoral Bonds and now after the judgment.

So earlier there was Black money with donations in cash - basically bribery. No one, certainly not the banks, knew who gave what to whom!

Then came Electoral Bonds.

So now one giving the money had to use bank transactions - ergo taxable money - to give donations.

The bank KNEW who gave what to whom!

Oh, Mr Chandrachud as a citizen didn't know. So that became an issue.

Really?!

And so what is the alternative to that, if one may ask?

"The Electoral Bonds scheme is not the only means for curbing black money in electoral financing. There are other alternatives which substantially fulfil the purpose and impact the right to information minimally when compared to the impact of electoral bonds on the right to information," CJI DY Chandrachud stated in his judgment. The Court observed that for contributions below Rs 20,000, contributions through other electronic means are the least restrictive means. For contributions above Rs 20,000, contributions through electoral trust are the least restrictive means. The Court held that these alternative means have a less restrictive impact on the right to information while having the same ability to fulfil the purpose. (Source: "Electoral Bonds Not The Only Way To Curb Black Money, There're Alternative Means Which Are Less Restrictive : Supreme Court" / Livelaw)

Awww, that is so cute.

Trusts or electronic transfers will be better.

How?

There are enough ways to create anonymous trusts and create backdoor funding mechanisms to circumvent this.

And, even then, the information will remain with the banking system. Not openly available to the public. Of the fronting trust. The backend mechanism can always be opaque.

In fact, even more opaque than the situation with the Electoral Bonds!

Let us look at another democracy and see how this is done.

Political Funding Via SuperPACS and PACS

PAC is a Political Action Committee. It is a tax-exempt 527 organization that pools campaign contributions to support or oppose election candidates, ballot initiatives, or legislation. They are created for campaign finance reform, PACs aim to influence federal elections by pooling and donating campaign contributions.

Relative to fundraising and spending capabilities, as well as their relationship with political candidates, a committee could be a PAC or a SuperPAC.

Basically, both are not very different. Source for information below NALC / Church Law Center

1. PAC (Political Action Committee):
   • PACs are political committees that receive limited contributions from two or more individuals to support or oppose candidates for elected office.
   • They can donate directly to candidates, parties, and other political committees, and their contributions are subject to specific limits.
   • PACs are regulated by federal, state, and local campaign finance laws.
   • They can be operated by third-party individuals or groups and raise funds from specific sources like Separate Segregated Funds (SSFs) or Nonconnected PACs.
2. Super PAC (Independent Expenditure-Only Committee):
   • Super PACs are independent expenditure-only committees that can raise unlimited sums of money from corporations, unions, associations, and individuals.
   • They cannot donate money directly to candidates but can spend unlimited amounts independently to advocate for or against political candidates.
   • Super PACs must report their donors to the Federal Election Commission regularly.
   • They were created following the 2010 Supreme Court decision in Citizens United v. Federal Election Commission.

So here is the bottom line.

All sounds great and "above the line". Correct?

Let us understand the truth.

The Backdoor Mechanisms

We have talked about George Soros and his political interventions in other countries to interfere in their sovereign governance. Like Ukraine for example.

He also props up groups within the United States. Here is a quick list of donations that Soros Fund Management has made in just 2024.

It is not just hyperactive political entities like George Soros who fund the political camps that help them carry out their financially profitable empires, but large companies that are part of the military-industrial complex (MIC), so the same as well.

Why does this matter? Because these corporations - and their executives - benefit tremendously from propping up political operatives to do their job for them.

Remember Vivek Ramaswamy's criticism of Nikki Haley? Nikki joined Boeing's board and

Taking a swipe at Haley, Ramaswamy said, “She becomes a military contractor. She joins the board of Boeing … and is now a multimillionaire.” “I think that that’s wrong when Republicans do it or Democrats do it.” “Do you want a leader from a different generation who’s going to put this country first, or do you want Dick Cheney in three-inch heels?” (Source: Ramaswamy: Haley is ‘Dick Cheney in 3-inch heels’ / The Hill)

And it's not that Ramaswamy was saying something outlandish. It has been discussed and reported in the mainstream press for long.

The Washington Post describes the state of Nikki Haley's finances.

The foreclosure action, initiated even as Haley served in the highest echelons of government, illustrates the financial pressure she faced as her family’s primary breadwinner during her last stint in public service, which ended when she abruptly quit government later that year and entered the private sector. In short order, she improved her financial position dramatically, making millions from private consulting, paid speeches and spots on corporate boards. She quickly extricated herself from the lake house proceedings and, in 2019, purchased a $2.4 million property on Kiawah Island — a gated community near Charleston — with arched porticos, columns, balconies and stone balustrades. (Source: "When her family needed money, Nikki Haley found a lucrative path," / Washington Post

Apart from her lucrative speeches, she helped companies where she joined on the board. Boeing for example.

In 2013, she championed $120 million in taxpayer-backed incentives to help aerospace giant Boeing expand in North Charleston.

So you see how this works?

And when that war and arms sales are underwritten by the American taxpayers, it becomes even more lucrative.

For U.S. arms makers, however, the greatest benefits of the war in Ukraine won’t be immediate weapons sales, large as they are, but the changing nature of the ongoing debate over Pentagon spending itself.  Of course, the representatives of such companies were already plugging the long-term challenge posed by China, a greatly exaggerated threat, but the Russian invasion is nothing short of manna from heaven for them, the ultimate rallying cry for advocates of greater military outlays. Even before the war, the Pentagon was slated to receive at least $7.3 trillion over the next decade, more than four times the cost of President Biden’s $1.7 trillion domestic Build Back Better plan, already stymied by members of Congress who labeled it “too expensive” by far.  And keep in mind that, given the current surge in Pentagon spending, that $7.3 trillion could prove a minimal figure. Indeed, Pentagon officials like Deputy Secretary of Defense Kathleen Hicks promptly cited Ukraine as one of the rationales for the Biden administration’s proposed record national-security budget proposal of $813 billion, calling Russia’s invasion “an acute threat to the world order.” In another era that budget request for Fiscal Year 2023 would have been mind-boggling, since it’s higher than spending at the peaks of the conflicts in Korea and Vietnam and over $100 billion more than the Pentagon received annually at the height of the Cold War. (Source: "How Pentagon Contractors Are Cashing in on the Ukraine Crisis" / Quincy Institute of Responsible Statecraft)

Here it is quite clear that the governing establishment works hard to provide funds for the military and arms contractors while creating roadblocks for spending on civil needs of the US citizens themselves.

Is that normal? Are we really working as per norms here? Are the rules even being followed? They are made to feel as the rules are all intact, but if the American taxpayers' money, against their consent, or by influencing - even brainwashing - their consent, is spent on an unnecessary war by constructing a new enemy every few years, while the citizens see their own lives being dismantled one by one, then where are the rules and norms of a democracy being followed?

So ask yourself, are these organizations bribing or lobbying? And what really is the difference between the two? Investopedia tries to differentiate rather unsuccessfully.

This so-called lobbying becomes even more egregious when these weapons and military contractors own large media companies who unabashedly do their bidding as well!

Like when General Electric owned NBC.

Outright ownership of media companies is one of the most egregious examples of the relationship between the media and the MIC. General Electric and NBC are one example. General Electric is a large weapons manufacturer that consistently lands in the rankings of top arms-producing and military service companies. According to the Stockholm International Peace Research Institute (SIPRI), in 2019, General Electric ranked 12th in the United States and 21st in the world out of these companies. GE is a major manufacturer of aircraft parts and missiles that were used extensively in the Gulf War and in Iraq. And, until 2013, GE either directly owned or had shares in the National Broadcasting Company (NBC). (Source: "The (im)proper meshing of the corporate media and the military-industrial complex" – The Miscellany News

The money transactions happen, via shell companies and "dark money groups - who fund the politicians so they can do a quid pro quo.

In 2023 alone, shell companies and dark money groups injected over $162 million into political groups such as super PACs, surpassing the level of dark contributions seen at the same point in any prior election cycle, a new OpenSecrets analysis of Federal Election Commission data found. (Source: Unprecedented surge in ‘dark money’ floods 2024 elections / Open Secrets)

Here is a chart that shows it better.

In the US, they can be called "Dark Money" groups. In the United Kingdom, there are similar "shadowy groups".

So you see how this whole thing works?

That is all you need to know about the brilliant idea of the Indian Supreme Court.

World of Idealists -

Wherever there is public involvement in the politics and the powerful need the public approval, money will be involved in pushing through the campaigns for elections.

In other cases, uninhibited power can do that job.

In a democracy, power needs money. That is just a fact.

Just deal with it as it happens in the real world and factor that in. But then there are people who want an ideal world which has never existed.

Let us look at the time of the Roman Empire.

Ambitus and Benignitas - the Thin Line

There were two concepts in those times - Ambitus and Benignitas.

Before we dive in, I would suggest that you keep the discussion on Bribery vs. lobbying in your mind.

Ambitus in the Roman Empire referred to electoral bribery, where candidates attempted to influence elections through bribery or other forms of soft corruption. 

On the other hand, mere benignitas represented generosity, which was a more acceptable form of treating voters with shows, feasts, and entertainment during the campaign. 

The distinction between ambitus and benignitas was crucial in Roman politics, with ambitus being illegal bribery while benignitas was seen as a permissible form of generosity towards voters. 

Ancient politicians were just as skilled as modern ones at identifying and exploiting loopholes in election law. In Rome, the key loophole lay in the fuzzy distinction between ambitus (electoral bribery) and mere benignitas (generosity). Roman elections were often won on the strength of free food, drinks, entertainment, and sometimes hard cash offered directly to voters and financed by private fortunes. In fact, Roman campaign slogans were sometimes inscribed on the bottom of commemorative wine cups—you could drain the cup and find out whom to vote for. Most of the Roman elite relied on the gentleman’s agreement that the line between bribery and generosity would not be strictly patrolled. At worst, rank vote-buying was something your opponents engaged in; you, on the other hand, were simply being a good neighbor. (Source: "How Political Campaign Spending Brought Down the Roman Republic" / Slate)

The practice of ambitus involved candidates offering free food, drinks, entertainment, and sometimes cash directly to voters to secure their support, financed by private fortunes. This distinction between bribery and generosity was often blurred in Roman elections, leading to widespread corruption and the undermining of the political system.

And it wasn't just the distinction between ambitus and benignitas that was blurred, or the one between bribery and lobbying that is difficult to make out - the difference between any type of funding in politics has the same issue.

See, after all, elections require money. Money comes from businesses and their profits. Governments help regulate the markets. And like the US and its wars, creates opportunities for corporations to profit.

So, in this scenario, one needs to be tone-deaf to even imagine that there would be no engagement between the businesses and the politicians. Further, the funding will be without any quid pro quo.

You might have a better chance of riding a real unicorn alongside Santa in his sleigh than creating a world free of political funding that does not cross the lines into bribery-ish ways.

And, in that realistic world, when some gentlemen in black robes come along in with their arguments like - Black money is not a constitutional issue but giving information to every Ramesh, Sanjiv and Harpreet is - then the society is definitely hallucinating.

So what is the way out?

Public Funding and Corruption

Democracies like the US and India are large governance systems. India is by far the largest democracy with 945 million + voters eligible to vote. They belong to different religions, speak different languages, and are immensely diverse. In that scenario, the solutions come with their own challenges.

So things like political funding need simple solutions that will never be perfect. At best it will be optimal. No measure in India can check all the boxes.

One major study suggests that the relationship between political finance regulation and corruption may be curvilinear, indicating that both too little and too much regulation can lead to corruption

 In this study, we use focused measures for both phenomena to investigate whether more generous public funding reduces party corruption. Our independent variable reflects the actual cash amount of budgetary subventions provided to parties in twenty-seven post-communist countries. Our dependent variable of party-centered corruption represents the share of firms considerably affected by the informal payments made by businesses to political parties and parliamentarians to influence their decisions. We find that a higher level of state subsidies is associated with a reduction in corruption; its effect diminishes as funding increases, and its impact on corruption is lagged. However, there is a wide interval of uncertainty around these results. In the context of the existing literature, our contribution reduces the estimate of the size of a public funding effect and increases the level of uncertainty. (Source: "Rethinking public funding of parties and corruption: Confronting theoretical complexity and challenging measurement" )

Another study highlights that public funding for political parties can reduce corruption by decreasing their dependence on private contributions, legal and illegal, although the empirical evidence supporting this is considered fragile and uncertain.

But the empirical evidence on the anticorruption impact of public funding for parties is surprisingly thin, and results that initially seem to show the sort of effect described above often turn out to be quite fragile and unreliable. We recently published our own study, which examines how the level of public funding for political parties affects enterprise managers’ perceptions of the impact of payments to government officials, using World Bank survey data from 27 post-communist countries. Although we find an association between higher public funding and lower corruption, this result is extremely sensitive to minor changes in method, and the results are too uncertain to recommend public funding as a policy intervention to reduce corruption. (Source: Public Funding of Political Parties Is Unlikely To Reduce Corruption / The Global Anticorruption Blog)

Like a broken record, however, groups keep talking about regulating political finance as it is seen as a crucial part of combating corruption and preserving democratic values.

“Political finance is a pivotal issue in the fight against corruption. The integrity of democratic processes is contingent on financial transparency in political finance… When financial contributions to political parties, electoral campaigns, or candidates are opaque and unaccountable, this enables clientelism, fuels corruption, increases the cost of political participation and destroys trust in governments.” (Source: Regulating political finance is part of the solution to corruption / Westminster Foundation for Democracy)

This whole thing about Public Funding seems another one of those "Communist" type ideas of public sharing and greater good.

Public funding for political parties involves the provision of funds or resources by the state or government to support political parties and candidates. This funding is intended to help parties finance their electoral campaigns, maintain contact with constituents, prepare policy decisions, and pay professional staff (Source: ACE Project)

The idea seems interesting. But why would be the party in power be happy to fund his opponent?

Will Trump get enough money for his campaign against Biden, while Biden is the President? Heck no!

So why should the state - and therefore the ruling party - get the ability to distribute?

Confront the Reality!

The reality is that politicians will continuously seek funding. And those businesses will ask for quid pro quo.

Can a system be created that provides them anonymity in the public eye so they can finance whom they wish and align with?

In the absence of anonymity, the only way would be illegal and under-the-table funding.

So in that sense, the electoral bonds actually did the job. It provided traceability of the money shared. It provides the donor his or her anonymity, while he routes his money via a bank transaction that can be traced.