I’m no fan of the Wall Street Journal editorial page, but we agree completely on the pathologies of the campaign finance system, which reduces competition rather than promoting it:

We don’t begrudge Mr. Bloomberg a cent of his money, and he should be free to spend all of it on politics if he wishes, including on a run for President. The Supreme Court has said he has that right. But no one has so far explained why it’s fine for Mr. Bloomberg to advance his own political career using his personal fortune, but it would be “dirty” for him to bankroll someone else who shared his agenda. As long as voters knew where the money came from, they’d be free to decide whether it tainted the candidate or not. Such donations could be posted instantly on the Internet.

It is often said that billionaires should not be able to “buy” elections, and that strict donation limits weed out candidates without a broad base of support. But now a billionaire really can buy an election, in the sense that he is unrestrained by the limits imposed on everyone else. Mr. Bloomberg spent an estimated $160 million on his two mayoral campaigns, literally overwhelming his competitors with TV ads. Restricting billionaires to financing themselves, far from increasing political competition, has reduced it.

Barack Obama has defied conventional wisdom by raising enough money to compete with Hillary and Bill Clinton’s campaign juggernaut, but the rest of the Democratic field is less fortunate. Surely Chris Dodd, Senator from the hedge-fund capital of the world, could find some wealthy backers for his campaign if the rules permitted it. The money would hardly guarantee him success, but it would give him a fighting chance to put his agenda on the table, leaving voters to decide whether they liked what they heard. The same goes for New Mexico Governor Bill Richardson, a candidate of significant experience who is struggling to raise enough money because he comes from a small state and is less well-known than his competitors.

I think it’s clear that there would be a lot more well-financed Congressional challengers if donations were unrestricted. The difficult empirical question, however, is what happens if everyone can raise unrestricted money in a presidential race. Dodd et al could certainly raise more, but so would Clinton and Obama. The ultimate effect would seem to depend on how quickly the marginal effect of an additional dollar of funding declines as campaign budgets increase.