THE POWER OF MONEY: First in a Series on Money in Politics

July 5, 2016

This post is re-released to include a new report by the Roosevelt Institute. During the previous two months, I participated in the Demos Legal Convening at the University of Pennsylvania, and the Scholars Strategy Network meeting on Purchasing Power at the Soros and Ford Foundations. The meetings focused on reducing the impact of money in politics, which will be the subject of several of my next commentaries.

Money creates dependence on the narrow group of people who can fund campaigns.[1]

In turn, money affects elections. The best work I’ve seen is not yet public but confirms our intuitions – money increases the votes candidates get and affects how the elected vote. Scholars have even been able to trace which legislators switched votes on legislation.

The economic impact is huge. By non-enforcement of antitrust laws and providing regulatory breaks, political protection enables companies to take advantage of the public. Here, Albany politicians arranged to have themselves showered with gifts by creating a market payable in contributions by corporations seeking permission to build casinos. That’s also why the state ignored the evidence of harm casinos do. On the national level, political protection for favored corporations and industries has had enormous consequences.

The Roosevelt Institute estimates that the financial sector alone cost the public “between $40,000 and $70,000 for every man, woman, and child in the U.S., or between $105,000 and $184,000 for the typical American family”! No new taxes. Just regulatory bonanzas that take our money and put it in company pockets, because of the benefits our elected representatives do for them.[2]

Instead of facilitating productive activity, the financial sector now threatens prosperity, overcharges for brokerage services, ruins lives through predatory lending, misallocates talent to socially unproductive employment, re-orients corporate behavior “to short term speculation that costs jobs, wages, and productivity growth; and choos[es] poor investments that put people’s retirement incomes at risk. …”[3] It’s had a huge impact through private and public pensions, mortgage financing, credit derivatives, asset management services and predatory lending, imposing the resulting costs and financial instability on society and on the poor.[4]

Compare those figures with the costs of political campaigns. Reported expenses for the 2012 federal election cycle including both the presidential and congressional races exceeded $6 billion. But compare the $6 billion with the trillions that the financial sector alone has cost. We are talking about a return to investment of thousands of times, even when the cost of lobbying is added.[5] The costs of political campaigns are small change by comparison. Which is why investing in politics is such a good deal for those looking for big profits at public expense.

That’s why in an upcoming commentary, I will talk about public financing of political campaigns. If you want to spend your money to fill corporate deep pockets, that’s your business. But I’d rather get a lot more value for mine.

— This commentary was originally broadcast on WAMC Northeast Report, July 5, 2016.

[1] Lawrence Lessig, Republic Lost (2011); Ian Shapiro, Notes Toward a Conditional Theory of Rights and Obligations in Property, in Stephen E. Gottlieb, Brian H. Bix, Timothy D. Lytton and Robin L. West, Jurisprudence Cases and Materials: An Introduction to the Philosophy of Law and Its Applications 914 (LexisNexis 3d ed. 2015) (“defin[ing] freedom in terms of the multiplication of dependent relationships”); Bruce Bueno de Mesquita and Alistair Smith, The Dictator’s Handbook: Why Bad Behavior is Almost Always Good Politics (2011); BRUCE BUENO DE MESQUITA, et al,  The Logic Of Political Survival (2003).

[2] http://rooseveltinstitute.org/overcharged-high-cost-high-finance/ (page 3 of the downloaded report).

[3] Id.

[4] Id. at 4, 40-42. And see generally www.OpenSecrets.org.

[5] For studies of the return to lobbying without, however, including the cost of campaign finance, see Lee Drutman, Lobby more, pay less in taxes, http://sunlightfoundation.com/blog/2012/04/16/lobby-more-pay-less-in-taxes/ (note that their studies are examples, not totals); Steven Strauss, Here’s Everything You’ve Always Wanted To Know About Lobbying For Your Business, http://www.businessinsider.com/everything-you-always-wanted-to-know-about-lobbying-2011-11.

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Supreme Court Vacancies and the Sheriff of Nottingham

February 23, 2016

Justice Scalia’s death creates a vacancy on the Supreme Court. The next president may have more to fill. Deciding cases as if it were the Sheriff of Nottingham, The Roberts Court is having a major impact on the economy. How those vacancies are filled will make a big difference to all of us.

Robin Hood and the Sheriff of Nottingham come down to us from a medieval fairy tale and retellings in print and on film. Bruce Bueno de Mesquita and his colleagues explain the role of Sheriff of Nottingham type figures in our contemporary world. As fewer people have real power, those who run the government must shovel favors to them. Given how wealthy they already are, they won’t appreciate any but very large rewards. But what government does for the public leaves less for these powerful patrons. So rulers employ modern Sheriffs of Nottingham. It’s what Bueno de Mesquita’s group calls the dictator’s game: by starving the public, dictators have more for powerful supporters – and the more they demand.

Kevin Phillips detailed the enormous benefits that corporations seek and government directs toward corporations and their leaders. Spending on politics has huge returns, driving the fruits of government to the favored few, and dismantling government wherever business prefers to operate in the dark.

Many of us have been fighting against special favors for corporations that exploit workers, the environment and the general public. But it gets worse. As the story of Robin Hood implies, holders of great wealth and power fear the people will take their ill-gotten gains from them. To prevent it  they block opponents from voting, minimize their votes by gerrymandering, and pour large funds into preserving their power while starving the population of public services.

The Supreme Court has been helping. Despite enormous gains by the wealthiest in America, and the declining share of the general public, this Court consistently moves economic benefits from the public to business, from the victims to the predators. The Court reversed the meaning of a 1925 arbitration statute to derail a plethora of state consumer protections and made it almost impossible to sue. Instead, the Court allows corporate defendants to choose who will decide the dispute, and at what cost. The Court undercut both state and federal standards of liability for injury to consumers, securities fraud and the damages available if plaintiffs win. And the Court is waging a battle to strip the unions of power to protect workers.

At the same time, the Court unleashed the full power of corporate treasuries on politics. Those corporate treasuries had barred from politics since early in the twentieth century. And the Court allowed states to make it harder to register to vote by increasing the cost and time to register – making it harder for working class, poor or physically challenged Americans to vote. The Court allows gerrymandering to reshape American politics, and has supported other efforts to entrench political incumbents. The Court topped all that by removing the requirement that covered states pre-clear voting changes, the one weapon of the Voting Rights Act that had worked.

Historians and political scientists tell us that pattern of disparities often leads to the breakdown of democracy, the loss of self-government. Sometimes it leads to violence, like the Black Shirts, Brown Shirts, Death Squads, and the security services of people like Putin. Sometmes the plutocrats simply invite a dictator to take control. Great disparities are dangerous. Instead of moderating these outrages in the name of American tradition, the Court has been making the problems worse, increasing disparities and letting them take over American politics. This Court is a danger to American self-government.

That’s where the 2016 elections matter. Whatever policies candidates claim to support, their judicial picks will have a big impact on what really happens to ordinary Americans and the future of self-government in America.

— This commentary was broadcast on WAMC Northeast Report, February 23, 2016. An expanded essay can be found here.

 

 


Democracy’s Future in America

June 2, 2015

The Court has now decided that states can stop judges but only judges from personally asking for campaign contributions. It left all the rest of its protections of economic privilege in place.[1] Corporations can use treasury funds to flood the airwaves with political ads. Donors can hide their contributions behind a variety of specialized corporate entities. The one-tenth of one percent of the wealthiest Americans can dominate American politics directly and through their domination of corporate treasuries.

As I explained last week, inequality in the United States is making democracy increasingly unsustainable. When the wealthy and powerful take control of the whole shebang – political money, jobs, the media – the mass of the public is left with few resources to control their government, while the wealthy and powerful have enormous resources at their disposal to control the people.

In addition, democracy is fairly explicitly under attack. Conservatives attack the voting rights of any who might vote against them. Corporations use arbitration clauses in consumer contracts and international treaties to sidestep democratic decisions and make it easier for them to tear down environmental, labor and any other regulation that the people want but the corporations dislike. Their argument against regulation of markets is a euphemism for rules that favor whatever they want to do. But their point is that democracy has no right to interfere. And they hide their contempt for democracy behind Reagan’s claim that government, democratic government, is the problem.

Both these direct attacks and the distortions of wealth on the political process create a real threat that this government of, by and for the people could perish from the earth, undermined by control over speech, press and politics and squeezed out by untouchable markets and the exclusion of democratic decision-making from anything corporations care about.

Only the Tea Party seems prepared to rebel and their exclusionary politics adds to the problem. The gun rights folk will, if anything, protect the current distribution of wealth, enforcing their prejudices. Liberals – race liberals, economic liberals, big money liberals – are hardly united.

Under domination from powerful corporate interests, we could hope at best for the crumbs off their tables. Welcome to the many so-called democracies in Central and South America, Asia and Africa, where hirelings and sycophants help control the public for the benefit of their wealthy patrons.

We could try to pull the Supreme Court off the ramparts of privilege and regain control over the use of money in politics. We could fight back by supporting independent radio stations like WAMC. Or we could hope for the best ‘til Brutus assassinates Caesar – though that could lead to the consolidation of tyranny as it did for the Romans and is now doing in the Middle East.

Can we rally to save the planet and save democracy before we have lost them both? As we used to say in Brooklyn, before the Dodgers finally won the Series, “ya gotta b’lieve.”

Next week, the primaries.

— This commentary was broadcast on WAMC Northeast Report, June 2, 2015.

[1] Williams-Yulee v. Fla. Bar, 2015 U.S. LEXIS 2983 (U.S. Apr. 29, 2015).


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