Posts Tagged ‘Golden Rule of politics’

The investment theory of politics

August 29, 2011

I respect honest politicians who do what is right but unpopular.  I understand pragmatic politicians who do what is wrong but popular.   I can understand why politicians refuse to enact laws that are desirable but unpopular.  But what we have now are politicians who are refusing to do things that are obviously necessary and highly popular, such as break up and rein in the “too big to fail” banks.   Why would they do that?

golden.ruleSome light is thrown on this by a book I read recently, Golden Rule: the Investment Theory of Political Parties and the Logic of Money-Driven Political Systems, by a political scientist named Thomas Ferguson.  I became interested in Ferguson’s ideas when I saw him on the on-line Real News Network.

Golden Rule was published in 1995, and incorporates articles published before then, but it is highly relevant.   Ferguson’s analyses of the 1988, 1992 and 1994 elections, with name changes and minor rewrites, could just as easily have been written about the elections of 2004, 2008 and 2010.

Ferguson’s Golden Rule is “to understand who rules, follow the gold.”  This idea is hardly original with him, he did this on a much more granular level than most people.  He contended American politics is about policies—high tariffs vs. free trade, loose money vs. tight money, industrial policy vs. unregulated free enterprise—that some business interests favor and others oppose.

Businesses invest in candidates and political parties, and expect a return on their investment.  Since they have conflicting interests, the public gets to throw its weight onto one side or the other.   But proposals that are adverse to business as a whole don’t get on the public agenda.  According to Ferguson, no political party has ever supported a measure adverse to a business or corporate interest, unless there was some other business or corporate interest behind it.

Ferguson’s research explains a great deal that is otherwise hard to understand—why Bill Clinton, like Barack Obama, ran on a platform of economic growth and then abruptly changed to George H.W. Bush’s priority of bringing down the federal budget deficit.  It is because he could not afford to antagonize Wall Street financial institutions, such as Goldman Sachs.

Rep. Rahm Emanuel once reportedly told his staff:

  • The first third of a campaign is money, money and money.
  • The second third is money, money and press.
  • And the last third is votes, press and money.

By this account, money is six times as important as votes.  That is why there is bi-partisan support for such unpopular policies as the North American Free Trade Agreement, the bank bailouts and “reform” of Social Security.

The influence of corporate wealth is more than just campaign contributions, or even financing right-wing magazines, TV networks, research institutions and advocacy groups.  Wealthy people and organizations have ready access to information that the middle-class voter does not see or even know about.  They understand where their interests lie, and exactly how those interests are affected by governmental action, which is difficult for the average voter to learn. Members of the corporate and financial elite are personally acquainted with members of the political and intellectual elite.  They interact with each other and influence each other, away from the eyes of the public.

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