Posts Tagged ‘Investment theory of politics’

2016 and the fight against the money power

May 7, 2018

Political scientist Thomas Ferguson has spent his career tracing the influence of money on U.S. national politics.   In this interview from last week, he said the big story of the 2016 election is that it is politically possible to defeat big money.

Bernie Sanders raised 60 percent of his funds from small donors, who gave $200 each or less, Ferguson said.  This is unprecedented.  He said Sanders could well have won the Democratic nomination and the general election if he had started earlier and done things differently.

But even in defeat, he said, Sanders showed it is possible to fund a national political campaign without going to the wealthy and corporate donors that the leaders of both political parties depend upon.

Ferguson is noted for his “investment theory of political parties”—that wealthy interests invest in political parties and candidates, and that the only political issues that elections decide are issues on which the big donors disagree or that they don’t care about.

He says there are basically two elections.  There is the informal money election, conducted by big donors, which winnows the field   Then there is the actual vote, which chooses among the candidates pre-selected by the money election.

What Sanders—and also Trump, to an extent—showed is that large numbers of small political “investors” can offset the few big donors.   Sanders was the equivalent of an entrepreneur who funded a start-up with a GoFundMe fundraiser.

Trump himself raised 40 percent of his campaign funds from small donors, which is unprecedented for a Republican, Ferguson said.   But most of that was before he won the Republican nomination.

Starting in August, big money started to roll in—especially from Rustbelt manufacturing interests, who liked Trump’s promise to raise tariffs against foreign imports, and also from such far-right figures as Sheldon Adelson, Peter Thiel and Robert and Rebekah Mercer.

Hillary Clinton received most of the donations that came from Wall Street and the defense and aerospace industries.

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How big money keeps populism at bay

January 24, 2014

The Democratic Party is in deep trouble going into the 2014 elections, and it’s not solely due, or even mainly due, to gerrymandering, voter suppression or other dirty tricks by Republicans.

Thomas Ferguson

Thomas Ferguson

Their main problem is that the Obama administration is five years old, and there has been no economic recovery for the vast majority of Americans.  While Democrats can justly claim that the economic crash is due to the policies of the Bush administration, voters have a right to expect that by now, the Obama administration would have offered an alternative.

Recognizing the problem, President Obama has started talking about income inequality, and trying to re-energize the Democratic base of support — union members, working women, Hispanic-Americans and African-Americans.   The problem for the President and for Democrats generally is how to do this without jeopardizing their support from big-money donors whose contributions they need to win.

This is a tightrope that Obama has been able to walk so far.  The question is how long he can get away with it.

Political scientist Thomas Ferguson, who is known for his “investment theory” of political parties, and fellow academics Paul Jorgensen and Jie Chen recently published an analysis which concluded that the 2012 elections were basically a contest between different factions of the upper 1 percent of income earners.

Nearly two-thirds of itemized contributions to the Obama campaign and more than 70 percent of itemized contributions to the Romney campaign came from donors who contributed $10,000 or more.  Roughly the same breakdowns held for the proportions of total contributions in amounts of $500 or more.  Obama received more small donations than Romney, but both got the bulk of their funds from big donors.

That’s not to say nothing was at stake.  Republican candidates tend to get the support of the oil and gas industry; Democrats the telecommunications and computer industry.  Wall Street shifts back and forth between the two parties, but exercises strong influence over both.

The 2014 congressional elections will be the same, only worse, Ferguson, Jorgensen and Chen predicted, since recent court decisions have removed the last vestiges of restrictions on campaign contributions.

Thomas Frank wrote an eloquent article recently in Harper’s magazine, indicting college-educated progressive Democrats for their passivity and their disconnect from the concerns of working people.  He wrote that they are waiting for the Republican Party to be destroyed by the Tea Party movement, just as in earlier eras they waited for the GOP to be destroyed by George W. Bush, Newt Gingrich, supply-side economics, Watergate and Barry Goldwater.

The Democrats’ problem is not just the power of money.  It is that, for many Democrats, the power of money is not an issue.

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Thomas Ferguson on the choice of Paul Ryan

August 21, 2012

Thomas Ferguson, a political scientist at the University of Massachusetts at Amherst, Boston, is one of the most astute political observers I know about.  He is going to be a regular on the Real News Network.  I’m just now catching up with his first broadcast, which was last Friday.  Here it is.

Click on Paul Ryan – Insider Trading and Attacks on Medicare for a transcript of the broadcast.

Click on The investment theory of politics for my account of Ferguson’s idea that American political parties represent conflicting business interests rather than the public, and that voters only get a choice on issues that don’t affect corporate profits or on which corporate interests are in conflict.  In the post, I review Ferguson’s 1995 book, Golden Rule: the Investment Theory of Political Parties and the Logic of Money-Driven Politics.

Click on Business, not politics, driving nation rightward for my review of Right Turn: the Decline of the Democrats and the Future of American Politics, which Ferguson co-authored with Joel Rogers in 1986.

Unfortunately both books are out of print and a lot of his current writing is in scholarly publications not available on-line, so the Real News Network is doing a good service to the public by giving Ferguson a public platform.

[8/26/12]  I had hoped to post a follow-up interview with Thomas Ferguson this weekend, but it didn’t happen.

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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