“What is to be done about crooked banks, nitwit banks, bad banks in general? The problem seems to be beyond the capacities of American legislators, for every solution they have arrived at in the past has turned out, in the light of experience to be no solution at all.”
Money Corrupts Politics
It is difficult to overstate the impact of money on our current political system. For the past generation, the money power has been hard at work establishing control of our political system from all angles.
Campaign Finance
The most direct way for money to influence politics is by influencing elections themselves. The money power has been hard at work. In 1980, Jimmy Carter and Ronald Reagan spent a combined $92 Million on their campaign for President. Had the amount of spending simply kept up with inflation, the 2012 bill would have come in at a mere $264 million. Instead, the 2012 campaign bill looks to be coming in at nearly $2.5 Billion, a ten fold increase. And its not just the presidential race that has seen this explosion of money. During the same timespan, congressional campaign spending has jumped from $151 Million to an estimated $3.5 Billion.
This spending works. The probability that an incumbent in the United States House of Representatives is reelected has risen dramatically over the last half-century; it now stands at more than 98%. A number of factors contribute to incumbent advantage (name recognition, gerrymandering), but a major factor is funding: in the 2008 election, 93% of house races were won by the biggest spender. In 2006 it was 94%. In 2004, 98%. Not suprisingly, incumbents raised and spent on average four times as much money as their challenger. Moreover, in those rare cases where a sitting congressman lost, the challenger raised in excess of a million dollars. Regardless of who wins, money stays on the throne.
The result is a “political class” of deeply entrenched interests. It doesn’t matter whether the money partners are pharmaceutical companies, agribusiness, teachers unions, the prison-industrial complex, hollywood or wall street, a candidate has to have some sort of big money partner to win election. And this means being beholden to the interests of that partner if the seat is won.
Lobbying
Its not enough, however, to simply control elected officials. After all, the intent is to influence policy and regulation. Whether this involves deluging congressional staffers with self-interested position papers or hiring well connected beltway insiders to promote your agenda, dollars spent on lobbying can frequently be well spent. It is estimated that direct spending on lobbying to the federal government was $200 Million in 1983. Had this amount of spending kept pace with inflation, it would have expanded to $534 Million by 2011. The actual 2011 price tag? $3.3 Billion. Clearly the money power likes its return on investment.
The Revolving Door
Direct spending on lobbying is one thing, but why rent when you can own? Whether you are a congressional staffer, a member of the senate subcommittee on Agriculture or the head of the SEC, a lucrative job awaits you on “K-street” in Washington DC where the money power is waiting to hire insiders to “make sure its interests are represented”. And you can be sure that sitting legislators and regulators will be minding their P’s and Q’s while in office. After all, when a Congressman like Richard Gephardt can go from making $174,000 a year as a representative of Missouri to $7 million a year as a representative of Goldman Sachs, he serves as a shining example to all the folks in the “minor leagues” doing the people’s business: if you keep your nose clean and show you can play ball, you too might get a shot at the majors — representing the money power.
The result of lobbying and the revolving door is broken policymaking driven by special interests and not the general welfare. Policymakers look to their narrow political (and economic) advantage at the expense of the common good. Important things can’t get done. And what does get done is all too frequently wrong. The recent “health care reform” effort is a prime example. What happened to the stock market price of pharmaceutical and health insurance companies when it was enacted? They went up.
Cognitive Capture
In some sense, cognitive capture is the principal goal of the money power. To corner the marketplace of ideas. Whether they do so by financing campaigns or hiring lobbyists, or by funneling money into think tanks, funding academics or simply owning the mainstream media — so long as they are able to control the conversation, to make sure that we always and only think with their ideas, they win. Republican or Democrat (but never a third party). Austerity or Stimulus (but never a third way). Heads they win – tails we lose.
When speech is bought, the truth gets lost in the transaction. The premise of the political forum is that through dialogue and the debate of competing ideas and ideals we get closer to the truth. But when the money power turns the town hall into an echo chamber, the result is a breakdown of dialogue. Critical thought and constructive competition are replaced by knee jerk enthusiasm and causal cynicism. Politics transforms from the serious business of self governance to a dysfunctional mixture of pure power struggle and entertainment. The marketplace of ideas has turned into an episode of Jerry Springer.
The difference between the United States and, say, Zimbabwe isn’t wealth. Wealth is a consequence. The difference between the first world and the third world is “social capital”: the quality and legitimacy of social institutions. Things like the rule of law, honest government and an informed electorate are the foundation upon which everything else is built. An electorate that is driven to cynicism by the corrosive effect of money in politics will either become disengaged or radicalized. Both of which are poison to democracy. Democracy is a fragile thing and the corruption of money in politics has put ours dangerously at risk.
Perhaps in ordinary times, our muddled two party system with its wedge issues and partisan log-jams was able to pass for adequate. But, as more and more people are realizing, we are quickly entering extraordinary times – and politics as usual isn’t going to cut it.