Friday, May 13, 2011

Is This Why They Bought Congress?

-- Posted by Neil H. Buchanan

Imagine that you are a billionaire. You made your money in a U.S.-based business, and life has been very good to you. Still, it could be better, and you have noticed that the costs of buying politicians, think-tank analysts, academics, research centers, ingenuous grassroots groups, and media coverage are much lower than the benefits of owning those things. Taking advantage of an economic catastrophe, you have succeeded in buying a Congress that is more radical than you ever dared imagine.

One might think that you, as a person with a lot of money riding on the continued prosperity of the country, would not want your boys and girls in Washington and on the airwaves to shake things up too much. You, of all people, would not want the financial system undermined by loose talk of debt defaults. Yet here we are, looking at a political conversation in which all of your hired hands are now talking about the very thing that could ruin you.

Why might this be happening? A few possibilities come to mind, in no particular order:

(1) You have been playing with fire, confident in the belief that you will be able to control the blaze, only to find that the fire has now raged beyond your control. Or, to use a different metaphor: Dr. Frankenstein, meet your monster.

(2) You are still in charge. You think that there is political advantage yet to be gained from manipulating the extremely pliant naif who currently sits in the White House, getting him to agree with as many of your demands as possible. At the last possible moment, after you have extracted the last milligram of concessions that the other side offers up, you will flip the switch and have everyone suddenly agree to a “compromise.”

(3) You genuinely believe that it is a good idea to blow up the economy. You are convinced that you personally would be better off without a government, because you now have so much power that you can set yourself up in a post-disaster world as a monarch, controlling directly all that remains of the world. You understand that most people will be, at best, much less well-off than they are today, but you are confident that you will be much better off, both in material terms and – even better -- in terms of the power that you wield.

(4) You do not believe that you are actually going to blow up the economy. You have become convinced by your own propaganda machine, and you thus are sure that there is a “no government” Nirvana that you are going to bring to Earth. You are thus convinced that you are making the world a better place, not just for yourself but for the little people as well.

(5) You are not one of the billionaires who actually bought this Congress, and you are not one of the men who can pick up the phone and order a governor or a Senator to do your bidding. While you are not a liberal billionaire who funds the handful of (extremely weak and ineffective) versions of the right-wing machine, you are hoping that (2) is true for your co-billionaires who really are running the show. Each passing day, however, makes you more and more worried that we are in or near situation (1). You were willing to go along with threats of government shutdowns, to bash unions, and to use religion and culture to divide the country for your own ends, but you never considered the possibility that your co-billionaires would go this far. As each day passes, you consider breaking ranks.

As far as I can tell, this pretty much covers the terrain. Either things have gotten out of hand, or the puppet-masters still think they are in control. They are either cynical or sincere. They are either willing to destroy it all, or they think that they can preserve modern society while transforming it into their preferred form. They are thinking as a group, or they are increasingly at odds with each other.

The U.S. business community used to be pragmatic, taking non-ideological approaches to many issues. The larger the business, for example, the more likely it was that it would support national compromises on policy issues. Having a direct financial interest in reducing compliance costs, for example, larger businesses would find it in their overall interest to support federal laws over state laws, even if the state laws on average would be more favorable to business.

The one thing that we used to be able to say about business interests was that they were willing to put emotion aside and look to their empirical self-interest. While businesses could differ about what constituted their self-interest (especially the time frame for making profits), there was something comforting about knowing that they were doing nothing more than trying to maximize their profits.

This pragmatism was most memorably seen in the Gratz/Grutter affirmative action cases, when business executives in large number came out in favor of affirmative action programs in higher education. Combined with support from military leaders, and some very prominent Republicans, we saw empiricism soundly trounce ideology. (Court watchers can debate whether the ultimate outcome of Grutter was changed by this alignment of support. There certainly was a strong correlation, if not causation.)

We are now, however, facing a new breed of conservative billionaires, who are willing to push the U.S. political system to ideological extremes, at great risk (or so it seems, to those of us on the outside) to their own interests.

One final thought: Is this not a situation in which the classic divide between manufacturers and financiers (or, in classic political economy terms, between the industrialists and the “rentier class”) should be on prominent display? Even if a financial capitalist is willing to believe in the strategy of threatening Armageddon, surely he would be likely to flinch much sooner than someone whose money comes from drilling and mining. As the debate over the debt limit continues, we should expect to see fissures within the business community concerning how far to push their advantage, with the financial capitalists understanding that they, above all, have everything to lose from a meltdown of the capitalist system that begins in the financial sector.

8 comments:

michael a. livingston said...

If the "billionaires" are primarily conservatives, why is it Obama who is promising to raise more money than any candidate in history?

Frank Pasquale said...

1. The key thing about donation culture is that it influences both parties (see, e.g., Tom Ferguson's book Golden Rule, or Tom Edsall's Chain Reaction). So Obama's courting of the wealthy supports Buchanan's point, rather than undermining it.

2. I think the "classic divide between manufacturers and financiers" has been decisively resolved in favor of finance in the US. Gerald F. Davis's "Managed by Markets: How Finance Re-Shaped America" is good on this score. According to Mike Konczal, "the book "Financialization and Strategy: Narrative and Numbers" (2006) "does an extensive case study of General Electric and the financialization of the manufacturing business model from 1980 onwards."

3. I appreciate the post's focus on billionaires. The top 400 households are 20 times richer than the top 400 were in 1953. That wealth translates into a "power elite" that is far more influential than it was in C. Wright Mills's day.

4. Dean Baker has said that debt default would not be such a big deal for the middle class. It would hurt investors, but not too many others.

I wonder if there is a Hyman Minsky style left argument against raising the debt ceiling. Minsky believed that "stability is destabilizing;" efforts to keep unsustainable borrowing patterns going may stabilize the short run, but only lead to more dramatic reversals once the reckoning finally comes. Could a debt default shock force the broad populace to realize: you can have low taxes on the rich, or you can have war spending etc., but you can't have both?

michael a. livingston said...

The problem is that the analysis collapses if one cannot show a link between high incomes and the support of particular policies. It is probably true that on some issues, like (let's say) Wall St. reform, wealthy donors tend to be more "conservative" than "liberal" and push policy in a certain direction. But on others--social issues, foreign policy, quite possibly health care, environment, etc.--they may well be disproportionately liberal. In any event, in the absence of a scientifically established link between "big money" and conservative policies, we are simply dealing with rhetoric rather than a serious approach to political reform.

Frank Pasquale said...

Re "a scientifically established link between "big money" and conservative policies".

1) Maybe there's no scientifically established links between anything:

http://thehealthcareblog.com/blog/2011/05/17/fact-checking-medical-claims/

http://www.theatlantic.com/magazine/archive/2010/11/lies-damned-lies-and-medical-science/8269/

http://www.onthemedia.org/transcripts/2011/05/13/04

2) Maybe the "scientific link" has occurred so often in history that even a Humean skeptic must relent:

http://www.stat.columbia.edu/~cook/movabletype/mlm/Ferg-John%20INET%20Conf%20Cambridge%20UK%20April%202010%20final%20%20pdf-1.pdf

Frank Pasquale said...

By the way, in other news, Simon Johnson says there is little reason to worry:

"America will not score an own goal over the debt ceiling – and Boehner must know it. Symbolic gestures are to be expected, as with the threatened government shutdown earlier this year, which merely created fodder for political advertising by both parties. But any manufactured debt crisis now would deeply antagonize the corporate sector – and most of the electorate. In the wake of economic disaster, the party held responsible would presumably be exiled from power for a generation (the Great Depression kept the Republicans from the US presidency for 20 years)."

I have no idea why he thinks the GOP, rather than "politicians," will be blamed. And if the whole political system suffers yet another blow to its reputation, that's one more victory for businesses that want to operate without restraint.

michael a. livingston said...

Citing a group of blogs, which themselves engage in rhetoric rather than analysis, doesn't change things. Your argument is with the democratic system: people simply don't accept the values that you and Neil would impose on them, and so you are looking for a scapegoat (the "very rich," "big business," etc., none of them defined terms and none of them systematic in any way). You could call the people who disagreed with you "fascists" and it would have as much, or as little, persuasiveness. It is an excellent parable of why the left is so unsuccessful

Doug said...

>> In any event, in the absence of a scientifically established link between "big money" and conservative policies, we are simply dealing with rhetoric rather than a serious approach to political reform.

Now really; you don't think that the interests of wealthy donors and the average voting public diverge? Not just on the content of policies but on government funding, international actions and political attention (issue framing)? That is simply beyond belief. Your counter-claim is that there is no link between wealth and political positions - I would challenge you to provide some scientific evidence of that claim.

I would give the examples of global warming and anti-trust regulation. Both are strongly opposed by some narrow wealthy segments of the population who will use their wealth to influence the success of politicians who support these policies. The Koch brothers are climate change deniers, they are extremely wealthy, and they use this wealth politically to influence the success of politicians (by funding their campaigns) and by influencing them (through political access). If this is democratic I hardly see how.

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