Citizen Action Monitor

Crisis in American democracy: Part 4 – America’s money-driven political system

No 336 Posted by fw, November 12, 2011

Thomas Ferguson has worked for fifteen years to make two claims about democracy in the United States. First, “rule by the people” is a sham, and always has been. Second, the social “sciences” have badly botched the job of finding out why. Ferguson, in his book, and Jonathan Shockley, in his documentary film, offer an in-depth look at the influence of money in politics — analyzing social forces and events that the mainstream media and scholarship have largely distorted or kept hidden.

Part 3 of this 11-part series considered how corporate-controlled mainstream media aid and abet corporate power by keeping ordinary citizens stupid. This post, Part 4, examines the reality of America’s money-driven political system and compares it with the popular Myth of American democracy.

NOTE — I must say that in places in the video, including in this post, I would have liked the editing of some of Tom Ferguson’s off-the-cuff, rambling explanations to be a little tighter. I sometimes had difficulty trying to link pronouns with their antecedents and to figure out what point he was trying to make.

Continuing with the format for this series, a complete 77-minute video of Shockley’s documentary film is embedded below followed by my time-indexed transcript comprising Part 4, including subheadings, and any external links and text highlighting. The time indexing facilitates switching from the text to its related place in the video. Of course, readers have the option of watching the complete 77-minute video at one sitting.

Golden Rule: The Investment Theory of Politics a documentary film by Jonathan Shockley


Classical theories of democracy greatly underestimate costs to voters of being responsibly informed

10:09 <On screen text: The Investment Theory in a Nutshell> Tom FergusonThe classical theories of democracy way underestimate the costs facing ordinary voters as they actually try to control the stake.

  • They got to find out what it’s doing.
  • They got to sort through all the people telling you what the preferences are.
  • And then you got to try to push it across in voting.
  • And then you got to monitor what they actually do – if they live up, in effect, to their campaign promises.
  • And if they don’t you then have to do something to force them back on the course.

It’s that last ditch that’s the hardest. And I mean that is to say if the candidate doesn’t do what he said, what exactly do you do? “I’ll try to get him next election.” Maybe.

Ordinary Americans can’t afford to campaign for election causes like unionization

Okay, so if ordinary voters can’t easily afford those costs typically, then who can? The answer is rich people [and] businesses. Take a situation where everybody by hypothesis knows that the whole population – except for the business guys themselves – want unionization. If it costs, say, $1,000 to campaign – and that’s way beyond everybody’s income ability to raise it, it doesn’t matter how many people want it, or that everybody knows already that people, if you come out to them, they’ll get it. It’s that you can’t reach anybody with the appeal because you can’t raise the money.

Federal campaign finance limit regulations are easily circumvented

To this day, despite all the noise about small contributions, and particularly on the Obama campaign, which made a big pitch that they were a small contribution group, we now know they were not. They were encouraging their people to break their contributions into small bits, often $200, and contribute over and over. And the studies that initially started reporting that they were small contributor-driven — I know the data sources that they worked on – neither they nor the data sources have good enough matching programs to enable you to get the same person more than once unless everything is matched – that is to say, you know, the junior, the address, you change a middle initial and stuff like that you won’t typically catch it. And so they just miss the repeated contributions by the same folks. They keep recording them as multiple contributions.

12:15 Noam Chomsky – And when Obama did organize a large number of people, and many enthusiastic people – what’s called in the press “Obama’s Army” – but the army is supposed to take instructions, not to implement, introduce, develop programs and call on its on candidate to implement them.

Political power in America passes by default to blocks of wealthy investors who expect — and get — pro-business favors and policies in return

12:36 Tom Ferguson – You know, typically not less than two fifths to 60 percent of your contributions are going to come in from people over $500 and often over a thousand. You can think of a modern campaign like modern war as effectively the equivalent of shooting a dealer display floor full of Mercedes-Benzes at somebody. That’s a lot of dollars. So you need to keep refilling with Mercedes Benzes and that’s hard to do on small contributions. And the other side of it is – the two critical points are the voice is different between a few contributors and lots. And there is no easy follow up. That’s the really critical thing. For instance you can give – a bunch of us, you know, lots of us contributed to Obama. I know a lot of people who did. When they start to do things like appoint, as they did, a former lobbyist for Goldman Sachs as a Treasury Secretary’s Chief of Staff, there’s nobody who can come in and say “Hey, this is way wrong.”

But it happens in much party competition and most industrial states and pre-industrial states for that matter most of the time, that is unless the population is actually organized in a fashion that allows them to sort of do this cheaply and easily. Then power’s going to pass by default to blocks of investors. And they’re effectively going to compete to control the state. So what you need is an analysis of competition within the business community. Now this is competition with some real limits. I mean it’s not as though business communities compete to put themselves out of business. They don’t offer higher and higher taxes on themselves. They don’t offer medical care at their expense. And none of them offer unionization. But they will offer you something different. It’s just historically people offering you public works or something, or often investment in education which has become virtually a formula and the reason it’s a formula is precisely that’s something that benefits its elites as well as the ordinary people – at least those that get it.

The only difference between Republicans and Democrats is “they’re controlled by different blocks of businesses”

Republicans are different from Democrats not because they agree to be different to fool people but because they’re controlled by different blocks of businesses. And while they have a strong commonality of interests on many crucial dimensions, they also really differ.

Political coalitions change with the rise and fall over time of different business sectors. How will coalitions change now that the financial sector has taken a big hit?

14:55 Tom Ferguson – An awful lot of political coalitions in the United States, the condition for existing is that the national income not be failing. When that starts to fail, that forces industries out of whatever coalitions they’re in into new groups because they’ve got to get something that works. This leads naturally to an approach to long-term political change. Look at the rise and fall of different business sectors over time and watch how they sort of come into political prominence and sometimes fall out of it as they get old and sometimes overwhelmed. It’s particularly interesting way to think about the current financial crisis because look, over the last 30 years finance became absolutely the dominant sector in the American economy. It beat even high tech, I think, in the end. It certainly beat out sectors like oil and gas. When you get to 44 percent of corporate profits coming from finance that’s an extraordinary situation. And now that leading sector, if you like, is in complete crisis because of the broader deregulation of financial markets.

Businesses don’t include costs to others in their accounting of profits and losses

16:04 Noam ChomskyYou and I make a transaction, say, you sell me a car and we may make a good deal for ourselves but we don’t price into that transaction the cost to others. And there’s a cost – pollution, congestion, raising the price of gas, all sorts of other things – killing people in Nigeria because we’re getting the gas from them. So it means, say, that Goldman Sachs, if they’re managed properly, if they make a risky loan and they calculate the potential cost to themselves if the loan goes bad. But they simply don’t calculate the impact on the whole financial system. That’s an inherent market inefficiency.

16:47 – <Promotional ad to buy stocks> — Common stock investments have helped to make our country prosperous and powerful. Owning a share in American industry is like owning a share in the future of our nation. But  remember, John Q, there is a risk.

The so-called democratic system is rigged – Business coalitions get to control the state and run policy

17:28Tom FergusonThey actually control the state. They get to run policy. If they get to run policy well what would you like? Would you like your bank to be saved by government forbearance? I mean take that one. Does that sound pretty reasonable? That seems to be going on right now. I mean Bernanke was a client of the banking system and in the depression the Federal Reserve was a sort of captured arm of the banks. And so, in general you may get to run foreign policy. You almost certainly get to a tax law you’ll like. You’ll get labor laws you like. The real question is what don’t you get if you get to run the state.

American democracy – The Myth. Only fools still believe it.

18:03John Bolton, Former US Ambassador to the UN – In democracies, the elected officials are responsible to their own citizens and consider their interests to be paramount. That’s the theory of democracy. A president, an elected official represents the people who elect him. He doesn’t represent somebody else. Now if you have a problem with that, by all means let me know.

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