Public Policy

A Butterfly Flaps Its Wings: From the Powell Memo to the Eastman Memo and January 6th

Published on by Brynne VanHettinga

Part 3 of a 10-part Series:

The Powell Memo Let Loose

“All for ourselves, and nothing for other people, seems in every age of the world, to have been the vile maxim of the masters of mankind.”

Adam Smith, 1776

The wealthy, business elites and the corporatocracy took the advice from Powell’s memo and ran with it. The most obvious strategy was to exert influence in the places of power—where decisions that affect all of us are made. One way was through direct contributions to political candidates. Here in the United States, campaign finance reform (i.e., getting “big money” out of politics) has undergone a cycle of incremental improvements followed by regression. This is due to both the practical need for large amounts of money in order to run for office as well as limits imposed by Constitutional free speech jurisprudence.  Since the disastrous Supreme Court decision in Citizens United v FEC (2010), the amount of money already pouring into political campaigns has grown ever larger. Political committees may now accept unlimited contributions, so long as they do not “coordinate” with a candidate or a party. Although many of the fat cat donors have a political party preference, many of the special interest groups donate large sums to both parties—insuring access and influence regardless of what the people decide about who is elected.

 

Even prior to Citizens United, the Supreme Court eliminated the Millionaires Amendment in the 2008 Davis v FEC decision. The Millionaires amendment had allowed candidates running against an über-wealthy, self-funded opponent to bypass campaign contribution limits. Although the Millionaires Amendment imposed no limit on a wealthy candidate’s ability to spend funds on his own campaign, the Court’s rationale was that the Millionaires Amendment unconstitutionally “penalized” wealthy candidates; that such burden was not justified by any governmental interest in preventing corruption or the appearance of corruption; and that equalizing electoral opportunities for candidates of different personal wealth was not a permissible Congressional purpose. 

According to the FEC, the largest individual donors to Republicans in the 2020 election were Sheldon Adelson ($225 million), Richard Uhlein ($75 million), Kenneth Griffin ($70 million), Timothy Mellon ($60 million) and Dustin Moskovitz ($50 million). The two largest donors to Democrats—Michael Bloomberg ($150 million) and Thomas Steyer ($80 million)—were running for President themselves, so a large part of their donations was likely made to their own campaigns. The Adelson-backed super-PAC decided to support Trump late in the campaign, which likely contributed to Trump’s upset victory.  Thus illustrating yet more evidence of a “pay-to-play” political system.

Interest groups as well as wealthy individuals donate to political campaigns. One might think that these interest groups—who operate from individual donations and pooled funds—would likely be more representative of “the people.”  Yet, here again, we see that many of these groups either represent business interests (e.g., the Chamber of Commerce), or are “astroturf” organizations which appear to be supported by grass roots small donations, but are actually funded by wealthy (and often anonymous) donors:

  1. U.S. Chamber of Commerce   $130 million
  2. Crossroads GPS     $110 million
  3. Americans for  Prosperity    $59 million
  4. National Rifle Association    $58 million
  5. American Future Fund    $51 million

In 1971, only 175 firms had registered lobbyists in the nation’s capital. By 1982, some 2,500 firms had registered lobbyists. The number of Political Action Committees (PACs) increased from less than 300 to over 1,200 between 1976 and 1980, and their expenditures on congressional races increased nearly 500%.  In 1975, total revenue of Washington lobbyists was less than $100 million. By 2006, it was over $2.5 billion.  Although the number of lobbyists and the amount of money spent on lobbying proliferated during the 1980s and 1990s, the number of active lobbyists peaked at 14,837 in 2007.  In terms of both number of lobbyists and money, lobbying has been on the decrease following restrictions and reporting requirements passed by the Obama administration in 2008.

The Federal Election Commission (FEC) is itself a rather toothless organization. It is governed by six Commissioners, three from each of the major political parties. This (unsurprisingly) often results in deadlock. However, Commissioners must be confirmed by the Senate, and so the FEC frequently operates without a full Commission, which hinders its ability to issue rules, conduct investigations and approve enforcement actions. Shortly after the Citizens United decision, the FEC allowed the creation of independent expenditure-only committees, now known as super-PACS. Unlike political candidates, who must build their campaign coffers with legally limited smaller donations, super-PACs can collect six and seven figure donations. This “outside” (i.e., not under the control of a party or candidate) spending has amounted to $4.5 billion since 2010, outpacing “regular” candidate spending and contributing to record-breaking expensive campaigns. Billions of super-PAC dollars can flow instantly into ads and other communications—and they are often hard to distinguish from the ads produced by the candidates themselves.

Capturing the policy agenda with money may have been the primary agenda. But, in order to survive public scrutiny (and perhaps opposition), the oligarch agenda had to be supported with “scientific” sounding logic and argument. Money that wasn’t directly used to influence legislators and legislation was directed into academic-style “think tanks” that provided an intellectual foundation for oligarch ideology. This strategy is termed “preference-shaping,” a technique generally associated with advertising and marketing. When applied to the electorate, preference shaping is designed to insure that—during those few times when ordinary people (i.e., voters) are in a position to make a decision—that they are imbued with the world view, frameworks, and preferences of the plutocrats.

The Heritage Foundation was established in 1973 among a list of conservative notables. The Heritage Foundation receives an average annual revenue of $112.7 million. The Libertarian CATO institute was founded in 1974 and relocated to Washington in 1981. The older American Enterprise Institute—with an average annual revenue of $64 million—has been around since 1938. The AEI provided many of the personnel to staff the George W. Bush Administration. The Claremont Institute, founded in 1979, has become more recently infamous for its former senior fellow John Eastman, a figure (with another memo) who is nearly inextricable with January 6th. These are the sources of foundational ideologies that preach the gospel that allowing a few folks to become obscenely wealthy is good for all of us. This includes the “greed is good” ethos that emerged in the 1980s as well as “trickle-down” (aka supply side) economics—which has actually been disproven by real economists. But you would never know this from the continued promotion of it among economic and political elites.

Campaign finance ethics tends to focus on individual candidates—who is giving to whom in exchange for what favors. But the huge sums of money in our political system have a more insidious (and harder to discern) effect on both democracy and the welfare of the rest of us. It creates a system that is wealth-biased, or based on the presumption that everyone is equally free to accumulate as much as they are logistically able—and indeed are even expected to do so. Those whose only objective is the increase of their own wealth and power are easily able to create a unified and coherent value system.

All the rest of us, however, have a much wider universe of needs and interests: some folks struggle to keep a roof over their head or have enough to feed their families; others are worried about the quality of K-12 education for their children today and the cost of higher education for their children tomorrow. Others have more existential concerns about climate change, globalism, or war. If we can find time, energy, and resources which are not consumed with daily survival, we may be able to help toward one of these causes in some small way. But we will never have the unified clout of plutocrats and the corporatocracy. Indeed, a 2014 study by political science academics concluded that, “When the preferences of economic elites and the stands of organized  interest groups are controlled for, the preferences of the average American appear to have only a miniscule, near-zero, statistically non-significant impact upon public policy.”

 

It’s Official! America is an Oligarchy

Published on by Brynne VanHettinga

OK, the findings in one study do not necessarily make anything official. But this is a joint study by political science professors from Princeton University and Northwestern University with numerous publications to their credit.  Moreover, it more or less corroborates what many of us have suspected for years—our government no longer represents “we the people.”  This is not just a problem with elected officials, but extends to broader social structures that operate to keep the voice and concerns of regular working people unheard on policy agendas.  More people are becoming aware of this, and frustration on both the left and the right has resulted in the anti-establishment movements known as the Tea Party and Occupy Wall Street.

Political scientists describe the process of how policy is formulated, developed, and eventually adopted through three broad basic models. The first model is majoritarian pluralism. This is the “majority rules” model that most of us learn in school.  Indeed, the founding fathers were rightly concerned about the possibility of mob rule, political chaos and “tyranny of the majority,” and so they designed a system of government based on separation of power, checks and balances. This created a conservative bias, which means that all else being equal, it is harder to institute change than to maintain the status quo. The second model, interest-group pluralism, proposes that policy influence is brought about by competition between organized interest groups.  Because these groups have organization and resources, they are better able to develop expertise on a particular issue as well as create an infrastructure where their voices are heard by policymakers.  Both the majoritarian pluralism and the interest-group pluralism model predict that political candidates will tailor their policy platforms to accommodate as many of the competing viewpoints as they are able, thus policy results tend to represent some reasonable manifestation of the preferences of the “average” citizen.

Thomas Dye is a modern advocate of what has come to be known as elite theory. Dye is the author of The Irony of Democracy,  Top-Down Policymaking, Politics in America, and Who’s Running America among other publications on the same issue. In a nutshell, elite theory proposes that: (1) society is divided into the few who have power and the many who do not, (2) the few who govern are not typical of the masses who are governed, (3) elites share consensus on the basic values of the social system and the preservation thereof, (4) public policy is set by, and reflects the demands of, prevailing elites and is imposed downward on the masses and (5) the masses are relatively apathetic and exert little direct influence on elites and their policies.  A corollary of elite theory which combines it with interest group pluralism is biased pluralism. Biased pluralism predicts that it is elite groups—corporations, professional associations, think tanks, chambers of commerce—rather than elite individuals who have the greatest influence on policy.

In the Princeton study, the professors developed an updated analytical model to test the predictive validity of these four political models. First, they identified 1,779 distinct “policy cases” that represented an identifiable policy change and a clearly defined dichotomous “pro/con” response.  They also collected surveys of policy preferences based on respondents’ income level (at the tenth, fiftieth, and ninetieth percentiles).  Prior studies had suggested that each of the aforementioned models had some degree of predictive validity. In this study, the professors used more complex analytics to better parse out some of the confounding variables in the prior studies.  For example, there are cases in which the preferences of average citizens and the preferences of elites are highly correlated.  In such cases, ordinary citizens might appear to “win” on a policy issue, when they have simply been coincidental beneficiaries of elite lobbying.  Alternatively, the general public tends to be more divided on particular “hot button” issues such as abortion and gun control, while elites tend to be more united.  Consequently, in this study, the authors paid particular attention to policy issues on which elites and ordinary citizens disagreed.  The findings are summarized below:

1. When the preferences of elites (wealthy individuals) and net interest-group alignments is held constant, the preferences of the general public have virtually no effect on policy. The authors conclude that “empirical support for Majoritarian Pluralism looks very shaky, indeed.” What this means is that the democratic principles upon which our country was founded no longer apply.

2. Organized interest groups as a whole have a “very substantial and independent impact” on policy. However, when the authors computed separate net-interest-group alignment for business-oriented and mass-based groups, the influence coefficients for the business groups was nearly twice as large as that for the mass groups.  This is due to both the numerical advantage of business interest groups as well as the fact that (unlike the general public) they are rarely on opposite sides of an issue, particularly economic issues.  In essence, the model generally supports interest group pluralism, with the caveat that in the U.S., interest groups are “heavily tilted toward corporations, businesses, and professional associations.”   Moreover, the alignments of these groups are negatively correlated with the preferences of average citizens.

3. The elite theory model also performed well, and the authors suggest that it probably understates the political influence of elites.  For one thing, their data captured preferences in the top 10 percent, but they could not state with specificity how much of this was due to the top 1%, the top one-tenth of 1%, or the more numerous individuals around the 90th percentile. Also, economic elites tend to occupy positions of influence (high social standing and high-level positions in institutions), from which they can work to shape and shift the preferences of others lower in the hierarchy.

4. Finally, the authors examined the effects of policy preferences on the status quo, with the assumption that it would be more difficult when the proposed policy requires the government to act or change something (the status quo bias). In these cases, even when an overwhelming majority (80%) of the public favors change, it is only successful about 43% of the time.  These results suggest a cumulative effect of policy that favors elites, as elite-favored policy tends to become more of the status quo with each passing year.  This phenomenon could also explain the compounding effects of income and wealth inequality, which has also been documented.

The authors conclude by stating, “When the preferences of economic elites and the stands of organized interest groups are controlled for, the preferences of the average American appear to have only a miniscule, near-zero, statistically non-significant impact upon public policy.”  To which I respond, “Why are we not surprised?”

So what does all this mean for most of the rest of us?  There is some suggestion that if “we the people” could form a sufficient number of groups (with a sufficient number of members and resources) we might have a better chance. In essence, organization and mobilization is the key to being heard and impacting policy. But this takes effort, energy and organization, which many of us may not have because we are too busy simply surviving. Another practical problem is how to coordinate the efforts of already existing social change groups who are working on a multiplicity of unrelated or only tangentially related issues. In the non-profit world, the emphasis is on capacity-building and resilience  because—just like working people—many non-profits have to spend time, effort and resources just to manage their funding sources and cash flow, which makes less of this available to the servicing of their mission.  Moreover, non-profits who are dependent on mainstream foundation money may find themselves cut off if they advocate policy positions that are not acceptable to their wealthy funders.

Thus there appears to be a sort of catch-22: it takes organization to affect policy and it requires resources (time, energy, money) to get organized. So if organization presents too many logistical problems for ordinary citizens to effect significant change in policy, what are the alternatives?  Chris Hedges in his 2015 The Wages of Rebellion depicts a downward spiral of more vigorous public protests followed by increasingly forceful counter-resistance efforts and corresponding growth of the police and surveillance state, which will eventually lead to totalitarianism. Hedges argues that when the people have no voice or power in such an oppressive state, there is tantamount to a moral imperative for revolution. The American Declaration of Independence itself proclaims both the right and the duty of the People to alter or abolish any government (including the very one being created) when it becomes destructive of the life, liberty and happiness of its citizens.

So, if “we the people” are not being heard, we might just have to make a lot more noise.

 

Who Should Pay? Egalitarianism, Luck, and Redistributive Policies

Published on by Brynne VanHettinga

Recent studies of egalitarian ethics have attempted to resolve the conflict between redistributive egalitarianism and personal responsibility.  That is, how much of where one ends up in life depends on individual effort or merit as opposed to random luck should make a difference in how much of the surplus should be returned to help support the collective welfare.  In essence, this theory makes a distinction between rewards or losses that are “deserved” and those that are not.

Even the most egalitarian among us can probably agree that someone who works 60 hours a week should earn more than someone who only works 30 hours.  Most everyone can also likely agree that someone with a higher level of skills and training should earn more than someone without this for the same time increment of work.  Many agree that equality of opportunity (which the law should require) does not mean the same as equality of outcome.  Indeed, even if everyone in a society had the same income they would not be the same in how they spent or invested it, or even how satisfied they might be with it.  Others make the argument that so long as the lowest members of society are afforded a basic level of subsistence, any levels of inequality above this is acceptable.  However, the question is often one of how much more is too much, or can any person’s work be “worth” hundreds of times more than another’s, given a finite range of human abilities and only 24 hours in the day.

Egalitarian theory has attempted to address the issue of luck and risk, and proposes that there is an ethical distinction between risk that is rationally chosen and voluntarily assumed as opposed to risk that is more random.  This dichotomy was first proposed by Ronald Dworkin and is represented by the concept of brute luck and option luck.  Brute luck is the unchosen, random variety.  Option luck, on the other hand, is the outcome of a risk that is chosen, presumably on the basis of some probabilistic determination, and the person who chooses the risk can either accept or decline it.

On some level, this argument seems to make sense:  people should “pay” for losses incurred by voluntary risks, but society should cover those that are the result of unpredictable misfortune. Conversely, those who benefit from a calculated risk should be able to keep the fruits of their good fortune, but not so for those who benefit from a windfall. The problem with the choice-of-risk analysis assumes that the choice itself is voluntary.  For example, under this analysis, the “choice” to forego health or property insurance means that the individual should fully bear the risks of loss from unexpected illness or property damage.  However, especially for lower income individuals, the “choice” of purchasing insurance may involve trade-offs with basic subsistence such as food, medicine, or housing.  In such cases, what appears to be a “choice” may really be no choice at all.

Denise Huggins and Catherine Coghlan devised a study in which students of criminal justice studies played a game of monopoly, where they had occasion to select either an illegal or a legal “opportunity card”.  At the beginning of the game, unlike regular monopoly, where everyone starts with an equal number of assets, the students were allocated assets in accordance with the five income quintiles as determined by the latest census data.  Not surprisingly, students from the lowest quintiles were more likely to select illegal opportunity cards, which tended to have the greatest payoffs but also carried the greatest risk.  The purpose of the study was to encourage the (mostly) middle and upper class students to better understand how social structures impact decisions to engage in criminal behavior.  From the standpoint of luck egalitarianism, even the element of choice in risk-taking (what choices are realistically available and the degree of financial desperation) can be affected by one’s position in the social hierarchy.

As with most questions of distributional policy, there are positions that represent polar opposites.  On one extreme are the “you create your own reality/make your own luck” advocates who believe almost every outcome is self-generated on some level. In his book, The Luck Factor, Professor Richard Wiseman has analyzed factors that differentiate “lucky” and “unlucky” people and concludes that one can maximize their chances of “luckiness” by being open to new experience, listening to one’s intuition, persevering in hard times, and having optimistic expectations.  On the other extreme is Nicholas Barry, a luck egalitarian and political lecturer at La Trobe University in Western Australia.  Professor Barry suggests  that it would be logistically impossible to collect sufficient detail about the basis of personal decision, the degree of “choice,” and the impact on outcomes, as well as potential violations of individual privacy, and so the better practice is to “adopt a presumption in favor of equality of outcome.”

I do not claim to have the answer to any of this.  However, I do believe the luck egalitarians have a point in that some of what happens to people is as much a result of where they started out in life and the impact of social structures on their choices as it is their individual behavior.  I also agree that parsing out which is the cause and which is the effect is highly complex even in the case of a single individual, let alone to determine this on an aggregate level.  From a policy perspective, we should probably focus attention on the extremes of the income distribution and leave inequalities in the middle well enough alone.  As a developed society, our compassion should not allow people to perish, especially if they are unable to work because of illness or disability (regardless of whether it is their own fault or not), or are working at below-subsistence wages (even though other work is theoretically available). On the other end, people should reap the rewards of their own effort, but at some point those rewards are compounded by social structures where they reach levels that are way outside the bounds of any individual’s marginal productivity. Indeed, the luck egalitarians have done us a favor in that policy should perhaps concern itself with how political, economic, and social structures (as opposed to individual behaviors) create unnatural inequalities rather than arguing about after-the-fact redistribution.