Part 3. Here´s Your Bonus
“He who has the money is always the master of the other.”[i]
In the United States we do not have a democracy. We never did; we never will.
Preposterous? Indeed, that conclusion is contrary to everything anybody has ever said.
Well, almost anybody ...
Aristotle said it first, 2,000 years ago. If he were alive today, he would say America had, until recently, a polity, i.e., a hybrid of oligarchy and democracy moderated by a large middle class.
The American Founding Fathers, too, were fully aware that the system they were building was a polity even though they never called it by its real name. A forthcoming post will present evidence.
Aristotle thought the polity was the “best” type of government because it allowed the rich and the poor to peacefully coexist:
“There is no risk, in such a case, of the rich uniting with the poor to oppose the middle class: neither will ever be willing to be the subject to the other; and if they try to find a constitution which is more in their common interest than the ‘polity’ is, they will fail to find one.”[ii]
Where is a polity headed? Aristotle: a polity “is incline[d] more toward democracy.”[iii]
Democracy is a direction, not a place. “A” north or “a” south does not exist; you will never arrive there.
Stated differently, democracy is a job that never gets done.
Part 1 of this series noted that the American polity ended in 2008-2009. It was swept out with the tide of billions of public dollars to the oligarchy.
That moment was a decisive turning point in American history. Beyond any reasonable doubt to any sensible person, we no longer have a polity “inclined more toward democracy.” Our political system is now an oligarchy with democratic residues, overtures, leitmotifs.
It was an incredible achievement that the American polity lasted for over 200 years. Incredible, because any coalition of oligarchy/democracy is inherently delicate, strained. The polity’s Achilles heel is that the equal partners are not equal. Montesquieu: “It is impossible for wealth not to give power.”[iv]
Wealth it is, then, that threatens and eventually destroys a polity. Aristotle on oligarchs:
“[Forgetting the claims of equity], they not only give more power to the well-to-do, but they also deceive the people [by fobbing them off with sham rights]. Illusory benefits must always produce real evils in the long run; and the encroachments made by the rich [under cover of such devices] are more destructive to a constitution than those of the people.”[v]
Part 1 offered this basic strategy for a Second American Revolution:
“If you want to revive the polity, you must revive the democratic component. To revive the democratic component, you must weaken the oligarchy; such is the correlation of forces. Any approach that does not take that weakening into account is nonsense.”
History records many attempts to destroy oligarchies by seizing their money. History also shows the outcome: in the words of Shakespeare, “It cannot hold. It will not.”[vi] The crash of the so-called revolutionary governments in Eastern Europe is only the latest example.
The collapse was inevitable because how wealth was created[vii] went untouched. Hence, an oligarchy reappeared -- more savage and immature, like everything else that is repressed.
There is a second reason why kill-the-rich schemes are doomed. Innovative productive capitalists and other entrepreneurs[viii] are of cardinal importance to economic development. This reality has been recognized by economists as diverse as Karl Marx (unlike his sleepwalking disciples) and Joseph Schumpeter (Capitalism, Socialism and Democracy).
Aristotle’s base was the “common interest.” I wish entrepreneurs well. The goal sought here is not to destroy the oligarchy -- successful entrepreneurs are members of it. Rather, the objective is to reduce the political impact of money. Not eliminate (which is impossible) -- reduce.
No reform can achieve that reduction. That is why we seek no reform. The Second American Revolution is about changes of, not in, the oligarchic political system.
Some readers have voiced distress over the word revolution in this series’ title. Revolution here does not mean necessarily the prevailing notions of “novelty, beginning, and violence”; not an irresistible, “mighty undercurrent”; not an evolution in reverse as in a restoration or “swinging back into a preordained order” of some early time before things supposedly went wrong,[ix] but literally “re”-evolving -- that is, evolving once more, over again, culturally, into a non-preordained order.
To those who object to that nontraditional definition: how can any revolution be a real without evoking a revolution in the meaning of the word revolution?
“Re”-evolve. Revolutionary changes always begin at the beginning …
The political impact of money has its corner stone in political campaign contributions. Once laid and set, the rest of the building follows.
Dig up the corner stone, then. Start over.
To politically weaken the oligarchy = reduce the political impact of money. To reduce the political impact of money = revolutionize the funding of political campaigns.
On a practical level, reining in the power of money in campaigns is much easier than you think. It is also -- now that the polity is gone -- a lot harder than you ever imagined.
I want to caution you, Dear Reader, we will present a solution that never was and never will be implemented in America.
* * *
Here’s your bonus.
Every year at Christmas time in corporate board rooms across America, the same scene is acted out. Company presidents assemble their top executives, and joyfully pass out checks in sealed envelopes.
The executives smile appreciatively. There it is! They start dreaming about a family vacation to Europe, a new Mercedes, a sailboat.
The presidents glance over their shoulders; yes, the door is closed.
Oh, by the way. We have this little project in mind, Build A Better America. Sure hope you’ll help out. Nothing, absolutely nothing, mandatory, you understand.
The executives look longingly at the envelopes. They wonder how much is in there. Wonder is the beginning of philosophy, Socrates said. In this case, wonder is the last gasp of self-esteem.
Then, the executives pass back the envelopes.
Now it’s the company presidents’ turn to smile appreciatively.
That is how some political action committees (PACs) raise money to contribute to political campaigns. No wonder PACs are often singled out as THE corrupting force in American politics.
In reality, not all PACs are alike. Many education PACs, for example, collect money from their members in small, honest, freely-given donations. Such PACs truly have money from -- as politicos off camera call them -- “the little people.”
The people on one hand, the PACs on the other: do you see why that is a false dichotomy? If so, getting rid of PACs per se is not the answer.
Politicians loudly proclaim and defame to the stars above that their campaigns are supported by thousands of small individual contributors, as opposed to mean, nasty, terrible, awful PACs. Watch out! If you get a chance, corner such candidates and ask them two questions:
1. You are implying your campaign is being paid for entirely by thousands of small contributors, i.e., “the people.” Are you denying that you took any money whatsoever from PACs?
2. Assuming you took some PAC money, tell us what proportion of your total contributions came from PACs and what proportion came from “the little people.”
Watch their feet; you’ll see The Redneck Shuffle. When they respond, “Gosh, let me get back to you on that,” smile and tell them: “Gosh, that is exactly what somebody said you’d say.”
Politicians lie because they are aware of the appalling reputation of PACs. No wonder that reformers and politicos love to talk about outlawing PACs, putting a lid on the amount of self-funding by rich candidates, etc. To make a long story short, they want you to believe that campaign financing can be cleaned up by limiting campaign contributions.
I’ll tell you here and now what every politician knows: limits won’t work. Anybody who wants to drop a lot of cash on a candidate will find a way to do it. In fact, much of the corrupting activity the politicos moan about was generated by the very limits they say are so wonderful. PACs are a perfect example. They were created to get around the legal $1,000 limit on personal individual contributions.
Another illustration of how and why limits don’t work:
As far as I know, every state has limits, often $50, on the amount of money that can be contributed anonymously. I recall going to a neighborhood party for a candidate. Everybody and his dog showed up. Lobbyists, too, were present in force -- they were the wall-leaners with suits on and power red ties, nodding and eating, and drinking. In the middle of the living room was a huge fish bowl into which the neighbors were cordially invited to drop money. I saw numerous $100-dollar bills. Go figure. The public, official, legal campaign report showed only the aggregate total contribution: “Neighborhood event: $30,000” (or whatever).
Here’s another, entirely legal trick: The Speaker’s Fund. The Speaker is the leader of any house of representatives. You give money to the Speaker, and he gives the money to candidates he likes. None of the legal reporting requirements for PACs apply; your name, I promise you, will never appear on any list. Why? This gimmick is simplicity itself. The Speaker isn’t a PAC -- he’s a guy. You gave your money to a guy, that’s all. No law against that.
The land of campaign contributions is paved with double and triple-bottomed boxes. They are why non-corrupt people end up promoting corruption. To give you an example:
While working as the chief aide to a House Majority Floor Leader, I saw a proposed law that would have required all contributions made in an election year, no matter the amount, be reported down to the penny, including the name and address and employer and occupation of the individual contributor (even if a PAC was involved), the date the contribution was made, whether the contribution was a check or cash or in-kind (for example, free use of a car), and so forth. Sounds great, doesn’t it? I’ll bet if you were a legislator, you’d vote for it -- in fact, proudly co-sponsor it, then brag about it in your campaign literature.
Congratulations! If the bill just outlined became the law of the land, you would have created a monster -- mayhem in which political incumbents would run amuck. What the proposed law stipulated was that all contributions made in NON election years would NOT have to be reported. You don’t think so? Read it again. Did a light go on? You see how your good intentions can be waylaid to create the very thing you want to destroy?
I thought about writing a book, maybe two, about campaign money scams I’ve seen. No need to do it now that you’ve got the idea: campaign reform laws are written to be evaded. How could it be otherwise? As any insider in the campaign world knows, reforms create weasel holes faster than they plug them up. That is why the oligarchy and politicos love reforms.
I think all campaign donations need to be reported in full before -- not after -- elections. Other than that, reform blah-blah dances around the real issue: the absurdly high price of political campaigns. That high cost is how the oligarchy gets its foot in the door.
How high is high? In 2004 the total cost of the Bush/Kerry presidential general election campaign was $654 million. Four years later, the Obama/McCain campaign cost $859 million. That’s a 31% increase. I won’t go into campaigns for thousands of elected offices across America.
When an oligarchy rules, not only does money talk, it has something to say: Me First. The exponential rise in the money thrown at presidential campaigns is only one indicator among billions that a new political system is in place.
The real cause of exorbitant and soaring campaign costs is media advertizing. Ask Obama and McCain what percentage of their campaign budgets went to TV stations. Be sure you’re sitting down when they answer, because your mind is going to wobble.
The solution is simple, obvious. As part of their public programming responsibility to acquire and maintain Federal Communications Commission licenses, TV stations should be required to broadcast campaign ads at no cost.
The time of day candidates’ ads are shown could be set by a weekly rotation.
You’ve probably never seen that idea before. Such is the silence -- the omerta -- censuring this subject. The hush of money shows the incredible power TV station owners have.
A lot more power than any political action committee.
There are other ways to control TV costs. France and other nations set aside a block of time, usually early in the evening, in which political ads run back to back. The show runs for a 20 minutes or so, then regular programming resumes. I witnessed that procedure over many elections. Works fine.
Some readers no doubt believe it is the oligarchy on one side, the media on the other.[x] That is another, classic false dichotomy. Media magnates are just as much oligarchs as any Wall Street hedge fund mogul or computer tycoon.
And so, it turns out that the soaring, sky-high costs of campaigns are the oligarchy’s favorite game: heads we win; tails you lose. In that setting, the revolutionary change proposed here for free broadcast time for political ads cannot and will not take place.
That change is essential, but not sufficient. As Montesquieu indicated, any oligarchy will always be influential. All we are saying is their influence needs to be balanced by a revival of democracy to the extent that he who has the money is not the master of the other. That situation, which would be new in world history, is a defining characteristic of the Second American Revolution.
In the end, there is no end. Achieving a new, better oligarchy/democracy equilibrium is a task comparable to doing the dishes. It never gets done.
[i] « celui qui a l’argent est toujours le maître de l’autre […]. » Charles de Montesquieu, De L’Esprit des lois, Œuvres complètes II, Bibliothéque de la Pléiade, Gallimard, Paris, 1994, p. 472. (Book XIII, Chapter XIX).
[ii] Aristotle, The Politics of Aristotle, translated and edited by Ernest Barker, Oxford University Press, New York, 1962, p. 185. (Book IV, Chapter XII).
[iii] Ibid., p. 174. (Book IV, Chapter VIII). Brackets made by translator.
[iv] « il es impossible que les richesses ne donnent du pouvoir […]. » Charles de Montesquieu, Considérations sur les causes de la grandeur des romains et leur décadence, in Œuvres complètes II, op.cit., p. 113. (Chapter VIII).
[v] Aristotle, op:cit, p. 186. (Book IV, Chapter XII). Brackets made by translator.
[vi] William Shakespeare, “Timon of Athens,” Act II, Scene 1.
[vii] Under self-styled “communist revolutionary” regimes, the state became the one and only capitalist. State capitalism is still capitalism; even Lenin recognized that truth. So much for “communist.” As for “revolutionary,” the same contradiction applies. Marx defined revolution as a change of economic systems. If that definition is accepted, then no revolution occurred in Russia or the rest of Eastern Europe. In reality, those state capitalist governments were regimes of, by, and for middle class rebels.
[viii] Finance capitalists -- who received the lion’s share of the Bush-Obama megabucks giveaway -- must be differentiated from productive entrepreneurs. Indeed, finance capitalists are now the biggest enemy of independent, creative capitalists:
“The relentless pressure on profits was a recurring lament among multinational managers and a central paradox of the industrial revolution. In an era of declining labor wages, proliferating billionaires and awesome global enterprises, many people would intuitively reject the complaint as fraudulent. Nevertheless, the corporate anxieties were quite real, especially for manufacturing firms. The basic dynamics of technological innovation -- more from less -- had the perverse effect of depressing returns per unit of production while simultaneously increasing the new capital required to invest in the next round of innovation. [My emphasis] This squeeze left even the largest companies exposed to the threat of weak profits and capital shortages.
Across the last thirty years of globalization and technological change, corporate profits in the United States suffered almost in direct relation to the pace of revolution. In the booming 1960s, profits were typically 11 or 12 percent of U.S. national income and peaked at 14 percent. By the 1980s and early 1990s, they had declined to around 8 or 9 percent and fell as low as 6 percent. Manufacturing, in particular, used to be much more profitable than service industries, but was now less so. The wave of corporate restructurings that shed workers and factories in the first half of the 1990s succeeded in reversing the trend -- after-tax profit rates were booming again and reached a twenty-five-year peak in 1994 -- but it was not yet clear if this turnaround was permanent.
The capital insecurities, however, were deeply embedded in corporate balance sheets: U.S. companies had become much more dependent as borrowers…Corporate profits were 34 percent of corporate debt in 1960; by 1990, profits were only 15 percent of debt. [My emphasis]” William Greider, One World, Ready or Not, Simon and Schuster, New York, 1998, p. 83.
[ix] Hannah Arendt, On Revolution, The Viking Press, New York, 1965, pp. 18, 36, 38, 40, 42.
[x][x] The American model of media financing via advertising was never the only option or a done deal. A battle took place in the first half of the 1900s over public versus private financing. The main event featured Arthur Morgan versus the oligarchs. The oligarchs won. For a superbly documented, blow by blow account, see Robert McChesney, Rich Media, Poor Democracy, University of Illinois Press; 1999.