Money, Politics, and Cross Cutting Cleavages

So, this post was spurred by reading a couple of different posts on the Economist today (one on Bob Herbert, the other, less influential one for this post, on ideology and in particular the bit about politicians serving special interests as corrupt, which I find nonsensical since I believe all interests, including the people at large, are special interests.  If they weren't why do we still have the home mortgage deduction and low gas taxes, those individual special interests aren't strong enough, the people at large however preserves this folly.) , as well as by Bob Herbert's column.

Money influencing politics is a common, and in my opinion, lazy correlation to draw and not clearly causal of anything.  Concentrations of wealth have always been around, the question is whether and to what degree that influences the political process, and to the extent that it does how to forestall this.  To figure that out requires that we think for a bit about how money might influence the political process, beyond the easy way of campaign contributions, which I've read enough on to believe they aren't highly correlated with elections and thus probably not all that influential.

I believe that a better way of looking at it is solely in the terms of interest group politics (and, to pick on an earlier linked post, something that I think all politics is so it's impossible to distinguish between corrupt politicians serving special interests and others).  Specifically, I have in mind Federalist Paper Number 10.  In my view, the great and aggregate interests particular to the wealthy have benefited from an ever larger number of innovations that have made coordination amongst them easier as well as making their interests more uniform while reducing the influence of smaller and particular interests in breaking up the great interests.  In addition, great and aggregate interests that used to have the power to counter the interests of the wealthy, such as labor unions (not that I like labor unions, I believe they deserved what they got due to their own bad policies, but despite their flaws they were an aggregate interest that was able to oppose the wealthy on the national stage), have declined in power and lost their ability to act as a separate countervailing interests.



I don't want to go into a long history lesson, but feel a few remarks are necessary contrasting the economy of the founders with that of today to explain how our Constitutional structure is inadequate to modern interests but acted as an effective counter previously.  The biggest difference is that in the 18th century the economy was virtually entirely local, the section of it that was interstate and international was tiny compared to the local trade within the agrarian sector and between that sector and small towns.  Almost all production and consumption happened within something like 100 miles (the specific number varies and I'm not pretending this is an accurate estimate, my point is the scale).  So, while manufacturers and commercial interests may care about the large scale national economy, they were relatively easily checked by purely local economic interests.  In addition, few financial and legal institutions existed that would allow an individual to be able to act in a number of these localities.  So while all steel manufacturers might share an interest in exports, this paled in comparison to their interest in the local labor market (since labor wasn't all that mobile in between local labor markets) and local qualities such as access to coke and water transport.  Thus, even among steel manufacturers, coordination was difficult because their individual local interests frequently loomed larger then their collective national interest allowing cross cutting cleavages to weaken coordination and tendency to faction.

Modern economic, technological, and social developments have swept these checks away.  We have a national labor market, technical advances have left few industries tied to individual locations, and institutional innovation have led to individual companies owning plants and distribution points in all 50 states.  Expecting local interests to swamp great and aggregate interests doesn't work when Wal-Mart has a store in every other town and auto manufacturers have partisans, either through plants, parts suppliers, or dealers, in virtually every town.  Great and aggregate business interests throw so much wealth and potential revenue around that they can cause states and localities to engage in bidding wars for the best deal for them, with little concern over the net effect on the economy of these special carve outs.  No longer is a steel manufacturer tied to having to listen to how a town wants to regulate them because the local population has control over local coal supplies and the waterway, transportation costs are low enough they'll just ship it to a town that offers a better deal.  The growth of the finance industry over the past 30 years provides a commonality of interest among those possessing and living off of wealth (or more particularly investments) that provides even greater uniformity of interest than large scale business interests.

Now combine this with the near complete lack of strong, national level interests opposed to these interests and we get exactly the situation that Madison is warning about in Federalist 10.  The problem isn't that this faction exists, that's perfectly natural, the problem is that they are organized and have a great deal more commonality of interest due to modern innovations than any other group acting on the national stage.  They long ago completely overwhelmed local interests (being from a big state this is very obvious, in smaller states there is a great deal more commonality of interest between the biggest economic actors and the population generally than is true over wider areas, Madison mentions this as well and he's completely correct about it) which has weakened the ability of these interests to check general interests.  This is a natural development of market integration, which is overall a good thing, so there's no going back on this one.

Addressing this issue will be difficult, and likely require Constitutional reform (and thus, not happening).  The big problem is that since local interests are too badly outweighed by national level actors, a representative is going to be far more worried about whether a plant moves and jobs are loss in his district than over whether checking that company nationally might be in the general interest, that only national level actors could act as a counter weight and restore the cross cutting cleavages that our government depends on for its proper functioning.  It's hard to see these interests arising organically, who's going to be able to duel with the auto companies, oil companies, Wal-Mart, and Wall Street?  The University system?  Labor Unions?  Climate Scientists?   Scientologists?  There's really no one that has the scope of influence and the ability to act at the national stage on an equal level with financial and business interests.

The solution I see is to expand representation (Madison already does say that too few representatives can weaken a Republic, while I agree, I think local interests have been too decisively outclassed by corporations and the financial industry for this to work, scope of representation is an essential counterweight) in the legislature to the nation at large.  If politicians had to pitch their message to the nation as a whole, rather than to their particular district which is likely to be more dominated by particular interests that can operate on a national scale, than the people as a whole become a special interest able to oppose other national level interests.  This at least means that the majority would have a voice in the legislature, which it currently lacks.  Since national interests play an ever greater role in our democracy this reform becomes increasingly urgent.  While national issues are far from the sole concern in national elections for local representation, across the aggregate of our nation these issues certainly do play a large role.  And when a business can have a location in most districts, or at least a few influential individuals who have a strong stake in a nationwide company, these interests play an outsize role in our national politics compared to interests unable to organize on this scale.

How much will this do, I have no idea.  But I think it's more likely to have an effect than hoping for resurgent labor unions or for people to start listening to university professors.  The Tea Party is of course a grass roots response to these national interests, though its members are fairly well off on the whole, but it is questionable whether they can maintain the kind of long term pressure that a company like Citibank, GM, or Exxon is able to.  I do want to emphasize one last time, I don't think it's money or wealth that are the problem, I think it's the lack of other interests able to act on the national scale.  If other interests could act on this scale, there would be a check on them restoring our Republic to balance.  As Madison also said in Federalist 10, it's not possible to remove the causes of faction, only to control the effects.  Getting rid of or lessening the power of this faction is not possible or desirable, raising up a countervailing power to control the effects of this faction is possible and has been done within our system before.  Until this countervailing power is realized, we will continue to witness the effects of unchecked faction.