Reform Week Part III

In 1916, John D. Rockefeller became the world’s first confirmed billionaire. 100 years later the United States alone has 540 billionaires with a net worth of roughly $7 trillion dollars. That’s about 10% of the entire US net worth. There are another 1270 known billionaires in the world, most of whom have extensive dealings in the US. Carlos Slim, for example, owns the American media by owning the New York Times. He may not be able to donate to campaigns, but he can get involved in other ways.

That is, in fact, how billionaires do politics. Giving directly to a candidate is not worth a whole lot to a rich guy due to caps on contributions. Even bundling contributions by getting all of your rich buddies and employees to give to a candidate is just a drop in the bucket to a modern campaign. The real impact is in funding the Super-PAC. A rich guy can give as much as he likes, without a lot of scrutiny from the press or regulators. In this election, just 50 billionaires are responsible for 50% of super-PAC spending.

The problem this creates for the political class is two-fold. If you are an ambitious politician, a Paul Ryan for example, you need to win elections and that means not making any enemies that can cause you trouble. The enemies that can cause you trouble are those who can finance a primary challenger to you in the next election.That means toadying up to the big spenders in politics, even if it means screwing your own voters.

The flip side of this is the fact that the technological revolution has made all of this public. Worse yet, it has made it possible for a challenger to use it against you via social media and internet campaigns. Paul Nehlen is not a well funded or well known candidate, but he is going to force Ryan to run a real campaign this summer. Big shots from the insurgency are flying in to help Nehlen simply to spite Paul Ryan.

The reason is people all over the country, via the miracle of the internet, can see that Ryan is a sellout so Nehlen is getting lots of help in his campaign. None of this would be happening if Ryan was relying on local funding for his campaigns.He would be tending to that knitting instead of ball washing the Koch Brothers at swank Washington DC restaurants. Instead, the third most powerful politician in DC is in primary fight.

The irony is that the technological revolution that created the donor class has also made it easier to spot a politician that is selling his vote. Thirty years ago a Tom Daschle could be a conservative Democrat at home in South Dakota, but vote with Ted Kennedy in Washington. He could do this while his wife made a tidy living as a Washington lobbyist. It was a nice grift, even though it was small time. The money is much bigger today, but it is all out in the open.

To their credit, many politicians have understood the dilemma and sought to mitigate it. Campaign finance reform was an effort to solve the problem, but the Citizens United case turned the virtues of campaign finance reform into a vice. The politicians have lost control of their own reelection efforts as they are now run by outside groups. The modern politician does little other than give speeches to curry favor with the donor class.

It’s an interesting dilemma for Congressman and Senators in that the strategy they often use on the middle class has now been turned on them. The game of “top and bottom versus the middle” has been standard politics in America for generations. Now it is being used on Washington. You either piss off the Wilks Brothers or you piss off your voters. In the modern age, it is an impossible dilemma.

Of course, another aspect to this is the brain drain. It used to be that a gifted political talent sought elected office. Today,the big money is in running super-PAC operations, fund raising operations and policy shops. That’s where the talent goes, leaving feckless grifters like Ben Sasse to be the bright stars of the GOP. The massive void of political talent in both parties is due to the fact the political talent is in the shadow campaign system.

I’ve pointed out previously that the non-profit rackets have become an enormous problem in American politics. One remedy is to pull the plug on the tax provisions that allow donors to deduct their donations. That draws down money flowing into these things. Another way, one that would have to apply to super-PAC operations, is to have full disclosure of all donors and the amount of their contribution.

This exists to some degree with contributions to parties and candidates. Extending this out to super-PAC and think tank contributors would most likely have the same effect it had on campaign spending, which is to diversify the donor base. This would also mean disclosing all salary data. It is the opacity of these operations that makes them so effective so letting the sunlight in would level things up a bit. It’s not a perfect solution, but it is something they could pass and something the courts would accept.

A lot of people reading this will be horrified because they have been conditioned by the libertarian cult to worship rich people. There’s a huge difference between the guy who gets rich building a better mousetrap and the the modern financial buccaneers riding the waves of credit money in the global economy. The former has a stake in his people and society. The latter sees every port as a chance for booty.

Even so, rich people will always be with us, but the concentration of wealth is not healthy for self-government. The Founders understood this which is why they designed a system to make it hard to concentrate power and in the current age, money is power. Having 0.0002% of the population controlling 10% of the nation’s net worth is destabilizing. Having 50 guys running the national politics of 300 million is insane.

32 thoughts on “Reform Week Part III

  1. The American experiment of a democratic republic ended in 1886 following the case of Santa Clara v. Southern Pacific. This was when corporations were given the same rights a individual citizens. This single decision undermined everything your founding fathers had framed in the Constitution. Unfortunately it had the same effect here. Our respective governments can impose all the new amendments, new tax laws, etc. but it won’t make any difference. Corporations will always have more power and more rights over the citizen, effectively creating two distinct classes unequal under the law.

    Read the “Gangs of America” by Ted Nace to understand exactly how and when this happened.

    http://www.gangsofamerica.com/gangsofamerica.pdf

    • You really can’t see the gorilla through the mist, Germany. The experimental republic ended in 1861. It lasted 72 years, an approximate human lifetime.. All that which happened afterward was inevitable, time being the only variable. This version is less of the experimental and more of the inevitable. At the age of 141, it is an apparition inhabiting the form of a well preserved dead body. Nobody can say when it will die because it already is. But by all means let us tinker with this, remove that, and add this other.

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  3. Is it possible the USA has simply become too big and 300-million is beyond a manageable number based on a nearly 250-year old political system? Despite the genius of the American founding fathers, even they could have not possibly predicted your current population nor considered the issues with diversity of ethnicity and religion that your country now faces. Neither could they imagine the impact of the industrial revolution let alone even conceive of the idea that a single private citizen could acquire the wealth, equivalent to that of European kings, within his own lifetime.

    It’s a concern for us here in Europe in what is proving to be a failed EU experiment where an elite central political body, far removed from the common citizen, is trying to manage such a diversity of countries, cultures, languages and attitudes. It simply doesn’t work.

    • Well, they did envision a “federal” system where the states had most of the power and the feds only dealt with international relations, trade, and war. They even passed an Amendment clearly reserving all power not specifically assigned to the federal government in the Constitution, to the States and the People.

      Not their fault we allowed it to be corrupted and ignored.

    • It’s a concern for us here in Europe in what is proving to be a failed EU experiment where an elite central political body, far removed from the common citizen, is trying to manage such a diversity of countries, cultures, languages and attitudes. It simply doesn’t work.

      The people who support the EU must have missed history class the day they studied the Austro-Hungarian Empire. It was the cracking of the fault lines in that conglomeration that started the First World War, precursor to the Second.

      Jean Monnet and his acolytes thought they would prevent future wars by building the same sort of structure whose instability caused two big ones. With luck, this one will break up peacefully.

    • I think our representatives should represent about the same number of people they did at the nations founding. If we had 2k of them instead of capping the number like happened in the teens they would be more responsive to the will of the people and maybe more trouble to buy off than they are now.

      • Not sure why it wouldn’t be easier to buy them at this point in a disfigured republic.

      • Quite so, each Rep is meant to represent 30,000, as it was before the 20th C.
        6-10,000 Representatives means no few can rule the rest.

        • I meant to imply that in this era it may be easier to buy 10,000 reps than 435. What we need is a lot less representing, not better representing of things that never should have been represented by government in the first place.

          • If a member of congress is about as rare as a state legislature I believe it would be harder to ignore his constituents. They would at least live in the nearest town, go to the same churches, shop in the same stores. The number would be to great to house in Washington, the majority would be voting electronically. Key members would still be bought, but it’s less practical to buy 2k souls than 200.

          • I would find it easier, but that’s just me. You seem to think that the problem is that politicians are being bought. The problem is that the electorate is being bought.

  4. I used to be fine with those that had more, often much more, than me. I was happy and satisfied with my life and was willing that they buy their boats and planes and have their parties, etc. Had nothing to do with me. Over the past 2-3 decades, though, they have more and more (or perhaps more and more blatantly) used their ever greater wealth to buy my government. The mask is off with Obumble and Lurch both praising the wonders of “borderless globalism” and the oligarch’s playing right along in the band. I’m not nearly so sanguine now.

    There must be a point where you have so much money that it ceases to have meaning. That point where you know that whatever random “want” comes into your head, you can satisfy it regardless of the cost. I’m thinking that you should probably be satisfied somewhere just a little short of that point. I’m thinking that beyond that point we should be taxing wealth rather than income. I’m not sure where the optimum point is, but I’d see it as something short of $billion. I believe it’s time for the plutocrats to exchange their arrogance for fear.

    • Dennis, last time I checked, billionaires don’t have it in dollars, they have it in stock. You know, trucks, warehouses, stuff on the shelves, payroll liabilities. If the Bernie’s of the world manage to take it away from them, do we really think he and his supporters can manage it?

    • For the billionaire crowd, money is just a way of keeping score. This is the only defining characteristic of wealthy people that matters. Telling a billionaire that he “has enough money” is like telling the New England Patriots that they should stop scoring points when they’re up by seven in the third quarter. It’s pointless and insulting, as competitiveness and the striving towards excellence is a virtue. The problem begins when the rich start to think that they are better people for their wealth, and then follow that line of thinking to its logical conclusion which is, since I’m so much better, I should be telling everyone else what to do. Pride and arrogance are their vices, not greed and gluttony. The truth, of course, is that the only thing they are “better” at, is accumulating dollars.

      • …”Telling a billionaire that he “has enough money” is like telling the New England Patriots that they should stop scoring points when they’re up by seven in the third quarter.”…

        That metaphor is not completely accurate. Just going by simple income multiples, a billionaire to a millionaire sets the score at 1000-1.

        But let’s play out the football analogy, for what it’s worth.

        If the score was, say, 62-7 (as it was during Dan Marino’s last game against the Jacksonville Jaguars on 01/15/2000) the Jaguars’ coaches went to their backup QB’s and did their level best to deliberately not break the record for the league’s worst loss. Marino and Johnson left the field badly defeated, but not crushed.

        I suppose that the Jaguars’ actions could be construed in some way as the nobility of sportsmanship, something the exceedingly wealthy (and many folks, lately) seem to show little regard for. The mantra generally seems to be “He who dies with the most (and biggest) toys wins.” That does not bode well for a “non-Marie-Antoinette” ending.

    • They were able to buy your government because we let it get so big it was worth buying – then we elected people willing to sell it.

  5. Simplistic as though it may sound, decentralization is the remedy to practically every societal woe.

    • The Founders were, or made themselves, into scholars of European governments over the centuries (including ancient ones); not merely nations but provinces, cantons, burgs of every sort, to study and weigh the comparative successes and burdens caused by various forms governments. The result was separation of branches of government, bicameral legislature, and a great separation of local and federal responsibilities. They greatly respected Montesquieu and knew they must overcome his dictum against attempting a republic of large size. Government has not evolved to meet the challenges of modern America, it has devolved into internal empire. Evolution, which always has many losers (that is the fucking point) happens under decentralization, and dies under centralization. The religion of equality worships centralization and uniformity.

    • I think the founders would agree that decentralization is the most practical remedy we have to our current dilemma of an over reaching ruling class. They actually had the foresight to legislate a solution in Article 5:
      http://www.conventionofstates.com/solution
      I am surprised that I have not seen much discussion about Article V on this blog. Is this not the most practical way we have to take back what has been stolen from us? I submit this question to the brain trust and would love to see some comments.

  6. Karl Marx, that bastard, was basically right: Oligarchs collude. When liberals blather on about economics, they sound like they’re time travelers from 1884 griping about Standard Oil. But the basic idea is, sadly, correct — only difference is, you don’t need to gouge the consumer and crush the worker directly when you can get politicians to do it for you via the tax code and “comprehensive immigration reform.” He was even right about the short-term solution: oppress the proletariat enough, and there will be revolution. His long-term solution is impossible, because human nature, but there’s going to have to be a cultural shift. Rockefeller lived a very different life from even his fellow rich Americans, but he was still, at bottom, an American. Culture is prior to economics, and economics, it turns out, is the great solvent of cultures.

    • One of the many bad outcomes of the Cold War was the demonization of Marx. The old commie was wrong about human nature, which was no small thing. But, he was right about some things too. I like to point out that Sanders is right about most of his critique of modern America. His solutions are insane, but he criticism are mostly sound.

      • True, Marx the economist was comically wrong, and Marx the Hegelian philosopher (the real Marx, as everyone forgets) was batshit insane, but Marx the social critic was spot on about a lot of stuff. Ditto Lenin — Imperialism, the Highest Stage of Capitalism nailed the causes of WWI, and the early 20th century in general, better than just about anyone. I think that’s the reason so much art (and/or effective pop culture) comes from Left-ish folks – they feel like jaundiced observers of an unjust system, perpetual outsiders. There’s great “conservative” art, of course — I’d argue that all truly great art is “conservative,” whether or not the creator intended it — but people who consider themselves Leftists see the causes of social phenomena as clearly as they completely miss the consequences of their proposed solutions.

        • Imperialism is not the highest stage of capitalism, but the lowest. See Burke above.

      • Marx was right about some things the same way a stopped clock is right about some things. Oligarchs collude? Powerful people have always colluded; that’s how you get powerful in the first place. Any idiot could see that. The same logic applies to Bernie Sanders. He’s a fringe player, and considered a clown by everybody, so he’s allowed to say what most smart people in Washington DC know, but don’t say because it will disrupt their livelihoods. Bernie is like the jester who some wag at the King’s court convinced to run around the country putting on shows in order to make a fool of himself for the general amusement of the aristocracy, but then the joke unexpectedly got out of hand.

      • “His solutions are insane, but his criticism are mostly sound.”
        Burke–“It is very rare for men to be wrong in their feelings concerning public misconduct; as rare to be right in their speculations upon the cause of it.”
        I would also point out that the preferred solution of the Prog to direct the path of government would be to replace 540 billionaires with 540 visionary and utopian philosophers (likely funded by billionaires). Marx was funded by Engles.

      • Sanders has mastered differential diagnosis, but his cure is always “apply leeches”. But that is why he rings authentic with a large audience on both sides.

  7. Campaign finance reform…what a pretty idea.
    As long as it coincides with the death penalty, and “estate redistribution”, for abuse of “non-profit” orgs, and “tax exempt” entities.

  8. “That’s about 10% of the entire US net worth.”
    I guess you mean …that’s EQUAL TO 10% US net worth.
    Their actual “worth” is 100% of THEIR worth, so far.

  9. The Founders also designed a system with a small and distant federal government. In 1800, a truly rich man would have little interaction with the Feds unless he was engaging in international trade. Barely enough money flowing through DC to make a living as a grifter in that swamp.

    Now we all deal with the federal government daily. Wealthy individuals and corporations must have accountants, lawyers, and lobbyists to navigate our Byzantine system.

    • I’ll get to that tomorrow, but the evolution of the Federal state was due to perceived defects in local government. The argument was that small groups of people operating in close proximity could easily collude against public interests. It is, of course, entirely true, but that is just the nature of man. Reformers of the last century looked at the Federal government as a solution to the defects of state government, namely segregation, but localism as well. That was fine when the world was a huge place. Now, isolated national governments are increasingly defenseless against predatory global operators.

      • Don’t forget the Civil War! Take a guy marching off to war in April 1861, knock him into a coma, and wake him up in April 1865 — he’d barely recognize the country he came back to. Before, he would’ve only interacted with the Feds at the post office. Now they could draft him, tax him (in entirely new, standardized paper money), they owed him a pension if he got hurt in the service (up to and including a permanent stay in a proto-VA hospital). The suspension of habeas corpus, censorship… not to sound like a Lew Rockweller, but Lincoln really did run a tyrannical one-party state there for four years. And once you cede a power to the government, you never, ever get it back.

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