By Wealth for Wealth: Adapted to Maintain

By Wealth for Wealth…Adapted to Maintain a Class Based Power Structure.

Introduction

The following was originally part of a preamble for The Public Enterprise Corporation Act written in 2014 which has since evolved into Centers for Economic Planning. The general arguements and analysys was used to substantiate half of a sentence. The first half is the United States was founded as a nation by wealth for wealth which is the focus of another article, and the assertion this article substantiates and has adapted to maintain underclass contentment while preserving a class based power structure.

A short summary is the article demonstrates that despite concessions since the ratification of the constitution, that the United States still has a classs based power structure.

This substantiation draws on data I used in other material, which is why the note is based on the 2012 election and not the 2016 election. It leans heavily on a 2013 paper published by the most prominent academic authority on the subject of money in politics Thomas Ferguson, along with his esteemed colleagues Paul Jorgenson, and Lie Chen. The trio has published a new paper in the series, examining the role of money in politics in the 2016 election as well as exploring popular points of significance in determining the cause of the result.

There was something a precedent set in the 2016 election which was the ability of Bernie Sanders to be fiercely competitive in a major primary race through largely small contributions. Trump, although not nearly to the degree of Sander received a sizable portion of campaign contributions through small donations. However, Trumps victory, the evolution of poll numbers heading corresponds to huge infusions of money from elite wealth and industry. This is to say that although Bernie was able to remain competitive in the primaries through small donations, does not mean his campaign will not suffer in the general election due to a shortage of funds. More on the Bernie exception is mentioned after a paragraph relevant to the precedent.

The reason I mentioned the date of the material is because although not the most current, the material I am drawing on is not dated. It is a snap shot less than a decade old with no significant changes occurring in regard to the exercise of power in elections. In fact, I could draw on data from the 2008, 2004, 2000 elections and so on and so forth, and each election would support the conclusions that contribute to the substantiation of the fact that wealth and wealth through industry directs legislative power at the exclusion of the underclasses; which means the United States does not have a popular form of government because the amount of wealth required for influence is held by at most a few tenths of a percentage of the population, and is expressed most visibly and directly through the corporations they own. Of course pre citizens united may look differently than post citizens united, and pre-1994 may look different than post 1994, but at no point in US history, is there a time when the United States has been a government not directed by the interests of wealth.

Some would argue incorrectly that civil rights for black people, women’s suffrage, and the new deal were times when the government was directed by a popular interest and not the interests of wealth. However, in order to maintain the power structure, as was the case in the midst of the depression, concessions had to be made to prevent popular discontent from erupting and striping the power of wealth to direct; these were systemic threats that could be addressed without altering the systemic order. In this, popular interests are served to serve the most fundamental interest of wealth, which is preserving a system where wealth directs power.

Some of the content in this note was written during the Obama Administration, and so it is critical of the administration that held power when this was compiled, but the content should not be misconstrued as me having rightest leanings simply because I am critical of democrats. I do tend to be more critical of democrats because they rhetorically pander to the interests of the disadvantaged and poor but their actions are consistent with the interest of their financiers. Whereas republicans openly express they are for the interests of wealth and lie only when they imply policies will help the middle class. In short, the republicans require very little exposure because they expose themselves.

The data and the arguments in this paper are solid but I do intend to write something along similar lines because I can write it more succinct and more definitively. Which isn’t to say the points contained are not definitive, only that a more simplistic structure facilitates the ease with which points are comprehended.

Abstract

I rely on the work of Ferguson, Jorgensen, and Chen to establish how much money is required and if the amount required is beyond the means of ordinary Americans.

Large firms supporting both candidates in a race is established and the motive considered.

I cite two studies that demonstrate the return on investment in regard to campaign contributions including lobbying.

The Affordable Care Act is mentioned in brief to demonstrate the influence of industry on legislation as well as how industry supports candidates after they’ve executed legislation according to their will.

The whole of the parts establishes that despite the extension of suffrage to all people meeting an age qualification, wealth is still represented in government at the near exclusion of popular underclass interest. Voters vote for a candidate after wealth and industry selects the candidates who will have the means to compete. This means whichever candidate they vote for has already pledged support to wealth otherwise they would not be positioned to compete.

By Wealth for Wealth Adapted to Maintain

The United States government is today, and has been to greater and slightly lesser extents historically, a facilitator of wealth to power: meaning legislative power is directed by wealth or economic power. The voice of an individual, or even a group in this government, is equal to the amount of money they have relative to competing interests. If the competing interest is industry as a whole, there simply isn’t enough wealth existing in the bottom 80% of the population to compete. ( Source: Note 4) To put it another way, a majority of the population has no representation in the federal government.

“Almost two thirds of itemized financing for the president’s (Obama) campaign came from donors contributing more than $10,000, while over 70 percent of the Romney campaign’s itemized financing came from donors of that scale…Both major party presidential hopefuls…rely on donors giving 1000 or more for about 90% of their funding… The relatively thin stream of small contributions does not suffice to float (conventionally managed) national campaigns, and all insiders know it.” (Party Competition and Industrial Structure in the 2012 Elections: Who’s Really Driving the Taxi to the Dark Side? Thomas Ferguson, Paul Jorgensen, and Lie Chen. Pg 13)

Ferguson and his associates found that a presidential candidate requires donor contributions that exceed $10,000 for a majority of itemized campaign funds, which implies without these donors, the candidate is not going to be a serious contender. How many American’s can afford $10,000 to have a political voice? Over half the population does not have $500 in savings. (CNN Money: 6 In 10 Americans Don’t have $500 in Their Savings, by Katheryn Vasel 1/12/2017 https://money.cnn.com/2017/01/12/pf/americans-lack-of-savings/index.html Source: Bankrate Survey).

Populist candidates competing for the republican presidential nomination (Paul, Bachman, and Cain), considered populous based on the fact that nearly or over half of their contributions came from unitemized donations of less than 200 dollars, were unable to remain competitive through these small donations: (Ferguson, Jorgenson, Chen: “…the sums raised were not nearly enough to keep them competitive.” Percentage of donations to candidates that were less than 200 dollars. Paul: 48%, Cain: 57% Bachmann: 73%) This attests to the fact mentioned in the first paragraph, that many small donations are not sufficient to compete against big donors in political races.

There is almost an exception to the previous paragraph uncovered in the Ferguson, Jorgensen, and Chen 2016 paper and his name is Bernie Sanders. According to the their research, Sanders campaign raised 240 million dollars almost exclusively through small contributions. To Sanders to be competitive in the general election he needs to raise at least three times perhaps four times the amount raised in the primaries, but it does demonstrate that it is possible to run as a purely populist candidate and accumulate enough money through small contributions to be competitive.

The exception of a single candidate being able to raise competitive sums does not invalidate the assertion that a candidate cannot is not elected without serving the interest of big money since despite the amount being in the ball park, he hasn’t won the election. It also does not disprove investment politics even if elected because investment interests hold in the other branches of government, because of what was previously mentioned.

While small donations are not altogether insignificant as a total, when compared to overall money raised, as with the Obama campaign, who received a little over a third of overall funding in 2012 from donations smaller than 200 dollars, they are insignificant in terms of carrying an interest; it is unorganized money, anonymous donations, the result of rhetoric that people mistakenly associate with their own interests. In other words, no one is going to the white house with a 50-dollar receipt and using it as leverage for policies by tactfully implying next year they’re going to let that 50 ride on the other guy.

Since a presidential candidate relies on donations in excess of 10,000 dollars for the bulk of his relevant or itemized donations in order to be competitive, to attempt to carry forward policies which were popular, but adverse to the interest of these wealthy donors, would effectively remove him from being a viable candidate. A president represents the interest of wealth to power or he doesn’t become president.

To go further in regard to the president being a facilitator of wealth to power, would be to analyze policy, and I’m sure there is probably a wealth of research dedicated to policy and polling. While not meaningless, is less meaningful than an analysis of policy and benefit, since the opinions of many Americans are formed based on media campaigns concerning policy, and have little to do with the public’s understanding of who benefits from such policies, or the details. While a detailed and systematic analysis eludes the scope of this note and this effort to establish that the federal government is the facilitator of wealth to power, and always has been, I will provide one example in brevity.

In regard to public opinion, in October 2009, the Washington Post reported 57% of people supported a public option for health coverage under the affordable care act, and also cited an ABC Poll from a few months earlier claiming 62% favored a competing government health insurance option.( Most Support Public Options for Health Insurance Polls Find. Washington Post, 10/20/2009 by Dan Balz and John Cohen) In August of the same year, the New York Times Reported “Several hospital lobbyists involved in the White House deals said it was understood as a condition of their support that the final legislation would not include a government-run health plan paying Medicare rates — generally 80 percent of private sector rates.” (Obama is Taking an Active Role on Talks on Health Care Plan. New York Times, 08/12/2009, byDavid D Kirkpatrick) The interest of industry and money clearly won out in legislation, over both the opinion of the public, the benefit to the public, and presidential rhetoric.

What we ended up with while still something of use to some people, and a burden to others, is a subsidy to the health care sector. The funneling of public funds in the form of vouchers to private companies, which are more expensive than public premiums.
The 80/20 rule served no purpose, as health care economist Uwe Reinhardt explains “insurers skim off 15-20 percent of premium dollars for administrative costs and profits” (Health Insurance Industry Fudges Data to Downplay its Astronomical Profits. Think Progress, by Igor Volsky) which is also confirmed by 2009 SEC filings of 5 of the largest health insurance firms which report medical loss ratios of just over 81 to 85 percent, (http://hcfan.3cdn.net/a9ce29d3038ef8a1e1_dhm6b9q0l.pdf Page 7) meaning the 80/20 rule is consistent with the industry norm and is unimposing.

Not surprisingly, the health care sector made good on their end of the deal strongly supporting the Obama campaign in 2012 (Ferguson, Jorgensen, and Chen pp 16,17 70% of money from the Health Insurance Sector went to Obama, even though 100% of large firms supported both candidates.), and while certainly there are many other pieces of legislation and policy that demonstrate a clearer link between money and politics, I chose this example as it takes the form of popular legislation, but is really just business legislation with short term positive effects for some of the public.

In electing representatives and senators, big money actually plays a bigger role in campaign funding than in presidential elections. “Donations from individuals giving $200 or less make up a fairly small wedge in the fund-raising pie: a little over 10 percent of the money collected by House members and about 15 percent for senators.” (https://www.opensecrets.org/resources/dollarocracy/04.php) The remaining 85 to 90 percent of funds came from less than 3/10s of 1 percent of the population, (https://www.opensecrets.org/overview/donordemographics.php “…based on contributions from individuals giving $200 or more. All donations took place during the 2013-2014 cycle and were released by the Federal Election Commission on 12/14/14.”). So once again, in most cases, if you represent the interest of your constituents over the interest of the minority that fund your campaign, your service will be short lived.

Without the support of wealth candidacy has been shown to be not serious, meaning if a representative is not acting exclusively on behalf of the wealth that positioned him to be competitive, he is limited in representing non-moneyed interests by moneyed interests. In other words, he can consider representing the general public only if doing so does not put him up against moneyed interests; or, anytime there is a conflict of interest, between the general public and wealth, he has to cast his vote with wealth, otherwise he will not be reelected. The only way the general public does not have a problem with this, is if they believe the interest of the haves, and the have not’s is the same; which they are not, despite the republican line of reasoning that if public policy creates an environment where the ultra wealthy are given advantages, this will lead to more opportunities for the poor who will prosper from the trickle down.

“Mounting evidence that when the preferences of the affluent are controlled for, the policy preferences of poor and middle income Americans typically count for little or nothing.” (2012 Ferguson, Jorgensen, and Chen pg 6. (Ferguson, Thomas. 1995. “Deduced and Abandoned: Rational Expectations, the Investment Theory of Political Parties, and the Myth of the Median Voter.” Pp. 377-419 in Golden Rule, edited by T. Ferguson. Chicago:University of Chicago Press.)

The founders of this nation did not believe these interests were the same, reminiscent of Federalist Paper vol 10:“…those who hold and those who are without property, have ever formed distinct interests in society…” Those who have, are in a position to dictate the terms by which those without may have. The interest of those who have not is to have. It is not in the interest of those who have, for the have nots to have, because then the haves lose the power to dictate the terms of opportunity. And worse yet, it creates competition. The interests are distinct not because those without want what those with have, but because those with do not want those without to have, because in doing so, they lose the ability to dictate the terms of distribution, in an owner worker relationship as well as the ability to direct government in a system of government created by wealth for wealth.

The argument is corporations and wealth are simply supporting the candidate or party who will do the best job for the nation as a whole. If principally, the parties are different, why would the same firm support both parties, and especially in presidential elections both candidates? They both cannot be equally representing your interest, otherwise they cease to be different, and then even worse where is the choice? And if they are the same, then it would certainly make more sense not to fund either, since whichever candidate is elected will be representing your interest. Because it is an investment in legislative and policy outcomes. Most legislators do very little legislating, most are rubber stamps for sale. Somehow there is still a debate about whether or not money in politics is ruining our democracy? How can you ruin what you never had?

If we look at the 2012 presidential election, the 9 largest health insurance companies gave money to both candidates, defense and air industry as a whole collectively split their money right down the middle between Obama and Romney, the largest investment banks and hedge funds did about the same thing with 48% of their contributions going to Obama, and across nearly every sector of the economy the largest players supported both candidates. (Ferguson, Jorgensen, and Chen pg 16)

“Between 2007 and 2012, 200 of America’s most politically active corporations spent a combined $5.8 billion on federal lobbying and campaign contributions. A year-long analysis by the Sunlight Foundation suggests, however, that what they gave pales compared to what those same corporations got: $4.4 trillion in federal business and support. That figure, more than the $4.3 trillion the federal government paid the nation’s 50 million Social Security recipients over the same period…”. I like the comparison between the total amount received by corporations, and the total amount spent on social security, because it begs the question of how Americans would feel, if they considered that about what is taken from their check in social security tax, is about the same amount they pay to supplement the profits and ensure the success of large corporations? “After examining 14 million records…we found that, on average, for every dollar spent on influencing politics, the nation’s most politically active corporations received $760 from the government… (and some corporations) received 1,000 times or more” (Fixed Fortunes: Biggest Corporate Political Interests, Spend Billions, Get Trillions. Sunlight Foundation , by Bill Allison and Sarah Harkins, 11/17/14 http://sunlightfoundation.com/blog/2014/11/17/fixed-fortunes-biggest-corporate-political-interestsspend-billions-get-trillions/) And many unknown companies who are not large enough to invest in politics had to rely on markets to get a return on their investment.

A Kansas University study found that companies who lobbied for a tax holiday provision in the American Jobs Creation Act of 2004 received “in excess of $220 for every 1 dollar spent.” (Measuring Rates of Return for Lobbying Expenditures: An Empirical Analysis Under the American Jobs Creation Act by Raquel Alexander, Susan Scholz, and Stephen Mazza. University of Kansas, Lawrence. Pg 1)

It seems the common ideal shared by wealth and the politician is that wealth should be the measure by which one can gauge his representation.

Because it is rarely possible to be elected to the federal government without big money, and the only way to attract and obtain big money is to subordinate yourself to the interest of big money; and those interests are fundamentally distinct from the interest of the general population who is without big money, then the interest of wealth is represented at the exclusion of the general population. Those without wealth are without meaningful representation, and policy is decided almost exclusively at most a few tenths of a percentage of the population. The United States is today, what it was intended to be by those who founded the country: by wealth for wealth.

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