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November 01, 2007


Friedrich von Blowhard writes:

Dear Blowhards,

All our teachers taught us that we live in a democracy, or, perhaps more precisely, in a republic. In either case ultimate sovereignty derives from The People. And (eventually, at least) the Will of The People cannot be denied, because their votes call the shots. Right?

Well, as we edge closer to an election year, I would have to say I've got my doubts about all that. Because, the way I see it, it's distinctly possible that we actually live in something more akin to an "auctionocracy" where people who want political influence write checks to purchase it. My guess is that dollar bills donated to campaigns or devoted to lobbying, rather than votes cast for candidates, constitutes the real action in terms of how America is governed and how Americans live.

I did a little research on the total dollars donated at the Federal level on Congressional and Presidential elections, as well as those dollars spent on lobbying, at can - and should - check them out here.)

I totaled up all the contributions and lobbying expenditures for the years 1998 to 2006 (or the 1998 - 2006 election cycles). I excluded the 2007 numbers because they are still fragmentary. I excluded data on campaign contributions from before the 1998 election cycle because there is no corresponding data on lobbying.

A drumroll please...the following are the leading sources of political money in modern America:

  • #1. The finance industry, including commercial and investment banks, savings & loans, private equity firms and insurers (other than health insurers) made $933 million in campaign contributions and spent $2,077 million on lobbying, giving them a grand total of $2,941 million.

  • #2. Health care providers, including medical professionals, hospitals, nursing homes and the pharmaceutical industry, made $420 million in campaign contributions and spent $2,043 million on lobbying, giving them a grand total of $2,463 million.

  • #3. Ideological donors, single-issue donors and retirement-focused donors made $1,259 in campaign contributions and spent $848 million on lobbying, giving them a grand total of $2,107 million.

  • #4. Agribusiness made $229 million in campaign contributions and spent $694 million on lobbying, giving them a grand total of $923 million.

  • #5. The real estate industry including mortgage bankers made $358 million in campaign contributions and spent $549 million on lobbying, giving them a grand total of $906 million.

  • #6. Electric utilities made $84 million in campaign contributions and spent $793 million on lobbying, giving them a grand total of $877 million.

  • #7. Lawyers and lobbyists made $670 million in campaign contributions and spent $188 million on lobbying, giving them a grand total of $857 million.

  • #8. The defense industry made $75 million in campaign contributions and spent $716 million on lobbying, giving them a grand total of $791 million.

  • #9. The computer/Internet industries gave $124 million in campaign contributions and spent $625 million lobbying, giving them a grand total of $749 million.

  • #10. The education industry gave $93 million in campaign contributions and spent $563 million lobbying, giving them a grand total of $656 million.

  • #11. The oil and gas industry gave $127 million in campaign contributions and spent $526 million on lobbying, giving them a grand total of $653 million.

  • #12. Labor gave $376 million in campaign contributions and spent $265 million on lobbying, giving them a grand total of $641 million.

  • #13. Business associations gave $12 million in campaign contributions and spent $607 million on lobbying, giving them a grand total of $619 million.

  • #14. Miscellaneous manufacturing and distributing industries gave $111 million in campaign contributions and spent $475 million on lobbying, giving them a grand total of $586 million.

  • #15. The TV/Movies/Music industries gave $154 million in campaign contributions and spent $396 million on lobbying, giving them a grand total of $550 million.

I developed figures for 42 donor groups, but I think this gives you a flavor of what I’m driving at.

I have several observations as a result of pondering this data.

First, I couldn't help but notice how much more money is spent on lobbying than on campaign contributions. For all 42 donor groups, campaign contribution dollars are only 29% of the total, or less than one third. Conversely, lobbying accounts for 71% of the total, or more than two thirds. This suggests to me while America cares somewhat about who it elects, it cares a lot more about how issues get framed before Congress and the administrative agencies.

Second, I noticed how few dollars are spent on politics, per se. Ideological, single-issue and retirement-oriented donors account for less than 10% of all the money in politics (roughly $2 billion out of the $22 billion total that I accounted for with my 42 donor groups). The website describes this group of donors briefly:

Groups as diverse as the National Rifle Association, the Sierra Club and EMILY’s List make up the bread and butter of the ideological sector. In recent years, the most generous donors by far in this sector have been leadership PACs, which are organized by current and former officeholders at the federal and state level. The sector includes groups active in debates over abortion, the environment, foreign policy, gun policy, human rights (including gay rights), Israel policy and women’s issues.

You should note that corporate and industry-based political action committees are also included in this group, and that I tossed in spending by retirement-oriented groups (e.g., the AARP) into this category to give it the broadest possible definition. My conclusion: politics of the Republican - Democrat, conservative - liberal, NRA - gun control, pro life - pro choice flavor just isn’t as big a deal in our system of governance as you might think from reading either the New York Times or the Wall Street Journal (or the Weekly Standard or the Nation.)

Presumably this aspect is foregrounded so heavily in our political culture in order to mobilize, and possibly channel, the enthusiasms of the masses. Let 'em feel they have some stake in the process or something.

Well, if politics, conventionally speaking, isn’t such a big deal once you open up the hood of the Federal government what is? Well, a cursory glance at the chart might suggest a few thoughts.

Financial industry money (Item #1 on the hit parade) just might have had some impact on why Wall Street speculators and “financial innovators” got bailed out by the Federal Reserve in September and again yesterday even at risk of inflation for the general public.

Health care provider money (Item #2) might have something to do with the fact that healthcare policy is almost entirely focused on getting more dollars into the system (under the rubric of coverage for the uninsured) rather than controlling the system's wildly excessive costs.

Agribusiness money (Item #4) might suggest why we’re so generous to our agricultural sector both in the form of direct subsidies and in our embrace of corn-ethanol subsidies.

Real estate and mortgage banking money (Item #5) might suggest why we’ve had such ineffective regulation of reckless mortgage lending.

Electric utility money and oil & gas industry money (Items #6 and #11)--to say nothing of automotive industry money (spending a grand total of $517 million which qualifies it for Item #17 in our hit parade) might suggest why coming up with a system to curb greenhouse gas emissions could prove so difficult in Congress.

Contributions from education and labor (Items #10 and #12 respectively) probably have something to do with why school vouchers aren’t being embraced on the national level and why rapidly swelling public-sector pensions arouse so little concern among our legislators.

Hollywood money (Item #15) might suggest why Congress keeps extending the period for which copyright owners can control intellectual property and why we focus so much on 3rd world piracy in our trade talks.

Heck, you can draw your own lessons. I’ll grant you, I'm probably excessively jaded after working in a highly regulated industry in which the regulation primarily benefits the industry incumbents. As I've said before: I get more cynical every year but I just can’t keep up.



posted by Friedrich at November 1, 2007


Unfortunately, Auctionocracy is the natural result of Democracy when campaign contributions are allowed, because advertising works and ads cost money. The only people who can make a dent without contributions are the fantastically wealthy, like Perot.

The real problem is that advertising works and there's not much we can do about that. The only potential, legal solution I can imagine working is public financing of elections. Say all candidates who can collect X signatures get on the ballot and all candidates on the ballot get identical funds. Opting out does a candidate no good because the public funds will be raised to match whatever that candidate raises.

This would of course cost a fortune, so it will never happen.

Posted by: JewishAtheist on November 1, 2007 12:35 PM

Fascinating. Of all the groups, only Labor gave more in campaign contributions than it did in lobbying. Given Labor's decreasing influence over our politics, I can't help wondering if a change in strategy is in the works there.

And Lordy! Has the entertainment industry ever gotten a lot of bang for its buck. Only #15 in the rogue's gallery, but they have got Congress hop, skip and jumping to their tune. It would be interesting (and difficult, I should think) to try to determine 'bang for buck' for all the groups, i.e., who pays the leastest for the mostest.

I wonder as well if the disparity between amount spent on lobbying and campaign contributions is simply the result of the fact that campaigns are intermittent, while lobbying is forever.

Posted by: PatrickH on November 1, 2007 12:40 PM

So the picture is: Government squeezes as much milk as it dares out of the milk-cow populace; then dispenses favors and largesse to powerful groups; which in turn help the people who work in government continue to be employed there; so that government can continue squeezing milk out of the ever-more-exhausted milk-cow populace.

Meanwhile, everyone on the inside of this process generates a lot of tinsel and confetti and "entertainment value" to keep the milk-cow suckers on the outside of the process confused about whether they're being played for suckers or not.

Sounds about right to me. Moooo!

Posted by: Michael Blowhard on November 1, 2007 1:20 PM

JA: The more-stringent campaign-spending laws here in Canada have they're downside too. The main problem is that, in order to make them effective, you have to regulate all political advertising during election periods. Otherwise, for example, someone could fund save-the-planet advertisements that would be in effect an off-the-books campaign expenditures for the Green Party. This does two things:

(1) It massively curtails free speech - just for a couple of months ever few years, but demonstration effect is really poisonous;

(2) It gives political parties a monopoly over the political agenda during campaign periods. Try injecting a dissenting view on an issue the politicians have decided to leave off the table (immigration, say, the State) - you may end up with a fine. (The apotheosis of this approach were the two Quebec referendums on independence. At least in theory, the Oui and Non committees decided what points could and could be advanced pro and con, if there were costs involved. In fact, both campaigns were marked by a certain unruliness among the Non-voting proles, but it was still a terrible advertisement for life in the prospective Quebec republic.)

Posted by: Intellectual Pariah on November 1, 2007 1:26 PM

I can't believe I wrote "they're" for "their".

Posted by: Intellectual Pariah on November 1, 2007 2:03 PM


Yeah, I recognize the problems. Good points.

Posted by: JewishAtheist on November 1, 2007 2:04 PM

Great post, Friedrich. Nauseating points, but good journalism.

The young lady who cuts my hair (a twenty-something) recently had a political discussion with me. She made the statement that she never votes, and said it quite matter-of-factly, though I detected a sad resignation in her shrug. I was curious why that was.

She went on to explain how she felt totally left out of the process, "the electoral college decides the presidency - not me", and that without gobs of money, the average American Joe or Jane doesn't stand a fart in a whirlwind's chance of making a difference in our government.

She feels totally disenfranchised, forgotten, and invisible. So, why bother with voting when the effort is worthless? Forget about duty or patriotism - those are old fogey ideas long past their prime in this new world order of a two-class system.

Her wages are barely enough to make a living with, though she works long hours. Savings, retirement, and good health insurance are pie-in-the-sky extravagances that have no chance in her budget. She enjoys being a hairstylist, but knows that she has to somehow find time to finish college and find a "real job" to support herself.

Her attitude is quite prevalent among her peers, and probably represents the sentiments of most Americans who work a daily grind to keep a roof over their heads - myself included.

Premonition or pessimism?

Posted by: Cowtown Pattie on November 1, 2007 2:37 PM

Ron Paul

Posted by: charlton Griffin on November 1, 2007 2:53 PM

I know this isn't a good comment, but you write the best posts, FvB!

Posted by: blue on November 1, 2007 2:59 PM

CPs hairdresser's story shows the plight of an average American: actively despised by the Democratic Party, and held in contempt by the GWB / Karl Rove / John McCain wing of the Republican Party.

Posted by: PA on November 1, 2007 3:22 PM

Great post and interesting comments!

A friend and I have argued for years over him never voting. He says that none of the candidates are ever going to do anything to improve his life and voting only encourages the bastards. It's hard to disagree with him sometimes.

Among my own perennial suggestions for improving the situation are two major ones. First, we should begin to use "progressive" or "Automatic run-off" style balloting. This should loosen the grip of the two major parties (I tend think of them as the Good Cop & Bad Cop parties). The other is to require a quorum of at least 75-80% of eligible citizens to actually vote for an election to be considered valid. This would reinforce the responsibility we, as citizens, should take for self-governing.

An aside is that we need to be clear about the differences between The Government and Elected Officials. There is a permanent governmental bureaucracy, and then there are those whom we elect to office along with a vast number of political appointees. Each area has a different relationship with lobbyists and citizens.

Posted by: Chris White on November 1, 2007 5:40 PM

I often find this idea appealing: include a "none of the above" possibility alongside the various candidates. And if that number wins, then require a run-off. And require it over and over again, until some real candidate wins more votes than "none of the above" does.

Is there a flaw in this scheme that my math-challenged mind is failing to see?

Posted by: Michael Blowhard on November 1, 2007 5:44 PM

It seems to me the flaw in MB's scheme is this:

Who goes into the run-off? The candidates with the least votes? That doesn't make any sense. The candidates with the most votes? Then we're right back where we started.

Posted by: includedmiddle on November 1, 2007 8:14 PM

It's like the world is divided into two groups: (1) those who say "It shouldn't just be money that dictates everything, there should be justice and courage and Mr. Deeds!" and (2) those who always knew, and never fought, the idea that OF COURSE money dictates everything and would think it was ridiculous to even hold out hoping for something else, and just play the game!

The financial industry's lobbying efforts have far more impact even than bailing out Wall Streeters (which, believe it or not, might actually trickle down and keep a few ordinary folk employed and in their homes at the end of the day). The financial industry's real poison is on the consumer debt side: the laws permitting the instant re-pricing (to what was once usury level interest rates) of the interest rate on credit cards the minute a payment is one day past due; the encouragement of the proffering of huge credit card limits in the hopes people will bury themselves in high-priced revolving debt that remains outstanding for years--good for profits, you know! And the revision a few years ago of individual bankruptcy laws that makes it practically impossible to discharge credit card debt. People think tobacco encouraged addiction! Look at consumer debt! We never really see or hear about the legislation that is really the highest impact.

Posted by: annette on November 2, 2007 10:00 AM

"Is there a flaw in this scheme that my math-challenged mind is failing to see?"

Michael, this is an interesting idea that has been debated before. It seems that the biggest flaw with your plan is how many people would likely go back and re-vote. And, possibly, re-vote again and again.

Let's say you had a 50% turnout the first time with "None of the Above" getting 60% of the votes. Well, in the (first) run-off, you might get 30% turnout with, again, 60% going to "None of the Above". Or, worse, someone wins with a 30% turnout.

The Libertarians over at the Free State Project had a lot to say about this method.

Posted by: Ian Lewis on November 2, 2007 11:41 AM

Set to one side the "None of the Above" idea for the moment. A progressive or automatic run-off ballot for President might list G.W. Bush, Al Gore, Ralph Nader, Ross Perot, and Gus Hall. After each name are five numbered check boxes. Ross Perot is your first choice so you check box one. You can stop there or you can check 2 for Bush and then stop or continue to rank all five candidates. It becomes a fairly simple and straight forward way of encouraging third (or fourth or fifth or sixth or ...) party candidates to run without the "spoiler" issue that has plagued us in recent years. A vote for a minor, alternative, candidate is no longer a vote "thrown away." If your first choice, Perot, comes up too short to actually win, Bush, as your second choice, gets your vote. In such a system there is no need to hold a separate vote. People only need to go to the polls once.

Requiring a quorum on the other hand might mean that, if fewer than the required percentage of eligible voters show up, we all have to do it again until that percentage (I like 70%) IS reached. Making Election Day a "holiday" would also be a good idea. An election or two that needs to be redone should provide plenty of social peer pressure to get as close to everyone eligible to the polls as possible.

If we are ever to see meaningful changes we need to move beyond the current two party system serving the entrenched interests of lobbyists and "core constituencies" rather than the nation as a whole.

Posted by: Chris White on November 2, 2007 4:26 PM

But isn't FvB just demonstrated that lobbying gets more influence than campaign contributions/voting system? Why to get sidetracked devising voting schemes - wouldn't it be more effective to concentrate on reshuffling the lobbying situation?

Posted by: Tat on November 2, 2007 4:47 PM

Thanks for everyone's comments.

While I would support experimentation with voting systems, I think that it misses one of the main points of my piece, which is that the special interests of America have decided they don't care that much who gets elected, they just want to control the deliberation process through lobbying. In other words, fixing elections may not fix much of anything if "administrative" processes and laws are the REAL government, as they appear to be.

The problem of running a big government society is one that really hasn't, as far as I can tell, attracted nearly the attention it should. Big government gets you many benefits, but like Microsoft products, it has gaping "backdoor" vulnerabilities that determined special interests can and do utilize for their own benefit.

Well, I may not have many solutions here, but one thing I do know: it's time to stop looking at our government through traditional "political" eyeglasses.

Perhaps I wasn't blunt enough in the posting about how I currently look at politics: that is, as essentially a dumb-show for the masses, a delusion, a snare, while the real action goes on behind the curtain.

Admitting we have a problem (that is, we're constrained by a world-view that has been foisted on us by many of the people who that world-view benefits) is, I think, the first step to potentially solving it.

Posted by: Friedrich von Blowhard on November 2, 2007 4:47 PM

The way our voting system evolved has resulted in a rigid two party system that thrives on, and indeed is partially the creation of, the interplay between campaign contributions and lobbying expenditures. Certain special interest groups may stick close to one party or the other while others hedge theirs and split the booty, but this is no more important a difference than preferring Coke or Pepsi. Where are fruit juice, beer, milk or seltzer on the menu? This is the heart of the problem.

The only current, viable, way 'we the people' have of directly bring about change in our government is through the vote. We either need to tinker with the election process in an effort to broaden our choices and increase our participation ... or we face more of the same. Unless someone stages a new Jeffersonian revolution... or, for the paranoid ultra-nativists out there, we are absorbed by the NAU (a wholly owned subsidiary of the U.N.).

There is no way that I see (short of that revolution and summary executions up and down K Street and Constitution Avenue) to effect change in the "administrative" processes and laws" that are our "real government" without first changing the nature and culture of the elected officials who write those laws and, at least in theory, over see the processes.

Posted by: Chris White on November 2, 2007 6:35 PM

It's popular to blame "special interests" (of course our own interests are legitimate, freedom of petition for the redress of grievances for me but not for thee), because it's a lot easier than blaming the voters themselves. Even my favorite candidate, Ron Paul, absolves the American people of responsibility for Iraq despite the fact that most people were in favor. As the government spends more and more money and has a larger and larger impact, only a fool would think that people wouldn't attempt to influence it. McCain-Feingold failed miserably because they thought certain kinds of monetary contributions were the problem rather than the system itself.

John Lott has done some studies on the effect of campaign contributions that are discussed in Freakonomics. I found them interesting and some of you might as well.

Posted by: TGGP on November 3, 2007 12:54 AM


Yes, the American people have consented to many things not in their best interests, but to be fair they have done so after generations of being fed rather misleading information (or in many cases, outright lies). I'm not sure that they can be held to have given "informed consent" to many of these decisions.

As for Mr. Lott's studies, it appears from the Amazon ad for the book that they aren't exactly definitive. For one thing, I see no evidence that he controlled for the fact that the legislators were only able to get elected in the first place by being sufficiently acceptable to big money donors. In other words, his group had suffered considerable pre-sorting before being tested, which would appear to moot his conclusions.

Also, the study appears to ignore my major point: that it's not so much the legislator, as the way the issues are framed in the lobbying process. In other words, when it comes to subprime lending, it sounds different to say "Subprime loans and negative amortization loans should be made freely because Wall Street makes huge fees from securitizing the loans and then makes even bigger ones on repackaging those mortgage-backed securities into CDOs and selling them to suckers like the guys managing your retirement fund," than it does if you say "Subprime mortgage lending ensures higher rates of homeownership, especially in minority communities. Why should those borrowers be shut out of this great wealth-building opportunity?"

If you let me frame the debate, then you can have any ideological concepts you want and I'll still get what I want.

Posted by: Friedrich von Blowhard on November 3, 2007 10:49 AM

Good points, all. I have to agree with the two groups theory: as I get older, I get more cynical.

I have to say, I don't understand Mike's support for business at the expense of the Professional Managerial Class. Businesses are the ones who are doing all this; the bureaucrats just do what they're told.

Here's another reason to dig the French, Mike: they know exactly how to treat the swells when they get out of line.

Posted by: SFG on November 4, 2007 8:36 AM

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