(This review is cross-posted at Goodreads.)
Theorists of the left and the right argue that there are tensions if not contradictions between democracy and capitalism. Left-wing theorists argue that business has undemocratic power, buying influence through political donations and altering policy by threatening to invest elsewhere. Right-wing theorists argue that democratic majorities vote for taxes and regulations that weaken incentives and undermine the efficiency of capitalist enterprises.
Judged by the normative standards of these theorists, these critiques have something to them. But judged by some other standard, such as elected governments maintaining capitalist economic systems with widespread high living standards over long periods of time, the ‘advanced capitalist democracies’ discussed in Democracy and prosperity: reinventing capitalism through a turbulent century, look very successful compared to other political and economic combinations.
One contention of the book’s authors, Torben Iversen and David Soskice, is that a symbiotic relationship between democracy and capitalism contributes to the success of these countries. Although business and rich people may, at least initially, resist the increased taxes that democracies impose for social policy programs, often in the long run these programs contribute to economic success.
For example, education is electorally popular and provides business with the highly-skilled workforces they need. Government unemployment, health, and retirement programs reduce workers’ uncertainty about their future welfare, reducing short-termist behaviour and industrial conflict. Workers are less dependent on their employers.
In turn, key constituencies in advanced capitalist democracies depend on a successful economy for their own jobs and the tax revenues that support social programs. They support political parties that competently deliver economic growth, limiting the political potential of parties that would damage the capitalist economy. The rejection of Jeremy Corbyn’s Labour in Britain is an example. Continue reading “The symbiosis of capitalism and democracy”
(This is cross-posted at Goodreads.)
The Light that Failed’s first sentence says ‘the future was better yesterday’. And so it was. Thirty years ago there were high hopes for the future of liberal democracy, especially in Central Europe, which had just peacefully ended communist rule. But that is yesterday’s future, replaced now with Central European governments dismantling liberal democracy, authoritarian regimes in Russia and China causing trouble around the world, and many established liberal democracies suffering from serious political dysfunction.
In trying to explain what is going on, The Light that Failed: A Reckoning, reads to me more like a pre-20th century political classic than contemporary political analysis (one of its authors, Stephen Holmes, has previously written excellent books on the history of liberalism and its critics; I have ordered the English-language books of his Bulgarian co-author Ivan Krastev). The Light that Failed has evidence and examples, but not the relentless facts and data of recent journalistic or academic accounts. Instead, its contribution is the categories it uses to understand events and its psychological insight.
The book’s central concept is imitation. Individuals and societies are always copying each other, but this process can be experienced in very different ways. In Central Europe, the first post-communist political leaders and many of their people wanted to imitate the West: democracy, individual freedom, a market economy. And a triumphalist West wanted its model to be imitated; including in countries where the political elites and many of their people were not asking for advice. Continue reading “History gone wrong: liberal democracy’s failure to flourish in Central Europe and Russia”
The commenters on yesterday’s campaign finance post think that big ad campaigns don’t always work. That’s certainly the finding of the US literature on this subject – not that money never makes a difference, but that it interacts with so many other factors that there is no stable or predictable relationship between political spending and political outcomes.
Generally speaking, I believe the chances of any campaign over-turning stable elements of public opinion in the short to medium term are very low. The Howard government’s propaganda campaign on WorkChoices was doomed because the unions could tap into deep elements of public opinion. The importance of the union campaign against WorkChoices wasn’t that it changed minds, but that it kept the issue in people’s minds until polling day.
The more interesting campaigns are on unfamiliar issues, where public opinion is to a certain extent up for grabs. The mining tax was an example of this. Given existing tax and spend polling the issue could have headed in several directions if it had continued – we are generally in a pro-tax part of the political cycle if consequent spending the public approves of is emphasised, but opinion is also highly sensitive to situations in which workers may lose their jobs. Another factor in the mining tax case was that the government advertising in response to the miners was terrible, an off-putting lecture that did not hit existing pro-tax intuitions. Continue reading “When might big-spending campaigns work?”
Katharine Murphy’s Age column yesterday attacking big ad campaigns against government policy is the third such argument I have seen from journalists in the last six months or so. George Megalogenis made a similar argument in his Quarterly Essay (though for reasons I did not entirely follow, he thinks campaigns are ok after laws have been passed), and Peter Hartcher argued that ad campaigns threaten economic reform.
We have a choice. We can either bump along and slide into a combative political environment where vested interests set the agenda, or we can stop, think and consider the alternatives.
Should there be full public funding for elections, ensuring that politics is left to the politicians? Should we require truth in political advertising?
Or should we do nothing, and wake up in a decade to find that politics can’t do anything; that politics is now solely about carving up the spoils, that reform has become impossible?
Though I strongly disagree with the Murphy’s views, she does more or less correctly describe what campaign finance reform is about. Its purpose and effect is to insulate the political class from the views of those who disagree with them or might challenge them. Continue reading “The media gatekeepers vs free speech”
The annual Australian Electoral Commission donations data dump was today, and I have collated the figures for the ‘political expenditure’ requirement.
The current rules were introduced by the Howard government in its lost-the-plot last term (I have extensively critiqued the law here). Their intention was to make life more difficult for left-wing ‘third parties’, and as can be seen from the table in most years left-wing organisations massively outspend right-wing organisations.
2009-10 was the first time since these disclosure rules came into effect that business groups outpsent the union movement. All of the declared spending of more than $22 million was by mining interests, presumably on opposing the planned mining ‘super-profits’ tax. Continue reading “The threats to political expenditure”
I’m working on a CIS paper on political donations, so today’s lead Age story on the biggest ever donation to an Australian political party caught my eye. Wotif founder Graeme Wood gave the Greens $1.6 million.
Despite this, Greens leader Bob Brown is calling for donations to be capped at $1,000. Remarkably, he seems to understand that – like virtually all electoral ‘reforms’ – donations caps are attempts by existing political players to rig the system in their own favour:
‘”‘…the Greens are going to continue to get a disproportionate increase in funding,” he said.
“Maybe it will be that factor which will get one or other of the big parties to bring in restrictions on political donations.”
Exactly. As Bradley Smith argues in his book Unfree Speech: The Folly of Campaign Finance Reform, political newcomers often find it hard to raise money through small donations. They frequently lack the strong organisational base needed to tap into networks of many donors. Continue reading “The folly of donations caps”
The Australian this morning reports Michael Chaney’s comment that ‘thin-skinned politicians’ are creating a culture of ‘consequence and retribution’ for businesspeople who speak out on policy.
Unfortunately he did not name names or give examples. These instances may not in reality be frequent. But the perception that the danger exists has a chilling effect on public debate.
It is one of the main reasons I oppose lowering the threshold for the disclosure of political donations. If we assume that politicians will favour their own donors, I think we must also assume that politicians will disfavour their opponents’ donors. The disclosure regime creates for the government a convenient list of opposition donors.
No wonder ‘thin-skinned’ Labor wants the current $11,500 threshold lowered to $1,000.
Update 8/10: PM denies intimidation.
The Greens have been the most enthusiastic of the political party supporters of state-controlled campaign finance, wanting to eliminate public funding entirely.
But maybe in NSW they are starting to understand what a foolish idea that is. According to a report in the SMH yesterday, the government is planning a public funding scheme that favours major over minor parties:
candidates or parties that receive between 4 and 8 per cent of the vote will be reimbursed 25 per cent of their costs. Those who receive between eight and 20 per cent of the vote will be reimbursed 50 per cent, while those achieving more than 20 per cent of the vote will be repaid 75 per cent of their costs.
So the Greens would usually get 25% or 50% reimbursement, while the major parties would get 75%.
It’s the fundamental problem with all these proposals for electoral finance reform. While they are always surrounded with high-minded rhetoric about the integrity of the political process, they would give the political winners much greater power to rig the political game in their favour. Anyone who thinks that the NSW Right of the ALP would play fair in this system is very naive.
The great strength of the currently system, with extensive freedoms for the civil society to fund political activity, is that it does not link capacity to challenge the government to the generosity of those in power. Checks and balances is one of the oldest liberal constitutional ideas. We should never abandon it.
One argument for stricter disclosure and control of political donations is to improve public perceptions of the political process. A NSW Parliament report from earlier this year said:
In evidence to this inquiry, the need for reform to restore public confidence in the integrity of the system was recognised by most of the political parties that are currently represented in the New South Wales Parliament…
It’s never been clear to me whether the disclosure regime would increase or decrease public confidence.
The general knowledge that it exists may increase confidence. On the other had, almost every specific mention of a donation is used to impugn donor and decision-maker alike. This could decrease confidence by providing more news hooks for negative stories about how politicians may favour donors.
However an analysis of political integrity questions asked by pollsters suggests that public confidence has generally been increasing over time. Continue reading “Do political donations disclosures increase or decrease confidence in the the political process?”
As the SMH reported this morning, the NSW government has announced plans for the nation’s most draconian campaign finance laws, including:
• Political donations from individuals, registered political parties and other entities will be capped at $5,000 to registered political parties or groups and $2,000 to candidates or elected members annually;
• A candidate’s campaign expenditure will be capped at $100,000 per electorate during a regulated period;
• Expenditure by political parties will be capped at $100,000 per electorate and this is in addition to candidate’s expenditure cap
• Third parties may not receive more than $2,000 from each donor in a financial year;
• Third parties may not spend more than $1.05 million in a regulated period or $20,000 per electorate
And indeed if you were running the nation’s most unpopular government six months before an election why wouldn’t you back a plan to limit how much money people can spend throwing you out? Continue reading “The corruption of campaign finance laws”