Risky Investments: The Politics of 2016

By Adam Stromme
Editor-in-Chief, International Relations & Economics Undergraduate Student

Mark Hanna, the legendary Gilded Age political manager was fond of saying: “It takes three things to run a political campaign in America: Money, money, and I forgot the third thing…” Following the money, and the dash of cynicism which is always a safe bet to bring to the American political system, are as American to political commentary as apple pie. But when faith in government is polling at lows unprecedented in American history, Republican obstructionism is becoming the stuff of legend, and Congressional productivity is far and away the lowest it has ever been, one begins to wish that it wasn’t so.

But by almost every barometer, from ideological polarization in Congress to voter turnout, something is desperately out of whack with American politics. And although it has become remarkably fashionable to self rationalize the rise of the demagoguery on the Far Right and the Further Right, as columnists Left and Right and even here in St Andrews have done, to do so without consideration to the drivers this time around is remarkably naive. All respect to Mr. Yeh for bringing some needed historical context to the table, but I fail to see the Republican spectacle of today as being explained purely by a faith in electoral extremism that ebbs and flows with the predictability of the tides.

By almost every barometer, from ideological polarization in Congress to voter turnout, something is desperately out of whack with American politics.

But before we get too far ahead of ourselves, it’s important to set up the way the political game usually works. Keying in the insight of Hanna, the famous political scientist Thomas Ferguson lays out the Investment Theory of Party Competition, and its insights have historically proven remarkably effective. The intuition at its core is very simple: if you want to know how a politician is going to act, look at who their backers are, how much they have pledged, and what their interests are. There are websites and applications where one can do this with very little work, and it does wonders to explaining why certain legislators enter the fray on specific issues.

But one should be wary of remembering the other side of this electoral coin. On the opposite, much less flattering side, it holds central the intuition that investors in the American electoral process are in effect vetting to control the State in order to generate a return through legislative reform. Its that simple, and for much of American history, from the days of Hanna to today, an effective model for describing how the prevalence of electoral considerations increasingly dominate Congressional ones.

The sheer insanity of 2016 has lain bare a problem for this profit motive approach to government.

But it is not without its limitations. The sheer insanity of 2016 has lain bare a problem for this profit motive approach to government; an agitated population tends to behave less predictably, risking the investments of those who are actually bankrolling the whole show. Hence, the far Right’s embrace of Evangelical extremism and conspiracy theorists on the airwaves is not to be condemned from the perspective of any moral consideration, but purely by the fact that it risks making the candidates unelectable.

On the other side of the aisle, Democrats play by the same rules. The key difference arises again from institutional backers fighting for the status-quo, which in contestation to the Republicans now amounts to a defense of the right of the government to exist. But in times of increased democratic participation, the party has opened itself to a broadside from the dreaded “grassroots” candidates whom the Democratic party stifles without a hint of irony given its name.   

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So what should the Investment Theory of Party Competition tell us about 2016? Is it not less relevant in this turbulent electoral cycle dominated by Trump and flanked by Sanders?

Hardly.

What it can tell us is this. The establishment candidates are going to be those with the prerequisite degree of institutional backing and favorable policy for institutional investors. After all, if the oil industry backs one candidate, who loses to another who proposes the same legislation, then of what cost is it to them? The demand from these actors is uniformity in policy as much as responsiveness to their specific demands, and in that regard 2016, particularly amongst the Republicans, is little different than other elections.

The establishment candidates are going to be those with the prerequisite degree of institutional backing and favorable policy for institutional investors.

It also tells us that fringe candidates, so defined not by the reasonableness of vision of their policy prescriptions but by their uniformity with other investor-sanctioned candidates, are going to be universally condemned. Hence the absolutely absurd comparisons in the media of Trump and Sanders, both considered outsiders despite the institutional support and deranged demagoguery of the former and the alignment of many of the policies of the latter with the easily forgotten American electorate.

While this election season has heated up remarkably quickly, the game hasn’t changed entirely. So when following 2016, keep in mind those who have literally put their money where their mouth is. Ferguson doesn’t buy much of the rhetoric screaming around Washington, and neither should you, but he is keenly aware that the only thing that matters as much as money to politicians are votes. And if a candidate like Sanders is able to upset the rules of the game, it will be a truly unprecedented affair.

When following 2016, keep in mind those who have literally put their money where their mouth is.

So whether one Feels the Bern, Stands with Hillary, or dares venture further Rightward, the important take away is to never let conviction keep you from that gilded maxim of American Politics: “Follow the Money.”

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Feature image by “Alex”
Secondary image by Jon Sullivan

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4 Comments Add yours

  1. This blog post seems to use a lot of words to say “moneyed interests support the mainstream candidates,” “Bernie Sanders is the good guy” and “Donald Trump is insane.” Is it not, perhaps, possible that partisanship is clouding your ability to accurately view the Republican race? I’m sorry, but when the self-funded candidate beats the candidate who was supposed to be the runaway favorite with millions and millions of elite money behind him, you can’t handwave it away by calling him a deranged demagogue.

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    1. strommuse says:

      Not entirely sure what relation this comment bears to the article it was attached to, but it appears to refer only to a two sentence blurb in an extended essay. The investment theory covered in the rest of the essay, as I noted in a more thoughtful comment which followed, is hardly discredited by Trump or Sanders’ appeal in what has proven an unusual election. By contrast, it would be difficult to explain, flipped around, the powerful support away from Sanders and Trump without use to such terminology.

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  2. K says:

    Following the money works well as a predictive tool. Do we really have evidence that it is causal? What is there to suggest that it is not merely that the money goes to the politicians on its side?
    I guess what I’m saying is that it could easily be that the money is helping the politicians rather than the opposite.

    As a side note, your evidence for Trump’s ‘institutional support’ is incredibly weak. It does not demonstrate that any institution supports him. It merely demonstrates that he has had some donations.
    At this stage he may have in fact gained some institutional support in the form of endorsements, but if those are important it rebutts your whole thesis.

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  3. strommuse says:

    Interesting thought. As a matter of fact we do have great evidence that it is causal, and that there are important forces which in effect “follow the money”; Ferguson’s work “The Golden Rule” published in 1995, is an excellent place to start. Additionally, his studies on Congressional voting patterns are well worth a read.

    Trump is an interesting abberation, though I would hardly refute a thesis built on 100+ years of statistical observation on the fact that he showed up and has been successful within the last two. Though I would point out that you’ve got the two backwards, the investment theory holds that donations become an essential prerequisite for institutional support, which is uncontroversially true, and not that money in and of itself will mean institutions will support the candidate. Trump has been picking up steam, but he has done so through much the same tactics that insurgent players have always done, and in that regard is hardly original, nor an exception, to the general rules of the game.

    I really can’t recommend enough the long form of what this essay touches on to get a better sense of the nuance of the theory, as it really is quite intuitive once one gets the basic ideas, which an essay can only do so much justice to.

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