Crony Capitalism, Tribalism and the Cycle of Decay: Can the Internet Fix Politics?

7 years ago


(The following is the text of my speech at the Personal Democracy Forum on Thursday June 3, 2010, in New York City — jh)

Thank you to Andrew and Micah for inviting me to be here today, and I appreciate the opportunity to speak on today’s topic: “Can the Internet fix politics?” Which raises the obvious question –- who broke it?

I guess this is the appropriate moment to mention what an honor it is to follow Newt Gingrich.

Moving right along –- well, whether the Internet can “fix” politics does depend on what you think is wrong with politics. And as someone who has spent the past several years working in online activism, I would say that the problems in our political system are monumental and spin out from what I call the Cycle of Decay:

Not to be overly melodramatic, but at the moment, it’s becoming more and more apparent that corporate America and political elites of both parties are locked in an embrace that threatens to scuttle the world economy, the environment and our system of representative democracy.

And we don’t even have a language to talk about it. We measure every political debate along a right-left axis, with rhetoric left over from the culture wars of the '90s. But in doing so, we’re firing past the true villains —- the Masters of the Universe who skillfully manipulate tribal prejudices to insure that it is their interests, and not those of the public, that are the ones always being served.

So how does this system work? Well, it starts with crony capitalism –- defined as “an economy in which success in business depends on close relationships between businesspeople and government officials.”

And are they ever close. During the past decade the most hotly contested political battle in Washington D.C. has not been over gay rights or abortion or taxes or the war –- it’s been the battle for PhRMA’s money.

When George Bush was in the White House, Congress passed Medicare Part D, with the caveat that the government couldn’t negotiate for pharmaceutical prices. Now how does a Congress obsessed with “fiscal responsibility” pass a law forcing the government to pay whatever price an industry want to charge them?

And yet, they did.

So when the Democrats took back Congress in 2006, they made a big show of passing drug price negotiation, championed by Nancy Pelosi, Rahm Emanuel and Barack Obama. But since George Bush would never sign it, there was no danger of it actually passing.

And when Barack Obama could sign it, the Democrats cut a deal with the pharmaceutical companies that guaranteed there would be no prescription drug price negotiations –- in exchange for the low low price of $150 million in political advertising.

At the time, my blog FDL was engaged in an online campaign to provide competition and control health care costs by passing the public option –- something that 80 percent of the country, the president and a majority in both houses said they supported. But as I watched the debate on the Senate floor with my colleague Jon Walker, we shook our heads in dismay and realized the problem was much bigger than we’d ever imagined. It was clear that there was nobody on either side of the aisle who was willing to tell the truth and speak up for the people they were elected to represent, and that overwhelming popular support is not a factor in passing legislation.

The public never heard about the true struggle that drove the health care debate because the national media and the political dialog is incapable of much above the level of demagoguery. And in the end, the blogs that had been powerful independent voices during the Bush era became largely subsumed by partisan dynamics.

But the deal that drove $300 billion into PhRMA‘s coffers is not an isolated example. They are the rule, not the exception. And what do companies do when they know their profits are thus guaranteed?

That their markets are protected from competition?

That no matter what kind of a mess they make, they can just take those profits and plow a small fraction of them back into the political system, and lay their losses off on the taxpayers?

They take excessive risk, knowing they will never have to pick up the tab if things go wrong.

It inevitably leads to disaster.

The damages from the BP oil spill could easily go into the tens or even hundreds of billions of dollars. Yet top BP executives felt free to take big gambles with safety and the environment because Congress had capped the liability of the oil companies at $75 million. There was no downside.

And so these companies become incentified by our political system to take risks —- risks with terrible consequences.

In 2008, the excessive risk-taking of Wall Street banks brought the entire world economy to the verge of collapse, or so we were told. Congress moved with bipartisan swiftness unseen since the Terry Schaivo crisis to approve emergency bailout funds.

If I leave you with one thought today, I hope it is this: In 2009, the Center for Responsive Politics reported that banks who received TARP funds spent $77 million on lobbying and $37 million on federal campaign contributions.

Their return on investment was 258,449 percent.

We are rewarding failure with the funds they use to further bribe and contort our political system. We are pouring concrete into our problems. Small businesses may be building better mousetraps, but they can’t bring them to market, because the megacorps are gaming the system. The companies that could drive economic growth and create jobs are stifled as the incentive for competition and innovation is extinguished.

That is a problem that cannot be solved on either the right or the left alone, because both the Democrats and the Republicans play critical roles in perpetuating it.

During the health care debate, Republicans demagogued “socialism” to kill competition in form of the public option that the insurance companies didn’t want. Then it was left to the Democrats to pass the insurance mandate to guarantee their market, strip out language that would make them subject to anti-trust laws, and guarantee profits by prohibiting prescription drug price negotiation or reimportation.

Likewise, the banks weren’t crazy about paying into a fund that would absorb some of the costs should they find themselves in trouble again. And it came straight out when the GOP started screaming about it. But the banks wanted to make sure that if they DID get into trouble that the taxpayers would be there for them, so once again the Democrats were left to bat clean-up.

So basically, after screwing everything up royally, the banks were allowed to write the very legislation that was supposed to safeguard the system and rein them in.

Why do people allow their representatives to do these things? How is it that they return them to office again and again even in the face of this open criminality?

One word: Tribalism.

If you won’t vote for several billion dollars in no-bid contracts for Halliburton to overcharge for monogrammed towels for soldiers in Iraq who don’t have sufficient body armor, you don’t support the troops. If you don’t support forcing Americans to pay 8 pecent of their income to the insurance companies they hate, you obviously want Sarah Palin to be president. If you don’t support the agenda of your “tribe,” as determined by corporate money pouring through the coffers of validators in your respective interest groups, you’re a homophobe. Or a moonbat. A bigot or a teabagger. A baby killer, a godless socialist, an ignorant redneck or a tree-hugging hippie freak.

Now all of those things might well be true. But it rarely has anything to do with the outcome, which is almost always the same: Halliburton (or Chevron or Pfizer or Monsanto) gets what they want because to oppose the ability of the party leadership to rob you blind means the other side might win, and nothing could be worse than that.

The online world has been able to force some accountability by challenging party authority on both sides, carving out notable populist victories that have toppled corporatist politicians who voted for the bank bailout.

And I have to say that of late, the right has done a better job of it than we on the left have, and they’re scaring the daylights out of the Republican party.

But we’re doing our best to catch up.

Online populists on both the left and the right are vilified in the media for bucking party authority and for supporting “extremists,” as if those politicians who dub themselves “centrists” are anything other than radical corporate lackeys whose actions would have been considered criminal in another era.

But it’s unclear whether anyone elected to replace them will be immune from the institutional pressures that lead to exactly the same pattern of behavior. Without serious systemic change, it is unlikely.

Politics online is largely siloed on opposite sides of the right-left cultural divide, and as such our websites easily flooded flooded by party operatives who who frame the terms of the debate around advancing corporate interests. Thus we frequently redouble the limitations of the status quo rather than acting as an independent political force.

We did have one notable political success recently, in a hard fought battle to audit the federal reserve. Did you know that Congress can not audit the Federal Reserve? That JP Morgan’s Jamie Dimon is on the board of the Fed, and he gets to know what goes on with the institution that prints our money, but the Chairman of the Senate Banking Committee can’t? A lot of people don’t know that.

The bill to audit the Fed was championed by Republican Ron Paul and Democrat Alan Grayson:

We worked hard to whip support from libertarian and progressive leaders on both sides of the aisle. Bruce Fein and Grover Norquist made cause with Richard Trumka and James Galbraith. Freedomworks, the National Taxpayers Union and the John Birch Society joined with the Campaign for America’s future, US PIRG and Public Citizen. Conservative blog Red State, liberal blog Firedoglake and finance blogs like Zero Hedge and Naked Capitalism wrote about the subject diligently and raised the issue onto the radar of both parties.

We caught them in a pincer move:

And despite the fact that both the Fed and the Treasury lobbied against it, and Republican Senator Judd Gregg threatened to filibuster it as “dangerous populism,” in the end it passed:  96-0.

Five votes cast against it switched when they saw which way things were going. In the end, despite the furious well-funded lobbying of the banks, everyone in both parties was afraid to vote against it. The Republicans were terrified of what had just happened to Bob Bennett, which cut off the ability of our “centrists” to triangulate against the left and find refuge in “principled conservatism.” They all just looked like hacks for the banks.

It won’t work in every instance. Right and left do have major substantive disagreements about social issues, as well as the appropriate role of government in our lives, that can’t be papered over by wishful thinking.

But by making peer-to-peer connections that obviate the need for intercession of an elite media who intuitively serve the interests of the Masters of the Universe, the structure of the Internet could potentially facilitate the trans-partisan alliance of outsiders capable of taking on insiders on discrete issues.

When corporate money is limited in its ability to influence political outcomes on one side, it simply achieves its objectives by flowing to the other side. And as long as the online world reinforces the tribalism that perpetuates the problems of partisan politics, the results will be the same.

I do have hope. But in order to have any real, lasting impact, online activists are going to have to change both the language and the terms of the debates. None of us can win the battle against a heavily armed corporate world by ourselves. We’re going to have to extricate ourselves, and our political dialogue, from the tribalism and demagoguery that facilitates corporate hegemony.

Because until we do, we are simply putting new tools in the service of the old order. And we will continue to lose.

Jane Hamsher blogs at Firedog Lake.

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