The dark money game. 

There was recently a program on HBO the contents of which merit summarizing because they are very relevant to our cause at werunthehouse.org.  In case you are not already familiar, our mission is to reduce the corruptive influence of money in American politics.  

If you’ve heard the term dark money but would like to know exactly what it means, this summary will give you a specific example to clarify what that term is used for.  This is a must read for anyone who is concerned about how special interests have taken over American politics and how voters no longer hold any sway over their representatives as a result.

This prose will explain the details of an FBI investigation that began in 2019 and recently resulted in the incarceration of the Speaker of the House of the Ohio state legislature. In the process of the investigation the FBI uncovered a conspiracy in which one of the largest energy companies in the United States, called First Energy, used $60 million to bribe the members of the Ohio state legislature in order to successfully pass a bill that has provided a $1 billion bail out for First Energy. Despite the fact that the Speaker of the House was incarcerated for being bribed to pass the bill, the bill has not been fully repealed. 

This is how the story goes…

The 2010 Citizens United supreme court ruling has allowed fringe groups to bundle billions into secret slush funds to frustrate popular rule.  The Citizens United ruling states that corporations have the right to spend unlimited amounts of money in American politics.  They can do this as long as they don’t give the money directly to the candidate. Instead they have to set up so-called independent organizations called super PACs.

More than 60% of voters in Ohio believe that abortion should be legal in most cases.  Ohio’s lawmakers recently passed one of the most restrictive antiabortion laws in the nation.

Thanks to a rigging of the political map Republicans, who all oppose abortion, control 68% of the seats in the chamber, which is way more than their share of the popular vote.

Ohio was a purple state trending slightly Republican, but things changed drastically after the citizens United ruling.

In 90% of US congressional elections, the candidate who spends the most money wins.  Corporations realized they could take over state legislatures because they were really cheap races. 2010 was the year to do it because that was the year when congressional districts are re-drawn by whoever was in power.  The practice of re-drawing these districts with boundaries that favor a particular party is called gerrymandering.

Once districts are gerrymandered, politicians have no incentive to appeal to a broader, public interest. They win by catering to extremes and inflaming anger over hot button cultural issues.

A couple of decades ago there was an informal term in Ohio, called the caveman caucus. It was a smallish group of lawmakers, who were very conservative. They wanted things like concealed carry without permits, and a complete ban on abortion. After Citizens United that group was not a smaller subset of the Republican caucus. It became the  majority. Corporations would fund these people by saying we will fund your hot button issues if you look the other way on economic regulation. To understand what was going on you had to follow the money. 

When Citizens United was passed, the justices said that these PACs would be transparent and that would be a check on bribery in politics. But what happened was that a ton of this money was being spent by nonprofit corporations that can hide their spending. These are called 501(c)(4)s.  This is known as dark money. This is money from anonymous donors, and it is actually impossible to trace a lot of the money at this point. That’s intentional because frequently the donors have corrupt intentions.

In 2019, the authorities were investigating the suicide of Neil Clark. 

Neil Clark kept a diary of his work as a lobbyist in the Ohio legislature.  Some time in 2018, Neil Clark disclosed in his diaries that he was meeting with two men, Brian and Rob who would always drink good wines, and would always pay for dinner in cash. He said they seemed like junior mafia. 

 

The FBI started investigating Neil Clark and an FBI undercover agent caught Clark on tape talking about c4s which is what he called the nonprofit organizations that can take undisclosed dollars and spend them on campaigns or issues.  Clark was caught on tape explaining to clients that he would ask the client to invest the c4s of the governor and of the speaker. This was concerning to the FBI, because the law dictated that there was not supposed to be coordination between a politician and the nonprofit corp.  So now the FBI had identified the money that was being misused.  They just didn’t have the motive yet. 

Then House Bill 6 (HB6) was introduced in the Ohio legislature, which was also commonly called the Ohio Clean Air Bill.  It provided a subsidy to failing nuclear plants run by a company called First Energy.  First Energy is a large energy company that has operations stretching from Ohio to New Jersey.  House Bill 6 was basically a $1 billion subsidy born on the back of energy rate payers. The bill, according to FBI agents, didn't mention a specific company, but all of the criteria made it look like it was designed to benefit First Energy.  First Energy is one of America’s biggest polluters and was sued for dumping 20,000,000,000 gallons of arsenic infested coal waste into groundwater and reservoirs. Its nuclear plants paid huge fines for covering up safety violations and its balance sheet was so bad that it declared bankruptcy a year before HB6 was introduced in the Ohio state legislature.  Unfortunately HB6 would eliminate a renewable program to subsidize the wind industry.

Larry Householder became Ohio state legislature’s speaker of the house. HB6 was Larry Householder’s signature bill. No one knew why he was taking so much interest in the bill.

HB6 was very unpopular.  Corporations didn’t like it because their energy bills would go up, and the environmentalists didn’t like it. Television ads started being run to provide cover for conservatives that voted for it. Positive ads were run for people that were voting for it and negative ads were being run for members of the Ohio Congress that were maybe.  As it turns out all of these television ads were funded through Larry Householder's c4 which was funded by FirstEnergy.

The FBI received a call from a member of the Ohio House of Representatives called Dave Greenspan, who did not want to vote for the bill and was getting pressured to do so.  Neil Clark called Greenspan and told Greenspan that he had to vote for the bill.  Neil Clark told Greenspan that nobody cares about his philosophical inclinations so Greenspan called the FBI.  Then Larry Householder was caught on tape, saying “ Do you think we should go ahead and make some kind of a movement on Greenspan just to sit there and say if you’re gonna fuck with me I’m gonna fuck with your kids.”

Greenspan later told the FBI that he was told to delete text messages and then, if he agreed to do that, all would be forgiven.

That gave the FBI enough ammunition to subpoena records and start an investigation and quickly build from there. The FBI knew that there was an effort to delete evidence, so they were now racing against time to collect the evidence before it would get deleted.

HB6 moved through the legislature really quickly. It was introduced at the beginning of April and the governor signed it the day it hit his desk in July 2019.  After it passed, the FBI were still in the early stages of investigations. They wanted to know if it was a corrupt deal.

The FBI had heard about the speaker's 501(c) (4) and they needed to find out the name of it and connect it to him.  They received information that Householder had put a half a million dollars into the House District 43 election. J Todd Smith, a candidate running in that election, was not an initial member of team Householder, but he became one in the general election.

The Democrat, running against Todd Smith was called Dan Foley. Dan was pulled over after he had one beer and he passed the alcohol test but the footage from the police car was found and used in ads by a dark money organization. The ads lied about the fact that he failed a sobriety test and called him a corrupt politician. The ad was paid by a corporation called Hard-Working Ohioans.  The FBI subpoenaed the bank records of that corporation and found that it had received something in the neighborhood of $1.4 million million dollars and that the majority of that money came from an entity called Generation Now, which was also a 501(c)(4) entity.  They now needed to connect that organization to Larry Householder.

 

Then Neil Clark was caught on tape saying that Generation Now was the speaker’s c4.  There were forty other clues in the bank records of money going out to various entities. So then they subpoenaed those entities and it took thirty days to get those records back and then they subpoenaed forty more entities and so on.

 

What was discovered was that Speaker Larry Householder was able to build a majority in the House thanks to First Energy’s money that was siphoned through this labyrinth of PACs.  For example Generation Now sent money to PACs called the Coalition for Growth and Opportunity, to Hardworking Ohioans and to others. From there it would go to benefit Household’s chosen candidates by running negative ads against their opponents. The trail was quite long and confusing and it was intended to be that way in order to make that money hard to track.

Hard-working Ohioans were able to put out negative ads at the last minute for several key districts that were very important in the general election.

Householder was putting hundreds of thousands of dollars into these races, which was a huge amount of money for these races.  That money directly translated into power for Householder.

Neil Clark was Householder’s henchman.  He said that he learned early on that the House Speaker rules the roost.  He dictates who gets rewarded and who gets punished and the Speaker usually gets what they want.

Householder’s game plan was this. He would use dark money to get anti-abortion members elected. In exchange, they would vote for HB6.  And as a reward for their loyalty, he gave them a reward in the shape of a bill, which was the human rights protection act. This act was a ban on abortion. It was one of the most draconian antiabortion laws because it bans abortions after six weeks.  It was coined as “The Heartbeat Bill.”

As soon as the abortion bill was passed, Householder moved to try to get HB6 passed in record time.

At this point the FBI knew about Generation Now. They knew about the millions and millions of dollars that were going into that account while the HB6 legislation was pending.  But a 501(c)(4) allows any person involved to obscure the fact that they were involved. Luckily, the FBI agents were having dinner with the person that was collecting the money, Neil Clark.  Neil was caught on tape telling the FBI agents who were pretending to be potential donors that a noticeable donation was 15 to 20 to 25 thousand dollars. He said he was the speaker’s appointed guy to collect the money.  The FBI agent said our $15,000 is going to be like feeding a TicTac to a whale. And then Clark said you can’t compete with some of the corporations that have billions of dollars and the agent prompted Clark to give the name of this huge donor.. Clarke said the donor was First Energy and the agent asked “what they do?”  Clarke said, “it’s a nuclear power plant.” So the FBI now had that conversation on tape. But that was still just circumstantial evidence.

The next thing that happened was that oil interests and other advocacy groups got together and decided to launch a referendum to oppose HB6

In his diary Neil Clark said that his team ran a poll which concluded that if the referendum did go on the ballot they would lose, so the conclusion was that they would have to ensure that the referendum never made it onto the ballot.

The person that ran the referendum was someone who had worked with Householder in the past. His name was Tyler Fehrman. Tyler managed candidates for Householder in the primary.  Matt Borges who is the former chairman of the Ohio Republican Party was working closely with Householder but had also been Tyler‘s mentor since he was a young rookie. Matt reached out to Tyler shortly after he began the repeal effort and asked him to get a coffee.

 

Borges told Tyler that he wanted him to feed him information from the inside of the campaign. Borges told Fehrman that if Fehrman could provide him with numbers of how many signatures were being collected, the locations of his signature gatherers and other details that Borges would be a hero to Householder. Borges also said that if Fehrman did that, Fehrman would be taken care of.  He said he would pay Fehrman’s legal bill so that he could fight for the custody of his daughter. Borges told Fehrman “pick a salary, pick a car, whatever you want, we will take care of you.”

The next day Borges called the FBI. The FBI asked him whether he’d be willing to wear a wire and to accept Borges’ proposition and to play along. Borges was desperate to impress Householder so he went for it.

Borges had hired private investigators to follow Fehrman so the FBI was following Borges and Fehrman and the private investigators.

After the deal was struck Borges met with Fehrman and said that he would give him 15,000 upfront and 10,000 when it was all over.  Then he asked Tyler how many signatures they had so far.

The repeal effort paid money for a modest TV campaign and support for HP6 dropped to 20%.   That same poll showed 88% of Ohioans were opposed of foreign countries like China investing in Ohio’s energy grid.  Householder and Neil would write the TV scripts for the next few months.

One of the scripts went like this. They took our manufacturing jobs, and now they’re coming for our Energy jobs. The Chinese government is quietly invading our American electric grid.  Paid for by Generation Now Inc.

Another script went as follows. The special interest groups that are opposing house bill six can’t convince Ohioans to sign the petition. They’ve resorted to bringing in shady, out-of-state political operatives to work for them.  If they approach you asking for your personal information, tell them no. Decline to sign.

Speaker Householder’s team were hiring private investigators to follow around petitioners that were collecting signatures for the referendum.  They would have people show up and shout down the petitioners.  They would show up with a fake petition that they would try to pass off the legitimate one.  They even contacted the petitioners and offered to pay them $2500 and a plane ticket home to just stop working. Householder and Clarke tried to pay all of the signature collection companies they could find, to get them to not work on the repeal effort.  You can pay people not to talk. That is legal. What you cannot do is quid pro quo. Getting someone to pass a bill for a bag full of cash.

Around the time that Neil Clark and Larry Householder were trying to thwart the referendum, Neil Clark was caught on tape saying that he had spent $20 million in the last eight weeks.  The undercover agent asked how much money they had to play with and Neil said - “it’s unlimited.”

The repeal team had to collect north of 200,000 signatures.  It was exhausting work. They would start at eight in the morning and finish at 11 PM.

They were finally able to connect Householder to First Energy. Turns out that First Energy had been looking for a sugar daddy for a while.  In turn Householder was looking for a company that wanted something in return and they found that with First Energy.  It was a match made in heaven.

First Energy needed a $1.3 billion bail out to avoid bankruptcy. After the bail out a certain executive was going to sell off the nuclear plant and personally make $100 million.  First Energy had drafted HB6 before Householder was even elected speaker.  The money was sent from First Energy to Generation Now. That provided a guaranteed stream of revenue leading up to the general election.  Everything was funded by First Energy. $60 million of First Energy’s money was spent on personal investigators, TV campaigns, on hiring petitioners, etc.

Householder used some of the money personally. He made repairs to a home that he owned in Florida and paid off credit cards. But the vast majority of it was spent to help him gain power by gaining the speakership.

 

The referendum effort didn’t achieve the 200,000 signatures they needed.

The covert work was done so the FBI then arrested the speaker of the house Larry Householder, and the former chair of the Ohio Republican Party, Matt Borges.

After he was arrested, Householder was reelected that fall because Ohio’s districts were drawn so narrowly that moderate voters never had a chance to make their voices heard. In that election Republicans actually gained three seats in the house.

This caused Ohioans to call for a referendum saying that they needed to have legitimate contests in fairly drawn districts.  The referendum passed overwhelmingly and it created an amendment to the constitution of the state.  The members of the Ohio state legislature ignored the results of the referendum. Time and time again the Supreme Court had to tell them they could not use the maps they had drawn.  The legislators would then send the same maps back to the Supreme Court of Ohio. The chief justice sided with the three Democrats regarding the unconstitutional maps, and there were threats to impeach her.

They did this all the way up to the election, and finally the federal government stepped in and said Ohio had to have an election, so they were forced to have the election with the unfair maps. Ohio is still using those unfair maps today.

With Team Householder unaccountable at the ballot box due to the unfair maps, the citizens of the state looked to federal prosecutors for justice.

 

Shortly, after the charges were announced, two individuals contacted the FBI through their attorneys and said they were coming in to talk. These insiders brought a lot of the circumstantial evidence to life.

The FBI had a huge amount of evidence against Neil Clark in wire taps and so on and they brought him in for a 4.5 hour meeting. They offered to let him cooperate but told him he would have to begin by pleading guilty.  Neil Clark said that would never happen.  Neil then explained to the FBI that because Citizens United c4s are entities that are created by the IRS, what they were doing was perfectly legal. Neil really did believe in his innocence.  He said it over and over in wire taps. His theory was that you can give unlimited amounts of dark  money for political purposes as long as you don’t give it directly to a candidate but instead you give it to a supposedly independent group like Generation Now.

Larry Householder was sentenced to 20 years and Matt Borges was sentenced to 6 years.  The case against Neil Clark was dismissed after he was found dead. The head of the public utility commission and two executives from First Energy were then indicted.

The district attorney of Ohio was asked whether any of this could’ve happened without c4s. He said it would have been impossible. He said he spent a lot of his career going after the Sinaloa cartel and they went to great lengths to launder $200,000. Using c4s is a low risk high-yield endeavor according to this prosecutor.  It’s really rare that you see any kind of prosecution having to do with dark money because for the most part, nobody knows where it is and how much there is. In the case of the Householder investigation the FBI got lucky because they stumbled on to it accidentally when they heard things said on wire taps in a separate investigation.

  

Even if you believe in freedom of speech and anonymous donations, that doesn’t justify what Citizens United does, which is to create a secret lobbying, tax-free mechanism for unions and corporations.

A number of Supreme Court decisions have made it increasingly difficult to detect and prosecute corrupt politicians, by narrowing the definition of bribery, to an exchange of favors for a bag of cash.  Larry Householder, and First Energy had to be extraordinarily reckless and unlucky to get caught.  The line between criminal behavior and business as usual is paperthin.  Through campaign donations and sympathetic courts, powerful interest groups have effectively legalized bribery, by calling it free-speech, but it’s a peculiar kind of free speech that’s expensive, influential and anonymous.  It’s a recipe for disaster when elected officials deal with very very wealthy business interests. 

 

During the 2024 campaign season $4.5 billion flowed into super PACs and c4s.  These are supposed to be independent expenditures, but they were not independent. In exchange for rallies and TV advertising the donors wanted something in return.  LinkedIn cofounder read Hoffman gave $7 million to Kamala Harris while demanding that she fire FTC chair Lena Khan.

Elon Musk's super PAC spent $250 million to elect Donald Trump and Trump offered him a position in government. Between his job, federal contracts, stock rises and changes in government regulation, Musk’s Enterprises stood to pocket well over $100 billion.  How exactly are these campaign deals not quid pro quo? After Citizens United, what exactly is the difference between a campaign contribution and a bribe?

Unfortunately there’s no political will on either side with either Republicans or Democrats to change it because both parties benefit anonymously from dark money. 

 

Neil was wearing a governor DeWine T-shirt when he was found dead. He claims that Governor DeWine agreed to accept a $5 million contribution from First Energy.  Neil made various statements to the effect that Governor DeWine accepted bribes from FirstEnergy. Governor DeWine is still governor of Ohio.

Neil Clark wrote a memoir. It was published after he died.  In it he said, “from the first day I walked into the state house. It was already a corrupt pay to play state and over the last forty years, I saw no saints. Members always put power, self-interest and greed before the interest of Ohioans.”

There you have it. If we can find a way to reverse Citizens United, I hope you agree that it’s something that should happen.

Catch you next time!

  

Cecilia Mackie, MPhys (Hons), CFA

A TOUR OF THE CITY OF LONDON!

Yesterday I visited the square mile that makes up the city of London, with its coat of arms and guarding dragons.

I opted for a self guided tour, recommended by the website for the city of London itself. It is given here.

https://www.cityoflondon.gov.uk/things-to-do/walks-and-itineraries/self-guided-walks-and-trails/the-city-on-screen-self-guided-walk

This tour made me realize that you cannot fully understand American politics, until you understand the British governmental and judicial system. William Penn, the founder of Pennsylvania was born on Tower Hill and imprisoned in the Tower of London for his puritanical beliefs. He was a Quaker and an activist for religious freedom. At the end of his life, he was buried in the All Hallows church in the Square mile of the city of london where he had also been baptized. His father was owed money by the king of England. The king paid off his debts by giving Penn’s father, land that is modern day Pennsylvania and Delaware.

Benjamin Franklin was a printer’s apprentice In the lady chapel. This chapel is contained within the oldest standing church in London. The chapel had been turned into commercial premises after the reformation. He wrote “A dissertation on liberty and necessity, pleasure, and pain” during his time there.

The square mile consists of a number of geographical territories or liberties as they were called, that were excluded from the jurisdiction of the city of London. One example is the liberty of the tower of London.

https://londonwiki.co.uk/LondonPubs/Tower/LibertyBounds.shtml#:~:text=In%201929%20it%20became%20part,Of%20The%20Tower%20Of%20London.

Other examples include the inner and middle temples, which took their name from the Knights Templar and were originally controlled by societies of lawyers. This land is not open to the public and is situated across the road from the Royal courts of justice. Today the Inns of Court, including the Inner and middle temples, are local authorities that are exempt from the jurisdiction of the Corporation of London. This is due to the privileges inherited from the Knights Templar, who originally leased the land to the Inns.

https://www.middletemple.org.uk/about-us/freedom-information/inn-local-authority

The only such examples in the United States would be Indian reserves athough such reserves are subject to federal laws.  It's been a while since I last posted.  I hope all is well!  Cecilia :-) 

THE DECAYED AMERICAN POLITICAL SYSTEM EXPLAINED BY FUKUYAMA WITH THE COOL NAME

If you find these articles mightily useful sign up for future plog posts by typing your email into the box found at the top right hand corner of this page. 

Ok fellow ploggers, what have we learned so far?   Although it masquerades as a democracy, the United States government does not deliver for American citizens.  The next author I will focus on goes into detail about the way the work of millions of people employed by the United States' civil service, is organized.  Is it organized efficiently so we don't waste money?  Nope.  Is there usually a boss we can point to, to take responsibility when things go wrong?  That's called accountability by the way.  Erm.. nope.  When a problem is urgent does the US political system allow us to move swiftly and decisively?  Not particularly.  Part of the problem is that the American people are supposed to direct government via the election process but the system is too big and complicated for people to understand and cast judgement.  To get your head around it you have read "long and boring" books like the one I will cover here.  And no one wants to do that.  Ah but do not fear!  Mackie is here.  I invite you to gain a deeper understanding of how American politics works, quickly and easily by reading my summary of this fantastic book by the illustrious Francis Fukuyama (with the cool name.)

Stanford Scholar Francis Fukuyama’s 2015 tour de force “Political Order and Political Decay” is a 500 page tome, with what I expect is the tiniest writing allowed.  It is a giant endeavor in documenting how political systems around the world developed into what they are today and how well they work.  The short version is that due to America’s historical trajectory, which will be outlined in more detail below, our political system is overly controlled by special interests.  Secondly it is impeded by veto points and conflicting layers of government, which makes decision-making difficult and reduces accountability.  Finally our system is overly subject to clientilism which is the practice of exchanging public sector favors (mainly welfare or jobs) for votes.  The author goes on to detail why other countries around the world have avoided these problems and how their systems work.  It’s pretty useful and dare I say (for those wonky enough to be delving into these posts) riveting stuff.  I’ve skipped a fair amount of the chapters relating to foreign governments wishing only to focus on that which explains the United States’ political system.

People often ask why I call my blog a plog so let me digress for a second here and explain.  First of all plog obviously sounds like blog and when you smoosh the word politics into the front of the word blog, it turns into the word plog which is a good start.  After that the word plog is the gift that keeps on giving.  It sounds an awful lot like plod, which is what you do when you are reading long books, so I like that.  Finally I am British and we have a really bad habit of enjoying toilet humor.  It's just terrible.  So I quite like the fact that lurking surreptitiously under the word plog is plog's ugly brother plop.  I've just bared my naked soul.

POLITICAL ORDER AND POLITICAL DECAY BY FRANCIS FUKUYAMA

As is customary the author fleshes out the subject of state formation with a bit of history.

History

A state (a.k.a. a country) is defined as an entity which "[possesses] a monopoly on legitimate coercion.. [which it] exercises.. over a defined territory."  China was the first country to form a state.  In China the state was formed for the same reason European states were formed - prolonged and pervasive military competition.

A critical component of a state is the court system (a.k.a. the judiciary.)  Interestingly, the rule of law was most deeply institutionalized by the Roman Catholic Church. In the eleventh century it emerged as the guardian of a Roman law based on the sixth-century Justinian code put in place by Emperor Justinian of Rome.  Monarchs in Europe did not have absolute power because they had to follow this external code of law. The Chinese state never developed a transcendental religion and perhaps because of this, never developed a true rule of law. This led to a centralized absolutist China (meaning the government of China had absolute power over its people.)  Absolutist Russia emerged because the Eastern Church found itself subordinate to the state.

Accountable government first emerged in Europe in England (your plogger is of that ilk!) because of the fact that the estates (the aristocracy) and the monarchy were both as powerful as each other so the estates organized a cohesive parliament and had the power to block the King’s initiatives.  England beheaded King Charles I and formed a republic under Oliver Cromwell from 1688-1689.  When a monarch was reinstated he did so under the condition of "no taxation without representation."  The new monarch William of Orange was accompanied by philosopher John Locke.  Locke introduced the concept of ruling with the consent of the governed and that rights were naturally granted in human beings.  This was a crucial moment in history because the concept of giving the people power over their own government was entirely new.  A century later American colonists would use the same rhetoric as they revolted against the British.  However, both the new political orders of 1689 Britain or of the United States in 1789, ratified via the United States' Constitution, were not modern democracies because voting (and other privileges) were restricted to white male property owners.  Nevertheless Locke’s principle was durable and no one has since argued that government should not be accountable to the people.  

Political decay in America – The American system is wasteful and easily controlled by special interests because politicians are in control of government agencies so they use government resources to achieve political goals.  How did we get here?

Fukuyama says that the states with highest efficiency and least corruption are those that developed under an autonomous system before every person in the population was given the right to vote.  An autonomous state system is in place when government agencies from transportation to defense (a.k.a. the civil service) are not controlled by politicians, but instead have independent methods of hiring leaders and workers for the agency.  This means the agencies can fill leadership roles via a merit-based system where the best candidates can be selected instead of allowing the party in power to assign party members to run the agency.  Examples of such autonomous systems can be found in Germany and Japan.  Those countries that became democratic before the civil service achieved autonomy did not do so well.  Examples include the United States, Italy and Greece.  In these countries the political party in power controls who works at the agencies and can dole out jobs and money in exchange for votes in a practice called clientilism, mentioned earlier.  

Universal male suffrage (which means the right to vote) happened first in the United States in 1870.  It did so before the country had a chance to develop an autonomous state and as a result practically invented the practice of clientilism as political parties used state resources to achieve political power.  It suffered from this for much of the 1800s as the various class tiers were enfranchised (or given the right to vote.)

As an example of a country that formed a democracy before a strong bureaucratic state could take hold the author mentions Greece.  Clientilism is still rampant in Greece today.  Socialist parties handed out public sector jobs to party supporters so indiscriminately that between 1970 and 2009 those jobs increased five fold and the average public wage was one and a half times higher than a private sector one!  When Greece recently led the public debt problems in the Euro zone their debt woes had largely been caused by this.  Today Greece and Italy are notable because although they are modern industrialized societies they haven't succeeded in reforming their public sectors and eliminating political patronage and clientilism. 

Our author cites Britain as an example of a country that created an autonomous civil service before the country's voting franchise was expanded to include more of the population.  In 1855 an independent committee investigated the Crimean war and found there was poor organization of intel, logistics and strategy.  The risk to the lives of soldiers and civilians led to a disgruntled populace and subsequent reform to the military and civil service which meant appointments would be given on the basis of merit rather than patronage.  Patronage is the practice of staffing the government with friends and families of those who rule.  Through the 1860s only one out of eight British citizens could vote.  Mass political parties did not get underway in Britain until the 1870s by which time the civil service was autonomous which meant that parties could not use the mass distribution of government jobs as vote-getting opportunities.

Because of this difference Britain’s system cannot be compared to the American one despite America’s Anglo Protestant roots. The British Westminster system is biased towards rapid decision-making.  There is no federalism (where a system of government has several states which remain independent in internal affairs,) no Supreme Court to invalidate legislation, no separation of powers between the executive and legislature and there is strong party discipline.  The executive is the prime minister or president and their staff or ministers which execute governance.  The legislative branch is Congress or parliament which make the laws.  The judicial branch consists of the courts which enforce the laws.  Governments around the world usually consist of three branches: the executive, legislative and judicial branches.  Although America imported the common law system from Britain in Tudor times it became "stuck in time" and did not centralize as Britain’s did.  Since the Constitution was ratified at a time the Americans were rebelling against the British, this emphasized anti-statism and made Americans shun a strong central state leading to decentralization and an emphasis on checks and balances to put constraints on government power.  America’s physical size and dispersed rural population also led to the fact that it would be governed on a decentralized basis.

America was a pioneer in the idea of mass political parties, which lead to clientilism.  It was patronistic until non-elite president Andrew Jackson was elected in 1829. He started the ball rolling from a patronage system to a clientilistic system.  For example in 1849 president Zachary Taylor replaced 30 percent of all federal officials in his first year in office!  Later Lincoln would complain that he was trapped in a system in which doling out bureaucratic offices was an integral part of building political coalitions.  Politicians needed to recruit precinct captains and ward heelers to succeed.  Ward heelers were people that would commit illegal acts like tearing down an opposition party's posters or paying constituents for their votes.  In return for his services the ward heeler was often given a job, perhaps in the city's civil service, which was controlled by the party.  One of the reasons socialism did not take hold in the United States is that the parties captured poor Americans by offering short-term rewards.

In what ways is the US political system dysfunctional?

As a case study of American state building and dysfunction the creation of the much needed railroad regulation agency is described.  It was set up to be governed by a board of party appointees so it ultimately served party interests.  On top of that it was not given powers to enforce things like rate policies which would instead be enforced by the courts.  During the First World War a problem caused by German interference with European bound American shipments caused goods to start piling up at an American port and the Interstate Commerce Commission (ICC) could not deal with the problem so President Wilson nationalized the rail system.  3 years later it was returned to private control and the ICC continued to be run by party appointees but this time is was given more regulatory power.  So the problems swung in the other direction and the excessive regulation eventually led to a crisis in 1970s with many railroads entering bankruptcy.  Allowing party power to influence the economy means it will eventually get captured by interest groups at the expense of the general public.  The moral of the story is bureaucratic systems must have autonomy to make decisions that protect the greater good of the people.

All modern societies started off as patrimonial (patronage) states.  Both classical Marxists and contemporary economists agree that democracy emerges when the threats made to the rich are severe enough that the rich make concessions.  The middle classes can make alliances in either direction but are more often bought off by the rich.  Fukuyama believes that when there is a large middle class of over 30% of the population, a stable democracy is much more sustainable.  This stability may have begun to unravel in the developed world because income inequality has increased massively since the 1980s.  This is most notable in the United States where the top 1% of families took home 23.5 % of GDP in 2007 which grew from 9% of GDP in 1970.  

According to administration specialists the overall efficiency of the United States government has been deteriorating steadily for more than a generation.  The number of government workers has been capped at 2.25 mill since the end of World War II and in 2005 it was actually lower at 1.8 mill.  However, the reason for this is that the government is using outside agencies and contractors to give the impression that we have capped the size of government.  The number of outside contractors is currently larger than the number of direct employees!  Also, the United States public service has departed from being an energized merit-based system.  One of the reasons for this is that half of new entrants are veterans and many of them are disabled. Within government there is a sense that a job well done goes unrewarded.  67% of people in public service responded that their organization was not good at disciplining poor performance.   More generally institutions fail to adapt because human nature encourages norm following beyond rationality (cognitive rigidity.) 

On top of the problems caused by government contractors in that they make for a fuzzy line of accountability, another grave problem is that often no one person is really in charge.  “The welter of congressional committees.. produce conflicting mandates.  There are dozens of congressional committees through which all bills must pass before they get a vote on the house or senate floors.  This decentralized system practically invites special interest groups to protect their interests.  Barack Obama’s affordable care act in 2010 turned into.. a monstrosity.. as a result of all the concessions that had to be made to interest groups including doctors, insurance companies, and the pharmaceutical industry.”  My next piece is going to shed more light on the inner workings of lawmaking in Congress. 

In other words there is a patchwork of government branches in the United States that can each issue different orders to the same agency.  The author cites the forest service as an example of a department which has competing mandates.  This area of government was simultaneously captured by the interests of home owners and of environmentalists.  Preposterous economic impracticalities arose and the government ended up spending $1 million on fire protection per $200,000 home!  On top of that the forest service has failed to meet the original mandate of sustainable wood production, an endeavor that should easily turn a profit but instead loses money every year. 

Water always seeks its own level and during the nineteenth century government functions in the United States, which in Europe were performed by an executive branch, started to be performed in a round about way by judges and elected representatives thereby causing Stephen Skowronek to characterize the US as a “state of courts and parties.”  A merit-based bureaucracy arrived in 1880 but the amount of classified civil servants only reached 80% after the new deal in 1930s.  In 1954 we reached a turning point in history.  A lawsuit started by the NAACP – The National Association for the Advancement Of Colored People named Brown  v. Board of Education made segregation illegal.  Because the state was controlled by pro-segregation forces, private groups found they had to use the court system to fight to overturn segregation law.  Since then social movements such as environmental protection, women’s rights, consumer safety and gay marriage have been pursued though the courts.  There is no other liberal democracy that proceeds in this fashion.  “The decay in the quality of democratic government is rooted in the fact that.. the courts and legislature have usurped many of the proper functions of the executive, making the operation.. incoherent, unaccountable and inefficient…  The courts.. have become alternative instruments for the expansion of government.”

Another notable change was the explosion of lobbyists from 175 individuals in 1971, to about 12,000 (who spent $3.2 billion) in 2013.  When a congressperson is exposed to a particular viewpoint it is called intellectual capture.  A pervasive and troublesome effect has been that “while nominal tax rates in the US are much higher than in other developed countries, very few American corporations actually pay taxes at that rate because they have negotiated special exemptions and benefits for themselves.” 

Fukuyama presents a graph depicting the number of veto points against the difficulty of decision-making and the graph shows that the US has the most difficulty of all contemporary democracies in making decisions.  His conclusion is that America is a vetocracy in gridlock.

The United States differs from most democratic counterparts in other ways.  Examples of countries that have parliamentary systems are the United Kingdom, Denmark, Sweden, Germany, Ireland, Italy, Switzerland, India and South Africa.  In a parliamentary system a lot of laws are drawn up by the executive branch with the help of the civil service, and the civil service is administered by ministers.  That means the people writing up the laws deciding where money is spent are the people responsible for making the money work for the good of the people.  Do you remember I explained before that there are three branches of government: the executive, the legislative and the judicial?  The way to remember it is that instead of having three branches, a parliamentary system seems like it really has two branches because some of the key functions of the executive and legislative branches are merged.  In contrast the United States' Congress writes and passes laws independently from the Whitehouse/President (the executive.)  Congress' overlapping committees produce duplicative and/or conflicting mandates and result in a governance without clear direction which is thus unaccountable.  As an example of the result of this setup the Pentagon is asked to produce 500 reports a year often on duplicate issues consuming huge amounts of time and energy.  Financial sector regulation is shared by 9 regulatory bodies and by State Attorney Generals.  “It was easy for the banking sector to game this system.. in the late 1990s.”

Government agencies are run differently too.  In a parliamentary system once a party is elected it runs the whole governmental system.  In the United States that is not the case.  Instead of straightforwardly delegating power to a single agency head it sometimes goes to a group of commissioners balanced between parties.  This ultimately makes agencies and regulators less accountable.

How can the US system be fixed?

The success of anti-establishment presidential candidates this year demonstrates that the United States has a political system which is considered illegitimate by a lot of its citizens.  Legitimacy is a crucial component to a well functioning system.  A perfect example of this can be seen in the moment when England applied the principle of "no taxation without representation" to their political structure in the 17^th century.  Because of it they were able raise more money than France's coercive system which in turn allowed them to win wars against France.

Fukuyama believes the United States has devolved into a patronage system.  “The nascent American state was captured by democratic politicians and has been repatrimonalized through interest group influence through Congress.”  This has been aided in part by the huge growth in lobbying groups and by a series of Supreme Court decisions which has liberated these groups from constraints on spending money.

The American system was designed to resist tyranny but that has been at the cost of an ability to make decisions.  This crippling effect means Congress will be unable to make very necessary changes to its infrastructure, health, immigration, entitlements, the tax code (to cite but a few examples of highly pressing issues) in the future.  To expand on just one of these problems, an important challenge for democracies around the world is the unsustainability of their welfare-state commitments.  Almost all welfare systems were created when birth rates were higher, life expectancy shorter and economic growth was more dependable.  The failure of America to deal with the sustainability of its welfare state has been due to the polarization of its two parties, their perennial feuding and their race for more funding for themselves and their constituencies. 

America is caught in a bad cycle.  Americans distrust government so Congress mandates complex rules that reduce the government’s autonomy and make decisions slow and expensive... The government under performs which confirms the people’s distrust and so on.  This decentralized system does not represent majority interests and instead gives excessive representation to the views of interest groups and activists.  “A lot of political actors recognize the system isn’t working very well but have very deep interests in keeping things the way they are.”  Many of these problems could be solved if we moved to a parliamentary system but that is unlikely since Americans love their Constitution.  If change is to be made to the structure of the US political system it is important to note that too little or too much bureaucratic autonomy are both bad.  A careful balance must be struck to find an optimal point.

Conclusion

Most United States citizens only pay attention to politics during a presidential election.  Clearly the responsibility of being a United States citizen does not end at choosing the right president.  A great president can do little to fix fundamental flaws in the design of the United States political system which was framed in a different world.  There are 435 Representatives, 100 Senators and 52 states today.  When the Constitution was institutionalized in 1776 there were only 56 delegates, 13 colonies and under 4 million, mostly disenfranchised and poorly educated citizens.  Today, improved communications have led to heightened governmental transparency and scrutiny which means we can safely cut back on some of the checks and balances that are hampering our ability to make critical changes.  Fukuyama suggests we move to a parliamentary system which has worked effectively across the developed world.  I say we dare to hope for this, or a similarly effective and necessary change.

I am Cecilia Mackie, MPhys and I worked on Wall Street for 10 years where I rose to an executive level.  The owners of a firm I worked at are now in jail.  Because of this experience I have avidly researched corruption based issues over the last few years.  Outside of this plog, I am building a tech platform which will allow people to participate in a community for political change.  

Please go to www.mackiemusic.com to access my social media pages and learn more about my polymathematical world of wonder!