Sunday, March 13, 2016

A STUDY ON CAMPAIGN FINANCE REFORM

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Here I am, once again taking the “long and boring” out of important books that affect our lives today by plogging for joy!




Trump’s and Sanders’ unexpected success in the March 1st, 2016 primaries was an anti-establishment cry from the American people.  Americans feel powerless to change a system that does not deliver results for the average person.  Campaign finance reform is a perfect example of an area of politics in which the average person’s desires are not being met.

An ABC–Washington Post poll conducted in 2010 showed that 80% of those surveyed opposed the idea that “corporations and unions can spend as much money as they want to help political candidates win elections.”  The influence of lobbyists and special interests strikes deep in the hearts of American citizens yet in 2010 a case brought to the Supreme Court by Citizens United ruled that there would be no limits on what corporations could spend to influence campaigns.  Obama stated the decision “gives the special interests and their lobbyists even more power in Washington” and “strikes at our democracy itself.”  The ruling sounds wildly off base and caused quite a stir in the media.  I wanted to understand the intellectual rationale behind such a seemingly counter-intuitive decision by the Supreme Court.  In 2010 The New York Times called Bradley A. Smith the “intellectual powerhouse” behind the movement to deregulate campaign finance.  In this post I will review his book, which makes the intellectual case for the ruling (or for deregulation.)  The book is called Unfree Speech: The Folly of Campaign Finance Reform and was published in 2001.  Fully versed on the subject and its legal history, Smith served as Commissioner, Vice Chairman and Chairman of the Federal Election Commission between 2000 and 2005 and is a veritable industry insider.  He is currently a professor at Capital University Law School.  I will then review a study that combines the results of multiple studies done on the effect that campaign contributions have on voting in Congress.  Finally I will summarize the Supreme Court judges’ statements on the Citizens United ruling and the public reaction to the ruling from commentators on both sides.

The contention over campaign finance law exemplifies the difficulties of government intervention. We know that while regulation has become more stringent in the last half century, we have seen decreased competitiveness in elections.  The more competitive our elections are the more accountable elected officials will be for their actions.  About 95 percent of elected officials that ran for office again were re-elected in 2014 yet 86 percent of Americans disapprove of Congress.  What is not clear is why reform has not had a positive impact on these crucial statistics.  That’s because there are a number of conflicting issues in the area of campaign finance reform and those issues are what I intend to shed some light on in this post.

Smith’s book is clearly presented and densely packed with history and citations of studies and case law.  Also, his desired ends appear to be the same as those of the reformist movement.  He believes that his prescription will allow us to arrive at a more competitive and democratic system.  The only criticism I have is that Smith seems like he is more intent on selling his case than he is on giving an unbiased view of both sides.  My favorite type of author gives me the feeling that he or she is determined to arrive at as good a characterization of reality as they can muster.  This shortcoming makes me suspicious as to whether I should swallow the overall thrust of Smith’s case.  But since his argument is quite solid and well researched a layperson like myself comes to a bit of a dead end as to what the correct solution to the matter is.  That’s because I could not find an intellectual rebuttal to Smith’s case in any publication and since the matters Smith deals with are technical and require the knowledge of an industry insider I cannot rebut his points myself.  I get the feeling that intellectuals have been trying to sweep this book under the rug in the hopes that if they do not give it any attention it will eventually be forgotten.  Clearly that strategy has not worked.  If a majority of the Supreme Court judges were intellectually captured by the merits of Smith’s case to the extent that they have taken control of the law itself, as was seen in the game-changing Citizens United ruling, then those merits can no longer be ignored.

Bradley A. Smith.  Unfree Speech: The Folly of Campaign Finance Reform


Smith opens the book with a series of anecdotes showing the ostensible results of campaign finance reform and how the laws tend to be targeted towards the grassroots activists that the constitution sought to protect.  Here are just two of the examples he cited.

The Federal Election Campaign Act (FECA,) passed in 1971 was the toughest campaign finance regulation the United States had ever seen.  On May 31, 1972 a group of lawyers, a Senator, a law professor and others paid $17,850 to publish an advertisement asking for Richard Nixon to be impeached.  The US Department of Justice sued the group in the first enforcement action ever bought under FECA.  “For the first time in history, Congress had passed a law requiring citizens to register with the government in order to criticize its office holders.”

On April 27, 1988 Margaret McIntyre passed out handbills outside a school in Ohio in protest against a school tax-hike.  The handbills criticized wasteful practices of the school board and broken promises made before the last tax-hike.  An assistant superintendent of the school district J. Michael Hayfield filed charges against McIntyre for violating the Ohio elections code by distributing “anonymous” campaign literature and she was charged, found guilty and fined. 

Shortly before finishing the book, Smith was nominated to a seat on the Federal Election Commission.  He states, “Life on the FEC can be summed up as follows:  We see many complaints, [some are violations of FECA, some are not].. but virtually none have anything to do with special interest influence or the prevention of corruption.” 

I will briefly summarize Smith’s history of campaign finance law in this country

The first campaign financing legislation was passed in 1907.  Smith argues that in the first half of the 1900s the several laws that were passed to ban corporate contributions, require disclosure and limit house and senate race amounts were largely ineffective since there was no enforcement provision which meant the laws were circumvented.  In 1943 after a wartime strike, laws were temporarily put in place banning contributions from unions only during wartime to protect the war effort.  It was then that the first Political Action Commitees (PACs) were formed by unions to circumvent the ban.  Decades later in the transformative FECA act of 1971, unions lobbied to sanction the use of PACs and during the bargaining, the use of PACs was extended to corporations.  Ironically the now vilified PACs were first created by unions and the FECA reforms increased and institutionalized corporate political activity.

Political spending, which was dampened by the Great Depression and World War II took decades to ramp up. 1948 spending was the lowest since 1880, $140 million was spent on the 2 year election cycle leading up to the 1952 presidential election, $200 million was spent leading up to the 1964 election, $540 mill was spent leading up to the 1976 election.  In 1971 the Federal Election Campaign Act (FECA) was passed.  It closed loopholes by putting penalties in place for non-disclosure.

Shortly after FECA the Watergate scandals of 1972 – 1974 broke.  Throughout this book Smith tries to convince the reader that we do not need reform because enforceable disclosure is enough.  He argues that Watergate proved that revelations caused by enforceable disclosure, and the public reaction to those revelations, showed that on its own disclosure is an adequate deterrent.  Watergate allowed the reform lobby to push for tighter reforms in 1974 amendments.  Between the 1971 and 1974 changes, enforceable disclosure, public campaign financing, spending and contribution limits were the new regime. These are the four cornerstones of what is thought to be a sound system.  Thus by 1974 a great part of the battle for campaign finance reform had been won.

This reform was immediately challenged in court by Senator James Buckley et. al. exemplifying a very problematic part of the American political system.  In parliamentary systems throughout most of Europe the courts cannot overrule legislation that has been decided by parliament.  Here in the US a bill that has been passed by the two chambers of Congress, The House and The Senate, can be overturned by a majority of the 9 Supreme Court judges.  In other words it only takes 5 judges to overturn a bill that has been scrutinized by hundreds of Senators and Representatives.

In the Buckley ruling of 1976, the court threw out the restriction on spending on the basis that in the act of spending an official is not being bribed.  The court upheld limits on contributions.  This created a central tension.  Spending was unlimited so donors just had to find a way to contribute that circumvented the rules and they have since found a number of ways to do that.

This book was published in 2001. Smith wrote an updated preface in Sept 2002 by which time the Bipartisan Campaign Reform Act (BRCA) of 2002 had been passed.  According to Smith BRCA was very far reaching legislation.  BRCA fueled the “Citizen’s United” suit which was mainly brought about to fight BRCA §203.  He states that among the scandals that were used to fuel the passage of BRCA two “stand out,” those of Enron and the Clintons.  He explains in detail why the wrongdoings of the Clintons and their personal friends who sought and received pardons in the closing hours of Clinton’s administration were, in their majority, related to gifts and actions which would not be banned under BRCA.  He argues that Enron’s campaign contributions brought the company “no assistance in court.”

Those are the main points regarding campaign finance law history.  Here are the saliencies of Smith’s intellectual case against campaign finance reform.

Limiting contributions - the unwanted effects on campaigns


According to Smith, overall our effort to reform the system has had a number of unintended consequences that are “undemocratic.”  Contribution limits have entrenched the status quo and favored incumbents.  That’s because the need to raise a lot of money from lots of contributors benefits those who have a database of past contributors.  Incumbents start with name recognition, are able to attract press coverage, receive assistance from their staff and have the privilege of free postage when mailing constituents!  These perks have been estimated to add up to several hundred thousand dollars.  The way to help any potential candidate with good ideas is to make it easier for political newcomers to raise money and that usually means finding large contributors.  Similarly, putting caps on spending merely concentrates political power with those who do not need to spend as much i.e. those who already have name recognition.  Smith believes that limiting spending may also have the unintended consequence of increasing voter ignorance, as candidates are being limited in what they can spend to reach constituents with their message.  It has also strengthened the power of the wealthy and upper middle class because it works against candidates who represent the interests of the working class and who have historically relied on wealthy sympathizers since their constituents cannot afford to donate.  Keeping contributions low has had the added negative effect of diverting the attention of the elected official away from official duties.  The contribution limit of $1000 has not been adjusted for inflation since 1974!!  Finally Smith makes the point that we should not be so worried about large donors contributing to campaigns because elected officials need votes not dollars.  Dollars only help by getting an official’s agenda heard.  If the agenda is not what the public want to hear it won’t translate into votes.

The Buckley decision held that congress could not limit the amount a candidate spends on his or her own campaign.  Because of this the millionaire candidate phenomenon has been renewed.  Smith argues that limits on contributions have made debates void of substance, as politicians do not wish to alienate a broad donor base.  He states, “It is no surprise that in the 1992 and 1996 presidential campaigns, the candidates who seemed most determined to discuss substantive issues were Ross Perot and Steve Forbes, self-funded multimillionaires.”

Money – The easiest way for the average citizen to contribute

Smith argues that spending money is only one of the ways to influence the public and that retracting it only puts those with other ways to wield political influence at an advantage.  Having access to the press via stardom or because you control the media are examples.  There is no good reason why actors and journalists should have more access to influencing voters than a wealthy entrepreneur especially since persons of influence do not represent the average American.  Smith argues that people “of wealth” are more representative of the American public.  The average person is 8 times more likely to describe themselves as conservative than a journalist.  “A recent study suggests that 30 million Americans could make a $1000 donation.”   Yet 89 percent of Washington press corps reporters and bureau chiefs voted for Clinton in 1992 vs. 43 percent of the population and 80% of academics identify themselves as democrats.  On the other hand 40 to 60% of contributions from corporate PACs give to Democratic Party candidates despite the belief that the Republican Party favors corporations.  It should be no surprise that the wealthy are more homogenous. Due to the fluidity of wealth in American society many of the rich have been poor and or have poor friends and family.  In fact money is a source for expanding political influence beyond a “narrow political caste.” “..we must realize monetary contributions are one of the most popular and egalitarian ways in which Americans participate in political campaigns.”

The unintended legal encumbrances of campaign finance reform

Campaign financing reform has created complex filing requirements has had the perverse effect of favoring those with money and expertise in the regulatory mechanics and legalities and has distanced the system from ordinary citizens and grassroots efforts.  It has also had the unintended consequence of making litigation a campaign tactic.

Government financed campaigns

Smith actually suggests government financing as one of the best options we have.  I find Smith’s posture here very redeeming since public funding is not the common plight of a conservative.  He states that a system of government financing of political campaigns will probably also reduce administrative costs.  As proof, he states that the FEC spends far less on administrating the “federal presidential campaign fund” (the government fund which currently finances presidential campaigns) than it does on enforcement, audits and disclosure of every other area of campaign financing.  Overall government-financed campaigns could have the triple benefit of saving money, increasing competitiveness and preventing the need for candidates to waste time fundraising.

He outlines a way to go about it.  From a technical standpoint courts have found that constitutionally, you cannot require candidates to take public funds and limit their spending.  Thus government financing proposals must draw candidates into optional schemes of public financing and voluntary spending limits.  This could be done if Americans could be persuaded to fund campaigns adequately from the public till.  Smith’s anecdotes demonstrate that it is not beyond the ineptness of Congress to spend months passing a bill, which proves inadequate in terms of improving the system.  The amount of money given for each type of race must be adjustable based on features like inflation or by using a measurement of the cost of enabling a new candidate to get their name and message out to a constituency.  Smith argues that current campaign financing levels are not very high.  At the time this book was published Smith claims that US political expenditures constituted just .05 percent of GDP.  GDP was about $10 Trillion that year (taken from The World Bank’s website.)  The budget was $1.8 trillion (taken from the budget issued by the Executive office of the President.) Thus US political expenditures were one four hundredth of the total Federal budget.  Our author then asks us to take a different perspective.  Apparently an analyst has calculated that to properly reach 300 million people there must be a presidential campaign expenditure of $600 million.  The amounts he suggested to adequately fund campaigns were: $30 mill for the general nomination of a major party Senate nominee in California, $8 million for a Senate nominee in Ohio and $2 million or more for a house nominee in any district.  Since in the 1997 to 1998 election cycle only 39 house candidates took in over $1.5 million, most candidates would probably accept the government subsidy.  That would then be conditional on a spending limit.  In a study of Wisconsin’s system by Mayer and Wood they argued, “a well-designed and adequately funded public finance program can dramatically increase competition levels.”  The biggest problem is that this solution is dependent on the government adequately funding campaigns.  According to Smith “There is no hint of a political will to dramatically expand the levels of tax financing.”  It is too easily labeled as “welfare for politicians.”  A second problem is that government spending means challengers will never be able to spend more than an incumbent and challengers that outspend an incumbent are the ones that are usually able to win.  The chances of success in getting adequately funded government financed campaigns through are slim.  Furthermore the presidential race which is now 100% government financed is an example of the potential result of such a system.  Smith thinks that due to publicly financing the Presidential race, soft money (a loophole from a 1978 FEC ruling) has becoming a widely used tactic. An example of this was the $33 million that came from “corporate sponsorship” to pay for Republican and Democratic national conventions in 1996, labeled as such to circumvent spending limits.  Smith says because the government spends $1.5 Trillion a year and regulates numerous industries, those industries are likely to find loopholes however draconian the system.  Thus, government funding might help, but not unless reform groups raise the current limits seen on contributions and spending so that politicians don't feel the need to raise money elsewhere, and none of the reform groups are considering a government-funding proposal without these caps.

Incumbents manipulate laws to protect their seats

Incumbents who seek to protect their seats will always manipulate new laws.  To demonstrate this, when Congress debated spending caps in 1997 the bills establishing those caps were set at levels which made it impossible for challengers to be competitive. “Only 3 percent of challengers spending below the proposed limit for House races had won in 1996 whereas 40% of challengers spending more than that limit had won.”  In other words Congress was seriously debating a bill which, based on the previous year’s election, would give challengers a 3% chance of winning!!  Another problem with the system is it is structured so Republicans and Democrats have the same amount of money, and more than any other party’s nominee.  The result is a system that is rigged to favor major party nominees.

Constitutional arguments

Let me make a simple note here regarding why the First Amendment comes up when we talk about money in politics.  The First Amendment protects the rights the people and the press have to free speech.  In US courts money and speech have been equated because “all communication in modern society requires at least some expenditure of money.”

Smith discusses at length the constitutional arguments made by different courts that affect this field of study.  I read it all and I found the arguments to be relatively unimportant and overly focused on semantics.  I am concerned with pragmatic policy that suits our time.  The constitution is arguably well composed.  However, it was written over 200 years ago at a time when people lived under an enormously different set of circumstances than we do today.   At that time the population was under 4 million and there were only 13 states.  Our population is almost 100 times larger, substantially more enfranchised, better educated and well informed.  Our standards of living are much improved.  Simply put, life is entirely different. 

Nevertheless I will mention one point Smith makes which strikes me as notable.  The First Amendment states: “Congress shall make no law... abridging the freedom of speech, or of the press…”  Since First Amendment rights are fundamental rights, if government regulation burdens those rights it is subject to “strict scrutiny” and must be “narrowly tailored” to the least restricted means.  FECAs disclosure laws are a less restrictive means than FECAs spending and contribution limits.  Smith argues that enforceable disclosure alone is a sufficient means of preventing corruption whilst minimally encumbering First Amendment rights.

Regulation has been fraught with the need to create endless distinctions

Over the past two decades [as of the time the book was first published in 2001] the Supreme Court has attempted to distinguish between the right of the individual to spend unlimited sums on his own campaign and contributing unlimited amounts to the campaigns of others.  It has distinguished between spending on campaigns, which are limited, and spending on ballot issues, which may not be.  It has tried to distinguish between expenditures by media corporations, which are not limited, and expenditures by non-media corporations, which are.  The courts allowed large donations to offset party expenses that have now been dubbed “soft money” and have been vilified.  They allowed political parties to spend on polling, get-out-the-vote drives and generic advertising in 1979 in order to strengthen the parties and such spending is now considered a “loophole.”  Proposals to ban bundling, to reduce contributions outside a representative’s district and to put limits on “issue ads” have all been attempted.  Smith draws our attention to the opening words to the First Amendment “Congress shall make no law..” which is explicitly calling for no government interference in speech and yet the courts find themselves imposing “ever-increasing restrictions on speech.”

The future of campaign finance reform

Smith finds it notable that reform groups often talk about a corrupt system without specifying the corrupt persons or pointing to specific events.

He explains that campaign spending has risen for very understandable reasons.  One of the main reasons is growth in the electorate that has grown much faster than the population.  Women were enfranchised in 1920, eighteen year olds were given the right to vote in 1971 and the Voting Rights Act of 1964 successfully enfranchised more black voters in the south. The electorate greatly expanded during this period until the early 70s.  Smith makes the incredibly compelling point that spending on a per voter basis has hovered around $2.50 to $3.50 since the early 70s and remains lower than several democracies including ones much poorer than the US like Venezuela, Italy and Israel.  Another factor that has led to increased spending since the beginning of the 19th century is the new style of campaigning which has given voters much more direct exposure to candidates.  Mass media forms of communication like radio and television have driven costs higher.

But, Smith argues, the single biggest reason spending on campaigns had gone up is that government size has gone up.  While the government spends $1.8 trillion and controls areas from health to farmland use, contributions will find their way into the system through one loophole or another.  Smith argues that campaign finance reform has grown with the size of government that had growth spurts at the end of the nineteenth century and implemented the great society programs of the 1960s.  Smith believes the only time special interests will stop spending will be when they do not want to spend any more.

“At work here is a fundamental failure to analyze correctly the workings of politics.  It is simply wrong to assume that eliminating money as a form of influence will, in some way, increase the influence of an average citizen.”

“..solutions imposed have made the problems worse.  Campaign finance regulation has helped to insulate incumbents, hindered grassroots political activity, infringed on free speech and made campaigns longer and devoid of content.”

Can it be true that we are doing more harm than good when we regulate campaign contributions?  Smith’s argument is not entirely preposterous.


______


“A Meta-Analysis of Campaign Contributions’ Impact on Roll Call Voting” by Douglas D. Roscoe and Shannon Jenkins, University of Massachusetts Dartmouth, published 2005.

Congress consists of two chambers, the Senate and the House.  A roll call is the name given to a vote on a bill and it happens in both of these chambers of Congress.  In his book Smith explicitly states, “It has been shown that campaign contributions play little role in floor voting.”  I am adding commentary on the above study to refute that statement.  Many academics have tried to argue that research has failed to establish a significant relationship between contributions and roll call votes and this has become somewhat of a conventional wisdom.  However, the above paper written by Roscoe and Jenkins gathered data on a comprehensive number of studies comparing contributions to roll calls.  It combined the results of all studies (and importantly compared the calculations used in each study which is called meta-analysis) and concluded that one-third of roll call votes exhibit the impact of campaign contributions.  What is perhaps of most concern here is that in general, all the studies controlled for (in other words ignored) contributions that were given to legislators that shared the donor’s ideology.  That means legislators were found to vote against their own ideals because they had received a financial contribution one third of the time!  Furthermore, contributions given to legislators that share the donor’s ideology should not be ignored.  If a corporation can line the pockets of an incumbent that shares its ideology that incumbent will be tougher to beat.

Citizens’ United
(Extracts taken from Wikipedia)

Citizens United v. Federal Election Commission, is a U.S. constitutional law case dealing with the regulation of campaign spending by organizations.  It was decided in 2010 and was won by a narrow 5 to 4 majority of Supreme Court judges.  By allowing unlimited election spending by individuals and corporations, the decision has “re-shaped the political landscape” of the United States.

The term “the majority” means the five judges that voted in favor of the case.  The dissent consists of the remaining 4 judges.

Notable extracts from author of the majority opinion, Justice Kennedy’s argument:

In its opinion the majority states, “If the First Amendment has any force, it prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech.”  The majority then goes on to use this to justify that the BCRA §203 prohibition of all independent expenditures by corporations and unions violated the First Amendment’s protection of free speech.  The majority argues that corporations are associations of people.  Well, no.  Corporations are the property of people and are much like any other income producing investment such as a building.  It is absurd to grant fundamental rights of self-expression to a piece of property.  The majority opinion goes on to say “..the First Amendment does not distinguish between media and other corporations..”  Well, that’s simply wrong.  The First Amendment explicitly mentions “the press” and does not mention corporations.  Therefore it clearly distinguishes the media (the press,) from corporations or from anything else you would like to mention, such as artichokes, which, like corporations are also omitted.  The majority opinion goes on to say “[the restrictions on corporations' speech] would allow Congress to suppress political speech in newspapers, books, television, and blogs.”  Well, no.  That would be silly.  Restrictions on corporations’ speech (or that of any other object omitted from the First Amendment, like an artichoke) would not affect the rights explicitly granted to “the press” by the First Amendment.  

Then the majority argues that granting First Amendment protections to media corporations but not other [corporations] presents a host of problems.  Ok.  This is a (only slightly) more grounded argument.  The problem suggested by the judge no doubt refers to the fact that limiting corporate political participation has the unintended consequence of making the voice of the media more powerful.  A biased media is an intractable problem which may need to be addressed.  But the idea of allowing both evils (a biased media and corporations) to sway elections for the sole purpose of not making one evil stronger is, in isolation, not a good basis.

In what I have extracted here from his comments, in complete fairness Judge Kennedy has presented a load of rubbish.  Just being blunt.  Sorry.

Notable extracts from author of the dissenting opinion, Justice Steven’s argument:

Stevens argued that the Court’s ruling “threatens to undermine the integrity of elected institutions across the Nation." "The path it has taken to reach its outcome will, I fear, do damage to this institution.”  “A democracy cannot function effectively when its constituent members believe laws are being bought and sold.”

“Stevens argued that the unique qualities of corporations and other artificial legal entities made them dangerous to democratic elections. These legal entities, he argued, have perpetual life, the ability to amass large sums of money, limited liability, no ability to vote, no morality, no purpose outside profit making, and no loyalty.  Therefore, he argued, the courts should permit legislatures to regulate corporate participation in the political process.”  “The First Amendment, he argued, protects individual self-expression, self-realization and the communication of ideas.  Corporate spending is the “furthest from the core of political expression””

“Stevens argued that corporations “unfairly influence” the electoral process with vast sums of money that few individuals can match, which distorts the public debate.  Because a typical voter can only absorb so much information during a relevant election period, Stevens described “unfair corporate influence” as the potential to outspend others, to push others out of prime broadcasting spots and to dominate the “marketplace of ideas””

Steven’s closing statement:

“At bottom, the Court’s [decision] is thus a rejection of the common sense of the American people, who have recognized a need to prevent corporations from undermining self government since the founding, and who have fought against the distinctive corrupting potential of corporate electioneering since the days of Theodore Roosevelt.  It is a strange time to repudiate that common sense.  While American democracy is imperfect, few outside the majority of this Court would have thought its flaws included a dearth of corporate money in politics.”

Support:

Several voices in support of campaign financing state that from a practical perspective regulating corporate money has only served to protect incumbents and make elections less competitive.

Some other interesting notes from supporters are:

Eugene Volokh, a professor of law at UCLA, stated that the “most influential actors in most political campaigns” are media corporations, which “overtly editorialize for and against candidates, and also influence elections by choosing what to cover and how to cover it.”  “Holding that corporations like Exxon would fear alienating voters by supporting candidates, the decision really meant that voters would hear “more messages from more sources.”"

Criticism:

In September 2015, Senator Bernie Sanders said that “the foundations of American Democracy are being undermined” and called for sweeping campaign finance reform.

The New York Times stated in an editorial, “The Supreme Court has handed lobbyists a new weapon. A lobbyist can now tell any elected official: if you vote wrong, my company, labor union or interest group will spend unlimited sums explicitly advertising against your re-election.”

Constitutional law scholar Laurence H. Tribe states [there is a] very real injustice and distortion entailed in the phenomenon of some people using [shareholders’] money to support candidates the shareholders have made no decision to support, or to oppose candidates they have made no decision to oppose.”

Conclusion

Without meaningful competitiveness in elections incumbents are not incentivized to act for the benefit of American citizens.  This is a baseline issue in American politics.  If you read my last plog post you will remember that notorious lobbyist Jack Abramoff called for an introduction of term limits so that elected officials do not develop long standing relationships with lobbyists.  His notable experience influencing elected officials on behalf of special interests has led him to believe that re-electing an incumbent time and time again was corrupting to the political process.

After a century of experience with campaign finance reform we find the field of seasoned Supreme Court judges split between those that think that regulation is bad and those that think we must regulate.  That is because the intellectual case for each side is plausible.  Maybe it’s time to realize that both sides may be right.  If we do not regulate, then the message can become saturated by forces that seek to change the system to serve special interests over the interests of the average citizen.  If we do regulate, then we make the situation worse by concentrating political power in even fewer hands and we experience the unintended effect of reducing competitiveness which in turn reduces accountability among elected officials.  Maybe we will never succeed in improving the system until we adequately fund elections publicly.  As you can see, Smith’s rhetoric reverberates through the opinion of all those in favor of deregulation.  If Smith, the intellectual bastion of the conservative movement, suggests this as a solution and on the liberal side there is plenty of support too, then decades of experience with campaign finance reform may have unified both sides in this respect.  Perhaps it is time to realize that until we adequately fund elections publicly we will not improve the statistics regarding incumbent re-election rates, we will not reduce the effect contributions have on roll calls and we will not change the fact that candidates spend far too much of their time raising money instead of doing their job.  Perhaps, whether we do so immediately or down the line, we must accept that the current ongoing battle between each side to regulate and deregulate necessitating seemingly endless litigation, involving a minutiae of distinctions and a never ending closure of loopholes will never come to improve these crucial aspects of our political system.  According to Smith, In 2001 US political expenditures constituted just 0.25 percent of the United States' federal budget.  If campaigns only cost one four hundredth of the total federal budget, that is a very small price to pay to ensure our elected officials are not allocating the budget in the wrong way for the wrong reasons.  We don’t know for sure whether Smith and all the other experts that believe government funding may improve things, are right.  What we do know is that after 45 years of enforceable reform measures there has been no physical improvement in key statistics.  It would seem sensible to try a different course to test whether these “pro-public funding” experts are right.  Scientists can pontificate about this and about that but in the end they must do experiments and the data must yield results, for their theories to have any meaning in the real world.

In Obama’s final State of the Union address in January 2016 he mentioned three things he would change about America’s political system.  When the most important man in politics mentions the top three things he wants to change, you listen. One of these things was to reduce the influence money has on politicians.  He said he hates raising money and he thinks most politicians do.

Another item on Obama’s short list was gerrymandering.  Right now Senators can change the borders of their district to include constituents that are likely to vote for them.  I can’t think of one good reason to continue to allow that.  It needs to stop.

In my next post I will be covering a book by Francis Fukuyama, published in 2015 called Political Order and Political Decay.  This book clearly explains the problems with America’s political system, what makes it different from most western systems and why it means that Congress can’t get anything done.  In the meantime I am working hard to build and deliver the tech platform I have been promising, which has the potential to help in all these areas by creating a system outside the system, a unifying force.  Stay tuned to follow this exciting journey!

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.  The platform will have a mechanism to allow our community to enact change within the world of American politics.  


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

Wednesday, January 13, 2016

A COMMENTARY ON "WASHINGTON BAD BOY" JACK ABRAMOFF'S BOOK

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Continuing with the theme of corruption in Washington I picked up the juiciest book I could find on the subject.  I need to think about readership engagement after all.  The writer of the book I am about to cover is as close as I can get to a gun-slinging cowboy/mafioso gangster/Bronx hoodlum/Tarrantino muse in the world of Washington politics.  He's kind of fun in the context of a couch and a bowl of popcorn..  But he's real, and he's been real bad..

His name is Jack Abramoff and he has been described by some as "Washington's most notorious lobbyist."  He published his book "Capitol Punishment" after serving time in jail and is now ostensibly fighting for reform.

As usual I have summarized the good bits for you.  As many of these items are impossible for me to verify you should read them “as told” by Jack Abramoff.  I think a disclaimer is appropriate here as Jack has probably told more lies than your average bear.  Ay ay ay!  What can be done about such scoundrels?  When faced with seemingly intractable conundrums you've just gotta plog hard!


Let's get started..

Abramoff attempts to explain and justify his actions throughout this book.  He did a pretty decent job of persuading me that he is not filled with bad intentions but I am not writing this piece to enable his absolution.  I am interested in picking out the parts of the book that highlight how corruption takes place in Washington and what an insider like Abramoff suggests as a means to reform the system.  

During college Abramoff became chairman of an organization called the College Republican National Committee.  Later he went on to get a job at Reagan's grass-roots lobbying organization.  It was there he says he got his first exposure to corruption.  Reagan wanted to fund the MX missile but he was six votes short of victory in Congress.  At that point Abramoff received a phone call from a Democratic congressman who offered 13 votes in exchange for votes on a different bill regarding a new naval base in Florida which the Democratic congressman wanted built.  Abramoff then called his point of contact on Reagan’s team, Pat Buchanan - Reagan’s communications director and within a few minutes the terms were accepted.  

After leaving this job Abramoff spent the better part of a decade making movies.  He was thirty five before he went back into politics and this time he worked as a lobbyist.

What is lobbying?  Lobbyists deal directly with our elected officials to persuade them to vote in a certain way.  The term originated in the 19th-century when individuals would gather in the lobby outside a political chamber to speak to their elected officials.  Lobbying is really nothing more than a form of advocacy, which is crucial to the democratic process. 

In 1994 the Republicans took Congress for the first time in a generation.  Because of the new "Republican tide" Abramoff's contacts within Republican offices soon became valuable.  One day a member of Abramoff’s synagogue congregation offered him a job at a law firm where a senior partner was Bill Gate’s father and whose main client was Microsoft.  Abramoff took the job and before long Microsoft needed access to the House Republican leadership.  By now one of Abramoff's contacts, Tom Delay had become majority (Republican) whip.  In accordance with their name "whips" enforce and induce party members to vote according to party policy.  In one of the meetings a Microsoft executive firmly brushed off a solicitation from Delay for political contributions.  Delay told the executive a story about a moment when Walmart did the same to him and how Walmart came to him a year later to get a ramp built from a federal highway.  Delay then said:  “You know what?  They didn’t get their ramp.  You know what else?  They will never get their ramp.”  That is some way to bully companies into making contributions!  As of the time this book was published in 2011 Tom Delay was appealing a conviction on money laundering and conspiracy.

One of Abramoff's clients was the Choctaw Indian tribe who needed a lobbyist at one point to prevent a tax hike which was about to go through.  The Choctaws and other tribes often made hundreds of millions of dollars a year in casino revenues.  Paying Abramoff’s $150,000 monthly lobbying fee or campaign contributions to Tom Delay and other elected officials, was both affordable and a sound business decision.  After scoring a victory for the Choctaws, Abramoff suggested to the tribe, as he often did with clients, that they should pay contributions to the elected officials that helped them.  He goes on to say that he did not realize until he was sitting in a jail cell that these were nothing but bribes.  Whilst dealing with the Choctaw Abramoff was around 40 years old.  I highly suspect he knew his actions were wrong, but he was an ambitious man.  He wanted to be the best lobbyist he could be.  I think he did wrong partly because he thought the business worked that way and partly because he thought he could get away with it. 

How do the wheels get greased in the lobbying industry?  Abramoff explains that lobbyists often don’t have law degrees (relationships are more important) and they can earn $300,000 a year.  Once a lobbyist feels the need to have a strong relationship with a particular representative’s office he can use an assortment of tactics to woo them.  It is common-place for lobbyists to buy the representatives sandwiches at lunch time, tickets to sporting events, golf games and dinners at posh restaurants.  Some lobbyists choose to raise campaign funds.  However, according to Abramoff the most effective method of wooing elected officials and their staff is via the hiring process.  Abramoff explains how he would meet with an office’s staff member and after a few rounds of golf, drop the line “when you are done working for the congressman you should come work for me at my firm.”  Abramoff states confidently that after his proposal “Every move the staffer made he made with his future at my firm in mind.”  According to Abramoff the staffer would now essentially be working for Abramoff from within his/her office in Capitol Hill.  In Abramoff’s experience 90% of staffers are interested in moving from Capitol Hill to K-street where salaries are much improved.  K-street is an actual street which contains so many lobbying offices that its name has become synonymous with the lobbying industry itself.  Abramoff states that he hired as many of these staffers as he could. 

At one point Abramoff had the idea of attracting a new potential client, the Indian tribe called the Tiguas.  To cut a long story short he decided to approach them and suggest that he might be able to get them officially recognized as a tribe which would allow them to open a certain type of casino.  I am telling you this because it is going to explain an interesting mechanism which enables lobbyists to conduct business in an underhanded fashion.  Abramoff needed to add the change, regarding how the Tiguas would be newly recognized as a tribe, to a bill.  Lobbyists trying to conduct similar shenanigans know that the best type of bill to add the change to is a reform bill.  A lot of bills don’t pass so the last thing you want to do is to put your amendment on a bill and wait for months for it to pass, only to find it doesn’t go through.  Reform bills are loved by Americans because they are supposed to fix the system.  Since they usually pass, lobbyists like to add their amendments to reform bills.  Therein lies the irony.  Reform bills, which are supposed to be fixing the system, are the ones most likely to be used by those manipulating the system for the sake of special interests. 

So Abramoff got a fancy lawyer from his firm to write a short sentence that no one would understand and used his contacts in Washington to slip it onto a bill called the “Help America Vote Act” or HAVA which was designed to correct the issues from the 2000 Florida general election ballot.  Here is the wording Abramoff plopped onto the bill: Public Law 100-89 is amended by striking section 207 (101 Stat. 668, 672.)  Abramoff was overjoyed with the lawyer who wrote it for producing something completely unintelligible!

Items that are unrelated to the underlying bill should be fully explained and drawn to the front of the bill in bold print and put in plain language to put an end to this underhanded practice.  I think it would be hard to argue against such a change. 

Abramoff’s work had just begun.  Congressman Bob Ney, the chairman of the committee responsible for HAVA, needed to be bribed.  Abramoff had a meeting with Ney about adding the change for the Tiguas onto the HAVA bill.  Ney agreed to it and from then on Abramoff lavished Nay with "almost daily" meals at Abramoff’s restaurant and took him on a golf trip to Scotland.  He needed to keep Nay “close” and “focused” on the amendment.  Ney suggested that Abramoff contact Senator Christopher Dodd, the chairman of the Democratic version of Ney's committee.  Abramoff's partner Mike Scanlon contacted Dodd and came back with Dodd’s assent and a request for a $50,000 Democratic contribution in Dodd’s name.  Scanlon covered the contribution directly from the budget the Tiguas had given him.  Abramoff states it was so common that his staff members return from a congressional office having been asked for money immediately after Abramoff’s staff member asked for help that he would always double check when his staff did not request money for legislators.  Apparently there was/is no subtlety in the process!

In 2006 ex-congressman Ney pleaded guilty to federal corruption charges and served less than a year in prison.  When this book was printed in 2011, former Senator Dodd had left the Senate to become one of Washington’s highest paid lobbyists.

During the time Abramoff was fighting on the Tiguas front, Abramoff was called to defend Tyco whose ex-CEO Dennis Kozlowski had been convicted of fraud.  Tyco had scores of lobbyists at this time but they had all failed to stop a bill which would have taxed Tyco $4 billion on past revenue.  This change would potentially put Tyco out of business.  According to Abramoff one of the underhanded reasons this fight was going on was because Tyco, now a "megalith," had grown by acquisition and had taken over about 300 companies over the last several years.  Executives related to the acquired companies felt aggrieved.  Abramoff says that public officials often crush the competitor of their donors.  He decided to start a grass roots campaign calling thousands of companies that did business with Tyco and some of those company's presidents put calls directly into their respective senators’ offices.  His grass roots team cross referenced Federal Election Commission lists to target the people each state Senator would not want to upset.  Senator Chuck Grassley of Iowa was the original sponsor of the bill against Tyco that Abramoff was trying to stop.  Abramoff’s office attacked him on two fronts, causing scores of Iowa corporations to call him from one angle and becoming one of Grassley’s biggest fundraisers from another.  Abramoff's team flew Grassley to their offices in Florida, Boston and Chicago for fundraisers and "plied" Grassley’s staff with "every trinket they had."  One of the firms Abramoff worked at would sometimes spend $1.5 million in event tickets per year for precisely this purpose.  The plan worked and the bill did not pass.  After this Grassley became one of Abramoff’s "most dependable Senate assets."  Grassley and the other Senator of Iowa Tom Harkin, "also a major recipient of Abramoff’s beneficence and campaign contributions," helped Abramoff’s tribal client beat a hostile takeover months later.  Grassley's and Harkin's donors dined at Abramoff’s restaurant and used his firm’s sport boxes with frequency. 

Senator Chuck Grassley is still the senior United States Senator from Iowa today.  As of the time this book was printed neither Grassley nor Harkin had drawn any federal corruption charges.

Finally Abramoff’s wrongdoings came home to roost.  The Washington Post wrote an article about Abramoff’s client representations and about his profit-sharing relationship with Mike Scanlon in February 2004.  Two days later Abramoff’s firm got a call from Senator John McCain calling for congressional hearings regarding the accusations.  It all went downhill from there.  Among other things Abramoff had broken the law by violating the gift ban to legislators, failing to register his representation of the Tiguas and not revealing to clients that he was sharing profits with Scanlon.

During the congressional hearing, while Abramoff plead the fifth, Senators Kent Conrad, Byron Dorgan, Tim Johnson and Senator Campbell, “hurled invectives” while Jack wondered how they would react if he mentioned the thousands in campaign contributions they had received from him.

During his time in prison, Abramoff pondered over ways to reform the system.  Firstly he believes contributions and gift-giving by anyone lobbying the government, participating in a federal contract, or otherwise financially benefiting from public funds, should be entirely eliminated.  Next, post-public service employment “one of the biggest sources of corruption in government” needs to be eliminated and this ban on congresspersons and congressional staff members from entering any entity that lobbies the federal government should be for life.  Another thing Abramoff insists on is that congresspersons should have term limits to prevent lobbyists and special interest groups from developing long term relationships with them.

Abramoff is not an entirely dislikable man.  He claims to have been giving 80% of the millions he was making to charities at one point and was purportedly responsible for funding a school.  He is similar in some ways to my old boss Ross Mandell who is currently serving time in prison.  Abramoff is capable of decent acts and he wants to believe he is a good man but he is so blindly ambitious that when confronted by a choice between his honor and his goals, he all too often folds to the latter.

To deal with corruption in politics you need to cast a far wider net than one simply used to capture villains like Abramoff.  The lobbying industry may be designed and regulated with the best of intentions but from a practical standpoint it ends up engendering immoral behavior.  Thus the corruption must be blamed on both the perpetrator and on the lobbying industry.  There are problems with the system itself.  From now on I will call this "systemic corruption."  Systemic corruption affects many industries from finance to healthcare.  It happens when a professional's interests are not aligned with the interests of the people that an industry serves and/or affects.  Many professionals can relate to a scenario where they get a job in an industry and find that the act of conducting business as usual creates financial incentives for them to act immorally.  Over time and due to the competitive pressures of a business environment, those immoral actions can become ever more acceptable and commonplace.  In some cases the wrongdoing can become so entrenched that it becomes difficult to compete in an industry without sullying your hands.  Abramoff goes on to make this point himself at the end of the book.  However, a misalignment of incentives is sometimes hard if not impossible to eliminate.  Thus the onus will always be on a professional to ask himself/herself whether their conduct is morally correct, even when their conduct does not break rules.  Abramoff plainly broke the law.  Some of the Senators mentioned in this piece did not break the law but acted immorally by asking for money in exchange for their help which places the average citizen at a disadvantage to companies that can afford to deliver big handouts.  Since one might reasonably argue that one cannot become a Senator without raising money in such a fashion, this potentially becomes an example of onerous systemic corruption.  As you know my days as an executive on Wall Street have engendered a passion within me for the subject of corruption (by which I mean situations where rules are broken) and a fascination with the complex subject of "systemic corruption" as I shall call it (which is the problem with the rules.)  I hope to be able to expand on this as time goes by. 

I think Abramoff's story is a useful one to summarize.  When ambitious men like Abramoff take the wheel (and perhaps a few too many congresspersons fit his profile) they can easily opt against thinking too deeply about the consequences of their actions.  At the same time the dollar amounts at stake are horrifyingly large and need to be placed in the hands of people with absolute intellectual integrity.  It is a conundrum indeed.  But imagine for a moment that we put the actions of the United States Congress and its courts, under the microscope for all to see.  Imagine if on every bill, the average citizen were represented by experts who advocate exclusively for the interests of the citizen and perhaps even translate the legal materials into layman’s terms for him/her.  Imagine that instead of having to trust our elected officials to act in our best interests we supervise their actions.  What would the harm be in ordering such reports to see the outcome?  Would it be financially prohibitive to do so when you compare the cost of a team of advocates against the cost of all congresspersons and their staff?  Most likely not.  Why isn’t the system already supervised in such a fashion?  As you saw in my last plog post a recent extensive study showed Congress is not delivering results for the average citizen.  Are my suggestions possible or are they just a dream?  Stay tuned as the story unfolds. 

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.  The platform will have a mechanism to allow our community to enact change within the world of American politics.  Stay tuned for this exciting development!
 
Please go to www.mackiemusic.com to access my social media pages and learn more about my polymathematical world of wonder!

Thursday, November 26, 2015

SUMMARIZING A RECENT RESEARCH PAPER ON THE SUBJECT THAT AMERICA IS NOT A TRUE DEMOCRACY

For those of you that are concerned about the harmful side effects of missing a plog post, please relax because subscribing to future plog posts is easy!  Simply type your email in the box on the top right hand corner of this page. 

My advanced apologies, I am going to plunge you in at the deep end of some pretty nerdy reading on American politics now.  It's super important and amazingly interesting reading, but it's a bit technical.  No pain no gain!  I need to cover this research because I am going to launch a new tech platform soon and I need to prepare you for the subject matter the platform is going to deal with.  More on that tech platform soon!  Today I am going to cover a paper released in 2014 by some professors at Princeton University which proved, through an extensive survey, that American politics is run by elite players.  You might say you suspected that right?  Well this study makes headway towards PROVING it by means of a study done on almost two thousand changes made to America's legal system by politicians in congress.  The study looked at whether ordinary people wanted those changes.  Then it looked at whether rich people and companies wanted them.  In doing so they were able to figure out who is capable of getting what they want!  It is groundbreaking in its scope.  It's not light reading but don't worry because I read it for you and summarized the important stuff below.

Brace yourselves.. here we go!
Testing Theories of American Politics: Elites, Interest Groups and Average Citizens.  By Martin Gilens and Benjamin I. Page


The net finding of this survey is that the average person in the United States has a negligible effect on policy making.  To quote the authors: “In the United States the majority does not rule.”

These Princeton scholars looked at individual people's preferences regarding almost two thousand policy issues and compared them with the outcome of each proposed policy change.  The individuals were put into two groups based on their income.  The first group contained the top 10% of earners.  The second group contained everybody else whose results they referred to as those of the average citizen.  They also looked at the preferences of interest groups and compared those to policy outcomes.  They separated the interest groups into two sub groups, business-oriented and mass-oriented groups.  This study did something that has never been done before which is to separate out the preferences that one group (such as the average citizen group) had that other groups did not have.  By doing this you don't get misled by the fact that an average citizen is getting what they want, but that's only because they want the same thing that elites want.  In other words, by only looking at the policy preferences where average citizens and elites disagree, you can see how capable average citizens are of getting their own way. 

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Here are the most salient pieces of the report:

The report covers some history to get us started on the subject.  In support of elite domination theory (which is the idea that elites control the government) “Charles Beard.. maintained that a chief aim of the framers of the U.S. Constitution was to protect private property, favoring the economic interests of wealthy merchants and plantation owners rather than the then-majority small farmers, laborers and craft workers.”

Majoritarian pluralist theory is a fancy way of naming the theory that decisions made by our government are driven by the wants of the average citizen.

“A major challenge to majoritarian pluralist theories.. [is that] individuals.. have no incentive to.. join an organized group. This is called the collective action problem.  Aware of this problem, officials may feel free to... act against the interests of the average citizen.“

Bear in mind “policies with strong support.. among [interest groups and affluent Americans] only get adopted 56% of the time [this is called "status quo" bias.]

One may argue that ordinary citizens get their way a lot because the report finds that elite's preferences tend to coincide with the preferences of the average American.  In response to this the report argues that “the issues about which economic-elites and ordinary citizens disagree reflect important matters, including many aspects of trade restrictions, tax policy, corporate regulation, abortion and school prayer" and thus cannot be ignored.

Let's move on to organized interest groups.  The authors warn that the report includes policies thought to be important enough for a national opinion survey.  Interest-group clout may be underestimated in the likely event that groups have more success on “narrow issues like special tax breaks or subsidies aimed at just one or two business firms [than they do on more broadly important issues which are more likely to be included in this survey.]”

“An important feature of interest group influence is that it is very often deployed against policy changes” reinforcing "status quo" bias.

As to the relative influence of business-oriented groups vs mass-oriented groups, “the greater total influence of business groups in [the] analysis results chiefly from the fact that more of them are generally engaged on each issue (roughly twice as many, on average,) it is not that a single business group has more clout on average than a single mass-based group.“

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I once read a politics course study textbook called "The Irony of Democracy."  The book made the case that the elite make better decisions for the masses than the masses would make for themselves.  This report points out that the best advocates for the interests of the masses are most likely to be the masses themselves.  There is scant evidence supporting the idea that elites will vote against their own self-interests for the benefit of the masses.

So that's the summary.  It's pretty hairy news.  How do we fix this issue?  I will soon be releasing an exciting tech platform which has the potential to address it!

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 blog, I am building a tech platform which will allow people to participate in a community for political change.  The platform will have a mechanism to allow our community to enact change within the world of American politics.  Stay tuned for this exciting development!

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

Saturday, October 31, 2015

MACKIE'S PLOG

Mackie's Plog is a blog that covers the political meanderings of Cecilia Mackie (me!)  Please feel free to subscribe by typing your email in the box on the top right hand corner of this page.

I worked on Wall Street for 10 years.  The President and Managing Director of the firm I spent most of those years at, are both in jail.  Because of that, for the last several years I have avidly read books on and around the subject of corruption.  In this plog I want to share my thoughts regarding some of those amazing and insightful books which cover areas such as politics and economics.  I want to give readers a simpler way of hearing about important, newly published books which have been written by leading scholars and which talk about issues that affect our lives today.

So let me get started!

A great book that I have read recently is called "The Second Machine Age."

M.I.T. professors Erik Brynjolfsson and Andrew McAfee, authors of the best seller “Race Against The Machine,” write a follow up thesis in "The Second Machine Age" published January 2014.  “Race Against The Machine” focused on the fact that machines started doing to white collar jobs what robotics previously did to blue collar jobs.  “The Second Machine Age” takes the idea one step further and points out examples where machines have recently begun doing tasks that until now were considered uniquely human.  

When the steam engine was improved by James Watt it was a turning point in human history. Prior to Watt’s invention engines were too inefficient, harnessing only 1% of the energy released when burning coal. In 1775 Watt increased this more than three-fold which made all the difference.  This lead to the industrial revolution which allowed us to overcome the limitations of muscle power.  After that, human development and populations started to grow exponentially.  In this book the scientist's theory is that computers are now making such unprecedented advances that we are heading into a "second machine age" which will have a similar effect on humanity's mental power than the steam engine had on muscle power. 

Computers were invented long ago but new technology can take decades to deploy as businesses change their processes. Over the past few years computers have started surprising the authors. Computers have facilitated driver-less car technology and have become adept at translation and speech recognition which are areas that were expected to be dominated by humans for some time to come. 

The book tries to explain why this is happening.  Firstly they point at the fathomless nature of exponential growth.  Humans have a tendency to underestimate exponential growth or the compound doubling of a number.  Around 1970 Moore’s law was hypothesized.  It stated processing power per unit of area would double every year.  That rule has held to this day.  The cost per unit of processing power has halved every year too.  In 1996 the fastest computer in the world for that time was produced for $55 million and fit on nearly 1,600 square feet of floor space.  9 years later the same processing power was sold on shelves for $500 and was called the Sony PlayStation 3. Massive improvements also happened in other hardware such as cameras and sensors.  Secondly, the scientists say that nowadays data is vastly accessible and aggregated and that networks are highly inter-connected.  Thirdly, with every technological advance comes the potential for new combinations of technologies and with them new possibilities.  A technology made up of a combination of other technologies is called a recombinant technology.  The Internet is itself a recombinant technology made up of "the much older tcp/ip data transmission network, a markup language called HTML and a simple PC application called a browser to display the results." 

Today an unprecedented number of humans have access to an unprecedented amount of data. In 2000 there were 700 million mobile phone subscriptions. In 2012 there were more than 6 billion and over three-quarters of the people in the world now have phone access. Simple handsets can have a big impact on society. An economist Robert Jensen studied coastal villages in India and found fish prices stabilized, prices dropped and profits increased as soon as fishermen acquired mobile phones and were able to eliminate the waste that occurred, when they stopped taking their fish to markets that already had enough supply for the day.  On another note, because 70% of the phones sold worldwide in 2012 were smartphones the number of people potentially working on recombinant technology has increased enormously.  

After this the book examines the impact of these technological changes on the economy. 

Technological advances create productivity gains but around the year 1990 median wages stopped tracking productivity.  In other words, the fact that a piece of technology can be quickly accessible to vast numbers of people across the planet is great for entrepreneurs and persons with skills which can be leveraged across a million new customers but it looks like the financial advantages of new technology are not ending up in the average person's pocket.  Digitization super-charges propagation of popular content and turns today's world into a winner-take-all market creating even bigger wage spreads the higher you get on the wage scale.  The authors argue that the decoupling of median wages and productivity growth that has occurred since the nineties is due to the second machine age.  They posit a dystopia of joblessness as machines replace humans in both computational and mechanical tasks. 

However, there is hope.  Chess champion Garry Kasparov lost to the first computer in 1997 but chess teams of "human plus machine" beat even the strongest computers today. That is because machines are no good at coming up with new ideas.  We have never seen truly creative, entrepreneurial or innovative machines. "These activities have one thing in common... coming up with new ideas or concepts."  

As compelling as these thoughts are I personally don't like the way the book continues after about half way through.  The authors try to crystalize ways in which people and governments can prepare for this second machine age. The potential effects of technology seem too unpredictable to me to make any further extrapolation and concrete solution-finding possible.  I did enjoy their reference to the principal of basic income and can only imagine the up-cry that would be heard if such a policy change was attempted in the United States today.  The principal behind it is this: if androids replace workers and unemployment goes up as a result it would be bad news for the economy since unemployed people don’t create much demand for goods.  A vicious cycle can take hold.  To counteract this it is suggested the unemployed should receive a guaranteed income even if they are not working.  A surprising number of economists have supported guaranteed income for the poor.  Bertrand Russell, Martin Luther and Milton Friedman are just some of the economists mentioned to have supported the idea.  Additionally, after 1200 economists signed a letter in support of the idea in 1967 Richard Nixon tried to enact it into law. 

I could have skipped the second half of the book but I found the first half thrilling.  The idea that in the near future we will see new technology which moves beyond our wildest dreams is a spectacular thought!

Outside of this plog, I am building a tech platform which will allow people to participate in a community for political change.  The platform will have a mechanism to allow our community to enact change within the world of American politics.  Stay tuned for this exciting development!
 
Please go to www.mackiemusic.com to access my social media pages and learn more about my polymathematical world of wonder!