-Caveat Lector- <A HREF="http://www.ctrl.org/"> </A> -Cui Bono?- Thomas Ferguson's Golden Rule. That is, it is not "votes" which matter. It is investors. Investors have shifted both parties to the right (see, for supporting evidence, Ferguson and Rogers *Right Turn* or Ferguson's *Golden Rule*). *Golden Rule: The Investment Theory of Party Competition and the Logic of Money-Driven Political Systems* (University of Chicago Press, 1995), pp. 381-3: The Myth of the Median Voter Let us begin, however, with the investment theory's bedrock claim: what might be termed the general failure of control by the so-called median voter (the voter whose strategic position exactly in the middle of a distribution of voters guarantees a candidate one more vote than he or she needs to defeat all comers). The argument can be developed with any degree of detail and formal vigor. But it is perhaps most easily and convincingly outlined in terms of a single concrete example designed to demonstrate with the clarity of a laboratory experiment just how money-driven political systems can thwart the will of even overwhelming majorities of voters. Imagine a world in which labor-intensive textile producers command virtually all pecuniary resources beyond those necessary for ordinary wage earners to live (a world, that is, in which the so-called "classical savings function" popularized by Kalecki, Kaldor, and Robinson applies). Such a situation is perhaps most conveniently pictured along the lines of some company town of the early industrial Revolution, but as will shortly be evident, conditions long ago and far away are not the essence of the problem. A fortiori, neither is the classical savings function. Suppose, further, that an election is being staged, in which everyone votes for one of two political parties. There is only one issue, and everyone agrees on what it is: passage of legislation that is likely to lead to 100 percent unionization of the labor force. All wage earners agree that the law is desirable. All textile magnates (3 percent of the total voting population) vehemently disagree. What stance do the political parties take? Analysts impressed by the familiar spatial models of party competition will of course reply that the parties must head immediately to the median position at the far right of [the figure below], where virtually all voters are located. | * 97% | * | * | * | * | * %Voters | * | * | * | * | * | * | * 3% * | * * | * * ----------------------------------------------- 0 100 Desired % Union The investment theory, however, spotlights a detail that leads to a dramatically different expectation: *When money matters importantly to mounting campaigns*, no party can afford to take up the median position that represents the views of the vast majority, if investors disagree. The mere fact that votes are out there does not imply that any party can afford to campaign for them, even if its message is what they would want to hear. In this instance, all parties depend on textiles for funding. The textile industry, of course, will not pay to undermine itself. It thus subsidizes only candidates opposed to passage of the law. (Readers who have been exposed only to the median voter model are often inclined to object: But wouldn't the textile party improve its chances of winning by embracing unionization? The all-but-irresistible tendency to this mistaken inference illustrates perfectly how a bad model can blind social scientists --- and many ordinary people, who intuitively know better --- to the harsh realities of money-driven political systems. The short answer is that if the cost of winning the election really were sponsoring unionization, textiles would, paradoxically, lose by adopting the "winning" strategy.) Given that the textile industry is the only source of campaign funds, all parties must comply with the industry's demand for a union-free environment, or else they cannot afford to compete at all. Without collusion or "conspiracy" of any kind, accordingly, each party *independently* discovers that available funds constrain it to champion the very same rate of unionization as all others: 0 percent, ironically, on the far left in [the] figure [above]. The conclusion is sweeping, but while the example is carefully constructed, it is not contrived. In particular, it does *not* represent a "special case" dependent on the improbably stark contrast between the very rich and the very poor, assumed here for simplicity's sake, or on features unique to unionization as a political issue. (Or, of course, on the lopsided 97 percent to 3 percent opinion distribution, which simply defines a case that, on the face of it, should be a knockdown for the median voter model since an overwhelming majority consensus has actually crystallized.) Instead, what is critical are the brute implications of a very pedestrian fact: that entry into politics (and, for that matter, subsequent campaigning) is normally very expensive in terms of the time and incomes of ordinary voters. As a consequence of this "campaign cost condition," whenever the generic policy interests of all large investors diverge from those of ordinary people (and there is certainly no presumption that they should always do so), voters are checkmated. As long as money matters importantly, and efforts to offset the costs of political activity by pooling resources confront high transaction costs or other obstacles, including overt repression, the electorate can shake, rattle, and roll. But it cannot float an alternative of its own to force the issue onto the agenda --- even if, as in this case, the majority comprises an overwhelming 97 percent of the electorate. By virtue of what my earlier essay summarized as the "principle of noncompetition across all investor blocs," only investors can compel (at least one of the) parties to take up an issue-because only investors can afford to pay the high "replacement cost" of nonresponsive parties (candidates, etc.). ===================================================== <A HREF="http://www.ctrl.org/">www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are not allowed. Substance�not soap-boxing! These are sordid matters and 'conspiracy theory'�with its many half-truths, misdirections and outright frauds�is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. 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