Date:
Location:
Speaker: Robert Reich, Professor of Public Policy, University of California, Berkeley
Professor Reich's lecture can be viewed online.
In his lecture, Robert Reich, professor of public policy at U.C. Berkeley, set out to answer the following question: what explains the influx of money into U.S. politics?
To render vivid the phenomenon under consideration, Professor Reich began by noting the ways in which Washington's physical character had, over the past four decades, evolved before his eyes. First coming to Washington in 1960s and 70s, first as an intern to Senator Robert Kennedy and later as an employee of the FTC under the Carter administration, Reich observed that Washington was, at that time, a city of modest hotels and sub-par eateries. By the time that Reich returned to Washington in the 1990s as secretary of labor under the Clinton administration, however, Washington had become much wealthier, now home to "magnificent" hotels and "exquisite" restaurants. "Washington, in short, had," as Reich put it, "become a place filled with money." This trend, Reich noted, is one that continues today, as Washington has become even more luxurious than it was the 1990s, to the point where, as of 2007, nine of the twenty wealthiest counties in the United States are now located in and around the district.
In an effort to draw a connection between his question and one of the central concerns of the Center, Reich next turned to the task of explaining the relevance of the influx of money into Washington to the broader phenomenon of the decline of public trust in government. As Reich pointed out, and as others have remarked in the Center's lecture series, public trust in government has been on a more or less steady decline since the post-war era; whereas in the 1960s, Reich observed, two-thirds of Americans trusted their representative in Washington to act in the best interests of the country, by the 1990s two-thirds expected their representatives to act in the interest of special interest groups. So what best explains this shift in public sentiment? As Reich acknowledged, there are a number of theories on this front. On one theory, it was the series of highly publicized, embarrassing government missteps beginning in the late 1960s (e.g. Watergate, Vietnam, Iran-Contra, etc.) that disillusioned Americans and that led to the observed increase in mistrust. On another theory, the high degree of public trust that existed prior to the late 1960s was the byproduct of "an exceptional period" in American history that began in 1933 and ended with the end of WWII, where, as the result of the Great Depression, Americans felt that they had no choice but to trust one another, as the "generational memory" of that period faded, according to this theory, there was simply a reversion back to the norm in terms of public trust in government.
While happy to grant that each of these theories offered at least partial explanations, Reich stated that his own view was that this observed decline in pubic trust was largely the result of the aforementioned increase of money in Washington, an increase that, he argued, is owed to structural changes in the economy that brought about increased (and increasing) competition in the private sector.
Building on themes from his Supercapitalism, Reich argued that what brought about the influx of money into Washington was the steady erosion of the model of competition that dominated from the 1930s to the 1960s. This 30s-60s model was one based on high volume, standardized, stable production where barrier to entry was high and, as a result, one that allowed monopolies and oligopolies to rein across sectors of the economy, with, for any given sector, one to five players coordinating with respect to prices, wages, etc. Beginning in the late 1970s, Reich argued, advances in technology, including technologies that facilitated the globalization of the supply chain (e.g. container ships, satellite communication, etc.) as well as those that allowed for specialized production and minimized the importance of economies of scale of production, led companies to compete with one another much more with respect to innovation than with respect to size. And, as a result, competition increased immensely, both as a result of an increase in the number of players in any given sector of the economy (owed to the lowering cost of entry) and in a decrease in the stability of competitive advantage (owed to the fleeting nature of advantages based on innovation). This, in turn, Reich argued, led companies to compete more and more intensely in the political arena in order to secure what competitive advantage they could. And this, Reich maintained, is what accounts most for the increased (and increasing) flow of money into Washington.
With competition continuing to increase, corporate political spending, Reich went on, only continues to rise. In effect, what has been created is what Reich called a political spending "arms-race," where individual industry actors (e.g. corporations, trade groups, etc.) continue to spend more and more each year on political campaigns, advertising, etc. so as to avoid losing their competitive advantage relative to other industry actors in the shaping of policy. This dynamic has had the overall effect of driving up the cost influence and, in turn, effectively pricing non-industry actors out of the influence acquisition game. As a result, Reich went on, whereas policy disputes of the past were best understood as clashes between industry and non-industry actors (e.g. between industry oligopolies and unions), increasingly the disputes of today are best understood as clashes between different industry actors (e.g. between hospitals and insurers, internet applications companies, and cable and telecommunication companies, etc.). To illustrate this point, Reich mentioned a graduate student of his who recently administered a survey to ever major lobbyist and lobbying organization, trade organization, industrial organization, etc. asking those groups: "Who was/were your major opponent/s in most of the fights you engaged in last year?" In every case, Reich observed, the answer was some other corporation or industry. as current Google lobbyist Lauren Maddox put it, "the policy process is [now] an extension of the market battlefield."
That this sort of corporate competition for policy is not only pervasive but, more disturbingly, legally sanctioned is, as Reich puts it, "the greatest scandal of all of this." Because of ever-increasing competition, Reich sees no end point to the corporate arms race. As such, the only way to restore public trust, he argues, is "to get very serious about getting money out of politics." And while acknowledging that bringing about the necessary reforms will be of tremendous political difficulty, there are, Reich argued, certain industry actors that would be friendly to such reforms (as an example, Reich cited a major group of CEOs who supported the restriction of lobbying activities during the lead-up to the McCain-Feingold campaign finance reform bill), and the support of such actors is something that reformers could at least build upon. Whatever the difficulties, however, Reich argued that bringing about the necessary reforms was of the utmost importance, insofar as there is, as he sees it, no other way to restore trust in our democracy.
Ryan Doerfler, Graduate Fellow in Ethics 2009-10