Friday, October 29, 2010

Concentrated Wealth and the Purchase of Political Power: Democracy's Death Spiral

Democracy's Death Spiral is a positive feedback loop between ever-greater concentrations of wealth and the ever-higher costs of retaining political power.


Positive feedback loops lead to "death spirals" in which destructive forces reinforce each other until the dynamic implodes. One example is an "arms race" in which ever more costly and complex weapons systems must be matched lest one nation in the race fall behind.


Since the number of weapons and their cost are essentially unlimited, then the race continues until one contestant is bankrupted.


Though many would claim it is a simplification, this dynamic was at the root of the Soviet Union's collapse: as the U.S. embarked on a massive expansion of its military and technological power, the Soviet Union exhausted its much smaller resources attempting to keep up.


Though statistics from the Soviet era are not entirely reliable, various scholars have estimated that fully 40% of the Soviet GDP was being expended on its military and military-industrial complex.


The U.S. was spending between 4% and 6% of its GDP on direct military expenditures, even during the height of the Reagan buildup. If you include the Security State (CIA, NSA, et al.), the Veterans Administration and other military-related programs (DARPA, etc.) then the cost was still far less than 10% of GDP.


The greater freedom to exchange information between government-funded research labs, private firms and government-funded universities enabled the U.S. to outdistance the Soviets technologically. Once again a positive feedback loop can be discerned in the way that increased spending on military-related R&D in the U.S. led to increasingly networked nodes of technological advancement which led to greater advances and more spending to develop those technologies.


The U.S. emerged victorious as the sole superpower, but a more closely matched rivalry might have ended with the collapse of both competitors: a Death Spiral of the sort Jared Diamond describes on Easter Island in his book Collapse: How Societies Choose to Fail or Succeed.


In the U.S., the ever-greater concentrations of wealth gathered by an ascendant Financial Power Elite has entered a positive feedback loop with the costs of gaining or retaining political power. The costs of winning an election have skyrocketed to the point that fundraising is the key function of any politico who is not independently extremely wealthy.


This quantum leap up in the costs of gaining or retaining power has forced politicos to curry the favors of those few Elite groups which can give them millions of dollars.


Just as in an arms race, the amounts of money which can be spent on campaigns is essentially unlimited. The explosion of media now requires multi-million dollar campaigns on multiple fronts: broadcast TV, cable TV, mailed flyers, radio spots, promotion campaigns to influence the mainstream media coverage, adverts on the Web and social media campaigns--the list grows longer every year.


Here is the positive feedback loop. Candidate A gains the backing of a Power Elite group (a political action committee or other front) and collects $5 million. As a result of a media blitz, he/she wins.


Between elections, he/she amasses a "war chest" of $5 million from the same donors, guaranteeing that the final cost of the next election will be $10 million.


Potential rivals understand that victory against this well-funded incumbent, no matter how incompetent, will require $15 million. The only sources of that amount of cash are other Financial Power Elites and State-funded fiefdoms like teachers unions, and so each candidate sells their soul to the few "special interests" with deep enough pockets to harvest and contribute millions of dollars.


Now repeat that election cycle a few times and see how quickly the cost rises. The truly pernicious aspect of this positive feedback is this: if wealth wasn't becoming ever more concentrated in the razor-thin slice at the top of the U.S. economy, then politicos couldn't gather huge sums of money from such small groups. They would have to seek a broader base to raise money, and that would dampen the influence of the top donors.


Instead, the cycle grows stronger with each election cycle: to raise the gargantuan sums needed to keep political power, politicos become ever more reliant on a tiny pool of super-wealthy Elites and State-funded fiefdoms.


(In Survival+, I describe the desperate plowing of millions of dollars by public unions and other State-dependent fiefdoms into election campaigns as full spectrum defense of the status quo. When two such fiefdoms are competing for dwindling State resources, I term that Internecine Conflict Between Protected Fiefdoms.)


In other words, the more elections cost, the greater the dependence of politicos on a wealthy Elite. And thus the influence of those Elites over the politicos grows as well.This is how the political machinery of deomocracy gets "captured" by a tiny Financial Power Elite.


But there is another aspect to this feedback loop: the key way to gather more of the national income and restrict competitors is to get the Central State (Federal government) to lower your taxes, raise barriers to competition, award you sweetheart State contracts, and so on: in other words, partner with the politicos who now depend on you for their power to expand your cartel's reach, revenues and profits.


This is the Death Spiral of Democracy. The way to increase the concentration of wealth is to partner with the State so the Central State functionaries and agencies funnel ever-larger shares of the national income to your cartel or quasi-monopoly while the State suppresses or marginalizes potential competitors.


The more wealth you concentrate, then the more political power you can purchase.Indeed, the involvement of the super-wealthy causes the costs of campaigns to rise to levels where politicos have no choice but to become dependent on Power Elites to fund their campaigns.


You see how the feedback works: greater concentratiions of wealth creates greater concentrations of political power, and just as importantly, increases the dependence of the political class on the Financial Power Elites and fiefdoms for their very survival.


Alienating a Power Elite or State-funded fiefdom/monopoly is a death sentence, for all those millions will quickly flow to a political rival.


Now that the Supreme Court has ruled that corporations have the same rights as individual citizens and giving unlimited sums of money to politicos is protected as "free speech," then the Death Spiral of Democracy has no negative feedbacks to restrain its dynamic.


This is how a handful of banks and Wall Street firms over-rode the will of the citizens who expressed their desire to let the banks go bankrupt 600-to-1.


The winner and loser of this Death Spiral are clearly visible: democracy has imploded and concentrated wealth has won.


Lest you consider the bank bailout a now-stale example, consider these recent headlines:


A Paralyzed Fed Defers Decision On Monetary Policy To Primary Dealers In An Act That Can Only Be Classified As Treason


Triple Down: Fannie, Freddie, and the Triumph of the Corporate State


Want to get away with murder? Become a bank.


SIGTARP Report: Treasury Hid AIG Losses


Treasury Shields Citigroup as Deletions Undercut Disclosure


Top U.S. Incomes Grew Five-Fold in 2009, to a $519 Million Average


Apologists who claim democracy is basically unchanged abound. The entire goal of a corporate media and State propaganda machine is to obfuscate what is really going on. Apologists ignore $500 million elections, an army of 40,000 lobbyists, and all the other evidence that concentrations of wealth are concentrating political power which they then use to further concentrate and protect their growing share of the national income.


A guest on a recent "Charlie Rose" show (I believe it was the October 25th show) summed up the reality of our "democracy" with an anecdote about President Obama's visit to Wall Street while the bogus "financial reform" bill was in play. The President essentially pleaded with the Wall Street Elite to "please stop lobbying us" about the (already gutted) "reform" bill.


There you have the end-state of Democracy's Death Spiral: "the most powerful elected official in the world" begging Wall Street to stop lobbying its Central State lackeys so visibly, lest the public catch on.


Democracy is already dead in America, but the wizened death-mask offers a useful facade for propaganda purposes. As I noted in The Stealth Coup D'Etat: U.S.A. 2008-2010 , The Power Elites are apolitical. They don't care about the color of your uniform; whether you wear a blue shirt or a red shirt is inconsequential.


So please enjoy the bread and circuses of the election which the Central State is holding for your entertainment in the Coliseum. No expense has been spared.



My apologies: due to my workload I have fallen behind on my email once again. Your correspondence is greatly appreciated even when I am unable to respond in a timely manner.



Special podcast: Steve over at Two Beers with Steve was generous enough to invite me back to discuss topics of great importance to both of us and to you: health, diet, fitness and taking charge of our own lives. Please give it a listen: Two Beers with Steve podcast.



If you would like to post a comment where others can read it, please go toDailyJava.net, (registering only takes a moment), select Of Two Minds-Charles Smith, and then go to The daily topic. To see other readers recent comments, go to New Posts.





Order Survival+: Structuring Prosperity for Yourself and the Nation and/or Survival+ The Primer from your local bookseller or from amazon.com or in ebook and Kindle formats.A 20% discount is available from the publisher.


Of Two Minds is now available via Kindle: Of Two Minds blog-Kindle



Thank you, J. Mark C. ($100), for your monumentally generous contribution to this site-- I am greatly honored by your support and readership. Thank you, Bill B. ($10), for your excellently generous donation (and kind words) to this site-- I am honored by your support and readership.


Terms of Service

All content on this blog is provided by Trewe LLC for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information. These terms and conditions of use are subject to change at anytime and without notice.


Our Privacy Policy:


Correspondents' email is strictly confidential. This site does not collect digital data from visitors or distribute cookies. Advertisements served by a third-party advertising network (Investing Channel) may use cookies or collect information from visitors for the purpose of Interest-Based Advertising; if you wish to opt out of Interest-Based Advertising, please go to Opt out of interest-based advertising (The Network Advertising Initiative). If you have other privacy concerns relating to advertisements, please contact advertisers directly. Websites and blog links on the site's blog roll are posted at my discretion.


PRIVACY NOTICE FOR EEA INDIVIDUALS


This section covers disclosures on the General Data Protection Regulation (GDPR) for users residing within EEA only. GDPR replaces the existing Directive 95/46/ec, and aims at harmonizing data protection laws in the EU that are fit for purpose in the digital age. The primary objective of the GDPR is to give citizens back control of their personal data. Please follow the link below to access InvestingChannel’s General Data Protection Notice. https://stg.media.investingchannel.com/gdpr-notice/


Notice of Compliance with The California Consumer Protection Act
This site does not collect digital data from visitors or distribute cookies. Advertisements served by a third-party advertising network (Investing Channel) may use cookies or collect information from visitors for the purpose of Interest-Based Advertising. If you do not want any personal information that may be collected by third-party advertising to be sold, please follow the instructions on this page: Limit the Use of My Sensitive Personal Information.


Regarding Cookies:


This site does not collect digital data from visitors or distribute cookies. Advertisements served by third-party advertising networks such as Investing Channel may use cookies or collect information from visitors for the purpose of Interest-Based Advertising; if you wish to opt out of Interest-Based Advertising, please go to Opt out of interest-based advertising (The Network Advertising Initiative) If you have other privacy concerns relating to advertisements, please contact advertisers directly.


Our Commission Policy:

As an Amazon Associate I earn from qualifying purchases. I also earn a commission on purchases of precious metals via BullionVault. I receive no fees or compensation for any other non-advertising links or content posted on my site.

  © Blogger templates Newspaper III by Ourblogtemplates.com 2008

Back to TOP