The real competition is for campaign contributions
Tip of the hat to lambert for finding this absolutely brilliant essay: Understanding Obamacare. You need to read the whole thing, carefully, but I’m going to quote the first nine paragraphs here. Yes, nine whole paragraphs, because every one of them words rang true and glowed like burning coals, man. It’s rare to see the truth of a political situation captured this clearly:
The idea that there is a competitive “private sector” in America is appealing, but generally false. No one hates competition more than the managers of corporations. Competition does not enhance shareholder value, and smart managers know they must forsake whatever personal beliefs they may hold about the redemptive power of creative destruction for the more immediate balm of government intervention. This wisdom is expressed most precisely in an underutilized phrase from economics: regulatory capture.
When Congress created the first U.S. regulatory agency, the Interstate Commerce Commission, in 1887, the railroad barons it was meant to subdue quickly recognized an opportunity. “It satisfies the popular clamor for a government supervision of railroads at the same time that that supervision is almost entirely nominal,” observed the railroad lawyer Richard Olney. “Further, the older such a commission gets to be, the more inclined it will be found to take the business and railroad view of things. It thus becomes a sort of barrier between the railroad corporations and the people and a sort of protection against hasty and crude legislation hostile to railroad interests.” As if to underscore this claim, Olney soon after got himself appointed to run the U.S. Justice Department, where he spent his days busting railroad unions.
The story of capture is repeated again and again, in industry after industry, whether it is the agricultural combinations creating an impenetrable system of subsidies, or television and radio broadcasters monopolizing public airwaves for private profit, or the entire financial sector conjuring perilous fortunes from the legislative void. The real battle in Washington is seldom between conservatives and liberals or the right and the left or “red America” and “blue America.” It is nearly always a more local contest, over which politicians will enjoy the privilege of representing the interests of the rich.
And so it is with health-care reform. The debate in Washington this fall ought to have been about why the United States has the worst health-care system in the developed world, why Americans pay twice the Western average to maintain that system, and what fundamental changes are needed to make the system better serve us. But Democrats rendered those questions academic when they decided the first principle of reform would be, as Barack Obama has so often explained, that “nothing in our plan requires you to change what you have.”
This claim reassured not just the people who like their current employment benefits but also the companies that receive some part of the more than $2 trillion Americans spend every year on health care and that can expect to continue receiving their share when the current round of legislation has come to an end. The health-care industry has captured the regulatory process, and it has used that capture to eliminate any real competition, whether from the government, in the form of a single-payer system, or from new and more efficient competitors in the private sector who might have the audacity to offer a better product at a better price.
The polite word for regulatory capture in Washington is “moderation.” Normally we understand moderation to be a process whereby we balance the conservative-right-red preference for “free markets” with the liberal-left-blue preference for “big government.” Determining the correct level of market intervention means splitting the difference. Some people (David Broder, members of the Concord Coalition) believe such an approach will lead to the wisest policies. Others (James Madison) see it only as the least undemocratic approach to resolving disputes between opposing interest groups. The contemporary form of moderation, however, simply assumes government growth (i.e., intervention), which occurs under both parties, and instead concerns itself with balancing the regulatory interests of various campaign contributors. The interests of the insurance companies are moderated by the interests of the drug manufacturers, which in turn are moderated by the interests of the trial lawyers and perhaps even by the interests of organized labor, and in this way the locus of competition is transported from the marketplace to the legislature. The result is that mediocre trusts secure the blessing of government sanction even as they avoid any obligation to serve the public good. Prices stay high, producers fail to innovate, and social inequities remain in place.
No one today is more moderate than the Democrats. Indeed, the triangulating work that began two decades ago under Bill Clinton is reaching its apogee under the politically astute guidance of Barack Obama. “There are those on the left who believe that the only way to fix the system is through a single-payer system like Canada’s,” Obama noted (correctly) last September. “On the right, there are those who argue that we should end employer-based systems and leave individuals to buy health insurance on their own.” The president, as is his habit, proposed that the appropriate solution lay somewhere in between. “There are arguments to be made for both these approaches. But either one would represent a radical shift that would disrupt the health care most people currently have. Since health care represents one-sixth of our economy, I believe it makes more sense to build on what works and fix what doesn’t, rather than try to build an entirely new system from scratch.”
With such soothing words, the Democrats have easily surpassed the Republicans in fund-raising from the health-care industry and are even pulling ahead in the overall insurance sector, where Republicans once had a two-to-one fund-raising advantage. The deal Obama presented last year, the deal he was elected on, and the deal that likely will pass in the end is a deal the insurance companies like, because it will save their industry from the scrap heap even as it satisfies the “popular clamor for a government supervision.”
The private insurance industry, as currently constituted, would collapse if the government allowed real competition. The companies offer no real value and so instead must create a regulatory system that virtually mandates their existence and will soon actually do so.
The Democrats have been competing fiercely for the privilege of representing the insurance and pharmaceutical industries. And they’ve succeeded, at least for now. They have successfully transformed themselves into the party of corporate America, besting the Republicans at that game. The healthcare bill is the payoff. It’s Obama and the rest of the party delivering on the promises all those campaign contributions purchased.
That’s what this is about. The reason healthcare “reform” is happening is because the insurance industry wants it to happen. And Big Pharma is allowing it to happen because they’re being guaranteed billions of dollars from a captive market.
And what do we, the citizens, get? I guess some of us will get some shitty health insurance. We’ll also get an effective ban on abortion in any state that wants it. Hell of a price.
On the other hand, we’ll also get a very happy President, checking off one more box on his to-do list and upping his self-awarded grade to an A. That’s certainly important. And we’ll get lots of self-congratulation by Democrats for having delivered on that corporate payoff — though of course they won’t call it that in public. In public they’ll talk about how they’ve given the American people some wonderful healthcare guarantee. It’s a two-fer, this bill: Democrats get to pay off their donors and maintain the illusion of representing their actual human constituents.
It’s a win-win. For everybody but us.
34 Responses to “The real competition is for campaign contributions”
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Adrienne in CA says:
Plus ça change, plus c’est la même chose.
*****A
December 21st, 2009 at 1:07 am EST -
lambert strether says:
Fuckers. To coin a phrase.
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lambert strether says:
Oh, and IMNSHO, it’s important to realize that “regulatory capture” is also what happened with the banks (see Willem Buiter). And, for that same reason, “financial reform” was no such thing. I have little doubt that if the analysis was done on climate reform, we would find the same pattern. So we’re in grand unified theory mode in the Harper’s article, which is nice.
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Jeff says:
You can throw the SEC into the hat. I keep saying these Trading ‘Bubbles’ are pre-programmed. “But the regulators are there to protect us!” pfft. Steer a wavy course and the herd can’t see the cliff.
What do we expect? The first SEC Director was Joe Kennedy. -
myiq2xu says:
That is basically the same conclusion I reached when I said “failure was the plan.” We’re getting this f**ked-up plan for HCR because this is the plan the health insurance companies and Big Pharma want.
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Violet Socks says:
Excellent post, myiq. I just read it. Excellent.
Though I’m intensely alarmed that you and I should be thinking the same thing at the same time. That’s just so wrong.
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Nessum says:
Maybe I’m naive when it comes to politics, but … will money always trumph votes?
I mean, if all Democratic Americans knew about this, would the Democrats in Congress still be confident that they (the voters) will come around at election time, ’cause “they have nowhere else to go”? – So they don’t have to pay attention to the voters?
Which brings me to my pet peeve: You’ll never win if you don’t have the (established) media on your side!
(I guess somewhere in there I just answered my own question!) -
myiq2xu says:
will money always trumph votes?
No
If it did then Ross Perot would have won in 1992 instead of Bill Clinton. Bill Clinton didn’t have the media on his side either.
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lambert strether says:
Speaking of third parties, MadameAB has an interesting idea.
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hannabanana says:
its still early. we should start pushing for a 2012 third-party.
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Donald W. Paulus says:
Thanks, Violet, for the Reclusive Left which provided those two wonderful posts from Harper’s Bazaar and the one by myiq2xu. They were outstanding. Our system is almost absolutely corrupt at the national level. What are we to do?
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Violet Socks says:
lambert, that link goes to sisterkenney’s comment — that’s what you meant?
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Nessum says:
@ myiq2xu
As this post is (also) about how
Democrats get to pay off their donors and maintain the illusion of representing their actual human constituents
I thought it was obvious that what I asked in #7 was:
For a politician, does the prospect of being paid/financed(/bribed?) always trumph the prospect of getting votes (as in: serving their voters/constituents).As for the media’s influence I’m confident that a lot have changed in that regard since 1992.
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myiq2xu says:
@ Nessum
Like everything else it depends on the person. But if you have a politician who doesn’t have any deeply held ideological beliefs or policy goals and he runs for office because he wants the title, power and/or prestige of that office the odds are that his constituents are screwed anyway.
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lambert strether says:
Violet, yes. I just thought I’d through the idea of a membership organization that provides member services into the mix as a party (or movement) building idea. That could go a lot of ways, even microfinancing.
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Caukee says:
This reminds me of my attempt to get help with a quality control issue with Rx Meds. The FDA informed me I was mistaken that their job might be to help me, or to do anything at all. As he said, “It’s their [the drug companies'] business to produce a safe and effective medication. And they do a fine job.” He reluctantly referred me to an “investigator” who took a report, then apologetically warned, “Don’t expect to hear anything.”
I haven’t. -
GnomeDigest says:
Regulatory Capture…what a perfect term for it. Gotta start using that descriptor in conversations more often…underutilized indeed.
While I tend to agree with the idea that Obombya and the Dems get to check off the healthcare box on their to-do form, it just seems like it will be such a short-lived political success.
Once people start running into the continuing-to-spiral upward premiums and are forced to try to actually get healthcare from crappy health insurance, that this will all come back to bite the dems.
It reminds of the Wallstreet approach to profits. Incentives are all for frontloaded, short term gain, while ignoring longterm consequence completely. Then again, what does Brockstar Obombya care? His last election is 2012.
Or perhaps the dems just figure all our elections are bought in the end, so as long as they have the most money come campaign time, it doesnt matter what the public thinks before they start spending money to tell the public what to think.
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Kookaburra says:
So I was thinking about this last night - what would it take to pass a constitutional amendment that requires congresspeople and the executive branch to be paid the mean salary for the State they represent? I bet that would cause them to get cracking on the economy! And of course their retirement benefits would be what the average tax payer gets. No more raiding Social Security! While I’m dreaming, what about also requiring them to use whatever public option healthcare is available. Single-payer would be enacted tout suite!
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Gayle says:
ThreadJack:
Hi,
I’m looking for a good charity, preferably a one specifically geared towards women, like one of the micro-loan charities (but I’m open).
Can anyone make any good recommendations?
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Gayle says:
Oh Dear, that was poorly written.
Pardon!
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TheOtherDelphyne says:
There’s a PayPal button on this site - which is specifically geared towards women.
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propertius says:
would the Democrats in Congress still be confident that they (the voters) will come around at election time, ’cause “they have nowhere else to go”?
Pretty much, because that’s the way the choice has been presented to us. When a fundraiser for my current, appointed junior Democratic Senator called me the other day, I told her that not only would I not be donating, I wouldn’t vote for him for dogcatcher.
Her (obviously prepared) reply was, of course: “Well, you wouldn’t want a Republican, would you?”
When I asked her exactly how I would tell the difference, she didn’t have an answer. I guess it wasn’t on her script.
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Mec says:
Now there’s some leftist commentary that a libertarian such as myself can applaud, too. Ecumenical! :)
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Aspen says:
@Gayle
This one doesn’t only serve women, but you can choose the recipient(s) of your donation, so you can choose women/women-owned enterprise.
http://www.kiva.org/ -
steve says:
Well, we rush to jump into stupid party line and this is where it gets us. Those who seek the power are not after it for the sake of the common good. This is why there should be less power.
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Gayle says:
Thanks Aspen!
I’ve heard of them before. They are pretty much exactly what I was looking for. That and a good anti-trafficking org which i just emailed Sam about.
Thanks Again!
Happy Holidays!
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Gayle says:
A Christmas quiz for one and all- Who wrote the following in a recent post?
Can I say that, even though I would have been ecstatic to have her as President (certainly would have been the same level of victory as electing Obama), things are really working out on the Hillary Clinton front?
The answer will amuse you!
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Violet Socks says:
I know. Someone else emailed me that. It’s hilarious. I guess she figures if rewriting history works for Obama, it can work for her.
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Gayle says:
HA! Isn’t it hilarious!
I haven’t been there in months and months and for some unknown reason I popped over just to see what she was saying about the health care debacle. (Had a feeling she’d figure out a way to support it.)
When I saw that post I laughed my ass off. I thought you’d appreciate it, too.
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lambert strether says:
#27 C’mon, gayle, they buried the lead. Quoting:
It’s been a fucked up year for everyone major in politics except probably Hillary Clinton. No wonder assholes hate her so much.
Too delicious…
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Kookaburra says:
Wow, first blog that popped into my head was a bullseye, Gayle. Whodathunkit?
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votermom says:
Who is it?
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Gayle says:
Here ya go Votermom. I’m keeping it under wraps in case anyone else cares to play. Enjoy!
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Janis says:
Holy CRAP. I SWEAR to you, the first thingh that went through my head was, “Amanda. *snorts in an effort to suppress laughter* No really, can’t be THAT obvious … ”
I guess she found out the hard way that voting for Teh Mayun doesn’t always get you laid.
