Why business interests are losing influence in local politics
The standard journalistic narrative is that local, statewide, and national politics is unduly influenced by big business. But much data suggests that, in fact, the opposite is true. Eitan Hersh explores in Annual Review of Political Science.
What role do business leaders play in American democracy?
Business leaders are fragmented and fail to achieve many of their goals; their power has weakened over time; the public wants more business engagement with politics, not less; and no viable reform agenda would fundamentally alter business power.
First, while economic elites individually have more power than average citizens, as a group they are fragmented, are unable to coordinate, and fail to achieve many of their core policy goals.
Second, historically speaking, economic elites are weak and disengaged from politics relative to the common benchmark of the postwar years.
Third, the public favors substantially more, not less, political engagement from economic elites.
Fourth, to the extent that economic elites have outsized power, that power is unlikely to dissipate through any reform agenda. What's more, the public would benefit from economic elites emerging from their dormant state and exerting more political leadership.
The foundations beneath claims of oligarchic policy influence are shaky. Reanalysis of data used by Gilens (2012) and Page & Gilens (2017) reveals widespread agreement between middle and upper classes in what they want out of public policy (Branham et al. 2017, Enns 2019, Lax et al. 2019). The economic classes agree on policy some 90% of the time, and when the rich prevail, it's only by a hair. In many cases, when the rich disagree with the poor, it is on social policies in which the wealthy hold more liberal preferences than the nonwealthy. Ironically, one issue about which the rich and the nonrich consistently disagree is campaign finance reform: The rich prefer policies that take power away from the rich!
Rather than finding support for the dominance of the wealthy, several scholars point out there is less a class divide than a status quo bias: Congress is unable to pass policies that large majorities of Americans across economic classes prefer.
While much has been said about the impact of conservative billionaires, there are many billionaire activists on the left too. In 2020 alone, two billionaires spent hundreds of millions of dollars on their own Democratic presidential bids. However, the billionaires on the left may be less strategic than those on the right (Hertel-Fernandez 2019, Hersh 2020).
The investors on the right see themselves as taking on overwhelmingly liberal domains of civil society, domains such as higher education (Jaschik 2017), government (Newport et al. 2011), and media (Hassell et al. 2020). It is hard to maintain the view that America's civic institutions have been taken over by right-wing billionaires.
Do business interests dominate through campaign contributions? There is no denying that politicians spend a lot of their time soliciting donations—an activity that of course gives donors access, raising the elitism concern. But, as a whole, the literature is mixed about the donor class either skewing politics to the right (the conservatism critique) or gaining particularistic benefits in exchange for donations. On some issues, donors are to the left of the party bases rather than to the right of them; in some ways donors are more polarized, and in other ways they are less (Broockman & Malhotra 2020, Grumbach 2020, Rhodes et al. 2018, Wright & Rigby 2020).
In a recent study, Fowler et al. (2016) find that barely winning politicians have no effect on the value of firms who supported them over their electoral opponents. Donations are not a realm dominated by businesses looking for a quid pro quo benefit. Of course, donor influence is difficult to measure, and scholars continue to innovate in search of clear effects, but on balance the research fails to show that business interests get their way on account of campaign contributions. Donations from corporate leaders seem to follow their ideological tastes in politics rather than their narrow business interests (Ansolabehere et al. 2003, Bonica 2016).
What does the second narrative say about lobbying? That the lobbying industry focuses so much on particularistic goals is itself a sign of weakness. The claim of the second narrative is not that business elites don't individually have outsized power in politics but that, as a group, the wealthy are fragmented and unable to achieve their collective class goals.
Many of the researchers associated with the first narrative argue that business elites would actually benefit from a range of policies such as healthcare reform, finance sector regulations, and tax simplification (Drutman 2015, Hacker & Pierson 2016, Hertel-Fernandez 2019). Big businesses have an interest in human capital development (Martin 2000). They benefit from more efficient health care and a workforce prepared by a first-rate public education system. In this telling, then, the picture of lobbyists fighting for particularistic benefits is a signal that business elites are failing to coordinate even on issues in their collective economic interests.
Read the whole thing here.
Follow Opportunity Now on Twitter @svopportunity
We prize letters from our thoughtful readers. Typed on a Smith Corona. Written in longhand on fine stationery. Scribbled on a napkin. Hey, even composed on email. Feel free to send your comments to us at opportunitynowsv@gmail.com or (snail mail) 1590 Calaveras Ave., SJ, CA 95126. Remember to be thoughtful and polite. We will post letters on an irregular basis on the main Opp Now site.