| The simple resolution to the conflicting tensions embodied in the above three points is that historical cycles of accumulation lead to changed social circumstances in which the temper and judgment of entire populations grows increasingly unrealistic compared to longterm objective reality. In those circumstances, financial bubbles arise along with a bubble of self-referentially concsiousness that screens out the normal long-term reality that ultimately has the last word over everything. While the financial bubbles are the immediate causes of harm, it's the bubble consciousness, with it's wildly distorted sense of reality and perverted norms that stands as the greatest obstacle to tacking corrective action after the fact. And that is the situation we find ourselves in today.
So when I talk about the need to stop the power of finance, I am not advocating or endorsing a demonic view of that power. Yes, it has run amok. But its perniciousness is not, ultimately, inherent in finance per se. The problem lies in the balance of power-or rather the lack thereof. And it can be seen very clearly in the chart presented above.
Money In Politics
Back on March 11, I posted the following short diary
Obama's Donor Base--A Reminder By Industry
From Open Secrets:
Rank Industry Total
1 Retired $44,524,860.00
2 Lawyers/Law Firms $42,861,936.00
3 Education $22,342,123.00
4 Misc Business $15,457,514.00
5 Securities & Investment $14,442,282.00
6 Health Professionals $11,532,962.00
7 Business Services $11,256,534.00
8 Democratic/Liberal $11,120,392.00
9 Real Estate $10,351,779.00
10 Computers/Internet $ 8,631,192.00
11 TV/Movies/Music $ 8,599,038.00
12 Civil Servants/Public Officials $ 8,381,475.00
13 Printing & Publishing $ 6,013,428.00
14 Misc Finance $ 5,599,284.00
15 Other $ 3,665,329.00
16 Hospitals/Nursing Homes $ 3,205,041.00
17 Commercial Banks $ 3,167,003.00
18 Non-Profit Institutions $ 2,902,041.00
19 Construction Services $ 2,762,510.00
20 Insurance $ 2,211,348.00
The important fact, of course, is the enormous differences in how well organized different sectors are, plus how specific and how narrowly-targeted their asks are. That's what we're seeing play out now.
It was such a short diary, I was a bit surprised that it seemed rather hard for some to take in the simple message of the longest of the two complete sentences in the post, to wit: "The important fact, of course, is the enormous differences in how well organized different sectors are, plus how specific and how narrowly-targeted their asks are."
To get things started in the right direction, here's a chart (click to expand in a new window) that gives some sense of how tightly organized the financial sector is:
If you look again at the list of industry donations to Obama, you'll see that there's no trace at all of the automotive industry. No trace of transportation at all. In contrast, not only does a major chunks finance ("Securities and Investments") clock in at #5, real estate also makes the top 10 at #9. These constitute a good chunk of two of the three industry groups comprising the "FIRE" sector of the economy--Finance, Insurance and Real Estate. ("Commercial Banks," also part of finance comes in at #17, while "Insurance" shows up down in #20.)
In contrast, almost everything else in the top 10 is relative diffuse. "Retired" encompasses people from all walks of life. "Education", too, covers people in all manner of different fields, whose allegiences are often stronger to the fields they are in than it is to education per se. The same could be argued for "Lawyers/Law Firms," "Misc Business," and "Business Services" as well.
But, of course, that's a rather narrowly focused view of the role of money in politics. The concern here is with the big picture, and though presidential campaign contributions loom very large in the overall picture, they do not tell the whole story, and can even mislead us about the overall shape. So we need to take various other views into account. (All the other information below comes from Open Secrets as well.)
Let's start off with a big-picture look at the FIRE sector vs. the transportation sector, over the full history of records that Open Secrets has in its database:
Three things stand out immediately: (1) The transportation sector is overwhelmingly Republican, by more than 2-1, while the FIRE sector is more evenly balanced, even swinging over to the Democrats this past cycle. (2) The FIRE sector is MUCH larger in terms of contributions--almost an order of magnitude larger this past cycle. (3) The FIRE sector is growing in importance. It was 4 times larger in 1990. It grew to 8 1/2 times larger this last cycle.
But auto manufacturers are only a small part of the transportation sector. In fact, they aren't even the largest chunk of the automotive industry, as can seen by looking at the following three categories within that industry:
We can compare the automakers to just one part of the Wall Street complex, hedge funds, which literally came out of nowhere 18 years ago, to take a dominant position today:
In 1990, hedge funds accounted for 1/9th the contributions that automakers provided. They reached near parity in the year 2000, and this last cycle, hege funds accounted for almost 6 1/2 times as much in contributions as did automakers.
Is it any wonder Detroit gets no respect?
Let's go back to the sector level, and take a look at the list of top 20 contributors:
The top automaker within the transportation sector is Ford, at #10--beaten out by Enterprise Rent-A-Car! Chrysler and GM are right behind it, but still, all three automakers combined ($2,414,136.00) didn't contribute as much as #2 UPS. Put them into the FIRE sector and their combined total wouldn't even make the top 10--it would trail #12, Credit Union National Assn.
Now let's look at these two sectors in terms of recipients:
The order of the recipients here holds few surprises. We already know that transportation is overwhelmingly Republican, and McCain's been around forever, so he sweeps past Obama to come in #1. But in FIRE, Obama easily passes McCain by.
The real story, once again, is the relative sizes of the two sectors. There are NINE candidate who get more money from FIRE than McCain gets from transportation--including Norm Coleman! It's really not much solace that one of those nine is John McCain himself. Not much solace for the transportation industry, that is.
Transportation means even less to Obama. Heck, Joe Biden got more from FIRE than Obama got from transportation.
Breaking it down to the industry level, we compare the whole auto industry (incuding foreign and domestic dealers) to just hedge funds:
Obama gets more from hedge funds than McCain gets from the entire automotive industry. That alone says it all.
And, finally, looking at the two presidential candidates, we've already seen Obama, but let's look at him again, compared to McCain:
Like Obama, McCain's top two categories are retirees and lawyers--although unlike Obama, there's a much bigger drop-off from #1 to #2. But his next two categories are both from the FIRE sector. But despite that fact, Obama gets more from both the industries involved: $10,351,779 from real estate, compared to McCain's $8,858,237, and $14,442,282 from Securities & Investment, compared to McCain's $8,547,727. Thus, McCain is actually vastly more dependent on the FIRE sector than Obama is, even though he takes in less money.
This can be seen as well in our last view of the contribution picture, looking at individual corporate contributors for both candidates:
Here I've added another column, just make it easier to compare the top 5 contributors from finance for both candidates. In McCain's case, they are his top 5 contributors, period. You just couldn't ask for a more pure Wall Street candidate than John McCain. No wonder his head was spinning like a top as he tried to figure out what to do when the meltdown exploded. Even so, Obama got more than twice as much from the top five Wall Street firms on his list, even though they ranked lower down.
Summary
This part is simple: any way you look at it, finance crushes transportation. Period. End of story. That's all there is to it.
But, of course, that's not reflective of the real world. Not in the least. We need to totally remake our transportation system if we're to adapt and thrive in the face of global warming. But we can't even begin to do that if our political class has a neglectful and disdainful attitude toward the transportation sector. And we won't be able to do anything at all if they keep on worshiping Wall Street as it sucks every last dollar out of the real economy, along with IOUs that will last until the ice caps melt. |
