Duopoly of Division

You have probably seen it on TV many times, an advertisement for Fisher Investments where the spokesperson says they do things differently than other money managers and the other money managers don’t understand why. The advertisement then shows another money manager who says, “because our way works great for us.” And that got me thinking. Not about money managers but about politicians, because what they are doing may work great for them, but it is not working out very great for us.

If you think about politics, it is a huge industry. I am not talking about government but about the political industry that runs within the government. Politics includes not only politicians, but staffers, pollsters, advisors, think tanks, lobbyists, and political action committees among others. Harvard Business School professor Michael E. Porter and business leader and entrepreneur Katherine M. Gehl have written a book describing this phenomenon, The Politics Industry, How Political Innovation Can Break Partisan Gridlock and Save Our Democracy. Porter, an expert on industrial organization and competition, credits Gehl with having the vision to see politics as an industry and to work with him to find out why this industry has such poor results for its customers, the citizens of America.

The first insight was that the Constitution only provides a bare bones outline of how government works and relies on politics and politicians to put flesh on this beast. The Founders abhorred faction, but soon after George Washington relinquished the presidency and returned to Mount Vernon, the remaining Founders became bitter rivals and their factions developed into political parties. But despite their rivalry, these incipient political parties began to fashion the political system to suit their needs.

Porter and Gehl describe how there are two currencies in politics, votes and money. But while the number of voters is finite (maybe only theoretically given America’s porous borders), there is an infinite amount of money available. These huge bags of money are readily available because the return on such investments is great (as was noted in my first book, Principled Policy). So, the corporations, unions and special interests pour their currencies into the political process to gain access and influence while the average voter with little money and only one vote gets short shrift.

Porter and Gehl describe the two party system that dominates US politics as a duopoly. A duopoly is an industry dominated by two huge competitors, and while they fight fiercely against each other they are even more fierce in their opposition to other competitors. The Democratic Party dates back two hundred and twenty years all the way to Thomas Jefferson, while the upstart Republicans have only been around about one hundred and sixty-five years. Over the decades the ideologies and public policies of the political parties have changed and metamorphosed into something that would be unrecognizable to those original party members. In the twenty-first century these parties are further mutating into radically extreme entities far beyond the control of ordinary citizens. This mounting extremism is fomented by electoral processes that give greater power to partisan extremists than to more moderate voters.

The first step in this radicalization of the political parties is the primary election process. Initially thought to be an improvement over the selection of candidates by party bosses in the smoke-filled back room, primary elections promote partisanship because they have a lower turn-out than general elections giving highly motivated partisans an advantage over the less motivated moderate voters. This was the mechanism that got Donald Trump the Republican nomination and almost worked for Bernie Sanders as well. Porter and Gehl assert that this primary system not only favors more partisan candidates, it also deters more moderate elected officials from following their consciences for fear of antagonizing the partisan primary voters. We are seeing this partisanship now in the onslaught of retirements by moderate Republicans being threatened by primary challenges from hard-core Trumpsters. Democratic moderates fear the wrath of the progressive left if they were to compromise on anything.

Another problem in the voting process is plurality voting. When there are more than two candidates in a race, it is easy for a person to be elected who does not have the support of the majority of voters. This happened in 2006 when Daniel Ortega won the presidency of Nicaragua with only 38% of the vote. He has ruled there ever since.

Plurality voting not only means a possibly unpopular candidate, when the partisan primaries result in two unpopular candidates plurality voting contributes to discouraging the participation of third parties or independent candidates. This is due to a “spoiler effect,” in that voters are afraid that by voting for a third alternative, the candidate they like least will win so they vote for the less bad candidate. Add in the fact that many states have sore loser laws that prohibit the loser in a primary from running in the general election as an independent when there are more moderate voters.

Partisan primaries and plurality voting have suppressed competition from third parties and independents resulting in two very unpopular presidential candidates in 2016. In 2020, moderates or centrists such as Mike Bloomberg or Howard Schultz quickly gave up after being confronted by the Democratic machine. Competition and innovation are the driving forces behind America’s economic miracle, but the duopoly of the Democrats and the Republicans have raised very high entry barriers to potential competition. And the only innovation in the American political system has been to reinforce the power of the duopoly.

But what can we do to inject competition and innovation into a political industry dominated by two powerful institutions?

---

Nancy Pelosi’s House of Representatives recently passed H.R. 1, the For the People Act to change voting procedures around the country. The Act is strongly supported by Senate Majority Leader Chuck Schumer and President Joe Biden. The Act is being presented as an effort to expand voting access and to counter Republican efforts at voter suppression. The For the People Act would be better named the For the Democrats Act because the goal of Pelosi, Schumer and Biden is to convert the duopoly into a monopoly. And the customers of a monopoly (in this case us) fare even worse than do the customers of a duopoly.

In their book, Porter and Gehl propose changes to voting procedures that are intended to break the grip of the current duopoly by introducing competition and innovation into the political industry. The first step to weaken the grip of the duopoly is to change voting procedures to give moderate and centrist parties and candidates a better chance of winning elections.

They recommend opening up the primaries to all candidates, in essence converting them into first round elections. Currently the primaries are only for duopoly candidates and the Republicans and Democrats run the primary elections. In some states, only party members can vote in primaries. Opening up the primaries would generate a slew of independent and third-party candidates in addition to the potential Democratic and Republican candidates making it hard for any candidate to get a majority so Porter and Gehl recommend that the top five vote getters run against each other in a second election. Currently, after the party primaries, the Democrats and Republicans would have a single candidate each to run against the slew of independents and third-party candidates in the general election, giving the duopoly candidates a distinct advantage.

Of course, the top five vote getters might still be from the duopoly parties, but the second-round election would still give voters a choice between moderate and extremist candidates. And with five candidates, it would still be difficult for any one candidate to get the majority. But the most extreme candidate might still have a core of supporters that would give the extreme candidate a plurality over more moderate candidates. A winner take all election based on a plurality could frustrate the intentions of a majority of moderate voters.

Porter and Gehl recommend replacing plurality voting with ranked choice voting. In ranked choice voting each voter ranks all five candidates in their order of preference. An extremist candidate might be the first choice of his extremist core supporters but last among everybody else, while a more moderate candidate might have less first place votes but was everybody else’s second choice. Ranked-choice voting works in the second round of elections but would be a mess in the first round where there are a lot of marginal and unknown candidates that would be impossible to rank.

No state has adopted the combination of top five first-round voting and ranked choice second-round voting as recommended by Porter and Gehl, but the states of Washington and California have adopted a top-two second round voting system. But while the top two candidates can be from the same party, at least the voters whose candidates did not make the second round can select a candidate more closely aligned with their preference. In California this has made races more competitive and kept some extremists candidates from winning.

Breaking up the duopoly’s hold on elections procedures will not be easy. It will be even harder if Pelosi, Schumer and Biden create a monopoly of political power as they are attempting to do with the For the People Act. But there are things that citizens can do. Go to www.gehlporter.com to find out more.

Of course, breaking up the duopoly’s stranglehold on elections in only the first step. Next, we have to look at how to break up their stranglehold on the machinery of government.