It may already be too late for the United States. The world-wide decline in democracies has no greater threat than the attack on democracy within the United States of America. Let’s be quite clear – a second term for Donald Trump could easily mark the end of democracy in America. There are two scenarios that could arise from a Trump victory. The first is that, unburdened by the need to remain popular for a second term election, he would exercise authoritative powers with no restraining chains and no guard-rails. The second is that a greedy and power-hungry Republican-dominated Congress would push through an amendment that enabled him to have a third term (age and health permitting). Do you think the Trumpster hasn’t noticed that Xi Jinping managed to wangle a third term in China in contravention of standing practice? 

The upcoming mid-term elections in the States are the first battle in the war that is the 2024 Presidential election. If Democrats are able to take control of the House and Senate now, they can help Joe Biden pursue an agenda that attempts to revitalize the American middle class. Some big victories in legislation over the next two years would position Biden, or his successor as Democratic nominee, to gain another term. On the other hand, two years as a lame duck President fighting a hostile House and Senate will likely destroy Biden’s agenda and probably hand the White House back to the nut-bar Republicans in 2024. So, these elections are absolutely critical.

What are the issues that matter in this election? People commonly talk about the critical issues being inflation, the economy, immigration policy, abortion, gun controls, and foreign policy as key issues. Those issues are all important issues, but I don’t see any of them as being the dominant issue. The dominant issue for the mid-term elections is money.

The mid-term elections are for sale. Elections have been for sale in the US for many years of course, but never more so than in 2022. Election spending in the United States is insane. I found some data on a site called Open Secrets. (The Center for Responsive Politics (Open Secrets) is rated by MediaBiasFactCheck as least biased and very high for factual reporting.) Open Secrets reports that mid-term election spending first exceeded $3B in 2010 ($3.6B). Spending rose marginally to $3.8B in 2014, and then jumped to $5.7B in 2018. The spending in 2022 is projected to be approximately $9.4B. In 2018, the total number of votes cast in the election was 113 Million. If one assumes 120 Million in 2022, then election spending will equate to around $8000 per vote. And if that number scares you, think about the years when a President is to be elected. The total spending for both Congressional and Presidential elections in 2020 was $14.4B. 

Of course, the good thing is that all of those political contributions came from altruistic and visionary citizens who had no ulterior motives and no personal profit motive, right? Yes, that was sarcasm. 

Why are people motivated to spend $9B to try to gain control of the House and Senate? I think you’d be foolish to believe that a great many donors aren’t expecting a return on their money. I believe that there are a number of donors who do have some form of altruistic motivation, but sadly I expect they are out-weighed by those who are investing with the expectation of profit.

Well, where is money flowing? I follow an American professor of History, named Heather Cox Richardson (HCR). It would be a mistake to think of her as a neutral party. She is unashamedly supportive of the Democrats and generally terrified of the Republicans in their current state. What I find interesting about her discourses is that she applies a long historic view to her commentary of current events. It is not uncommon for her to go back to the American Revolution or to the American Civil War and explain the historical evolution of current attitudes, laws, and rationale. It is interesting that in that long evolution, some attitudes and approaches that were driven by Republicans in the post Civil War era are now sponsored by Democrats and vice versa.

One of HCR’s touchpoints is the era of Ronald Reagan’s presidency. Reagan introduced “trickle down” economics; the notion that smaller government and lower taxes would create prosperity for the working man by enabling the rich to get richer and bring their workers up with them. It is the economic implementation of the cliché that “a rising tide floats all boats”. It sounds good, and I must confess that I was, and to a certain extent still am, susceptible to believing in that notion. I have stated in other blog postings, for example, that it is the government’s job to create an environment in which businesses can prosper, and then stand back and get out of their way.

Liz Truss, the 45 day PM of the UK, attempted to pass huge tax cuts for the very rich. It was very blatant and obvious obeisance to the elite with whom Truss likes to associate herself. It didn’t work – the markets sent the pound into steep decline and the Bank of England had to step in and raise interest rates sharply to the detriment of every poor bugger who has a bank loan or a mortgage. 

Unfortunately, trickledown economics hasn’t worked. Well, that’s not true. It has worked nicely for the very rich, but it hasn’t worked well for you and me. In my “Tax the Billionaires” article, I posted some information about the rising number of billionaires in the US and in Canada, including, for example the note that the richest 87 families in Canada control more wealth than the bottom 12 million families combined. Data taken from the Pew Research Center (Trends in income and wealth inequality, January 2020) dealing with the US economy tell us that “In 2018, the median income of U.S. households stood at $74,600.⁵ This was 49% higher than its level in 1970”….However, “This was considerably less than the 64% increase for upper-income households” ….and furthermore, “The top 5% of families, who are part of the highest quintile, fared even better – their income increased at the rate of 3.2% annually from 1981 to 1990. Thus, the 1980s marked the beginning of a long and steady rise in income inequality.”

The flow of money has been from the poor to the rich since the early 1970’s. In an article from the Fraser Institute, Livio Di Matteo a professor of Economics at Lakehead University identified another trend from that same period. “Public sectors were small during the 19th century and expanded dramatically in most developed and industrialized countries particularly after World War II. The period from 1980 to the late 1990s saw a leveling off and then reversal of the historical trend towards larger government. In 1980, the average size of government around the world, measured as a share of the economy (GDP), was 36 per cent. By 1999 it had declined to 31 per cent.” So, the flow of money from poor to rich, the introduction of “Reaganomics” and the decline in the average size of government all took place over roughly the same period. Interestingly, Professor Di Matteo doesn’t argue for sharply increasing the size of government. Instead he offers evidence that there is an optimum size of government spending as a fraction of GDP, and that eventually too much government is as bad as too little.

In the two years of his Presidency, Joe Biden clearly has been looking to reverse the trend to smaller government, and to reverse the flow of money to the middle class. Democrats have succeeded in passing bills to forgive student loans, to reduce cost of prescription drugs for seniors, and to provide huge subsidies for a number of climate care initiatives. So far, the US economy is doing surprisingly well.  The US Job Report of October 7^th 2022 reports that 263000 jobs were added in September, that unemployment is down to 3.5%, Jobs are up. Middle class incomes are up. If Biden gets support in the last two years of his presidency, he may be able to deal a fatal blow to Reaganomics and begin the restoration of the American middle class.

There are rich people on both sides of the political divide. By far the biggest contributor according to Open Secrets is George Soros (Soros Fund Management). Soros is a bit of an anomaly – from what I’ve read he is indeed an extraordinarily committed supporter of liberal democracy. He has donated almost $130 M to democrats in 2021/2022. The next highest contributor on the list is FTX.US, which, to my amazement is a huge cryptocurrency exchange. That organization has given $44M to Democrats and $18M to Republicans. There is only one reason for that giving pattern – they are investing in political patronage. Whoever wins, they are going to be able to call on someone for favours when they need them.  There is a surprising number of people or organizations which donate large amounts to one party but also a small amount to the other party. There’s an even more surprising group which contributes like FTX does, providing large amounts to both parties.

I think there is no doubt that the most significant battle in these elections is the one between those who want to continue the flow of cash to the rich, and those who want to interrupt and reverse that cash flow trend. 

Soros may have been surpassed as the biggest political donor though. In August, Heather Cox Richardson reported “Today’s big news is an eye-popping $1.6 billion donation to a right-wing nonprofit organized in May 2020. This is the largest known single donation made to a political influence organization.

The money came from Barre Seid, a 90-year-old electronics company executive, and the new organization, Marble Freedom Trust, is controlled by Leonard A. Leo, the co-chair of the Federalist Society, who has been behind the right-wing takeover of the Supreme Court.”

The attack on the integrity and political neutrality of the US Supreme Court is another issue which should concern us all. HCR says “This attack on the rule of law—the idea that the laws apply to everyone equally—has been underway since the administration of Ronald Reagan, when Attorney General Edwin Meese set out to, as he said, “institutionalize the Reagan revolution so it can’t be set aside no matter what happens in future presidential elections.” Contrary to established procedures at the Department of Justice, Reagan appointees began to quiz candidates for judgeships about their views on abortion and affirmative action, to tilt the direction in which the courts would rule.” The expectation that the Supreme Court should be a political body, not an impartial judicial body, is a serious attack on the rule of law.

I find the direction of US politics depressing. The fact that the election is for sale is sad. It’s sad that rich people are both willing and cynical enough to spend lavishly  to purchase political advantage. It is even more sad that stupid and credulous voters are unwilling or unable to vote in a non-partisan way with the expectation that exhibits integrity and honesty matter.

What’s the lesson for Canada? Well first, we should watch these mid-term results carefully and if the bizarre lurching towards autocracy continues, we should ensure that our international affairs policy begins to separate us, in the eyes of the world, from America.

Second, I have argued in previous writings for rigorous rules that would significantly limit election spending. In particular, I suggested that 1) we should ensure that serious free air time is provided for serious political parties, 2) I would like to see a real, serious, and low limit on political advertising and 3) I think that political parties should get equal election funding directly from Revenue Canada and there should be some ridiculously low limit on how much a person or a corporation can donate to a political party. I would prefer that we pay for our elections from our tax base and ensure there is integrity in the process. Private funding for election spending is always a gift that comes with strings attached, and we should take steps to eliminate those strings.

Keep an eye on those US mid-terms; they’re very important.