Mitt is on the money

It is final now: Mitt Romney is the official presidential candidate of the Republican Party for 2012.  This is in itself a little miracle. To begin with, given the strength of Christian fundamentalists in the GOP – from Evangelicals to Catholics – it is still remarkable that a Mormon has finally made it to the top of the ticket. Given the history of Mormonism in the US and its longstanding antagonism from ‘mainstream’ Christian groups this is probably the clearest indicator of the magnitude of resentment towards Obama. To Tea Party fundamentalists, even an apostate is more acceptable than – I guess – a black person in the White House. Those two delegates who threw nuts at a black CNN camerawoman with the comment "this is how we feed the animals" are probably – despite the political correctness of the official reaction - just an indicator of the Republican Zeitgeist.

There is though another reason why this is even more interesting. After all, this is the first election where private corporations (or rich business owners through their companies) are able to basically fund the campaigns of their preferred candidates without any limits. We saw this clearly in the primaries, where candidates such as Herman Cain, Newt Gingrich or Rick Santorum were all able to stay in the race far beyond what their paltry successes in the primaries would traditionally suggest. It was ironic, that the Citizens United ruling by a Republican-leaning Supreme Court in 2010 reared its predictably ugly head first to the detriment of the Republican frontrunner Mitt Romney himself. Newt Gingrich was probably the best example: not only did his philandering past made him unpalatable for even the most ideological GOP supporters at the base, but also his success in the primaries was dismal –he could not even win his home state Georgia. He stayed in the race though because his ‘sugardaddy’ Sheldon Adelson poured limitless amounts of cash into his campaign. Adelson, the owner of a global Casino empire, is currently investigated for breach of the Foreign- and Corrupt Practices Act by the US Justice Authorities and has good reasons to make sure whoever ends up in the White House has some loyalties to him.

The Republican primaries have shown that rich individuals, after the Citizens United ruling, basically can buy elections. It will be exciting to watch how this will now impact the presidential campaigns in the fall in the US. Mind you, four years ago it was Obama who had the biggest coffers. And still today, if one just analyzes the funds of the actual campaigns of Obama and Romney, where donations are capped at $5,000, Obama is still leading Romney (according to a recent report in The New Yorker). However, what the Citizen United ruling has allowed is the creation of so called ‘Super PACs’ (as in political action committee), which can advertise on behalf and in the interest of a candidate and can accept unlimited amounts of donations.

The effect is fairly impressive. Already now, if we look at the Super PACs around both candidates, Romney with $120m in donations leads Obama by factor four. Adelson alone has pledged $100m to get rid of Obama and other rich republican donors such as the Koch brothers are willing to donate whatever it takes. Estimates suggest that Romney (and his entourage) by November may have been able to spent some mindboggling $1.2bn dollars!

The interesting thing here then is that for some reasons, the Obama campaign is not playing the same game. This not so much due to a lack of potential donors (according to the cited article); there are enough rich business people who are leaning towards the Democrats. It appears that Obama himself is not too keen on becoming too close and dependant from wealthy individuals and interests. Another factor appears also to be that some of the individuals who potentially could play the game of the Koch’s and Adelsons’ on the other side feel that this trend in politics is not desirable: “I don’t want to see democracy go in that direction”, Warren Buffett (a longstanding Obama supporter) is quoted in The New Yorker.

There are many people among the Democrats who are worried about this. After all, come fall it may well be possible that most advertising time on TV and radio has already been bought by Republican Super-PACs. And indeed, as we have frequently discussed here on this blog, the current situation in the US lifts the entire debate of corporate influence on the political process to a truly new level. There is now only a little and mostly cosmetic difference between how ‘third world’ dictators can buy elections and the way the sheer financial backing of a candidate and his capacity to spend on his campaign will decide the US Presidential election.

The Republican primaries though have left us with a glimmer of hope – albeit in a somewhat twisted way. After all, despite the corporate backers of several candidates, in the end the Republican base by persistently not voting, for instance for Gingrich, finally got to speak the last word. The assumption that money can buy an election then rests on a simple assumption: that the majority of the electorate, in fact: the few millions of swing voters in some ten states of the US who effectively have decided elections in the last decades are stupid enough to fall for a bombardment of advertising (for which most of the funds are used these days) and just succumb to these formidable means of manipulation. Or is it still also true, as the Republican base has shown, that voters still have some minimal set of convictions and the ability to see through all the veneer of a political campaign – and decide for themselves. One way or the other, these specific circumstances have added an ingredient to this presidential campaign which might actually make it a slightly more interesting spectacle to watch.

Artwork from DonkeyHotey, reproduced under the Creative Commons License.

Business Ethics enters Politics

Finally. The American establishment is talking about the issues the Occupy Wall Street movement attempted to raise since October last year: the ethics of Wall Street investors, private equity firms, the inequality of income distribution, the unfair taxation system. All these issues are now at the core of the Republican primary. Four of the five remaining contestant use those things in an attempt to stop current front runner Mitt Romney. And apparently he looks guilty on all accounts.

Mind you – let’s not get into the ethics of why these issues are brought up. The Republican base, many of them evangelical Christians, just hates Mormons such as Romney. So any argument will do to stop an heretic on his way to the White House. And while Newt Gingrich, Rick Perry and Rick Santorum are pretty much guilty of most of the things they accuse their opponent of - Mitt Romney as the Ex-CEO of Bain Capital, a private equity firm and the richest of the contestants, is just such a clear cut, stereotypical representative of the ‘One Percent’.

There are a number of reasons why this is worth pondering. The first and obvious one is that none of the Republican candidates was a strong supporter of these classic ‘Occupy’ issues. They all more or less dismissed the movement. In the primary election, in which the Republican base selects the next presidential candidate though it appears that obviously the issues have traction even with conservative voters. Whether this is an indirect result of the ‘Occupy’ movement is hard to tell. But it certainly shows that the role of Wall Street, income inequality and a tax code that favors wealthy people resonates with a far wider constituency of Americans. These issues currently, in the Republican primary, appear to be somewhat engineered and disingenuous; but they will become a core issue of the election later this year, when Romney as the most likely winner of the Republican ticket will run against Obama in the fall.

This turn in the debate is also remarkable as for the first time in a presidential race, a serious candidate with a background in business is assessed on his credentials in business ethics. Not that he is the first business person to do so: Romney stands in a long line of the likes of Mike Bloomberg in New York, Silvio Berlusconi in Italy or Sebastián Piñera in Chile - all examples of this kind of career. But it is interesting, that for the first time the ethics of a businessman-turned-politician's wealth creation is the subject of a debate on whether s/he is fit for public office. Obviously, ethical issues in business resonate with the general public more than ever before. This includes the level at which they have paid taxes, which in Romney's case with just 15% over the last years will make it very hard for him to endear him to the '99 per cent'...

This said then, the crucial ‘ethical’ issue seems to be the question whether Romney’s activities at a private equity firm resulted in job losses for the average American. This is however just a small fraction of what really is the ethical issue with private equity firms. In some ways, the rise of the private equity industry in the US (and beyond) was a result of the Sarbanes-Oxley Act, which attempted at addressing limited transparency and accountability which led to the Enron- and other scandals 11 years ago. With Romney in the race, for the first time there seems to be a real public awareness and scrutiny of what has happened in corporate America in the last decade.

While this makes one feel somewhat hopeful with regard to the potential of politics and the public sphere to not just accept the current state of ‘financial crisis’ and all that has gone along with it, it is also important to not forget about the context in which this happens. In some ways, if we judge Romney by his track record as Governor of Massachusetts – from the perspective of a liberal democracy he looks actually not too bad: as much as he denies it now, he pioneered what Obama now wants to implement as a general approach to health care in the United States. At the same time, characters like Rick Santorum are nothing short of suggesting some sort of ‘Judeo-Christian Sharia’ law, dismissing the rights of gays or women’s rights of abortion, just to name a few. The first country in the world that constitutionally separated state and religion now decides on candidates according to their faith. But that’s a whole new topic.

Picture by LWVC, reproduced under the Creative Commons License