Home Business & Finance Building a business of politics the rise of political consulting and the transformation of American democracy
Political Consequences of the Profit Motive
Fundamentally, to say that politics has become a business in the United States is to underscore how commercial incentives inform political practice and shape political campaigns. Money in politics is nothing new. The conduct of political work has always reflected a mixture of partisan and pecuniary interests to some degree. However, a crucial difference separates the political consultant of today from the party worker of the past. Today, politics is heavily influenced by the political consequences of the profit motive. The reliance on surveys, television advertisements, and direct mail in contemporary campaigns reflects the financial incentives of consultants in search of more revenue and more reliable sources of income. Consultants offer tangible goods such as media or polling that campaigns, candidates, and their inner circle are unable to provide themselves. Accordingly, the most commonly used compensation structure in the industry is payment as a percentage of campaign expenditures: the more candidates spend (and the earlier in the campaign they spend it), the more consultants receive in return.22
The financial incentives of consultants may help explain why campaigns spend so much money on media and other professional services even when the evidence for their efficacy is far from clear. Beginning with the early voting studies by Lazarsfeld and others in the 1940s, political scientists have tried to measure campaign effects, including the role that media and other forms of mass communication play in shaping political behavior. The accumulated findings from almost seventy-five years of research indicate that campaign tactics do matter, but in ways that can vary quite considerably and often depend on factors that are beyond the control of a candidate or the campaign.23 However, even though it is difficult to know precisely how political advertising will influence voting or turnout in a given race, the allocation of campaign resources relies heavily on paid media nevertheless. The history of political work suggests that this feature of contemporary campaigns is due to the influence and incentives of the consultants advising the candidate.
The prominent role of media consultants today is a product of gradual transformation over the course of the twentieth century. For innovations in political technique to spread, practitioners had to overcome skepticism and even resistance from candidates who relied on traditional sources of political advice. Edward Bernays used social scientific data to target political messages in ways that look familiar to contemporary eyes, but it is important to remember that William O’Dwyer did not follow his advice in the 1941 campaign for New York City mayor. Bernays failed to close the sale. Similarly, Gerard Lambert could not convince Thomas Dewey’s inner circle of the virtues of poll-tested messages in the 1944 presidential race. Even Whitaker and Baxter, whose firm, Campaigns, Inc., boasted an impressive record of success in California, worked hard to convince their clients about the value of their methods.
Things are very different now. Candidates today seek to hire consultants in order to signal the viability of their campaign and secure the support of donors.24 The use of consultants is so pervasive, in fact, that the structure of the industry and the incentives of individual firms shape the conduct and character of our politics in various ways. As noted earlier, the heavy emphasis on media and mail reflects the fee structure of the business. The broad diffusion of consulting through state and local races, ballot initiatives, public affairs work, and even international campaigns further reflects the desire among consultants to acquire a steady source of revenue.25 Consulting shapes campaigns in other ways as well. Recent research suggests that certain consulting firms are more likely to employ negative ads, and House candidates who shared the same consultants were more likely to use similar strategies, particularly the kind of issues emphasized during the campaign.26 Consultants are an important vector for the diffusion of political technique.
The financial incentives of consultants may also diminish the competitiveness of our political system. Consultants are extremely cognizant of the importance of reputation because the business of politics is predicated on the idea that consultants help candidates win office. Within the market for political services, a reputation for winning is critical for the long-run success of a firm. Knowing this, consultants will compete for candidates who can enhance their reputation, which is to say candidates who are likely to win. Consultants may garner attention by helping a previously unknown challenger win a tough race, but from a business perspective, working for an incumbent is a much safer bet. Consequently, larger and more successful firms may seek incumbents as clients. At the same time, incumbents themselves possess limited information about the quality of consultants other than their previous record of success and, therefore, are likely to hire firms with a record of winning. The combined effect of these incentives is to concentrate the work of the largest, most successful firms in the service of incumbents whether or not they face a tough re-election battle. Once hired, consultants tend to work for the same incumbents even if they face little or no opposition to re-election.27
In other words, consultants do not necessarily work where they are needed most, in highly competitive races, but where they have established relationships with clients. This does not make sense from the perspective of a party, which might allocate consulting resources according to need, or really from the perspective of a candidate who would presumably spend less money on consultants when the probability of winning is quite high (as is the case for most incumbents). However, the pattern does make sense from the perspective of a consultant who, rather than take the chance of losing a close race, works for an incumbent who is likely to win (and likely to pay). In this manner, the business of politics contributes to the entrenchment of a political elite who rely on consultants partly as a form of electoral insurance and partly as a way to legally dispose of political contributions.
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