The 2012 Election and the Investment Theory of Politics

In his book, Thomas Ferguson attempts to apply microeconomic capitalist theory to politics, with a great deal of predictive success ( The basic idea is that elections are times when groups of investors buy control of the government. A corollary is that analyzing campaign contributions will indicate which investors control which politicians and which faction of the business party (Democrats or Republicans) will emerge the winner. (Note that the predictive value of such analyses diminishes with the scope of the election: it is much more useful for presidential elections than for the people running for the local school board.) Money can be used to influence consumer (voter) behavior, whether businesses are selling cars or candidates. The 2008 election was polling rather closely until the financial crisis, when Wall Street and associated blocs of interest groups contributed mightily to Obama's campaign, leading to a secure victory for Wall Street policies and Obama; while Bush only slightly out-raised Kerry, and won with a much smaller margin; in 2000 Bush out-raised Gore, leading to the ouster of the vice president of a popular government during the midst of an economic boom; in 1996, etc., etc., et al. This theory also helps elucidate why candidates' policies are so close to each other on major issues (Obamacare = Romneycare; Obama voted for TARP; Obama withdrew from Iraq based on Bush's timeline; etc.), despite public opinion and much rhetoric to the contrary, which, to reiterate in the latter case, comes from advertising industry focus groups (change, yes we can, freedom, believe in America, etc.) and co-opted media lapdogs and has little relation to policy. Corporate money helps politicians lie.

I have been hypothesizing for the last year or so that Obama would win reelection in 2012 because corporate profits are at a record high and Bush II's brand of state capitalism, i.e., the housing bubble and collapse, harmed many more interests than it helped. I have been surmising that the corporations that own our country at this time prefer a more managed form of state capitalism rather than the so-called laissez-faire version. Campaign contribution numbers are starting to come in and Obama has out-raised Romney, the choice of the Republican business establishment, by almost 3:1 ( This is to be expected at this point in the game, because we are early in the primary season and Obama is the incumbent. It is very unlikely that this almost 3:1 trend will continue. However, within the still-developing data there are some interesting points to consider using the investment theory of politics. To understand the fundraising data, look to the industries that are supporting each candidate ( and

First, even given the gap between Obama and Romney's totals, Romney is out-raising Obama 2:1 in Wall Street contributions (securities and investment). The reason should be obvious by comparing Romney's economic plan ( and comparing it with Obama's record. Romney wants to cut taxes on investment income, cut corporate taxes, and eliminate the estate (death) tax.

The other industry that is mostly lining up for Romney is oil and gas. Hence, Romney is calling for expanded drilling rights, weakening environmental laws, and, in an ode to the importance of yearly $3.5 billion in direct government subsidies (welfare) for the oil and gas industry, not to mention the costs of securing access to Middle Easter oil, Romney is offering to expand the role of the government in research and development, where the public takes the risks that can then be privatized when they become profitable (the free market).

Some of the top industry investors in Obama stock also merit discussion (that lawyers are overwhelmingly behind Obama is too trivial a point to spend time on).

Interestingly, labor is not yet lining up behind Obama ($13,000 in total contributions), although surely that will change as people are subjected to wave after wave of propaganda about how Obama stands up for labor and, in a much more effective tactic, how scared labor should be about Romney's anti-union plans.

Obama significantly takes the lead in most sectors, but is particularly dominant in education, health care (health insurance, pharmaceuticals, hospitals), high technology (computers, software, biotechnology, etc.), and the media. Clearly these categorizations leave room for speculation.

As far as education is concerned, remember that this money is not (yet) coming from unions: these are for-profit education companies, who are hoping that Obama continues his push for K-12 charter schools, as well as professors, who cannot join unions and are counting on increased funding (at least, increased relative to Romney) from the state.

The reason why private health companies are pushing hard for Obama is obvious for anyone who actually knows what Obamacare is: a trillion-dollar giveaway to these companies. The linchpin of this law is the individual mandate, in which the state compels mostly healthy, young people (the elderly, poor and sick already being principally covered by Medicare/aid) to buy their product. Romney has promised to overturn Obamacare and, if elected, may very well do it. This is not what the health industry wants, despite conventional slogans.

The folks who own Silicon Valley recognize, just as the oil industry welfare kings do, that some of the best research (ahem, the computer and the Internet) come from massive government investments. Given Romney's plan to cut discretionary spending heavily, in contrast to Obama's continued support of Silicon Valley, this is to be expected.

The media companies favor Obama's efforts to extend coverage throughout the United States, as well as the aforementioned subsidies and those to Hollywood. Although there is indeed a Democrat-friendly bias in most mainstream news sources, this is not to be confused with whether or not the investment theory of politics serves any point. We will find out this answer in November.

One thing is to be sure: if fundraising is close, the election will also be; if one candidate has a lopsided edge, he will be assured victory. Based on this analysis, and big oil/gas' and especially Wall Street's disproportionate control over the wealth of the country, it is possible that lopsided contributions from them alone will be enough to vault Romney Co.'s investors over the interests represented by Obama, Inc. It is important to remember that the tail is wagging the dog, and the outcome of the election is decided by the vote of America's corporate boardrooms rather than small-town church basements.

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