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Hey there, it's Stephen Dubner, I know how much you all love the American political system, which delivers nothing but excellence, efficiency and compassion to all of us. Still, we thought it might be useful to look under the hood to see if our two party system is really as awesome as we all think it is. This episode first ran in 2018, but it's probably even more relevant today. It's called America's Hidden Duopoly. Imagine a gigantic industry that's being dominated by just one or two companies, actually, you don't have to imagine Google has more than 90 percent of the global search engine market.
So not quite a monopoly, but pretty close. Such cases are rare, but not so rare is the duopoly when two firms dominated industry like Intel and AMD and computer processors, Boeing and Airbus jet airliners, the sharks and the jets in the fictional gangs from the 50s industry. But surely the most famous duopoly is this one.
There's no such thing like people who think young, say Pepsi, please. That I regret today, the rivalry between Coca-Cola and Pepsi Cola goes back to the 19th century, Coke was long dominant, but in the 1970s and 80s, Pepsi gained ground and marketed hard to younger consumers.
Cost. Coke's internal research found that most people, even Coke employees, preferred Pepsi. In 1985, they abandoned their classic recipe in favor of New Coke, which tasted more like Pepsi. This did not work out so well.
I'm Don Keough, president of the Coca-Cola Company. When we brought you the new taste of Coke, we knew that millions would prefer it and millions do. What we didn't know was how many thousands of you would phone and write asking us to bring back the classic taste of original Coca-Cola.
Coke eventually got rid of New Coke altogether. And despite the flip flop, or maybe because of it and the attendant free media, in any case, Coke regained the top spot today. Even as soda consumption falls, the rivalry rages on, with both companies adding juices, teas and waters to their portfolios. You can afford to make those big acquisitions when you've got a ton of cash on hand, when you're one of just two companies sharing a huge market.
And there's another advantage to being half of a duopoly self-perpetuating. This was covered pretty extensively in the media during the so-called Cola wars.
The, quote, war is good for both of them. I believe the Coke and Pepsi together on this Cold War they've been in for decades now, actually help each other sell an awful lot of product. There are plenty of reasons why duopolies exist and they're not necessarily all sinister in capitalism. Scale is really important. There are all sorts of advantages to being big, which leads big companies to get even bigger, gobbling up smaller companies and essentially dictating the rules of their market.
Not everyone likes this trend.
In many quarters, there's a strong appetite for a smaller scale for mom and pop and Indian artisanal. But let's be honest, that smaller scale idea is cute. It's not winning. What's winning this dominance? Entire industries dominated by just a couple behemoths.
We've already given you a few examples from a variety of industries. But there's another duopoly, mighty one that you probably don't even think about as an industry. Which duopoly am I talking about? I'll give you some clues. Let's go back over what we just discussed about duopolies. They're big institutions that take advantage of their size to get even bigger.
I mean, I'm talking to consultants on both sides, many of whom have been doing this for a long time. And they've never seen this amount of money.
As we said, not everyone likes this trend, but the opposition is not winning.
I'd like to see more competition.
You know, competition is it makes a better product and this leaves an entire industry run by just two behemoths, ladies and gentlemen. My mother, my hero, and our next president and I could not be more proud tonight to present to you and to all of America my father and our next president, Hillary Clinton, Donald J. Trump. Does it surprise you to hear our political system characterized as an industry surprise?
This guy absolutely never thought of it in those terms. And that's Michael Porter, the world famous business strategist. And at the core of it is what we call the duopoly, comparing our political system to something like Coke and Pepsi. That can't be right, can it? No. Porter says it's worse than that. Coke and Pepsi don't control their market nearly as fully as the Republicans and Democrats do.
So you see, even in soft drinks, we have a lot of new competitors, even though Coke and Pepsi are so big, they don't truly dominate.
Indeed, Coke and Pepsi only control about 70 percent of the soft drink market. Least they've got the Dr Pepper Snapple alliance to worry about. Whereas Republicans and Democrats, you can take all the libertarians and independents, the Green Party, Working Families Party, the American Delta Party, the United States Pirate Party, which is a real thing. You add them all together and they're not even close to Dr. Pepper. For decades, we've been hearing from both sides of the aisle that Washington is broken, Washington is broken, Washington is totally broken.
This system is broken.
It's not working. Washington is not working in Washington right now is broken.
Mr. Speaker, Washington is broken.
But what if the Washington is broken idea is just a line I like to teach the world to say maybe it's even a slogan, but the industry approves. Yeah. What if they're just selling and we're buying?
What if it's not broken at all?
The core idea here is that Washington isn't broken.
In fact, it turns out that Washington is doing exactly what it's designed to do today on Freakonomics Radio.
Is Washington really an industry just like any other how to get that way and what's it mean? And oh, yeah, it's election season in America.
Don't forget to vote. We make our money is the real thing. From Stitcher and Dubonnet Productions, this is Freakonomics Radio, the podcast that explores the hidden side of everything. Here's your host, Stephen Dubner. Once upon a time, there was a dairy products company in Wisconsin called Gaile Foods. My name is Catherine Gale. Catherine Gale was the CEO of the company. It had been founded well over a century earlier by her great grandfather.
For years, Gail Foods sold the standard dairy items butter, milk, ice cream. In the 1960s, they got into pudding and cheese sauces.
And more recently, Dayle Foods kept keeping up with the times high tech food manufacturing, meaning low acid, aseptic processing and packaging using robots, which creates shelf stable foods without the use of preservatives. The process is also useful for products like weight loss shakes and iced coffee drinks. Under Kathryn Gail Gail Foods had more than 300 employees and was doing nearly 250 million dollars a year in sales.
But there were a lot of challenges. Why?
Because the food industry is incredibly competitive. There are new competitors all the time.
Also new technologies, new consumer preferences. So to plot a path forward, Gail turned to one of the most acclaimed consultants in the world. I'm Michael Porter.
I'm a professor at Harvard Business School, and I work most of the time on strategy and competitiveness.
Porter is in his early 70s as an undergrad. He studied aerospace and mechanical engineering. Then he got an MBA and a Ph.D. in business economics. So he understands both systems and how things are made within those systems. He's written landmark books called Competitive Strategy. And on competition, he has cited more than any other scholar in the field. He's best known for creating a popular framework for analyzing the competitiveness of different industries.
The framework that I introduced many years ago sort of says that there's these five forces, these five forces helped determine just how competitive a given industry is. The five forces are the threat of new entrants, the threat of substitute products or services, the bargaining power of suppliers, the bargaining power of buyers, and rivalry among existing competitors.
We're not there yet, but if you want to jump ahead and consider how these forces apply to our political system, I'm going to say them again. The threat of new entrants, the threat of substitute products or services, the bargaining power of suppliers, bargaining power of buyers and rivalry among existing competitors.
Anyway, you can see why someone like Catherine Gale, the CEO of a century old food company, might want to bring in someone like Michael Porter to figure out what to do next.
It was a classic business strategy exercise. Now, Gail, in addition to her family business, had another abiding interest in politics.
Yes, I've certainly moved around in the partisan classification during high school, she was a Republican.
Over time. She drifted, left.
My daughter, actually, when she was six, came to me and said, Mommy, I think I'm a Republican or maybe a Democrat. And I think that gives a good sense of where things are at in our household.
In 2007, Gail joined the National Finance Committee of Barack Obama's presidential campaign. She became one of his top fundraisers a couple of years after Obama was elected. Gail joined the board of a government organization called the Overseas Private Investment Corporation, which helps U.S. firms do business in emerging markets.
And why was paying a lot of attention to what was happening in Washington, D.C..
And Gail did not like what she saw in Washington, D.C. She didn't like it one bit.
It became really clear to me that this fight was not about solving problems for American people.
This fight was about one party beating the other party and that the parties were more committed to that than to actually solving problems or creating opportunities. Eventually, I understood that it didn't matter who we elected, it didn't matter the quality of the candidates. And so once it became clear to me that it was a systems problem, I switched from investing my time in searching for the next great candidate and turned a blind eye to the fundamental root cause structures in the political system that pretty much guarantee that as voters we are perpetually dissatisfied.
So she started raising money for nonpartisan organizations working toward political reform.
And one of the things that became clear is that there was no thesis for investment in political reform and innovation.
In other words, people didn't want to give money to nonpartisan organizations working toward political reform. They only wanted to give money to political parties and their candidates. In fact, Catherine Gale found that potential donors had a hard time believing that such a thing as nonpartisan political reform even existed. That's how conditioned they were to seeing the political system through a two party lens. It was around this time that Catherine Gale began meeting with Michael Porter. She had brought him in to Gail Foods to help figure out the company's strategy going forward, keeping in mind his five famous forces about industry competitiveness, new rivals, existing rivalries, substitute products, supplier power and customer power.
And while we were on that strategy, I would consistently make the case to Michael that, wow, how we're analyzing this industry of low acid, aseptic food production, which is the business I was in. All of these tools are directly applicable to analyzing the business of politics.
And I frankly, I knew almost nothing about politics. But the more I heard in the more we talk, the more it became clear that that we really needed to take a fresh look here.
And so it was out of that crucible of analyzing a traditional business strategy and at the same time devoting so much time to political reform and innovation that it became clear that politics was an industry, the industry was thriving, and that all of the tools of conventional business analysis were applicable here.
And that's where kind of looking at this as an industry starts to provide some power.
OK, so you came to the conclusion that politics is an industry much like many of the other industries that you've been studying over your career. You never really thought of it in those terms before.
Absolutely never thought of it in those terms.
Of course, we always thought of politics as a public institution, that the rules were somehow codified in the rule of law and in our Constitution. But what we came to see is that politics is really about competition between largely private actors. And these actors are at the core of it is what we call the.
Duopoly, the duopoly, Republicans and Democrats, and that competition has been sort of structured around a set of practices and rules and in some cases policies that have been created over time, largely by the actors themselves. I mean, actually, the founders left a lot of, you know, a lot of room in terms of how the actual plumbing would work.
But it was interesting.
Multiple of our founders actually expressed a deep fear that parties would take over.
In fact, John Adams said at one point, there is nothing which I dread so much as a division of the republic into two great parties, each arranged under its leader and concerting measures in opposition to each other. And if you take a look at Washington's farewell address, which he wrote in 1796, he talks about dangers which could come in front of the republic in the future. And he specifically focuses on two. One is foreign influence and the other is partisanship.
The other danger is the formation of strong parties, having come to the conclusion that the political system operated more like a traditional industry than a public institution. Catherine Gale and Michael Porter set down their ideas in a Harvard Business School report. It's called Why Competition in the Politics Industry is Failing America. When you read the paper right there under key findings, is this sentence in bright red print? The political system isn't broken. It's doing what it is designed to do.
In other words, it was no coincidence that politics had become self-sustaining, self dealing and self centered. They were the blue team and the red team, kind of like Pepsi and Coke.
Essentially, they divided up an entire industry into two sides. And we ended up seeing that it wasn't just the parties competing, it's that they had created, you know, influence and in a sense captured the other actors in the industry.
So you have media and political consultants and lobbyists and candidates and policies all divided onto, you know, one of two sides.
What you see is the system has been optimized over time for the benefit of private gain. Seeking organizations are two political parties and their industry allies, what we together call the political industrial complex.
And this industry has made it very, very hard to play at all if you're not playing their game.
How does the political industry compare in size and scope dollars, employees, direct and indirect penetration and influence, let's say to other industries that you've studied, pharmaceutical industry, auto industry and so on?
Well, it's a great question and we have done enormous amounts of work on it. It turns out to be very difficult to get what I would call a completely definitive and, you know, comprehensive answer.
We estimate that in the most recent two year election cycle, the industry's total revenue was approximately 16 billion dollars.
This is not the biggest industry in the economy, but it's substantial.
It'd be one thing if this large industry were delivering value to its customers, which are supposed to be us, the citizens, but Gail and Porter argue the political industry is much better at generating revenue for itself and creating jobs for itself while treating its customers with something close to disdain, kind of like the cable TV industry on steroids and the numbers back up their argument. Customer satisfaction with the political industry is at historic lows. Fewer than 20 percent of Americans currently say they trust the federal government in terms of popularity.
It ranks below every private industry that includes health care and pharmaceutical industries, the airline industry and, yes, cable TV generally in industries where customers are not happy.
And yet the players in the industry are doing well. You'll see a new entrant.
You'll see a new company come into business to serve those customers, a new company like Netflix or Hulu or Amazon Prime or Sling TV or. Well, you get the point.
So in today's world, we have the majority of voters say in polls that they would rather have an independent. So, you know, in a normal industry, you'd have a whole new competitor coming up that was about independents, you know, to serve that unmet need.
And yet in politics, we don't see any new entrants other than, you know, Democrats and Republicans. So why is that? Well, it turns out that our political parties work well together in one particular area, and that is actually colluding together over time behind the scenes to create rules and practices that essentially erect barriers to entry, ways to keep out new competition.
In their report, Gail and Porter identify the five key inputs to modern political competition candidates, campaign talent, voter data, idea suppliers and lobbyists. Here's what they write.
Increasingly, most everything required to run a modern campaign and governance is tied to or heavily influenced by one party or the other, including think tanks, voter data and talent.
So essentially what's happened is the parties have now sort of divided up the the key inputs to political competition. And and if you're not a Republican or a Democrat, then you're in trouble in even finding a campaign manager, much less getting the best up to date voter data and the best analytics and so forth.
It's not enough to monopolize the campaign machinery. Gail and Porter argue that the political industry has essentially co-opted the media, which spreads their messages for free for the president.
This helps Donald Trump tonight. This is a big, big beginning to the end of what has been a witch on.
The man in the White House is behaving now like a character on that old detective show, Columbo.
Perhaps most important, the two parties rig the election system against would be disruptors.
The rules they set allow for partisan primaries, gerrymandered congressional districts and winner take all elections.
So each side of the duopoly, Republicans and Democrats and the players that are that are playing for those teams effectively have over time work to improve their own side's fortunes. But collectively, they also have come together to improve the ability of the industry as a whole to protect itself from new competition from third parties that could threaten either of the two sides of the duopoly in this industry, because it's a duopoly that's protected by these huge barriers to entry.
Essentially, what the parties have done is they've been very, very clever. They don't compete head to head for the same voters. They're not competing for the middle.
It's likely that we have a much more powerful center, a much more powerful group of moderates than our current duopoly demonstrates.
What they've understood is competing for the middle is a sort of destructive competition. It's kind of a zero sum competition.
So the parties have divided the voters and kind of sort of ignored the ones in the middle because they don't have to worry about them.
Because if if the middle voter is unhappy, which most middle voters are today in America, what can they do?
The only thing either party has to do to thrive to win the next election is to convince the public that they are just this much less hated than the one other choice that the voter has when they go to the ballot, which means that that gives those two companies, essentially the Democrats and the Republicans, the incentive to prioritize other customers and their target customer on each side is the special interest.
And the partisans and they get a lot of resources and a lot of campaign contributions and massive amounts of lobbying money to try to get their, you know, support with whatever those partisan or special interests needs are.
There is now an entire industry of politics that moves forward, independent of whether that industry actually solves problems for the American people.
So what's happened is that the moat or the barriers to getting into this industry and providing a different type of competition have been built to enormous heights, which has allowed the parties to structure the nature of the rivalry among themselves in a way that really maximizes their benefit to them as institutions but doesn't actually serve the public interest.
Well, that's depressing, isn't it? Insightful, perhaps, but depressing nonetheless. So do Catherine Gale and Michael Porter have any bright ideas for tackling this problem? Yes. Yes. Yeah. Oh, yeah. Oh, my God. It's coming up right after this. And don't forget to subscribe to the newest podcast from the Freakonomics Radio Network. It's called People I Mostly Admire, and it's hosted by my Freakonomics friend and co-author Steve Levitt. He interviews people he describes as wildly intelligent and a little bit off the rails.
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Let money.com take care of busy work so you can focus on what drives you to start your free 14 day trial. Go to Monday, Dotcom. Freakonomics Radio is sponsored by Choice OLogy, an original podcast from Charles Schwab Christology is a show all about decisions big and small, and the hidden psychological forces that influence them, like why it's so hard to be objective in our perceptions of what's fair or why we avoid information that might be unpleasant, but that's necessary to hear.
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The industry's primary beneficiaries are itself and its many ancillary participants, including the media.
But the vast majority of Americans who are somewhere in the middle are feeling very, very disaffected.
The lack of vigorous competition, they argue, has allowed the Democrats and Republicans to carve out diametrically opposed political bases, fairly narrow and extremely partisan.
So years ago, we created partisan primaries in order to actually take the selection of a candidate out of this, quote unquote, smoke filled back room and give the selection of the party candidate choice to citizens. So that was designed to give more control to citizens. It turns out it has had a very deleterious effect on competition and has increased the power of the parties.
And the parties, Gail and Porter argue, used those partisan bases to support the desires of the political industry's true customers and its wealthiest special interests industries like health care, real estate and financial services, also labor unions and lobbyists. In this duopolistic business model, polarization is a feature, not a bug.
We have a chart in our report that just selects what we call landmark type legislation over the last 50, 60 years.
And if you go back, you know, even 20 or 30 years ago, the landmark legislation was consensus.
For instance, the Social Security Act of 1935 had 90 percent Democratic support and 75 percent Republican. The Civil Rights Act of 1964 had 60 percent Democratic support and again, 75 percent Republican.
Now, for the last decade or two, that's been the opposite pattern. The only way landmark legislation gets passed is one party has enough votes to pass that by itself.
The Affordable Care Act, also known as Obamacare, was passed in 2010 with zero Republican votes in Congress. President Trump's 2013 tax reform bill zero Democratic votes.
So your diagnosis suggests that this industry serves itself incredibly well. It suggests that it serves us, the citizenry really poorly and also suggests that more competition would improve the industry, as it does in just about every industry. But just having, you know, more competition in parties doesn't seem to be the answer alone.
I mean, there are plenty of multiparty political systems around the world that have similar cases of dysfunction and corruption and cronyism like ours. The UK comes to mind. Israel comes to mind.
So how direct to step or direct a, you know, prescription would that be?
Well, I think in our system in particular, where we have only two and they have been able, through the set of choices we've described, actually set up the rules of competition that reinforce their, you know, partisan competition, dividing voters and so forth. More competition, I think, would be, you know, incredibly valuable. But it has to be a different kind of competition. You know, it can't be just another party that's going to split our electorate into three partisan groups.
And so in our work, we focus on what would it take to make the competition less about dividing the voters and how could we make the competition more around building up more choices for voters that were more about solutions. By the way, let me be clear. We're not against parties per say.
What we are against is the nature of the competition that our existing dominant parties have created. Let me ask you this.
When you suggest that these rules were carefully constructed, I guess if I were thinking about something other than politics, the first thought that would come to mind then is will collusion. Right, if I can be one member of a duopoly. I actually hate my rival much less than I hate the idea of anybody else who would interrupt that rivalry because we're splitting the spoils now. Do you have any evidence of collusion between the parties to create a system that essentially keeps the rest out?
Well, you know, first of all, that is the right word. It is collusion. And, you know, there's a probably a legal definition of collusion, which I don't know, you know, I'm not a lawyer, but the effect is exactly the same. The parties have agreed on. A set of rules that benefit the duopoly and preserve, you know, this nature of competition, you can really put rules into a number of buckets there.
There's kind of there's kind of legislative machinery, as we call it, which is how the Senate and the Congress are run. And and then there's the election rules having to do with what is the primary process like. And, you know, what does it take to get on the ballot as an independent and the various campaign finance stuff that surrounds that surrounds elections, has anyone ever considered filing, whether in earnest or not, an antitrust suit against the Republicans and Democrats?
You know, Stephen, that's a great question. You know, I have we've actually had, you know, a significant effort to see if that's feasible. You know, what the law is, you know, looking at the antitrust statutes. But this is absolutely what antitrust policy is all about. It's it's it's creating, you know, open, effective competition that serves the customer and the public interest. And this industry cries out for that.
All right. So in the report, you discuss the the many advantages the two parties have. And I think we all recognize that, you know, there's real power in size and there's leverage, especially when you're making your own rules for your own industry.
And you write that, you know, they use those advantages to retain control and to constrict competition, so on. But it strikes me that Donald Trump really got around a lot of those advantages.
So you write that the parties, quote, control the inputs to modern campaigning governing. But he didn't rely on that, really. You wrote that the parties co-opt channels for reaching voters, but he kind of co-opted or maybe took advantage of his own channels, including free media and his own social media accounts.
You write that the parties, quote, direct high and rising barriers to new competition.
But in the case of Trump, you know, his own party tried as hard as they could to erect the highest barrier and couldn't keep him out. And and so on those fronts, it would strike me that the party's failed, failed to constrict to certain competitors. So I don't know how you personally feel about President Trump, but according to those advantages and his end run around them, it would sound as though he is at least one example of the solution to the problems that you're describing.
Well, yeah, I think I think that is definitely a good question and we must take that on, I would say a couple of things.
First of all, the best choice that the President Trump made was to run in a party.
He had to pick one side of the duopoly because he knew he couldn't win as an independent. And he had actually explored running as an independent in previous years, but that in the current system is not seen to be a winning strategy.
The other thing I would say about him was that he had resources. In the end, he didn't have to use that many of them, but in a sense he could almost have self financed. And he was appealing to a certain subset of the partisans, maybe somewhat neglected subset of the people on the right. And he had a very strong existing brand identity. So he was able to, you know, get a lot of recognition and coverage without having to spend that much on advertising.
He represents a personality driven campaign within a party, but we don't believe that he represents fundamentally transforming the structure of competition in the industry.
But the real thing that I think, you know, everybody has to understand is that in modern politics, the parties are more powerful than the president. And Donald Trump has gotten very little done. He's achieved no compromise and his signature success got zero Democratic votes.
And the game hasn't changed so far. Trump is just the third in a row president that may have said that he was going to do things differently and cut across lines and all that kind of stuff.
But frankly, he didn't. Obama didn't and President Bush didn't.
Even though President Obama and President Bush campaigned on bipartisanship and bringing people together, they failed. So I think that those those recent case studies, I think are sobering.
We should note that some political scientists argue that Gale and Porter's analysis, party power has it backwards. These scholars say our political system is in bad shape because the parties have gotten weaker over time. They argue that stronger parties could help beat back special interests and produce more compromise and moderation. Well, some interesting evidence for this. Parties are weak argument. Think back to the 2016 presidential election. You had one national party, the Democrats, that tried as hard as it could to the point of cheating, essentially to preselect its candidate, Hillary Clinton, who then lost.
And you had the other national party.
The Republicans try as hard as it could to keep a certain candidate off the ballot, but they failed and he won.
It's true that the parties are not as strong as they were in the past, but both sides of the political industrial complex, Democrats or Republicans, are as strong as ever. It's just that the power may not all reside within the party.
And if parties were stronger, that doesn't mean they'd be moderating forces. That's what some people say. I don't I really don't understand that argument. The stronger they are, the less moderating they're going to be given the nature of the competition that's been created.
And I think we are really asking for too little when we say let's tinker around the edges and get stronger parties so that we can, you know, have a little bit of a cleaner process.
Instead, what we believe is we need to create structural reforms that would actually better align the election process and the legislative process with the needs of the average citizen.
All right. So you've diagnosed the problem in a really interesting and profound way by overlaying a template that's more commonly applied to firms, to the political industry. And, of course, it theoretically leads to a different set of solutions than we've typically been hearing. So then you discuss, I guess, four major solutions.
Let's go through them point by point. Number one, you talk about restructuring the election process itself. Give me some really concrete examples of what that would look like. And and I'd also love to hear whether you do see some evidence of these examples happening, because it does seem there has been some election reform in states and regions around the country. Yes.
Well, when we think about reform, we have to think about really two questions. Number one, is a reform powerful? Will it actually change the competition? And a lot of what people are proposing now is actually not going to make much difference. So term limits are a great example.
We aren't fans of term limits because we think that without changing the root cause incentives, you'll actually just have different faces playing the same game.
So no one is we have to reengineer the election processes, the election machinery, and there are three electoral reforms that are important.
We call it the election trifecta. And, you know, the first and probably the single most powerful is to move to nonpartisan single ballot primaries.
Currently, if you're going to vote in the primary, you show up and you get a Democratic ballot or a Republican ballot, and then you vote for who's going to represent that party in the general election.
And the one that's on the furthest left or the one that's on the farthest right has a tendency to win because the people that turn out for primaries are a relatively small fraction of even the party. And those are the people that show up because, you know, they're really partisans and they really have special interests and they really, really care about, you know, getting somebody on the ballot that, you know, for them in a single ballot, nonpartisan primary, all the candidates for any office, no matter what party they're in, are on the same ballot.
And we propose that the top four vote getters advance out of that primary to the general election.
And the reason, a single primary where everybody in it is is so important is that if you want to win, you want to appeal to as many voters as you can.
Hopefully, you know, more people will vote in the primary and therefore you're going to get people that, you know, we're not just trying to appeal to their, you know, particular, you know, extreme.
The second part of the Gail Porter election reform trifecta, ranked choice voting.
Here's how ranked choice voting works. You'll now have four candidates that made it out of the top four primary. Those four candidates will all be listed on the general election ballot and you come and vote for them in order of preference. So it's easy. This is my. First choice, this candidates my second choice, my third choice, this is my fourth choice, when the votes are tabulated, if no candidate has received over 50 percent, then whoever came in last has dropped and votes for that candidate are then reallocated to those voters.
Second choice and the count is run again until one candidate reaches over 50 percent.
And what that does is it gives a candidate of need to appeal to a broader group of voters.
And very importantly, it eliminates one of the hugest barriers to competition in the existing system. And that is the spoiler argument. So what happens currently is that if there is, let's say, an attractive third party candidate or an independent candidate, both Democrats and Republicans will make the argument that nobody should vote for them because they will simply draw votes away from a Democrat or draw votes away from a Republican and therefore spoil the election for one of the duopoly candidates once you have rank choice voting.
Everybody can pick whoever they want as their first choice. Second choice, third choice. No vote is wasted and no vote spoils the election for another candidate.
And then the last part of the trifecta is nonpartisan redistricting.
Gerrymandering has to go essentially one party's control, drawing the districts they can draw districts that will be more likely to tilt in favor of their party. And they can end up having a disproportionate number of, quote unquote, safe Republican seats are safe Democratic seats, by the way, that they draw the districts. And we want to make that that go away.
In addition to election rule reforms, Porter and Gale would like to see changes to the rules around governing.
So Congress makes its own rules for how it functions.
And over time, these rules, customs and practices have been set in place to give an enormous amount of power to the party that controls the chamber.
But what's happened it and this is sort of collusion in a way, is when the other party takes over. They do it the same way pretty much.
So we propose moving away from partisan control of the day to day legislating in Congress and also, of course, in state legislatures as well.
The third leg of their reform agenda is about money in politics, but their analysis led them to a different conclusion than many reformers.
Where we differ with so many people championing these reforms is that we don't believe that money in politics is the core issue.
Ultimately, the problem is really this nature of competition that leads to this partisanship. And that's not a money issue per say. That's a structural issue.
If you take money out of politics without changing the rules of the game, you'll simply make it cheaper for those using the existing system to get the self-interested results that they want without changing the incentives to actually deliver solutions for the American people. Having said that, we do believe that there are benefits to increasing the power of smaller donors. And so the reforms that we have suggested are primarily focused on increasing the power of small, smaller donors.
For instance, having the government itself match donations from small donors. We should note that most of the ideas Gail and Porter are presenting here are not all that novel. If you follow election reform even a little bit even we poked into a lot of them a couple of years ago in an episode called Ten Ideas to Make Politics Less Rotten. I guess it's one measure of how successful and dominant the political duopoly is that plenty of seemingly sensible people have plenty of seemingly sensible reform ideas that for the most part, gain very little traction.
It is definitely challenging. This is a ground game. We're not going to be able to do this in a in a year or one election cycle because the resources that the current duopoly have to deploy to play their game are substantial despite.
The rather depressing or at least sobering picture that you paint of the political industry throughout the report, you expressed quite a bit of optimism.
And I want to know why or how, because I don't see the avenue, I guess, for optimism here.
Well, you know, I do think we have a basic optimism. We have no sense that it will be easy to change the rules of this game for a whole variety of reasons.
But the good news is we've had some progress.
We've got some nonpartisan primary states now, including California. You know, we've got ranked choice voting in Maine.
I think what seems to be building in America is a growing appetite and a growing recognition that this isn't working for our country. And I think the younger generation, you know, millennials are particularly outraged and concerned and open to, you know, all kinds of new ideas.
But I think it's going to take time.
The most exciting strategy in this area that we championed is a strategy put forth by the centrist project. And full disclosure, I'm on the board of the centrist project. It's now actually called Unite America. And this is the Senate fulcrum strategy. So here's the idea. Let's elect five centrist problem solving oriented US senators who at that number five, would likely deny either party an outright majority in the Senate, which would make those five senators the most powerful single coalition in Washington, DC, able to serve as a bridge between the two parties or to align with one party or the other, depending on the issue, in order to move forward.
Very difficult policy solutions where previously there has not been the political will.
So we don't need to wait to change the actual rules of the game to deliver politicians to office who can act independently of the existing political industrial complex.
So that's an interesting idea, seemingly sensible, maybe even viable, but this whole conversation got me thinking, if our political system really operates like an industry, as Katherine Gale and Michael Porter argue, maybe it should be treated like one. In most industries, good products and services are rewarded. Weakness and incompetence are punished. Katherine Gale, coming from the Cut-throat food industry, surely knows this firsthand. There's constant pressure to modernize, to optimize, to fight off old rivals and new.
Indeed, not long after she brought Michael Porter in to consult on the future of Ghale Foods, she decided to sell her company to a private equity firm in Chicago.
Why? I absolutely loved running that company, she wrote to us later. But life is short and I had other things I was also passionate about. I wanted the company to be in the best position to succeed. And so I focused on professionalizing the company and developing a long term strategy that took into account a changing, competitive landscape. Hmm. And that got me thinking maybe there's some private equity firm out there who'd like to modernize a certain political party or to.
Any buyers out there, if you're too shy to approach the Democrats or the Republicans directly drop us a line radio at Freakonomics Dotcom, we'll get things moving. That's our show for today, if you want to learn more. Katherine Gale and Michael Porter recently expanded their Harvard Business School paper into a book. It's called The Politics Industry How Political Innovation Can Break Partisan Gridlock and Save Our Democracy. One more note. Remember that the Freakonomics Radio network is expanding.
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