The Awkward Confluence of Capitalism and Democracy

power linesCalifornia’s Proposition 16, on the ballot for the June 8 election, provides an interesting case in point for a discussion of the merits of unfettered capitalism in a democratic nation that values free speech and extends that right to corporations.

Basically, this proposed “initiative constitutional amendment” would require, with a few exceptions, a two-thirds approval from voters in a selected geographical area before a governmental entity could start offering electric service to its constituents. It is being bankrolled primarily by PG&E, one of the largest investor-owned utilities in the state, which (so far, according to the LA Times has sunk $46 million into the “Yes on 16″ campaign. The money is being used to purchase a mind-numbing number of TV ads, plus home mailers.

Aside from the veracity of the “Yes on 16″ effort (see below), let’s look first at the initiative itself. If a requirement were being imposed that mandated a vote of the people by a simple majority, I wouldn’t be writing this post. But imposing a 2/3 requirement makes the motivation for the effort transparent, because everyone knows that a supermajority of that magnitude is almost impossible to achieve. For example, a presidential election is considered a “landslide” if one candidate gets about 55% or more of the vote. President Obama received about 53% of the popular vote in 2008. He won 28 states, not even close to 2/3 of them. Look how difficult it is for the U.S. Senate even to get 60 votes on controversial issues, much less the 67 that would be required to achieve 2/3 of 100.

Personally, I don’t think that PG&E (plus a host of supporting Chambers of Commerce) is supporting Prop 16 to advance democratic principles (although that’s what their commercials would lead you to believe). No, they are using their right to spend enormous amounts of money (from consumers of their product, of course) to advance public policy that will simply give them more control over their ability to take more money out of those same consumers’ pockets (by reducing competition). Students of democracy, tell me where it says that people should be obligated to finance — without a shareholder vote, of course!! — the activities of corporations that are diametrically opposed to the best long-term interests of the people footing the bill!

If PG&E believes so strongly in democracy, shouldn’t it let its shareholders vote on whether to support a campaign like this? Don’t hold your breath. If capitalism thrives because it promotes market efficiency, what’s wrong with letting governments operate utilities if they can do it better than private enterprise? (I don’t know whether they can or not; it probably depends on individual circumstances. But throwing up insurmountable barriers is not an appropriate way to find out.) What’s next — shall we have a two-thirds vote before we can operate a publicly supported fire department?

Now look at the mailer I received at my house. Does it mention the two-thirds vote requirement? Is a triple fudge sundae good for you? What it says is that “Politicians throughout the state want to spend over $2.5 billion in public funds for government-run electricity — and they don’t want to let you vote on it.” The graphic design experts put a big check on this mailer, payable to “local politicians,” for “Gov’t-run electricity,” signed by the “California Taxpayer.” Brilliant marketing — it hits all the usual “hot buttons.” Just unfortunately, it seems to omit one vital detail.

Here’s the bottom line: most of us believe, to a greater or lesser degree, in the benefits of both democracy and capitalism. What do we do when one tries to destroy the other?

Ron Wolff

Ronald Wolff publishes the blog Musings from Claremont, where this article first appeared. Republished with permission.

Published by the LA Progressive on June 3, 2010
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About Ron Wolff

Ronald Wolff, Psy.D., has been writing intermittently since childhood. He has authored an unbelievably amateur first novel (“Unintended Consequences”), a political thriller centering on preservation of the Constitution and the Bill of Rights (“Operation Capitol Hill”), and a number of literary short stories (“The Magic Pill” and “The Cellist”). In his “spare time,” he serves as President/CEO of a non-profit agency serving adults with disabilities. Inspired by his background reading for “Operation Capitol Hill,” Ron is now researching and writing a non-fiction “sequel,” tentatively entitled “I Pledge Allegiance: To What? The Paradox of ‘Me’.” It’s a massive project intended to ask the following questions: How well is this country doing in achieving the fundamental goals outlined in its founding documents? To the extent that achievement falls short of potential, what barriers exist? How, if at all, can these barriers be mitigated or overcome? Ron lives in Claremont with his dog Angel. He texts but does not tweet. Should you be so motivated, write him at OpCapitolHill@aol.com.