A Private Industry

America’s political system, an outlier in the history of nations, was once the envy of the world. It advanced the public interest and gave rise to a grand history of governing that fostered both economic and social progress. Although the distribution of that progress among all Americans has not been, by any stretch, equitable since the country’s founding, Washington, D.C., hasn’t always worked so hard against the public interest. Politicians and parties have always battled for power, but there was a time when they also produced solutions and action born from compromise, in service of today and tomorrow, and which earned broad-based citizen support—the model outcomes we should expect of our politics, as proposed in chapter 3.

As we’ll explore, this legacy owes its birthright to the most American innovation in history—modern, representative democracy—and a tradition of political competition that honored the best aspects of its companion in the private sector, a free marketplace. Today, that legacy is nearly undone.

America’s political system has become the primary cause of our decline and the preeminent barrier to addressing the very problems it exists to solve. Americans are resigned to political gridlock and dysfunction—or worse, are disinterested in changing it. Citizens accept as normal the system’s decades-long retreat from deliberation and problem solving and its advance toward today’s self-service and hyper-partisanship. We accept this new normal, in part, because we are conditioned to helplessness. We assume that our political system, warts and all, is a public institution governed by impartial laws dating back to the Constitution.

But we would be wrong. Much of what makes up today’s political system has no basis in the Constitution at all. There are only six tiny paragraphs in the Constitution detailing how Congress should work, and only a few sentences describe how Congress is to be elected. Most of the rules that shape the day-to-day behavior and outcomes in the political system are perversely optimized—or even expressly designed—by and for politicians themselves as well as their allies in the larger political-industrial complex. The average American citizen today is rarely a beneficiary. Politics is the only major industry in America in which the rivals—the Democratic Party and the Republican Party—write their own rules, virtually unchecked.

The Founders were wary of political parties. President George Washington dedicated a healthy portion of his Farewell Address in 1796 to alerting the young country to the dangers of political partisanship.1 Washington’s successor, President John Adams, said, “There is nothing I dread so much as the division of the republic into two great parties, each arranged under its leader, and concerting measures in opposition to the other.” Completing the Founder trifecta, President Thomas Jefferson quipped, “If I could go to heaven but with a party, I would not go there at all.”2

Jefferson, Adams, and Washington were each badly bruised by the early politics of the republic—by opponents, political mercenaries, and even one another. There was no love lost for partisanship in their founding circle. Given that we failed to heed their advice to remain vigilant against to the dangers of unchecked party power, it’s likely that not one of these men or their trusted acolytes would be shocked by the extent to which unhealthy political competition has hijacked democracy itself.

But the problem is not politicians or political parties per se. Most politicians are genuinely seeking to make a positive contribution but are trapped in a system they cannot single-handedly change. Parties in a democracy play a critical role organizing citizens around shared needs and ambition, and communicating the platforms and ideas that can help voters make informed decisions.3 At various points during their long histories, both parties have moved the country forward. We support strong parties—provided that their strength manifests itself in their members’ ability to craft and enact legislation in the public interest. This would be a stark contrast to their current ability to keep winning elections—and thwarting new competition—even when very few are satisfied with the outcomes for the country.

Today, the problem is the nature of competition between the parties and politicians, as well as the surrounding industry actors and organizations.4 The American political system is perfectly designed to serve the private interests of this political-industrial complex: to grow its power and revenues and to protect itself from threats. It’s not designed so well to serve citizens—those who should, by rights, be the most important customers of the industry.

The business of politics is not a public institution. It is a bona fide multibillion-dollar private industry within a public institution. Seeing the system from this new perspective is liberating. It allows us to understand how critical it is to reclaim the rules of elections and legislating—which rightfully belong to the public—from the influence and control of private, gain-seeking actors. The challenge is to turn the politics industry into a driver of progress, aligned with the public interest—not a predictable drag on our democracy.

As we outlined in the introduction, Politics Industry Theory is not for navel gazing but for action. We seek to motivate political innovation, and eventually, realize improved results. We must move with urgency from illuminating the true nature of America’s political system to mapping its players, the power structure, and the operating incentives. To draw this map, we apply the key framework for studying industry competition: the Five Forces. In this book, we’ll provide a high-level summary of our Five Forces analysis. For a comprehensive analysis, see our 2017 Harvard Business School report, “Why Competition in the Politics Industry Is Failing America.”5

Applying the Five Forces to American Politics

The Five Forces framework was originally developed to look holistically at the forces that shape the nature of competition in for-profit industries by examining: (1) the nature of rivalry; (2) the power of buyers (channels and customers); (3) the power of suppliers; (4) the threat of substitutes; and (5) the threat of new entrants. An industry’s structure is the overall configuration of these five competitive forces. This web of dynamic relationships determines how an industry competes, the value available in the industry, and who has the power to capture that value. Industry structure also helps us understand how rivals or other actors can thrive even while customers are dissatisfied—politics industry competition is singularly unhealthy.

Healthy competition is win-win. Rivals compete fiercely to better serve customer needs. Customers have the power to penalize rivals for poor products and services by choosing to take their business elsewhere. Channels for reaching customers reinforce healthy competition by educating customers and pressuring rivals for better products and services. Suppliers compete to provide better inputs thatallow rivals to improve their products or services. New entrants and substitutes are not held back by high barriers to entry that prevent them from competing in new ways to deliver value to customers. In healthy competition, the rivals do well when the customers are satisfied.

Applying the Five Forces to politics for the first time was illuminating and it showed how American politics is an industrial-strength, nation-crippling perversion of competition. The rivals have managed over generations to entrench and enrich their duopoly while failing spectacularly to serve the customers—us. The duopoly has written its own rules and optimized others for its own gain, all while subverting the forces of healthy competition—the forces that would drive accountability for results (figure 1-1).


Five Forces: The Structure of the Politics Industry


Unhealthy Competition in Politics

In the politics industry, competition takes place on two key levels—competition to win elections and competition to pass (or block) legislation. Our elections and our legislating are drowning in unhealthy win-lose competition: the duopoly wins and we lose. This tragic outcome is a result of the structure of the politics industry, but before we explore that structure in depth, you must understand a unique characteristic of the politics industry.

The Dual Currencies of Politics

The politics industry has two currencies: some customers pay with votes; some pay with money.6 We call this dual political currency. The devastating power differential between the customers of the industry—average voters with little power; special interests, donors, and party-primary voters with tremendous power—is in no small part a result of the relative power of votes to money. Let us explain.

The currency of votes has consistently less relative value than the currency of money. The utility of votes has a limited upside (i.e., all you need to win an election is one more vote than your competitor) whereas the utility of money has no limit (i.e., more is always better—there’s always something to buy in the political-industrial complex). Votes are almost always taken for granted in general elections for Congress because over 80 percent of districts aren’t competitive—the winners are already decided in the primaries. Customers who deploy both currencies are especially powerful, such as special interest groups who donate dollars and get out the vote.

Said another way, money in politics gets a great return on investment (ROI)—votes, not so much. How can we reduce the outsized influence of money in the politics industry? By making the political currency of votes more valuable than the political currency of money—by reducing the reliability of the ROI for money and increasing the ROI for votes. As will become clear in this book, it is the structure and rules of competition in the politics industry that artificially devalue votes. The restoration of healthy and dynamic competition (the prescription for which we provide in chapter 5) will go a long way to driving a relative rise in votes-to-money value, making voters the important customers in the politics industry—as they should be—and disrupting the outsized control the current two rivals have in the industry.

Rivals: Duopoly Control

Rivals form the core of competition in any industry. It could be General Motors and Ford; or Kraft, General Mills, and Unilever. In the politics industry, the rivalry is between the duopoly, our two major political parties—the Republicans and the Democrats.

Duopolies are not inherently good or bad. But as politics is currently structured, the same two rivals are virtually guaranteed to remain in power no matter how poorly they serve the public interest. This would be a problem for customers in any industry—it’s a nightmare for a democracy.

Rather than competing head-to-head for the same voters—those often described as America’s “middle”—the parties divide the electorate into mutually exclusive partisan camps and prioritize on each side the highly engaged (and often single-issue or more ideological) constituencies who most dependably vote or give money. Furthermore, in a duopoly, the rivals understand that although they compete, both rivals will benefit from an “attractive” industry. From the duopoly’s perspective, an attractive industry is one that strengthens and reinforces their way of competing; limits the power of suppliers, channels, and customers; and is protected by high barriers to entry.

In a duopoly, the rivals mutually take steps to enhance the attractiveness of the industry and avoid undermining it. This collusion and anticompetitive behavior has been particularly damaging because there is no independent regulator to hold the rivals accountable, and antitrust regulations conveniently don’t apply. The rivals—and the political-industrial complex writ large—are free to collude as they desire to enhance their own interests.

The tacit agreement to split the electorate and target extremes makes politics polarizing. It pushes unreasonable, ideological, and emotionally charged arguments to the fore while withholding the solutions-oriented conversations citizens so desperately need—and once expected from our politics.

Customers: Power Skewed

A political system is supposed to serve the public interest, so all citizens should be its customers. But in fact, the industry does not serve all customers equally. Just as savvy businesses prioritize their most profitable customers, the duopoly prioritizes the customers who most effectively advance its own interests. In the politics industry, the most important and profitable customers are party-primary voters, special interests, and donors, because they reliably deliver the two currencies, votes and money (figure 1-2).


Customer Power in Politics

The duopoly prioritizes three overlapping groups who most reliably deliver money and votes.


PARTY-PRIMARY VOTERS: These customers are the guardians at the gate. Every party candidate must pass through party-primary voters to get on the general election ballot. Primary voters are typically more politically engaged, more partisan, and further to the left or right in their respective parties. They can also be counted on to turn out in the general election.7 In districts that reliably lean red or blue, because of either intentional gerrymandering or natural geographic sorting, the party primary is the only election that really matters. In the 2016 general election, less than 10 percent of US House races and just 28 percent of Senate races were competitive.8 The rest were in safe seats; the winner was decided in the primary.

As a consequence, the true influence of party-primary voters goes far beyond their low numbers. Less than 20 percent of eligible voters participate in most congressional primaries.9 The influence of more-ideological primary voters is even greater in about half the states, where primaries are closed or semiclosed to non-party-affiliated voters. In those states, citizens who decline to register with a party aren’t allowed to vote in these decisive contests.10 The relatively small group of party-primary voters then has a disproportionate influence on who gets elected and it pushes candidates further to the left and right. We expand on the nature of primary voters and the primary system in chapter 2.

SPECIAL INTERESTS AND DONORS: These groups are incredibly powerful customers because they deliver money, or votes, or both. Special interests are organized groups—either issue-specific or industry-specific—that are heavily focused on influencing policies on particular issues in their favor. Funding from special interests comes in the form of both spending to influence elections and lobbying to influence legislation. Examples include the pharmaceutical lobby, insurance lobby, gun lobby, small business lobbies, and unions. The National Rifle Association, for example, spent $412 million on political activities in 2016, in addition to guiding its 5.5 million members on how to vote. The health-care sector funneled $268 million to influence elections and spent $1.02 billion on lobbying in the 2015–2016 election cycle.11

Donors are also powerful because the duopoly (and other entities in the political-industrial complex) seeks to maximize dollars raised. Large-dollar donors include wealthy individuals, organizations, and corporations, and often overlap with special interests. This money comes in the form of direct donations, which are capped and subject to oversight, as well as “independent expenditures,” which are uncapped spending not donated directly to candidates or parties but used to support them (such as through supposedly independent advertising). Much of the latter is known as “dark money” because it evades disclosure and oversight.12

Relatively recently, small donors aggregated through online party-connected fundraising have become an increasingly powerful force, influencing policy and elections through donations and delivering votes, though they don’t have the same ability to convert their collective influence into access for any specific individuals.

Some special interests also influence elected officials by offering lucrative jobs when an official leaves government. A surprising proportion of elected officials now follow this path. Of the retiring members of Congress between 2009 and 2015, some 42 percent joined a lobbying firm and about another 25 percent took a position at a company involved in lobbying.13 These are stunning percentages—but just the tip of the iceberg. Almost half of registered lobbyists are some type of former government official, often former regulators who can influence the rule-making and enforcement process, or former congressional staffers who are instrumental in writing industry-friendly legislation.14

AVERAGE VOTERS: This customer group represents a substantial proportion of people who vote almost exclusively in general elections—they don’t vote in primaries—and who are not regular donors. They tend to be less ideologically extreme and they have little power or influence in today’s political influence.

The parties do pay some attention to the average voter to increase the turnout of their base or depress the turnout of the other side’s base and capture swing voters. But since average voters have only two choices in most general elections, parties appeal to them marginally. The parties compete for average voters not by delivering outcomes for their benefit, but rather by seeking to be a little less disliked than—or slightly preferred over—the other party. Parties don’t need to deliver solutions but only need to convince average voters to choose them as the lesser of two evils.

In a normal industry, ignoring such a large group of customers would make a competitor vulnerable to new competition. But in the politics industry, as we will discuss, new competition is not a threat, so the parties are free to concentrate on delivering value to their powerful party-primary voters, donors, and special interests.

NONVOTERS: These are the least powerful customers of all. Almost 40 percent of eligible Americans did not vote in the 2016 general election. Those who don’t vote cede their customer power to the duopoly and its allies. These individuals, perhaps not surprisingly, tend to be more moderate and more independent. And, sadly, irrelevant.

.  .  .

Recent research supports our conclusions about customer power. For example, in 2014, researchers Martin Gilens at Princeton University and Benjamin Page at Northwestern University examined congressional action on 1,779 policy issues. Their finding: “When the preferences of economic elites and the stances of organized interest groups are controlled for, the preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy.”15

Channels: Compromised

Channels exist between the rivals and the end customers. For example, warehouses and grocery stores are the channels between food manufacturers and grocery shoppers. In politics, the duopoly reaches us with information and persuasion through key channels, such as direct voter contact (the “ground game”), paid advertising, traditional independent media, and a panoply of new media channels that have remade the communications marketplace over the last few decades. Historically, channels mediated politics by taking in information directly and indirectly from the duopoly, sorting it, analyzing it, and redistributing it as unbiased news with a trusted seal of approval for the country. But the combination of market disruption—news media in free fall—and the creation or targeted capture of channels by the political-industrial complex for its own benefit have greatly diminished healthy competition.

DIRECT VOTER CONTACT: This contact takes place through face-to-face meetings, rallies, fundraisers, street teams, phone calls, and now text messages among other burgeoning digital spheres, and has always been heavily controlled by the duopoly. While this channel has not grown substantially, the duopoly has taken advantage of more sophisticated voter data to make contact much more targeted, distinguishing which voters they can bring to their sides while ignoring or suppressing turnout among the rest.16

PAID ADVERTISING: This channel is also controlled mostly by the duopoly and their donor allies. And it takes place on TV, radio, and, increasingly, digital media. Advertising is overwhelmingly negative and reflects and reinforces the divisive tactics deployed by the duopoly. Yet political advertising accounts for an important proportion of total revenue in election years for traditional and new media companies. Consequently, current partisan competition works for the media.17

TRADITIONAL INDEPENDENT MEDIA: Historically, traditional independent media has largely mediated information flow and persuasion efforts. Today, mainstream media is suffering declining revenues and audiences and duopoly interests are aggressively capturing particular media. What’s more, the advent of new media platforms has enabled duopoly actors to bypass the mainstream media to reach customers directly. Because of changes like these, much of the media programming that was independent, influential, and widely consumed is now co-opted by political ideology, and is often nakedly partisan. Many now ignore, mistrust, or even detest it.18

DISRUPTIVE NEW MEDIA: These new channels, which include social media echo chambers, content aggregators, online forums, and the ever-evolving niche blogosphere, is as powerful and addictive as it is rife with ethical and influence issues on an election-tipping scale. Many of the new media players—Facebook, YouTube, Twitter, and the like—are still far younger than mainstream platforms and unregulated, albeit incredibly powerful as avenues for information and influence. Clearly we live in a dangerous era of disintermediation and confusion—an era arising in part from a sickly mainstream media’s scrambling to find a viable viewership and revenue model for the twenty-first century.

.  .  .

The points of intersection among today’s channels now appear to outnumber the once-sacred separations. What constitutes news and what constitutes advertising—or, worse, propaganda—is at times a crapshoot to decipher, especially online. What was once clear packaging for news—a story in a magazine or newspaper, or a segment on TV or radio—now comes in myriad forms, from fifteen-second videos to 280-character tweets. What was once an unbiased perspective on the local news might now be a bought-and-paid-for influencer. What was once at least moderately deliberative and balanced is now a cacophony of rhetoric and reactionaries. And few in news today can afford (or deign to budget for) good, old-fashioned editors and beat reporters.

Thomas Jefferson summarized the value of trusted media to a democracy, saying that if he had to choose between “a government without newspapers or newspapers without a government, I should not hesitate a moment to prefer the latter.”19

The loss of confidence that many readers, viewers, and listeners once had in their understanding of issues and the truthfulness of public information is collateral damage and gut-wrenching for those of us who believe in the sanctity of the Fourth Estate. The players within the political-industrial complex can now go around the media to target, reach, and shape the points of view of the citizenry in ways that we’re still struggling to understand and manage. What will it take to rebuild the common trust that underpinned our journalism?

Arthur Miller, the famous playwright of Death of a Salesman, once said, “A good newspaper, I suppose, is a nation talking to itself.”20 While our focus in this book is on the ins and outs of politics directly, the reestablishment of a national, moderated, and mediated conversation would be a welcome partner effort worthy of investment.

Suppliers: Captured

Suppliers provide valuable inputs that allow rivals to produce their products and services. Think, for example, of raw materials such as sugar and oil supplied to food manufacturers, or the law and accounting firms supporting corporations like these manufacturers. In the politics industry, partisan competition is reinforced and amplified by the duopoly’s infiltration and capture of the key suppliers to the industry. There are five main supplier groups: candidates, specialized campaign and governance talent, voter-data shops, idea suppliers such as think tanks, and academics and lobbyists who contribute to shaping legislation or regulation and its implementation.

CANDIDATES: This group depends heavily on its party for legitimacy, funding, infrastructure, field operations, voter lists and data analytics, debate access, and other requirements of a modern campaign. Nonparty candidates face huge obstacles even to entering elections, much less winning them, given the lack of such party-supplied support. The parties also get to decide which candidates to back most aggressively—or sometimes not at all. This authority increases the duopoly’s power to align individual candidate platforms—not to mention elected officials’ actions—with the party line.

TALENT: The talent in politics includes campaign managers, political consultants, pollsters, public relations staff, data analysts, social media directors, ground staff, and certain legislative staff. But most talent works only for one side of the duopoly or the other.21 You are either a Democratic pollster or a Republican pollster, a Democratic staff member or a Republican one, and so on. Working with candidates who challenge incumbents without the approval of the party or working with independents challenging both parties leads to banishment.22 In 2013, for instance, the National Republican Senatorial Committee publicly blacklisted an advertising firm for working with a Republican challenging a Republican incumbent for the Senate.23 In 2019, the Democratic Congressional Campaign Committee put firms on notice that they would be blacklisted if caught doing business with anyone challenging an incumbent.24 When Greg Orman ran a highly regarded (yet unfortunately unsuccessful) independent campaign for senator in Kansas in 2014, several of his consultants could only work for him in secret.

VOTER-DATA SHOPS: These organizations are crucial to modern campaigns. Much like the exploding role of data and analytics in other industries, accumulating and analyzing the newly capturable information about people requires large, sustained investments. Candidates and elected officials depend heavily on massive voter files to efficiently cultivate supporters, raise money, decide on issues to target in campaigns, turn out the vote, and guide priorities in governing. However, such data is not available to just any candidate. Voter-data suppliers linked to the duopoly, such as NGP VAN for the Democrats, and i360 for the Republicans, have amassed the most extensive proprietary voter databases, analytics, and likely voter lists—and they keep tight control on the data they gather with agreements that ensure it all flows back to them. Partisans decide to whom such voter data is made available and at what cost. Party-supported candidates reap substantial advantages.

IDEA SUPPLIERS: These thought leaders develop and advocate for the policy ideas that are incorporated into party platforms, candidate policies, and legislation. Key idea suppliers include academics as well as an estimated 1,835 think tanks, with total budgets in the billions of dollars.25 Idea suppliers were once independent and a significant strength of our political system, creating vigorous competition on ideas generated from diverse voices. Today, more and more idea suppliers have become closely aligned with one side of the duopoly or the other.26 Out of the thirty-five leading US think tanks focused on public policy, about 70 percent can be identified as partisan or partisan leaning.27 Many think tanks have moved beyond a research-only focus to create political action units.

Meanwhile, congressional staff and research support responsible for generating, reviewing, and fine-tuning ideas have been gutted. From 1985 to 2015, congressional committee staff numbers have declined by 35 percent.28 Absent professional staff, Congress has been forced to rely more heavily on opportunistic suppliers—like lobbyists.

LOBBYISTS: These political influencers advocate for special interests by trying to influence legislation and regulation, often using leverage from significant donations. Lobbyists are employed by special interests and as part of these groups they help advance the duopoly’s core customers in frontline legislating. Lobbyists have become a major vehicle for disseminating research on issues, policy ideas, and legislative support for government staffers. They are the hired guns who pitch ideas to, and even draft bills and talking points for, increasingly overstretched and under-resourced congressional staffs.29 Lobbying has become a huge business in its own right, with reported federal lobbying spending (which significantly understates actual spending) of $3.15 billion in 2016.30 In 2014, when lobbying expenditures reached a recent peak, companies spent more money trying to influence public policy than Congress spent on itself.31

Numerous studies reveal that spending on lobbying often produces a high return on investment for the spender through its influence on legislation and its success in getting adjustments or exemptions in regulation.32 The clout of lobbyists looking out for their clients’ interests, and not for the public interest, distorts legislation and sometimes blurs the line between lobbying and corruption.

Barriers to Entry and Substitutes:
Colossal and Constrained

Industries that fail to serve their customers well are ripe for new entrants that improve value for customers and shake up the market. The barriers to entry determine how easy or hard it is for a new competitor to enter the fray. In the politics industry, the founding of a new party would constitute a new entrant. Substitutes and new entrants are different ways of competing—think of Uber to taxis or Amazon to brick-and-mortar retailers. In the politics industry, substitutes could be independent candidates not affiliated with a party.33

The barriers to entry for new competitors in the politics industry are colossal—and they dramatically constrain substitutes as well. A sure sign of the high barriers to entry is the fact that no major new party has emerged since 1854, when antislavery members of the Whig Party split off and formed the Republican Party. The Progressive Party (1912) and the Reform Party (1995) were both serious efforts but managed to elect only a few candidates and were disbanded within a decade. Today’s most significant third parties, the Libertarians and the Greens, run numerous candidates every cycle but have yet to win a single congressional or gubernatorial campaign—not to mention the presidency.34 Despite widespread and growing dissatisfaction with the existing parties, contemporary third parties continue to fare poorly. The same applies to independents, despite the high proportion of citizens who identify themselves as independents.35

There are myriad barriers to new competition, including economies of scale; incumbency advantages in brand recognition, relationships, expertise, and infrastructure; access to key suppliers and channels; certain election rules and practices, such as sore-loser laws; and access to funding. For example, duopoly-created fundraising rules allow a single donor to contribute $855,000 annually to a national political party (Democrats, Republicans, or both) but only $5,600 per election cycle—two years—to an independent candidate committee.36

Interestingly, the greatest barriers to entry are three structures that seem perfectly normal—not nefarious in any way—to us. These barriers, which were introduced earlier in the book, are (1) party primaries, (2) plurality voting—part of the elections machinery—and (3) a highly partisan legislative machinery. Later in the book, we will discuss these enormous barriers in detail and our plan for eliminating them.

Finally, unlike virtually any other industry, there is no independent regulation in the politics industry. The participants themselves dictate how they are held accountable. The only federal regulator is the Federal Election Commission (FEC), created in 1974 in the aftermath of Watergate to implement and enforce election laws. Despite its official designation as independent, the FEC is anything but that. The six-member commission is dominated by the duopoly and typically split down the middle, with three Democratic and three Republican commissioners.

Since August 2019, the Commission has been effectively neutered when the resignation of a Republican commissioner brought the number of commissioners down to three, below the legal threshold for the panel to take actions, and President Trump has not appointed a replacement. Politics is a classic example of regulatory capture—it’s as if the US Securities and Exchange Commission were jointly run by the boards of JP Morgan Chase & Co. and Bank of America.37

This all sounds like a clear antitrust violation. So why hasn’t the Federal Trade Commission or the Justice Department brought a case? Again, ever so conveniently, antitrust rules do not apply to the politics industry.

The “Trump Effect”?

Has the election of Donald Trump changed the structure of our political system or our analysis, conclusions, or recommendations? On the contrary, his victory validates them.

The 2016 election provided a striking indication of the level of public dissatisfaction with the status quo, as the voters clearly tried to reject the duopoly by electing someone from “outside the system.” In the end, they were not successful.

Trump ran within the existing duopoly, recognizing that a truly independent bid would not succeed because of the high barriers to entry facing an independent or third-party candidate. He reportedly came to this conclusion in 2000, when he explored running as the Reform Party candidate. This conclusion is, not coincidentally, the same one that Michael Bloomberg reached when he considered running as an independent in 2016. That conclusion held up: Bloomberg entered the 2020 race for president as a Democrat.

Did Trump’s election signal a shift in the nature of rivalry and the end of party influence? No. In fact, partisan rivalry and division have only increased, as has the capture and compromise of channels and suppliers.

President Trump can be understood as a hybrid substitute to the traditional duopoly but not as truly new competition. He ran as a Republican, albeit with mixed support from the party initially, and utilized the traditional party system and its advantages to campaign, get on the primary and general election ballots, and win. Trump’s ability to win reflected a very specific personal and political context. His high brand recognition provided two great benefits: (1) unprecedented free media access because his campaign style attracted viewers and (2) his ability to go directly to the public through Twitter.38 These two personal benefits lowered the cost of his campaign and, combined with his self-financing ability, lowered his barriers to entry.

Running as a supposed “outsider” within a party may emerge as a strategy that others imitate. However, Trump’s success is likely to be more an anomaly due to his unique personal situation. Certainly, Trump’s election and presidency has precipitated significant adjustments and disruption within both the Republican and the Democratic Parties. But neither the structure of the politics industry, nor its incentives, have fundamentally changed. In fact, the increased divisiveness of political competition has only increased congressional dysfunction, because Republicans who speak up for anything contrary to the Trump administration’s line, or Democrats who are seen to be anything less than completely obstructionist, fear getting primaried—there’s that verb again.

The Trump presidency supports our contention that the nature of the politics industry is an unhealthy pill our democracy has been forced to swallow. The fundamental failure of Washington, D.C., to address our biggest national challenges persists unaltered in the Trump administration. Yet the duopoly and the broader political-industrial complex remain intact. The need to reform our political system to create healthier competition and better outcomes remains unchanged.

A Thriving Political-Industrial Complex

In January 1961, in his farewell address, President Dwight D.Eisenhower, a Republican, warned the nation of the threat and misplaced influence of what he called the military-industrial complex: “This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence—economic, political, even spiritual—is felt in every city, every State house, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society. In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.”39

What Eisenhower foresaw was a powerful alliance between America’s military and the defense industry. He believed that if this alliance were to be left unchecked, it would perpetuate a build-buy defense-spending cycle that would outpace actual need and create products designed to serve the goals of the complex over the goals of the “customer” (which should be our national security interests). The military-industrial complex would create a supply of defense goods for supply’s sake and, like many other modern American sectors, become too big and too powerful to fail.

Politics in America has mutated in much the same way. The political duopoly and its surrounding actors and interests, many of which have been co-opted and divided along partisan lines, is aptly described as a political-industrial complex. By nearly every measure, the complex is thriving. Campaigns are seemingly endless and put to work an immense roster of canvassers, pollsters, and staff. Top consultants are in high demand, and the media interest has never been greater. Overall spending—a normal proxy for an industry’s success—continues to rise year after year.40 Funders pour in more and more money because it works; the ROI is high.

Direct political spending at the federal level was at least $16 billion during the 2016 election cycle.41 Roughly 40 percent of this total, or around $6 billion, was election spending by candidates, parties, PACs, super PACs, and other organizations; another 40 percent was reported for lobbying of Congress and government agencies by companies, trade associations, unions, and other special interest groups.42 Politics is also big business for the media. At least $1.5 billion was spent on advertising during political shows on channels such as CNN, Fox News, and MSNBC.43 The remaining balance flows to the budgets of major think tanks like the Center for American Progress or the Heritage Foundation. Together, the industry is responsible for at least nineteen thousand jobs and thousands more in consulting.44 Keep in mind that these numbers only pertain to the federal level of the politics industry. If we were to add spending at the state level, these estimates would balloon.45

While these figures are staggering, they severely underestimate the total size of the industry. Because of substantial underreporting, actual direct political spending is many billions of dollars higher. Just factoring in estimates of so-called shadow lobbying, for example, would easily add another $6 billion to the total.46 This estimate excludes politically active nonprofits and social welfare organizations, such as the National Rifle Association, the Sierra Club, the American Civil Liberties Union, and Americans for Prosperity, all of which work tirelessly to influence public policy. If we include the revenue of all these political organizations, the politics industry inflates to over $100 billion dollars per election cycle.47

Most importantly, the politics industry determines how the government spends an almost unimaginable amount of money—$3.9 trillion in fiscal year 2016 at the federal level alone.48 In addition to controlling what government spends and how, the politics industry has a huge effect on the overall economy by setting policies that affect economic and social spending in every field.

By any measure, politics is big business. The mission of deliberative democracy is no longer central to the work of the key political rivals, much less to the sprawling set of supporting political entities—the core customers that fund the system, the controlled suppliers, the co-opted channels. All of this both enables unhealthy competition and feeds off it.

The politics industry is a game with one golden rule: keep the duopoly in power. It’s time to write new rules. We’ve done it before.

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