America’s Hidden Duopoly (Rebroadcast) episode artwork

EPISODE · Jul 25, 2019 · 52 MIN

America’s Hidden Duopoly (Rebroadcast)

from Freakonomics Radio · host Freakonomics Radio + Stitcher

We all know our political system is “broken” — but what if that’s not true? Some say the Republicans and Democrats constitute a wildly successful industry that has colluded to kill off competition, stifle reform, and drive the country apart. So what are you going to do about it? Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

We all know our political system is “broken” — but what if that’s not true? Some say the Republicans and Democrats constitute a wildly successful industry that has colluded to kill off competition, stifle reform, and drive the country apart. So what are you going to do about it?

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America’s Hidden Duopoly (Rebroadcast)

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A few weeks ago, the Michigan Congressman Justin Amash announced that he was leaving the Republican Party to become an independent. I've had concerns with the Republican Party for several years. I've had concerns with the Party system generally. Amash said the partisan rancor in Washington was just too much and counterproductive.

I think we really need the American people stand up and say, hey, enough is enough. We've had it with these two parties trying to ram their partisan nonsense down our throats. So we thought you might like to hear the following episode, we first put out last fall just before Election Day. Because even though the next big Election Day is more than 15 months away, doesn't it kind of feel like it's tomorrow?

The episode is called America's Hidden New Wobbly. Imagine a gigantic industry being dominated by just one or two companies. Actually, you don't have to imagine. Google is more than 90% of the global search engine market.

So not quite a monopoly, but pretty close. Such cases are rare, but not so rare is the new aptly, when two firms down in the industry. Like Intel and AMD and computer processors, Boeing and Airbus, jet airliners, the sharks and the jets, and the fictional gangs from the 50s industry. But surely, most famous do aptly is this one.

People think young say, absolutely. The rivalry to be Coca-Cola and Pensacola goes back to the 19th century. Coke was long dominant, but in 1970s and 80s Pepsi gained ground and marketed hard to younger consumers. 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. When we bought you the new taste of Coke, we knew that millions would prefer it and millions would. But we didn't know how many thousands of you would throw in the right asking us to bring back the classic taste of original Coke.

Coke eventually got rid of new Coke altogether. And despite the flip-flop, maybe because of it and the attendance-free media, in any case Coke regained the top spot. Today, even as soda consumption falls, the rivalry radiaries on, both companies adding juices, teas and waters to their portfolios. You get forward 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-perpetuation. This was covered pretty extensively in the media during the so-called Colours. Is that quite war? It's good, for most of them.

I believe the Coke and Pepsi together. This Colours, they've been in for decades now, actually helped each other sell a lot of product. There are plenty of reasons why duopoly exists, and they're not necessarily a lot of sinister. And capitalism, scale, is really important.

There are also 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, they're just wrong at the plate for a smaller scale. From mom, pop, and Indian, artisanal.

But, let's be honest, that smaller scale idea is cute. It's not winning. Which winning is dominance. Entire industries dominated by just a couple of keynotes.

We've already given you a few examples from a variety of industries, but there's another duopoly. You might 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 duos. There are big institutions that take advantage of their signs to get even bigger. I mean, I'm talking to consultants on both sides. I'm not even going to be doing this for a long time.

I think 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 a bit of product.

And this leads an entire industry run by just two of 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, and our eighth president, Donald J. This is surprising to hear our political system characterized as an industry.

It's a prize this guy. Absolutely never thought of it in those terms. And that's my quarter. The world famous business strategist.

And at the core of it is what we call a duopoly, comparing our political system to something like Coke and Pepsi. I can't be right, can it? No, where it says, it's worse than that. Coke and Pepsi don't control the market nearly as fully as the Republicans and Democrats do.

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% of the soft drink market. We say you've got the Docker Peppers 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 you're not even close to Docker Peppers. 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.

Washington is not working. Washington is working. Washington is broken. Washington is broken.

It's just a line. I like to teach the world to say it's even a slogan for the industry approved. 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 Freak Noms Are You Is Washington Really Industry? Just like any other?

How to get that way? And what does it mean? I'm not a high-spine in the world. I'm a co-parent.

I'm a co-founder. The industry is the real thing. From Stitcher and Dumber Productions, this is Freak Nomix Radio. The podcast explores the hidden side of everything.

Here's your host, Stephen Dumber. Once upon a time, there was a dairy product company in Wisconsin called Gale Foods, G-E-H-L. My name is Katherine Gale. Katherine Gale was a CEO of a company.

It had been founded well over a century earlier by her great grandfather. For years, Gale Foods sold the standard dairy items, butter, milk, ice cream. In the 1960s, they got into pudding, cheese sauces, and more recently, Dale Foods kept keeping up with the times. High-tech food manufacturing, meaning low-acid, acetic processing, and packaging, using robots, which creates shelf-stable foods without views of preservatives.

The process is also useful for products like weight loss shakes and ice coffee drinks, under Katherine Gale. Gale Foods had run in 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, Gale turned to one of the most acclaimed consultants in the world. I'm a quarter. 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 on MBA and a PhD 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 is cited more than any other salary in the field.

He's best known for creating a popular framework for analyzing the competitiveness of different industries. The framework that I introduced a year ago sort of says that there's these five forces. These five forces have determined 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 product or services, the bargaining power suppliers, bargaining power of buyers, and rivalry among existing competitors. Anyway, you can see why some like Catherine Gail, the CEO of a century-old food company, might want to bring in some 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, 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 her household. In 2007, Gail joined the National Finance Committee of Barack Obama's presidential campaign. She came on at his top fundraisers.

After Obama was elected, Gail joined the 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 from American people's fight. It 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 an 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 in innovation. In other words, people didn't want to give money to nonpartisan organizations working toward political reform. They only want to give money to political parties and their candidates. In fact, Catherine Gail found that potential donors had hard time believing 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 Gail began meeting with Michael Porter. She brought him in to Gail Foods to help figure out the company strategy going forward, keeping in mind his five famous forces about industry competitiveness. New rivals existing rivalries, substu products, supplier power and customer power.

And while we were on that strategy, I would consistently make the case to Michael that, wow, how were analyzing this industry of low asset-y subject food production, which is business I was in, all of these tools are directly applicable to analyzing the business of politics. And I frankly almost nothing about politics. But the more I heard and more we talked and more it became clear that we really needed to take a fresh look here. So it was out of that crucible of analyzing a traditional business strategy at the same time, devoting some time to political reform innovation that it became clear that politics was an industry of 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. Okay, so you came to the conclusion that politics is an industry much like many of the other industries that you've been setting over your career. You never really thought of it in those terms before. Absolutely never thought of it in those terms.

We always thought of politics as a public institution that the rules were somehow codified in the rule law and in our constitution. 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 actually multiple of our founders actually expressed a deep fear that parties would take over. In fact, John Adams said at one point, there's nothing which I dread so much as a division of the republic into two great parties.

Each of the rain sundards leader in concerning measures and 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 for an influence and the other is partisanship.

The other danger is the formation of strong parties. I'm coming to the conclusion that political system operate more like a traditional industry than a public institution. Catherine Gail and Michael Porter sat 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-feeling, 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 is 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 to write an 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 comprehensive answer.

We estimate that in the most recent to your election cycle, the industry's total revenue was approximately $16 billion. 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 is supposed to be us, the citizenry. But Gail and Porter argue that 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 historic lows. If you're in a quarter of Americans currently say they trust the federal government.

In terms of popularity, it ranks below every private industry. That includes the healthcare and pharmaceutical industry, the airline industry and, yes, cable TV. Generally, 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 Slings TV or you got the point. So in today's world, we have the majority of voters say in polls that they would rather have an independent. So in an oral industry, you have a hold of competitor coming up that was about independence to serve that on that net. And in politics, we don't see any new entrants other than 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 the report, Gale and Porter identify the five key inputs to modern political competition.

Candidates, campaign talent, voter data, ideas, suppliers and lobbyists. Here's what they write. Increasingly, most everything required to run the modern campaign and govern is tied to or heavily influenced by one party or the other, including think tanks, voter data and talent. So essentially what happened is the parties have now sort of divided up the key inputs to political competition.

And if you're not a Republican or Democrat, then you're in trouble in even finding a campaign manager, much less getting the best of the day, voter data and the best analytics and so forth. It's not enough to monopolize the campaign machinery. Gale and Porter argue that the political industry has essentially co-opted the media, which spreads their messages for free. This helps Donald Trump tonight.

This is a big, big beginning to the end of what has been a witch on. Now, man, in the White House is behaving now like a character on that old detective show, Kalamo. Perhaps most important, the two parties rig the election system against would be disruptors. The rules they set allow for partisan primaries, gerrymandered conventional districts, and we'll take all elections.

So each side of the Duopoly Republicans and Democrats and the players that are playing for those teams, effectively, have over time worked 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 entry, and the two 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 disruptive 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 because 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 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 support with whenever those partisan or special interest needs are. There is now an entire industry of politics that moves forward independent of whether that industry actually solves problems with the American people. So what's happened is that the vote 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 the pressing, isn't it? In sightful perhaps, but pressing nonetheless. So do Katherine Gale and Michael Porter have any bright ideas for tackling this problem? Yes, yes.

Oh, yeah. Oh my God. That's coming up. Right after this.

The business strategist Michael Porter and the CEO of Turn Political Reformists, Katherine Gale, are you in a Harvard Business Report that our political system has been turned into an industry with no real competition. The industry's primary beneficiaries are itself and its many ancillary participants, including media, but the vast majority of Americans who are somewhere in the middle are feeling very, very effective. The lack of vigorous competition they argue has allowed the Democrats and Republicans to carve out diametrically opposed political bases fairly narrow and treating the 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 this election 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, Gale and Porter argue, use those partisan bases to support the desires of the political industry as true customers and its wealthiest, special interests, industries like healthcare, real estate and financial services, also labor unions and lobbyists. The monopolistic business model, polarization is a feature, not a bug.

We have a chart in our report that just selects some 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% Democratic support and 75% Republican. The Civil Rights Act of 1964 had 60% Democratic support and again 75% Republican.

Now the last decade or two, that's been the opposite pattern. The only way a landmark legislation to pass 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. 2018, tax reform bill, zero Democrat 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 that every industry. But just having more competition in parties doesn't seem to be the answer alone. They're playing multiple 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 a step or direct a prescription would that be? Well, I think in our system in particular what we have only two, and they have been able through the set of choices we've described, to actually set up the rules of competition that reinforce their partisan competition, dividing voters, and so forth. The more competition I think would be incredibly valuable, but it has to be a different kind of competition.

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 can we make the competition more around building up more choices for voters that we're more about solutions. By the way, let me be clear, we're not against parties per se. What we are against is the nature of the competition that are existing dominant parties have created.

Let me see 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, well, collusion. 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 slaying the soils now. Do you have any evidence of collusion between the parties to create a system that essentially keeps their ass down?

Well, you know, first of all, that is the right word. It is collusion. And there's probably a legal definition of collusion, which I don't know, I don't know, I'm not aware. But the effect is exactly the same.

The parties have agreed on a set of rules that benefit the duopoly and preserve this nature of competition. You can really put rules into a number of buckets. There's kind of legislative machinery as we call it, which is how the Senate Congress will run. And then there's the election rules having to do with what is the primary process like.

And once it takes to get on the ballot, it's an independent and various campaign finance stuff that surrounds elections. Has anyone ever considered filing whether in earnest or not an antitrust suit against Republicans in Democrats? That's a great question. I have.

We've actually had a significant effort to see if that's feasible, what the law is, looking at the antitrust statutes. This is absolutely what antitrust policy is all about. It's creating an 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 discussed the main advantages that two parties have. I think we all recognize it. There's real power in size.

And there's leverage when you're making your own rules for your own industry. And you know, they use those advantages to retain control and to construct competitions on. But it strikes me that Donald Trump really got around a lot of those advantages. So you write that the parties control the inputs to modern campaigning governing.

But he didn't rely on that really. The parties co-opted channels for reaching voters. And maybe took advantage of his own channels, including free media and his own social media accounts. You write that the parties quote, erect high and rising barriers to new competition.

But in the case of Trump, his own party tried as hard as they could to erect the highest barrier and couldn't keep him out. And so on those fronts, it would strike me that the parties failed to construct a certain competitor. 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 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-enanced. And he was appealing to a certain subset of the partisans. Maybe someone neglected subset of the people on the right.

And he had a very strong existing brand identity. So he was able to 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 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. But the third and 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. Obamarin and President Bush didn't.

Even though President Obama and President Bush campaigned on by partisan chip and bringing people together, they failed. So I think that those recent case studies I think are sobering. We should note that some political scientists argue that the Gale and Porter's analysis of party power as backwards. These scholars say our political systems in Beijing 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. Most of them interesting evidence for this party's or weak argument, that they think back to the 2016 presidential election. We had one national party in the Democrats. The party as hard as it could to the point of cheating essentially to pre-select its candidate, Hillary Clinton, who then lost.

And you had the other national party, Republicans, tries 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 and 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 really understand the argument.

The stronger they are, the less moderate they're going to be given the nature of the competition's been created. And I think we are really asking for too little when we say let's think around the edges and get stronger parties so that we can have a little bit of a cleaner process. Instead, what we believe is we need to create structural forms 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 different solutions and we've typically been hearing. So then you just got to say it's four major solutions. Let's go through them point point point point number one. You talk about restructuring the election process itself.

Give me some really concrete examples of what that would look like. And I also love to hear whether you do see some evidence of these examples happening because it doesn't seem there has been some election performance 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 number one is we have to re-engineer the election process as the election machinery. And there are three electoral reforms that are important to be called the election trifecta. And 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 show and you get a Democratic ballot or 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 part that's left or the one that's on the far, that's 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 they're really partisans. And they really have special interests and they really, really care about getting somebody on the ballot that's for them.

In a single ballot, not partisan 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 the single primary where everybody's in it is so important is that if you want to win, you want to appeal to as many voters as you can. Hopefully, more people will vote in primary.

And therefore you're going to get people that are not just trying to appeal to their particular, you know, extreme. The second part of the Gale 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 candidate's my second choice.

So my third choice. This is my fourth choice. When the votes are tabulated, if no candidate has received over 50%, then whoever came in last is 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%.

And what that does is it gives a candidate a 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's 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 dooply candidates. Once you've ranked choice voting, everybody can pick whoever they want as their first choice, their choice, no vote is wasted and no vote spoils the election for another candidate.

And then the last part of the trifecta is non-partisan redistricting. German rendering has to go. Essentially, when parties 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 Republicans seats or 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 Gayle 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. And right now what's happened and this is sort of collusion in ways 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 champion these reforms is that we don't believe that money in politics is the core issue. Also, the problem is really this nature of competition that leads to this partnership and that's not a money issue per se, 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 with 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 smaller donors.

For instance, having the government itself match donations from small donors. We should note that most of the ideas Gayle and Porter are presenting here are not all that novel if you follow election reform in a little bit. And we poked into a lot of them a couple years ago in episode 10 ideas to make politics less rotten. I guess it's one measure of how successful and dominant political duopoly is.

The 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 the ground game. We're not going to do this 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 express quite a bit of optimism. I don't know why or how because I don't see the avenue I guess for optimism. 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 non-person primary states now including California. We've got ranked trading 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 millennials are particularly outraged and concerned and open to all kinds of new ideas. But I think it's going to take time. The most exciting strategy in this area that we champion is a strategy put forth by the centrist project and full disclosure among the board of the centrist project. It's now actually called United America.

And this is the Senate Full-Com 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 and outright majority in the Senate, which would make those five senators, the most powerful single coalition in Washington, D.C. 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 in viable. But this whole conversation got me thinking if our political system really operates like an industry as Catherine Gale and Michael Porter are you maybe it should be treated like one.

In most industries, good products and services are rewarded, weakness and incompetence are punished. Catherine Gale coming from the country of food industry surely knows this firsthand. There's constant pressure to modernize, optimize to fight off old rivals and new. Indeed, not long after she brought Michael Porter in to consult with the future of Gale Foods, she decided to sell her company to a private equity firm Chicago.

Why? I absolutely love running that company. She wrote to a later, but later 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 the changing competitive landscape.

And that got me thinking maybe there's some private equity firm out there. We'd like to modernize a certain political bar you're to. Any buyers out there? If you're too shy to approach the Democrats or Republicans directly drop us a line radio at freenoms.com.

We'll get things moving. Meanwhile, come up next time on Freecom, Ontario. If you think back to the Cold War surely you remember the US Soviet arms race, but did you know about the farm race? I hope producing the US in Freecom for a meat and meal production would be the Soviet equivalent of hitting American capitalism with a torpedo.

How did the Americans fight back? Literally airlifting at 10,000 square foot supermarket into Yugoslavia. Next time on Freecom's Radio. Freecom's Radio is produced by a Citroën in Denver Productions.

This episode is produced by Greg Risalski, who helped from Zappapensi. Our staff also includes Alex and Craig Logue, Greg Rippon, Harry Huggins, Matt Hickey and Corinavirus. Our intern is Daphne Chen. We had helped this week from Nelly Osborne and Special thanks to our Freecom's Radio listener, Kyle Watson, for bringing the Porter Gale paper to our attention.

Our theme song is Mr. Fortune, but hitchhikers all the other music was proposed by Luis Gaira. You can subscribe to Freecom's Radio and give it a nice reading if you'd like. On Apple Podcasts, Google Podcasts, Spotify, or any podcast app.

Our entire archive and we found exclusively on the Citroën app or at Freecom.com, we also publish transcripts and show notes you can also sign up for our email newsletter. To get our entire archive, add free on the bonus episodes. Go to stitcherpreneem.com slash freecomics. We also publish every week on medium, a short text version of our new episode.

Go to medium.com slash freecom's Radio. We can also be found on Twitter, Facebook, and LinkedIn, or via email at radioatfreecomics.com. Freecom's Radio also plays on many NPR stations to check your local station for details. As always, thank you for listening.

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This episode was published on July 25, 2019.

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We all know our political system is “broken” — but what if that’s not true? Some say the Republicans and Democrats constitute a wildly successful industry that has colluded to kill off competition, stifle reform, and drive the country apart. So what...

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