The Populist Paradox: Interest Group Influence and the Promise of Direct Legislation - Softcover

Gerber, Elisabeth R.

Softcover

ISBN 10: 0691002673 ISBN 13: 9780691002675

Publisher: Princeton University Press, 1999

Synopsis

Do small but wealthy interest groups influence referendums, ballot initiatives, and other forms of direct legislation at the expense of the broader public interest? Many observers argue that they do, often lamenting that direct legislation has, paradoxically, been captured by the very same wealthy interests whose power it was designed to curb. Elisabeth Gerber, however, challenges that argument. In this first systematic study of how money and interest group power actually affect direct legislation, she reveals that big spending does not necessarily mean big influence. Gerber bases her findings on extensive surveys of the activities and motivations of interest groups and on close examination of campaign finance records from 168 direct legislation campaigns in eight states. Her research confirms what such wealthy interests as the insurance industry, trial lawyer associations, and tobacco companies have learned by defeats at the ballot box: if citizens do not like a proposed new law, even an expensive, high-profile campaign will not make them change their mind. She demonstrates, however, that these economic interest groups have considerable success in using direct legislation to block initiatives that others are proposing and to exert pressure on politicians. By contrast, citizen interest groups with broad-based support and significant organizational resources have proven to be extremely effective in using direct legislation to pass new laws. Clearly written and argued, this is a major theoretical and empirical contribution to our understanding of the role of citizens and organized interests in the American legislative process.

About this title

About the Author

Elisabeth R. Gerber, Associate Professor of Political Science at the University of California, San Diego, studies the consequences of U.S. election laws on interest representation. She is currently working on a major study of primary election laws in the American states.

From the Back Cover

"Gerber's key finding--that citizen interest groups are more effective in using the initiative to alter the status quo, and that economic groups are more effective at preserving it--is an important amendment to the popular perception that interest groups now control the initiative process."--Bruce E. Cain, University of California, Berkeley

"The questions raised in The Populist Paradox are fundamental to our understanding of elections and representation and to the roles of citizens, organized interests, and elected officials. The book is well written and extremely well organized."--Frank R. Baumgartner, Pennsylvania State University

Excerpt. © Reprinted by permission. All rights reserved.

THE POPULIST PARADOX

INTEREST GROUP INFLUENCE AND THE PROMISE OF DIRECT LEGISLATIONBy Elisabeth R. Gerber

PRINCETON UNIVERSITY PRESS

Copyright © 1999 Princeton University Press
All right reserved.
ISBN: 978-0-691-00267-5

Contents

List of Figures...................................................ixList of Tables....................................................xiAcknowledgments...................................................xiii1. What Is the Populist Paradox?..................................32. Interest Group Choice..........................................213. Direct Legislation Hurdles.....................................374. Group Characteristics and Resources............................595. Motivations and Strategies.....................................766. Direct Policy Consequences.....................................1017. Indirect Policy Consequences...................................1218. The Populist Paradox: Reality or Illusion?.....................137Appendixes........................................................147A. Direct Legislation Institutions................................147B. Survey of Organizations........................................152References........................................................159Index.............................................................165

Chapter One

What Is the Populist Paradox?

Among the difficulties encountered by the [Constitutional] convention, a very important one must have lain in combining the requisite stability and energy in government with the inviolable attention due to liberty and to the republican form. —James Madison, The Federalist Papers

All democracies face a fundamental problem in deciding how much political participation to allow and by whom. As Madison noted, perhaps the most fundamental trade-off in designing democratic government rests between limiting participation to ensure "stability and energy in government" and expanding participation to promote liberty. Disagreement over the proper balance between limiting and expanding participation was at the root of some of the most famous debates of the constitutional period. It continues to this day.

To Madison, the greatest threat to a democracy was the destabilizing potential of broad participation in government. He argued that "measures are too often decided, not according to the rules of justice and the rights of the minor party, but by the superior force of an interested and overbearing majority" (James Madison in Hamilton et al. 1961, p. 77). To mitigate the destabilizing potential of mass participation, and to protect minority interests, Madison advocated checks, balances, and a representative form of government.

All across America, and at all levels of government, the institutionalization of Madisonian ideals limited the power of the majority. In fact, these limits were so effective that over the past two hundred years, citizens have periodically felt it necessary to counteract excessive minority control. Perhaps the most important such attempt occurred at the dawn of the twentieth century. At that time, activists in many American states advocated direct legislation as a way to dilute the increasing power of narrow industry-based interest groups.

Direct legislation is policy making at the ballot box. The two types of direct legislation are initiatives (laws initiated by citizens and then put to a popular vote) and referendums (laws initiated by the legislature and then ratified or rejected by voters). Direct legislation's early advocates argued that allowing citizens to make policy would shift the balance of power from narrow economic interests to broader-based concerns. These early advocates emerged from and embodied several different reform movements.

In the late nineteenth century, the Populists mobilized in reaction to rapid industrialization and consequent economic dislocation. The Populists argued for a simpler, nonindustrial way of life, promoting laws that benefited agrarian and nonindustrial interests such as public ownership of the railroads and a graduated income tax. The Populists claimed that because the major political parties were beholden to corporate interests, they would block any attempt to reverse the effects of industrialization. To circumvent the parties, the Populists advocated direct legislation as a way to empower "plain people" to pass these policies.

A decade or so later, the Progressive movement emerged in the American West and Midwest. Like the Populists, the Progressives were concerned about the increasing political power of concentrated wealth. They claimed that corporate money in politics corrupted politicians, parties, and the political process. They advocated direct legislation as a way to neutralize corruption and to pass laws that promoted middle-class values.

Although the Progressive goal of reducing corruption differed significantly from the Populist goal of returning to a simpler way of life, reformers from both movements were motivated by a common belief that narrow economic interests made state legislatures unresponsive to broader interests. Both saw the promise of direct legislation as providing citizens with a means for regaining control of the legislative process. Since its inception, however, many observers have questioned whether this promise has been met. Contemporary observers argue that just as wealthy interests manipulated state legislatures early in this century, their modern counterparts manipulate direct legislation today (see, e.g., California Commission on Campaign Financing 1992).

The evidence most often offered in support of these claims is the enormous level of spending in direct legislation campaigns. In the 1988 California general election, for example, supporters and opponents of the twenty-nine statewide ballot propositions spent over $129 million to promote their causes (California Fair Political Practices Commission 1988b). Critics were outraged, calling the level of spending "obscene" and "scandalous." But the 1988 election was no anomaly. Viewed from a longer time perspective, we see that 1988 reflected the continuation of a spending trend that began in the late 1970s. In 1976, proponents and opponents spent approximately $9 million on statewide initiative campaigns in California (California Commission on Campaign Financing 1992). By 1986, this figure grew to $34 million. Spending peaked in 1988 and 1990, with $127 million and $110 million spent, respectively. Although spending on initiative campaigns has dropped off to some extent since 1990, it continues well above its pre-1988 levels. Spending in other states has reached staggering levels as well. Proponents and opponents spent more than $15 million in the campaigns for and against Washington's twelve initiatives between 1990 and 1994 (Washington Secretary of State 1990–1994). Average per-measure spending on Michigan's four statewide initiatives in 1992 was more than $5 million (Michigan Secretary of State 1992).

These expensive campaigns have led some critics to suspect that wealthy interests are using direct legislation to buy favorable policy at the ballot box. They fear that, despite the efforts of the Populist and Progressive reformers, the balance between citizen and economic interests has shifted too far in the direction of the economic interests. According to this view, direct legislation has paradoxically become a powerful instrument of wealthy interest groups rather than a popular balance against these groups. As Larry Berg and Craig Holman wrote, "the initiative process tends to become an instrument of the same special interests it was originally intended to control" (quoted in Los Angeles Times 1988). And as pollster Mervin Field exclaimed after the 1994 election, "The initiative process is now at odds with its original purpose—the special interests have taken over" (Roberts 1994). From this perspective, the populist paradox—the alleged transformation of direct legislation from a tool of regular citizens to a tool of special interests—undermines the promise of popular policy making at the ballot box.

But something is missing in these accounts of gloom and doom. Besides journalistic speculation and some colorful anecdotes, there is little systematic evidence about the relationship between money and interest group power in the direct legislation process. As a result, many important questions remain unanswered.

• Can wealthy interest groups use direct legislation to affect public policy?

• What factors enhance or inhibit their influence?

• Can narrow economic interest groups use direct legislation to pass laws that are detrimental to broader interests?

• Can the involvement of wealthy interests have favorable consequences?

• Finally, is the populist paradox reality or illusion?

The purpose of this book is to answer these questions by studying the role and influence of interest groups in the direct legislation process. Such a study is needed because the populist paradox is, at its core, the belief that economic interest groups use direct legislation to the detriment of other interests. To determine the extent to which this belief is valid, it is therefore necessary to understand how interest groups, particularly economic interest groups, can and cannot use direct legislation to influence policy.

A critical part of my argument is that it is a mistake to equate money with influence in the context of direct legislation. Without a doubt, organized interests, especially business interests, now play a greater financial role in the direct legislation process than at any other time in history. Big spending, however, does not necessarily imply big influence. To pass initiatives and referendums, interest groups must be able to mobilize an electoral majority. As wealthy interests such as the insurance industry, trial lawyer associations, and tobacco companies have recently learned after expensive defeats at the ballot box, if voters do not like what initiative proponents are selling, not even vast amounts of campaign spending can get them to vote for a new policy. This is not to say that money is irrelevant in the direct legislation process. Rather, my argument is that the relationship between money and influence is far more complex and more limited than many observers believe.

In the following section, I outline a theory of interest group influence. The theory is based on five simple premises that clarify the relationship between money and influence in the direct legislation process. From these premises, I deduce a set of conclusions about how and when interest groups can use direct legislation to influence policy. The main conclusion I derive is that, contrary to popular opinion, economic groups generally do not possess the resources to overcome some of the most important hurdles to success in the direct legislation arena. I conclude that economic interest groups are therefore severely constrained in their ability to use direct legislation to the detriment of broader interests.

A Theory of Interest Group Influence

Premises

My theory is built on five basic concepts or premises. My first premise (explored in depth in chapter 2) is that groups choose between numerous possible forms of influence and specific direct legislation strategies. I assume that interest groups in the direct legislation process are analogous to profit-maximizing firms as they are characterized in microeconomics. Like firms, interest groups have the goal of changing an outcome (i.e., influencing policy). Like firms, they can achieve their goal in several ways (i.e., they can choose from among different political strategies). And like firms, an interest group's resources determine which political strategies it can afford to pursue and whether the interest group achieves its goal.

The profit-maximizing firm analogy is useful because it emphasizes the constrained maximization problem that both interest groups and profit-maximizing firms confront. Interest groups attempt to maximize their political influence by choosing between alternative political strategies and forms of influence. Firms attempt to maximize profits by choosing between alternative modes of production. Both interest groups and firms evaluate the expected costs and benefits of alternative courses of action and choose those that promise the greatest net benefits. As with firms, uncertainty and limited resources restrict a group's ability to identify and pursue an optimal political strategy.

Differences between firms also help to highlight differences between interest groups. For example, some firms have a comparative advantage at raising capital, whereas others have a comparative advantage in mobilizing labor. These respective advantages should influence a firm's decisions about how to conduct its business. For example, firms that can raise money are more likely to benefit from involvement in capital-intensive activities. Interest groups differ in analogous ways. Economic-based interest groups have a comparative advantage at raising the funds required to buy television time, contribute to campaigns, and hire consultants. Broad-based citizen groups, by contrast, may have a comparative advantage in motivating the political equivalent of labor: voters and, ultimately, electoral support. These respective advantages should affect interest group decisions about how to influence policy.

My second premise (chap. 2) is that interest groups use direct legislation to achieve one of four forms of influence. Groups may attempt either to modify the status quo (i.e., replace the existing policy with a new one) or to preserve the status quo (i.e., protect existing policy from someone else's attempt to change it). Groups may modify or protect the status quo either directly, by prevailing at the ballot box, or indirectly, by pressuring other actors to modify or preserve policy for them. In sum, the combination of these two components results in four forms of influence: direct modifying, direct preserving, indirect modifying, and indirect preserving.

My third premise (chap. 3) is that institutions and the behavior of other actors create hurdles that groups must clear if they hope to influence policy. Examples of these hurdles include drafting a measure, qualifying a measure for the ballot, and running a winning campaign. To achieve a given form of influence, groups choose strategies that involve overcoming some or all of these hurdles. Strategies for changing the status quo include proposing an initiative, forming a committee to campaign in favor of an initiative proposition, contributing money or volunteers to an existing campaign committee, and publicly endorsing an initiative. Strategies for preserving the status quo include proposing a referendum to negate legislation the group opposes, proposing a "killer" initiative to prevent passage of an unfavorable measure already on the ballot, forming a committee to campaign against an initiative, and contributing money or volunteers to an existing committee opposing an initiative.

My fourth premise (chap. 4) is that groups need particular resources to clear the hurdles associated with a given strategy. These resources include monetary resources such as cash and other financial assets and personnel resources such as members, volunteers, and experts. Different strategies require different resources. To overcome the hurdles associated with some direct legislation strategies, groups must expend monetary resources. To overcome the hurdles associated with other direct legislation strategies, groups must expend personnel resources, whereas to overcome the hurdles associated with still other strategies, groups can employ either monetary or personnel resources. The type and amount of resources a group requires to achieve influence depends on the form of influence it seeks to achieve and its relationship with other policy actors (especially voters and state legislators).

My fifth premise (chap. 4) is that groups have comparative advantages in mobilizing the different resources required by direct legislation strategies. A group's ability to mobilize monetary and personnel resources depends largely on its membership composition. Groups whose members are primarily firms and organizational representatives can more easily mobilize monetary resources, whereas groups whose members are primarily autonomous individuals can more easily mobilize personnel resources. A group's resources will affect the strategies it can choose, the difficulty of clearing the hurdles associated with those strategies, and, as a result, the forms of influence it can have.

Conclusions

My premises generate a set of conclusions about interest group strategies and influence. If citizen and economic interest groups have the comparative advantages described above, then I expect to observe the following patterns between group resources and strategies. Because citizen groups tend to have the personnel resources required to mobilize broad-based electoral support, they are better able to amass an electoral majority. When they have sufficient capital to participate at all, I therefore expect citizen groups to employ strategies aimed at proposing and passing new initiatives. Economic interest groups, by contrast, should anticipate a more difficult time using their resources to achieve victory at the ballot box and should instead pursue largely defensive or indirect strategies. Analyzing surveys of interest group activities and motivations, as well as campaign finance data from 161 initiative and referendum campaigns in eight states, I find strong empirical evidence in support of these theoretical conclusions. Citizen groups report using the direct legislation process to pass new laws and contribute to campaigns to support new initiative legislation. Economic groups report using the direct legislation process to pressure the legislature and direct a large share of their financial resources to opposition campaigns. I present these empirical results in chapter 5.

I expect these patterns of interest group behavior to translate into patterns of policy outcomes. Specifically, I expect the laws that pass by initiative to reflect the interests of citizen groups that use the process to achieve direct modifying influence. I expect the laws that fail to reflect economic group interests. I also expect legislatures in initiative states to respond to interest group pressures by passing different laws than do legislatures in noninitiative states. Further analyses of the campaign finance data, plus comparisons of policies in the fifty states, provide strong empirical evidence that is consistent with these expectations.

Together, these theoretical and empirical results show that citizen and economic interest groups use direct legislation for different purposes and to different ends. The largely conservative and indirect influence by economic interest groups is a form of influence much different from—although perhaps no less important than—the one portrayed by modern critics of direct legislation.

(Continues...)

Excerpted from THE POPULIST PARADOXby Elisabeth R. Gerber Copyright © 1999 by Princeton University Press. Excerpted by permission of PRINCETON UNIVERSITY PRESS. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Edition details

• Publisher: Princeton University Press
• Publication date: 1999
• Language: English
• ISBN 10: 0691002673
• ISBN 13: 9780691002675
• Binding: Paperback
• Number of pages: 188