There is an important divide running through the middle of Democratic policymaking that gets very little attention, but may be as important as the much more well-discussed ideological, generational or regional divides. It is a battle between views I would describe as pluralist versus technocratic.
Let me take a moment to go into Political Theory 101, I promise I will get back to real life issues like health care and banking policy soon.
Fundamental to the early political theory about how a new form of government like a democratic republic would operate was the idea of pluralism. James Madison, Alexander Hamilton, and John Jay made is a cornerstone of their arguments for the new constitution in the Federalist Papers in the late 1780s. The basic idea was that a democracy could avoid slipping into tyranny because of competing power centers--big states vs. small states, cities vs. rural areas, regional vs. region, banks vs. creditors, etc. Now unfortunately, the only people they cared about having any power were white men with property like themselves, but nonetheless the theory in general stood the test of time. And as more people gained the right vote, and unions and other progressive movements and groups sprung up to compete with business groups, the country's political system grew generally fairer and more stable over much of out history.
There have been some significant problems with the theory, though. The most egregious of those was the massive, horrible corruption of slavery and then Jim Crow which so poisoned and perverted the American system that it resulted in the Civil War and violent fascism of the Jim Crow system of government, which stunted the South politically and economically for 90 years. Pluralism works reasonably well when political power is distributed widely and relatively equally, and slavery/ Jim Crow were obviously huge distortions of that principle.
The problem isn't just that some people and institutions have too little power. In fact, it is probably an even worse problem when some have too much. That caused the distortions to the economy and the corruption of the political system in the gilded age of the late 1800s, and that is the biggest economic and political problem we face today. As in the Gilded Age, some industries have quite simply become too powerful, and are distorting both our politics and our economics. Wall Street and health insurance companies are at the top of the list in terms of this problem.
This is where the divide I was talking about technocrats and pluralists come into play. Democratic pluralists believe that you can't just solve problems only with regulations, because industries that are too big and too politically powerful (the two usually go together) will find ways through clever lawyers and sheer market power around those regulations or, most likely, will just chip away at them year by tear through their political strength. That's why you need to find very significant checks on the power of these big businesses.
Technocrats, on the other hand, believe that they have the ability to write strong enough regulations or clever enough formulas to shift the marketplace away from doing unhealthy things. If you have been following the debates about health care and banking issues, you probably know where I am headed with this. The problems of distorted pluralism is why people like myself feel so strongly that health insurers need a public plan to compete with them, and that the too big to fail financial conglomerates need to be broken apart. If you leave these institutions in place without shifting the power dynamics, they will sooner or later- and very likely sooner- be able to manipulate either the market or political system to their favor, and hurt consumers and the broader economy in the process. That is why power dynamics have to part and parcel of policy discussions.
Policy wonks frequently don't understand this essential principle, but those of use who do politics for a living know it's an essential truth. An institution with no check on its market or political power will not let a few regulations get in its way for long. They will construct new legal theories around the regulations, they will get members of Congress to insert laws weakening the initial regulations into obscure appropriations and conference bills, they will cultivate and/or intimidate the regulators or sometimes just get them changed. In the case of health insurers with no serious competition, they will just keep raising rates year after year, and if a competitor doesn't have sufficient market power, they will find ways to crush them as sure as the robber barons of the 1880s crushed their small business competitors.
For health reform or banking reform to work, you have to restructure the current system so that there is a significant check on the industry's power. President Obama on one level understands this as a former community organizer, which is why he proposed a public option in the first place, but he has way too many technocrats working for him who don't understand it. It's time for him to go back to his community organizing roots, and start putting in place things that reduce big business power.
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