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Citizens United and the Myth of a Conservative Corporate America

July 12, 2010 3 comments

In my previous post, I looked at the ideology of Google’s employees and board of directors. I have since extended the analysis to board members from twenty major U.S. corporations, including the top ten corporations on the Fortune 500 list. The ideological measures include information from all contributions to state and federal candidates as well as contributions to party and ballot committees. Nearly all members of major corporate boards have made political donations in some form of another. Overall, I was able to estimate positions for about 90 percent of board members from their contributions to candidates or party committees between 1992 and 2008.

The graph below displays the ideological positions of members grouped by corporation. Each row represents a corporation and the points along the line are the locations of its board members. The point size represents the log-scaled total amount given. In addition to the board member positions, I included the median position for each corporate board (black triangles).

These results challenge conventional beliefs about the political leanings of corporate leaders. Republicans have long been seen as the party of big business. To whatever extent this label should apply, it probably owes more to the party’s policies than the composition of its support base. Although board members from some sectors exhibit conservative allegiances—notably the oil, gas, and coal industries—most corporate boards are either dispersed across the ideological spectrum, or seem to have aligned with the left, as is the case of many of the growth stories of the new economy. To provide some context, an ideal point at zero places a contributor directly at the political center, almost exactly at the midpoint between the mean Republican candidate and the mean Democratic candidate. The median ideal point is 0.12 for board members from the top ten corporations on the Forbes 500 list, and is -0.03 for a not quite random sample of 409 board members from other major corporations.

There has been much discussion about how the Supreme Courts’ recent ruling in Citizens United v. FEC will change how corporations involve themselves in elections. The estimates of corporate board members might provide insight on the matter. That being said, I have two preliminary predictions:

1) Corporate boards dominated by liberals/conservatives will be far more likely to become involved in partisan elections.

Boards composed exclusively of liberals/conservatives should have little difficulty agreeing on which side to support. Whatever disagreement does arise will center on whether allocating the funds is worth it. On the other hand, deciding which candidate to support could be a much more contentious issue for boards with both liberal and conservative members. Even if a clear majority agrees to support the Democratic/Republican candidate, forcing a vote would risk upsetting or alienating the conservative/liberal board members. It just does not make sense for a board to engage in partisan conflict when they could easily compromise on not spending the money on either candidate, or better yet, spending it on the type of non-partisan issue ads that are already common. Simply put, bi-partisan boards will rarely take part in partisan politics.

2) Republicans will not be the clear beneficiaries of Citizens United.

Although Citizens United has routinely been interpreted as a favorable development for Republicans, the ideological positions of board members suggest this assessment is premature and might prove incorrect. Although the survey of corporate boards is incomplete, liberals appear to control as many boards as conservatives do.

Insofar as my first prediction is correct, the preponderance of bi-partisan boards means that the corporate money flowing into elections will be closer to a trickle than a flood. If not, then perhaps it will be a relief that the ideological distribution of the people who control large corporations looks quite similar to the population at large.


The University of Google: Was the decision to exit China ideological or business as usual?

March 30, 2010 Leave a comment

After years of unease about the Chinese government’s censorship policies, Google announced this month that it would be shutting down its Internet search service in Mainland China, citing the recent cyber attacks on its systems, widely believed to have been orchestrated by the Chinese government, as “the straw that broke the camel’s back.” Instead of selling off their existing Chinese operations to the highest bidder and leaving town, Google pursued the more risky strategy of rerouting searches through its Hong Kong servers, which remain free from government censors.

Speculation surrounding Google’s motives seems to have generated as much media attention as the business implications of the fallout. While watching the story develop during the past week, I came up with three general perspectives on why Google really left China:

1) Google is making a principled stand against the Chinese government’s censorship and repression of free speech at the cost of its bottom-line;

2) Google is pursuing a strategy that appears costly in the near term but will benefit its business model in the long run;

3) Google was tired of being pushed around by what it saw as an increasingly hostile foreign government.

While it may be tempting to dismiss the first account as overly naïve, I think we would be remiss to discount the possibility that Google’s ideology was central to its decision. There are two reasons that I can think of to support this claim. The first is that Google has been upfront from the beginning that its decision had a major ideological component. In an interview with the Wall Street Journal, Google co-founder Sergey Brin invoked his personal experience with totalitarianism to characterize the decision as a principled stand against Internet censorship and government surveillance.

The second reason is that, despite its status as a Fortune 500 company, Google is among a growing group of powerful corporations closely aligned with the left. Based on my estimates, Google’s employees are the fourth most liberal of any U.S. corporation, behind Genentech, Apple Inc. and Starbucks (See figure above or click here to view in table format). A table with the  To put this in perspective, consider that during the 2008 election cycle, Google employees raised $20,800 for John McCain and $55,451 for Ron Paul; compared to $89,300 for Hillary Clinton and an astounding $803,436 for Barack Obama. In fact, in terms of political contributions, the employees at these firms more closely resemble faculty at liberal universities than traditional Fortune 500 corporations. In some ways, this makes sense. With the exception of Starbucks, each of the most liberal firms, in large part, deals in research and innovation, and each has a reputation of actively recruiting Ph.Ds.

This is the where I would usually caution against putting too much stock into what the ideology of employees reveal about a corporation’s decision-making, because it is the board of directors that ultimately decides issues of this magnitude. However, Google’s board of directors also appears to be decidedly liberal.

In total, seven members of Google’s board have contribution records that can be used to gauge their ideology. Two of the board’s members, Eric Schmidt (-0.71; view records) and John Doerr (-0.72;  view records) are major fundraisers for the Democratic Party and act as advisors to the Obama Administration. Ram Shriram (-1.78; view records) and Princeton University President Shirley Tilghman (-1.43; view records) are less active contributors but have contributed exclusively to Democrats. The only political contributions made at the federal level by Google co-founders Sergey Brin (view records) and Larry Page (view records) have been to Google’s corporate PAC. However, each has contributed heavily to California ballot initiatives. Although their ideological estimates cannot be directly compared to estimates recovered from FEC data, an ideological mapping of contributions in California places Brin and Page to the left of the average Democratic candidate for the California State Assembly. Lastly, Intel CEO Paul Otellini (0.02; view records) has given in roughly equal proportions to both parties.

Ideology aside, there is a case to be made that Google’s business model thrives on free, open and democratic societies, which is one of the arguments Google has used to justify its exit from China. It has even gone so far as to suggest to Congress that the U.S. should consider withholding development aid to counties that restrict access to certain websites. This has some merit, but it sounds suspiciously like a post-hoc rationale. While censorship is harmful to Google’s business objectives—especially the wholesale blocking of YouTube and Blogger—it is difficult to see how such laws are of a different nature than the types of regulation imposed on other industries. When faced with unfavorable regulation, as long as their operations remain profitable, corporations usually respond either by meeting the minimal requirements for compliance and lobbying for reform, or when feasible, moving their operations out of state or off-shores, which is essentially what Google ended up doing.

In the end, Google’s decision to leave China was likely a mixture of ideological and business considerations; which I think makes it much more likely that Google could actually begin exerting influence over U.S. foreign policy. A corporation’s efforts to influence policy are often most potent when its ideology and profit motives align. Perhaps the best example of this during the past century was the United Fruit Co., whose distaste for leftist regimes was matched only by its profit motive. It is the United Fruit Co. and its infamous history of involvement in Latin American politics to which we owe the term banana republic. The more idealistic view is that as Google expands, it will leave a handful of liberated Google republics in its wake. This is not the first time Google has openly defied a foreign regime. Last summer, Google rushed its Farsi translation tool to market in response to the pro-democracy protests. Then again, unlike the Chinese case, Google had little to lose by angering the Iranian government. It is an admirable thought, but making enemies of governments, foreign or domestic, has not yet proven viable as a long-term business strategy—and even Google is unlikely to change that.

Improved and Extended Industry/Occupation Plots

March 23, 2010 3 comments

I updated the industry and occupational rankings graph to include all repeat contributors in election cycles between 1990 and 2008. Anyone who has seen the previous figure will notice an overall shift the right for most industries and occupations. By including two-decades worth of election cycles, the estimates tend to smooth out the shift to the left caused by the unusually favorable climate for Democrats during the 2008 election. On the other hand, it tends to understate the extent to which certain industries have moved to the extremes in recent years.

I also added a few features to the plots in response to being rightly called out for the sloppy/incomplete presentation of the previous graph by an expert on statistical graphics. These new and improved graphs  include horizontal bars that represent the 40-60 percentile of each industry/occupation that are intended as rough measures of dispersion–most industries are bimodal, which would make wider distribution bands span nearly the entire graph, hence losing most of their informational content.  In addition, the y-axis now indicates the amount given by repeat contributors within each industry/occupation. These amounts would be much larger if non-repeat contributors were included in the sample as well.

Obviously, not all industry and occupational  categories could be included in the graphs. I plan to post a spreadsheet with a complete ranking of categories sometime in the near future.

The Dynamic French Fourth Republic

March 17, 2010 Leave a comment

As far as legislatures go, the U.S. congress has relatively stable legislative ideology. Most members of Congress adopt an ideological position upon entering Congress and maintain it for the remainder of their careers. Rarely do we see dramatic ideological shifts, and when we do, there is usually a story to explain the change—e.g. Senator Wayne Morse. This is not the case for many legislatures outside the U.S.. The French Fourth Republic was perhaps the best example. A chaotic legislature in constant motion, the National Assembly of the French Fourth Republic was well known for its dynamism and instability. A major contributing factor was the prevalence of party switchers. In fact, almost 20 percent of legislators switched parties one or more times between 1946 and the Fourth Republic’s collapse in 1958.

Below is an animation constructed from a dynamic optimal classification scaling with smoothed legislator estimates. Despite the fact that the French Fourth Republic is characterized by highly ideological voting, legislator ideal points were often subject to change, as only a fraction of members held consistent ideological positions for the duration of their careers.

(Maximize the video for best viewing. The roll call dataset is courtesy of Howard Rosenthal and Erik Voeten and is available for download here. The paper on the dynamic scaling method is available for download here.)

Watching the legislators in motion is quite a sight and makes the U.S. Congress seems somewhat boring in comparison. I’m not much of an expert on mid-twentieth century French politics, so I don’t have much commentary to add to the animation.  Although, a few things to look for are 1) early party positioning and legislator sorting in the first legislature and 2) the rise and collapse of the Gaullists during the second legislature.

Categories: Uncategorized

Ideologically aligned and ideologically divided industries

February 27, 2010 4 comments

I have been thinking lately about how the ideological distributions of individual contributors within certain industries might help illuminate the polarized state of  U.S. politics. There are two types of distributions that could implicate an industry in abetting polarization. The first distribution is what political scientists would think of as  typical of  polarization, a bimodal distribution in which individual cluster at each extreme but very few locate in the center. The second is a unimodal distribution located at either extreme. Both distributions are characterized by a preference for extreme candidates over moderates, but the former indicates that members are ideologically divided while the later indicates that most members have similar ideological positions. This distinction is interesting because there is good reason to suspect that the ideologically aligned industries interact with the political system differently than their ideologically divided counterparts.

Industries Aligned with the Left (2008)

Industries Aligned with the Right (2008)

The figures above display the ideological distributions of industries that I refer to as ideologically aligned—that is, composed of members that are ideologically extreme but skew overwhelmingly to the left or right. Living up to frequent accusations by right-wing commentators, the unholy trio of Hollywood, the print media, and academia do indeed appear to be overrun by liberals, with lawyers and online computer services (e.g. Google) not far behind. On the other end of the spectrum, members of the oil and gas, construction, insurance, agricultural and automotive industries are overwhelmingly conservative. Although the ideological orientation of these industries is not much of a surprise, the extent to which these industries favor the extreme, rather than moderate, wings of each party far surpassed my expectations. Some of the distributions more closely resemble what I would expect from occupations that were subject to the spoils system–for instance,  US postmasters prior to the Pendleton Act–than major contemporary industries with no official partisan ties.

Granted, ideologically aligned occupations are not the norm. Most industries have enough members on each side of the spectrum to be distinctly bimodal. Some of these industries have distributions that lean heavily in one direction or the other, while others are more balanced. Health care professionals, real estate, investment bankers, and commercial bankers, each at the center of recent political battles over government intervention and reform, are perhaps the best examples of deeply but roughly evenly divided occupations.

Ideologically Divided Industries (2008)

So what might we take away from this? Ansolabehere, De Figueriedo and Snyder (2003) have argued that the increasing proportion of campaign funds raised from individual contributors has helped safeguard our democracy by counteracting the influence of special interests and their PACs. This line of argument help push  provisions in the Bipartisan Campaign Reform Act that froze the contribution limits for PACs at $5000 per election, while doubling the contribution limit for individuals to $2000 which was thereafter pegged to inflation.

The existence of ideologically aligned industries brings pause to the notion that money raised from individuals is somehow less corrupting or less  influential than money raised from PACs. Insofar as candidates are able to identify those industries vital to their fundraising efforts, why would the incentives to support policy that favors growth in those industries be all that different because the money came from individuals rather than PACs?

Strangely enough, the comprehensive disclosure requirements for individual contributors may have had an effect opposite its intention. Rather than serving primarily to stymie backroom quid pro quid deals, it may have helped solved a coordination problem between legislators and aligned industries, by providing the means for those occupations to signal that enacting policy that favors their industry will fill their preferred party’s campaign coffers while only making a dent in the opposition’s coffers. This may seem less insidious than deals hashed out smoke-filled rooms, but as far as the public is concerned, the effects on policy probably are not all that different.

Ideologically aligned industries might also fan the flames of polarization by encouraging politicians to write-off entire industries as their de-facto opposition. This could manifest itself in mostly harmless ways. For example Senator McCain can get away with dusting off his favorite (and only?) lawyer joke on late night talk shows and stump speeches, while a cash-strapped Democratic presidential hopeful would be better advised to stump against corn subsidies on public health grounds than deride lawyers or other professionals.

Nevertheless, it could also rear its ugly head in policy disputes. Consider the ongoing fight over healthcare. Tort reform is one of the few clear opportunities for bipartisanship. Despite Republicans having oversold tort reform as a solution to keeping health care down costs, such reform would have at least had a marginal effect on costs and would have made the health reform bill much more attractive to the medical industry. (One recent survey found 92 percent of doctors in favor of malpractice reform, while 85 percent reported that the threat of malpractice lawsuits has prevented them from practicing medicine properly—it was commissioned by Jackson Health Care Services, so I would take the results with a grain of salt. A more direct estimate of the potential savings from health care tort reform can be found in the NYT’s Economix blog.) Yet Democratic lawmakers have continually dismissed tort reform with the flimsy explanation that medical malpractice is not a big deal because it only constitutes about 2-3 percent of medical costs. This is despite the notion that tort reform seems to be a natural complement to the White House’s early proposals to eliminate waste by freeing doctors to perform tests only when they deem them medically necessary rather resorting to “defensive medicine” to minimize legal liability.

One question to ponder is whether ideologically aligned industries have contributed more to the pattern of polarization than ideologically divided industries. My initial thought on the matter is that ideologically aligned industries have help blaze a path for congressional polarization by supporting extreme candidates while other industries merely responded to the increasingly polarized candidate pool. Once I have a scaling that includes a time-trend of all election cycles going back to 1980, it should be possible to track how the ideological distributions industries have changed over time and examine whether some industries acted as a catalyst to polarization while others merely adjusted to it.

Polarization in the Senate: How much is a lack of manners to blame?

February 22, 2010 1 comment

There has been much talk as of late about what has caused politics in this country to become so polarized. The political science literature usually points to changes in procedural rules, regional sorting,  a rise in economic inequality, extremism of party activists, and to a lesser extent, redistricting to explain the rise in polarization. However, the word on the street seems to be that Congress polarized because members from opposing parties no longer invite each other over to dinner. At least that is what Evan Bayh—the soon to be former senator from Indiana, who is also a son of a senator with the uncommon experience of taking up their fathers’ profession—had to say about it in an op-ed published in the NYT on Sunday. We political scientists tend to chalk up this account as something akin to pop-psychology, but given the level of genuine animosity apparent in Congress it is hard to see how it has not taken a toll, even if we lack sound methods to measure it.

One way to get a rough gauge of how the decline in bipartisan manners may have contributed to polarization is to look at how periods marked by bitter partisan disputes affected voting behavior of the parties. In order to get a measure of this, I use estimates from a roll call scaling method described here that uses kernel methods to smooth legislator trends over time. This makes it possible to track how polarization changes from one day to the next, in contrast to DW-NOMINATE, the only widely used estimation technique that allows for inter-temporal movement of ideal points, which only recovers a single estimate for each two-year Congress.

The figure above shows that day-by-day polarization trend closely tracks the corresponding DW-NOMINATE trend. Both trends tell a similar story in the long run: polarization reaches a low-point around the 90th Senate (1967-1968) and steadily increases in the following decades. At the same time, the day-by-day trend reveals that political polarization varies considerably between elections.

The next figure magnifies the polarization trend for the period between the 103rd and 109th Senates so that it is possible to view how Senate polarization responds to political events. There are three notable events that affect the polarization trend. The first event occurs during the 104th Congress and corresponds perfectly with the federal government shutdowns that resulted after the Republican controlled Congress failed to pass a budget bill. The second event is Senator Jeffords’ decision to switch parties during the 107th Senate, which was followed by a sharp decline in polarization. The third notable event is the rapid rise in polarization during the run up to and through the early months of the Iraq War. In December 2003, this trend abruptly ceases and then falls, corresponding with the capture of Saddam Hussein.

Some of the events seem to have lasting influence. This is best exemplified by the jump in polarization corresponding with the 1995 government shutdown. Rather than observing a spike in polarization that quickly returns to its previous level, the trend remains at its heightened level, perhaps, as Senator Bayh has suggested, as a result of increased animosity that weakened bipartisan goodwill.

Interestingly, despite my initial expectation that Clinton impeachment trial had increased polarization, in his op-ed Senator Bayh points to the impeachment trial as the one of the two instances (the other being September 11th) where all senators gathered for something other than purely ceremonial occasions and as a highlight of bipartisanship during his twelve years in the Senate:

All of us gathered in the Old Senate Chamber. For several hours we debated how to proceed. Finally, Ted Kennedy and Phil Gramm, ideological opposites, were given the task of forging a compromise. They did, and it was unanimously ratified.

This might offer some context as to why the polarization trend is in decline during that period. It also paints the somewhat paradoxical picture where a Senator best known for his consistently liberal voting record was also one of the most potent de-polarizing forces in the Senate. Although there is no way to know, something tells me that had Ted Kennedy not passed away last summer there would be much less talk at the moment about reforming the filibuster.

What the ideological content of contribution records tells us about the 2008 Presidential Election

February 20, 2010 2 comments

Regardless of one’s beliefs about how the 2008 Presidential Election ranks among other historic elections, it was certainly the most active and actively watched money race in the nation’s history. The $1.75 billion raised by presidential hopefuls from both parties more than doubled the amount raised during the 2004 Presidential Election. The surge of candidates declaring their intentions to run within months of the 2006 Midterm elections and the storied showdown between the Obama and Clinton campaigns for the Democratic nomination led to a primary season that started earlier and ended later than any in recent memory. All of this provided a seemingly endless stream of contribution data that, among other things, is ideal for tracking the ideological progression of the candidates over the course of the election. The figure below combines the IMWA with smoothing techniques to get an idea of how the election progressed.

Ideological Progression of Candidates during the 2008 Presidential Election: The presidential candidate trends are estimated in a two-step process. This first step recovered ideological estimates from an IMWA scaling that included all contributions from the 3125 PACs and 131,000 individuals that gave to two or more federal campaigns during the 2007-2008 Election Cycle. Holding the contributors estimates static, the presidential candidate trends are then smoothed over time using locally-weighted regression (LOESS) with a span of .3.

Although the plot largely speaks for itself, there were a few features that caught my attention. The first is that, with the exception of Biden and Richardson, the Democratic candidates generally maintain a consistent rank ordering, whereas the ordering of the Republican candidates is much more chaotic. The second point of interest is the Obama campaign’s move to the center during the run-up to the general election. I would venture to guess that this was this was the combined effect of Sarah Palin’s VP nomination and the financial meltdown, but that is just speculation.

Ideological rankings of occupational categories

February 19, 2010 12 comments

The FEC requires any individual that makes a contribution of $250 or more to a PAC or candidate to disclose his or her occupation and employer.  This bit of information is probably the easiest to leave blank or just intentionally ambiguous—for instance, writing down ambiguous job titles such as ‘self-employed,’ ‘businessman, or ‘internet warrior.’ Regardless, the disclosure rate for occupations generally hovers around 90 percent.

Combined with the procedure described the previous post, this allows for interesting comparisons of ideological giving patterns across industries/professions.As a first cut, I recovered ideal point estimates for the 3125 PACs and 131,000 individual contributors that gave to two or more unique candidates during the 2007-2008 election cycle and scaled them using the IMWA procedure. The figure below ranks a subset of occupations from left to right based on the mean ideal point of the members of each occupation. As a point of reference, the occupation ideal points are imposed over the density plots for all Democratic and Republican candidates.

Update: Improved versions of the graph that include all repeat contributors during the 1990-2008 election cycles are posted here.

Categories: Uncategorized

How to Construct an Ideological Map of Candidates and Contributors using Campaign Finance Records

February 15, 2010 Leave a comment

Partisan giving rates have long been the standard measure of contributor ideology. Measured simply as the percentage of funds a contributor gives to Republicans/Democrats, the partisan giving rate is a straightforward, easy to understand and generally useful measure of contributor ideology. Although it is a great place to start, it is a far rougher approximation of ideology than most people realize.

In their book Polarized America, McCarty, Poole and Rosenthal (MPR) introduce a method of recovering the ideology of contributors that does away with the partisan assumption without introducing a handful of more complex assumptions in its place. Rather than assume all members of each party shared a single point in ideological space, they used as starting points the ideological scores of each Congress member, as reveal from Congressional voting records via their DW-NOMINATE method. This relaxes the assumption that Tom Coburn and Olympia Snowe are ideologically indistinguishable—the same being true for Dennis Kucinich and Ben Nelson, for that matter. By first ordering Congress members along the liberal/moderate/conservative spectrum, MPR can then look at the contribution profiles of each contributor and construct an ideological score based on money-weighted averages of the recipients’ ideology. For example, if a contributor gave $1000, $500, and $1500 to three Democratic candidates with the respective ideal points of -0.5, -0.1, and -0.4, the ideal point estimate given to that contributor would be:

(-0.5*1000 + -0.1*500 + -0.4*1500)/(1000+500+1500) = -0.383.

MPR’s method of estimating the ideal points of contributors is a simple yet powerful tool. Nonetheless, its reliance on DW-NOMINATE scores limits which contributors and candidates can be included in the model as well as what we can take away from the results. Notably, it excludes contributions to unsuccessful candidates that never hold office and compile a voting record.

The Iterated Money-Weighted Averaging  (IMWA) procedure takes the MPR procedure a few steps further. If we can estimate the ideological positions of contributors based on the ideology of the recipient candidates, there is no reason why we cannot simply flip the procedure on its head and recover ideological estimates of candidates based on the ideology of their financial supporters. This results in a more inclusive ideological map of campaign finance that is not reliant ideological scores of candidates recovered from voting records.

The algorithm is as follows:

1) Set the ideal points of all Republicans candidates to 1, Democrats to -1, and independents to 0.

2) Estimate contributor coordinates as a function of the money weighted averages of their contributions.

3) Estimate legislator coordinates as a function of the money weighted averages of their contributors.

4) Normalize legislators to have a mean of 0 and a standard deviation of 1.

5) Go to step 2; repeat until convergence.

To illustrate, I include results from a scaling of the 2008 Election cycle that uses data from all individuals and PACs that contributed to two or more unique candidates. The figure above compare the ideological distributions of lobbyists, an important category of individual contributors, first derived from the partisan measure and then from the IMWA measure. The partisan measure lumps most lobbyists at either 0 or 1, representing the preponderance of partisans lobbyists that give exclusively to Democrats or exclusively to Republicans.

The IMWA estimates provide a much more fleshed-out portrayal that should lead to more informed inferences. For example, while lobbyists are clearly polarized, the IMWA distribution reveals that lobbyists are not as polarized as the partisan measure suggests. In fact, lobbyists are one of the least polarized industries. It also appears to be the case that liberal lobbyists are more dispersed than their conservative counterparts on K Street. In other words, the IWMA estimates are better able to account for something that is painfully obvious to anyone who follows politics, that ideology is not uniform across members of the same party or their supporters and that it is possible for one party to be more dispersed than the other.

The “no frills” IMWA method is not the only way to construct an ideological map of campaign finance. There are plenty of alternative approaches, most some slight variation on correspondence analysis, although more sophisticated statistical methods exist as well. The take-away is that no matter how one slices it, campaign finance data is rich in ideological content waiting to be unlocked and explored.