Partisan Politics In The Global Economy

This book discusses the future of the nation-state in a world of global markets. Unlike most studies asserting that global markets dominate national politics, this book argues that countries still possess considerable autonomy over policy choices. Furthermore, citizens’ demands for government protection from market forces (economic insecurity) are rising, while countries with strong trade union movements that can restrain the wage demands of workers (corporatism) are attractive to investors. As a result, there is still a viable leftist alternative to the free market in the global economy.

“This bold and exciting book challenges conventional wisdom concerning the impact of globalization and argues that the prospects of social democracy are much better than most of us have supposed. Garrett’s analysis bridges the analytical concerns of comparative and international political economy, and exemplifies state-of-the-art methodology in these academic fields. A tour de force on several counts, Partisan Politics in the Global Economy is a book that we will be talking about for many years to come.” Jonas Pontusson, Cornell University

“Partisan Politics in the Global Economy brings theory and data to bear on the common assertion that today’s levels of international economic integration have made national politics and policies irrelevant or impossible. In it, Geoffrey Garrett argues forcefully that domestic partisan politics, labor market institutions, and other forms of social organization continue to have an important impact on economic policy and performance in the advanced industrial countries. The book cogently addresses the crucial question of how the international economy affects domestic politics, and provides a powerful statement of a convincing perspective on this issue.” Jeff Frieden, Harvard University

“In this richly empirical study, Geoffrey Garrett explodes popular shibboleths about the irrelevance of state policy in an era of globalization. Although Partisan Politics in the Global Economy contains as many questions as answers, it suggests that the death of European social democracy has been greatly exaggerated, and that at least through the 1980s democratic publics retained significant scope for macroeconomic choice. Any student of the world economy needs to come to terms with the arguments in this book.” Robert O. Keohane, Duke University

“…The clarity of the book’s organization and the breadth of its analysis are likely to make this volume a focal point for research in the politics of open economy macroeconomic policy for years to come.” William Roberts Clark, Political Science Quarterly

The Political Economy May Have Just Hit Its Recession

Joe Biden’s campaign reported $10 million raised in the second quarter from donors giving less than $200. | Mandel Ngan/AFP/Getty Images

Candidates for office were practically swimming in grassroots money over the last few cycles, as politics increasingly went online and the money followed.

This cycle, the well is drying up.

A POLITICO analysis of federal campaign finance data found a dramatic downturn in small-dollar donations across the board.

The Democratic Congressional Campaign Committee reported raising $15.2 million from donors giving less than $200 through the end of June, compared to $23.5 million over the same period two years ago and $19.5 million in 2019. The National Republican Congressional Committee’s fundraising from small-dollar donors similarly dropped to $7.1 million through the end of June compared to $20.6 million two years ago and $8.7 million in 2019.

On the presidential level, Joe Biden’s campaign reported $10 million raised in the second quarter from donors giving less than $200, less than half of what the previous two incumbent presidents had raised at this point in the cycle. For Florida Gov. Ron DeSantis, the GOP presidential field’s top fundraiser in the second quarter, just $3 million out of $20 million raised came from small-dollar donors.

Though candidates are optimistic the small-dollar energy will return as the campaign season heats up, a sudden shortfall in grassroots giving would signal a tectonic shift in politics. The flow of this cash has made political stars of outsiders, and given campaigns a cushion when big donors tap out.

Now, politicians may need to look for other ways to stuff their campaign coffers.

“It’s going to be a problem for everybody, you just have to find a way to get through it,” said Rep. Byron Donalds (R-Fla.), who attributed the trend to the effects of inflation.

Until this cycle, small donations had been rocketing upward, reshaping political fundraising. But the dropoff is unlikely attributable to any one factor. Republicans tend to blame inflation. Democrats say their followers are giving in other ways. Fundraising professionals point to the relative calm of politics compared to crisis-level political events that drove online donations in the past. One explanation seems to be the nature of fundraising itself.

“I have heard from folks on the ground in my district about fatigue with emails and texts,” said Rep. Veronica Escobar (D-Texas), who added that “really aggressive” fundraising campaigns can sometimes backfire.

Some fundraising professionals have raised concerns about decreased effectiveness of online fundraising tactics as voters become inundated with emails and text messages and campaigns have relied more heavily on email list rentals. At a minimum, the ease of communication creates more competition between campaigns.

Still, Escobar, who is also a Biden campaign co-chair, and others are optimistic that donors would return as campaigning picks up in earnest.

“As we lean on the issues important to the American people, we are going to see that engagement go back up,” Escobar said.

Democrats have long held an advantage among online donors — ActBlue, the lead Democratic grassroots fundraising platform, had 7.4 million distinct donors during the 2022 cycle. Its Republican counterpart, WinRed, had just 2.5 million that cycle. This dynamic is replicated in campaigns and aligned groups — and remains true even as funds fall across the board.

Biden’s campaign pointed to signs of optimism, including that 30 percent of donors did not give to the Democrat’s 2020 campaign, as a sign that he is tapping into a new audience.

Though Trump hasn’t yet released his small-dollar information, which goes through a joint fundraising committee that will file at the end of the month, he is likely doing much better than his GOP rivals. Among those with a federal donation history, the trend compared to previous cycles is apparent. Sen. Tim Scott (R-S.C.), who has a reputation as an exceptionally strong GOP small-dollar fundraiser, pulled in $1.2 million from donors giving less than $200 in the second quarter. That’s far behind the $4 million he raised from them in the same period in 2021 as a Senate candidate.

Meanwhile, an analysis of all House and Senate campaigns from Middle Seat, a Democratic fundraising and digital firm, showed grassroots giving down nearly 50 percent compared to the first half of 2021.

NRCC Chair Richard Hudson said they are working on a plan to boost small dollar fundraising, but seemed to manage expectations on grassroots energy returning. | Meg Kinnard/AP Photo

The drop in grassroots donors may mean parties have to get creative about the battle for the House. NRCC Chair Richard Hudson (R-N.C.) said they are working on a plan to boost small dollar fundraising, but seemed to manage expectations on grassroots energy returning, citing the effects of inflation.

“We’re just careful not to overextend ourselves and to continue to grow our fundraising base, just knowing that the huge amount we raised pre-economic downturn is not going to come back right away,” Hudson told POLITICO.

Although inflation dropped to its lowest level in two years this month, it remains above pre-pandemic levels. The most common occupation listed in FEC reports is “retired,” and retirees are more likely to be affected by the rising prices while not benefiting from similarly rising wages, said Kenneth Pennington, cofounder of Middle Seat, the Democratic firm that found the drop in small-dollar giving to congressional committees. Pennington also noted that nonprofits had similarly struggled to maintain fundraising — suggesting the decline in donations may not be just about politics.

But for Democrats, the current political climate (not just the economic one) is not as conducive to grassroots giving as past cycles. The party raked in cash after the Dobbs decision last year (when inflation was even higher), and benefited financially from Trump’s presence in the White House.

So too did Republicans themselves. Trump’s fight to overturn the results of the 2021 election dominated GOP fundraising appeals in 2021, driving record fundraising then. Trump himself has said that the multiple indictments he faces are great for juicing his fundraising. But the energy of the past to cycles does not seem to be matched so far.

“Voters are looking at the likelihood of a Trump-Biden rematch and don’t seem to be excited about that,” said Eric Wilson, a Republican digital strategist. “Enthusiasm is down.”

Campaigns are still looking to leverage smaller moments that might motivate their donor bases. A Biden campaign spokesperson pointed to Trump’s CNN Town Hall and DeSantis’ buggy Twitter campaign launch as events the campaign had successfully leveraged with small donors. So-called “Dark Brandon” merchandise — a riff on an internet meme featuring Biden with laser eyes — has also been the best-selling online, the campaign said.

Ironic memes can also help make up the difference. This week, Biden’s campaign blasted a fundraising pitch via text messages and email featuring a video effectively narrated by Rep. Marjorie Taylor Greene (R-Ga.) seeking to attack Biden on policy issues, including comparing him to former Presidents Lyndon B. Johnson and Franklin D. Roosevelt. Across all platforms, the video was viewed more than 53 million times as of Thursday.

China’s Economy Is Slowing. Is The Political Economy To Blame?

According to Adam Posen, it’s been difficult for China’s leaders to re-establish trust after the implementation of zero-COVID. “We’ve already seen leaders from the Communist Party around President Xi Jingping say, ‘Oh, no, we want a vibrant private sector in China, said Posen. “But it’s hard to be credible once you get to that point.” Ken Ishii-Pool/Getty Images

While it’s been a little over seven months since the end of China’s zero-COVID policies, the Chinese economy has not come roaring back as expected. Instead, there are signs of a slowdown with even more turbulence ahead: Exports plummeted in July, and China’s National Bureau of Statistics announced Wednesday that consumer prices also fell, causing some to fear the country could be headed toward a deflationary spiral.

The problem might lie with China’s political economy and the implementation of the zero-COVID policies, wrote Adam Posen, president of the Peterson Institute for International Economics, in a Foreign Affairs article.

“That zero-COVID policy, as implemented in China, made things feel very insecure for average Chinese people in their livelihoods and their assets,” Posen said. “People are abjuring things like durable goods, purchases, investment in small business, stuff that ties up their assets, and they’re preferring things that feel safer and more liquid, like bank accounts.”

Posen spoke with “Marketplace” host Kai Ryssdal about the changes in China’s political economy. The following is an edited transcript of their conversation.

Kai Ryssdal: I will start with the title of this piece. It is called “The End of China’s Economic Miracle.” I note for the record there is no question mark on the end of that title. What are you seeing?

Adam Posen: Well, there is legitimately still a question, but you’re right, the title sticks my head out there. What I see is a trend that had been already underway since the start of [President Xi Jinping’s] term, roughly 2015, of greater and greater state intervention in the economy. That zero-COVID policy, as implemented in China, made things feel very insecure for average Chinese people in their livelihoods and their assets. It’s very different than when they were clamping down on Ant or Alibaba, which is, you know, some big oligarchs. This is people’s everyday lives.

Ryssdal: You know, it’s funny, you spend as much, maybe more time on the politics of the Chinese economy as you do the actual nuts and bolts. And one of the things you point out is that the Chinese people, because of the arbitrariness of what President Xi has done during the zero-COVID, they are just responding less to his stimuli, if you will, and they’re doing whatever they feel they need to do to survive.

Posen: Yeah, and I think it’s very important, not so much to pretend I’m an expert in Chinese politics, which you kindly don’t pretend, but to say that the political economy matters. And this is something that’s not just airy, we’ve seen this in other governments with autocratic regimes, that if you can hold off being too interventionist, too political in people’s lives, and the people know what I call “the no politics, no problem” deal. So protesting in Tiananmen Square or in Hong Kong will get you hammered, but your everyday life — if you’re a nonpolitical person — you can go, you can invest, you can spend. And the economics of this are of a very clear prediction. One piece is what you said, which is that stimulus policies — whatever the economic policies of government to clean up the banking system, to put cash in people’s pockets — are going to be less effective, because people don’t necessarily believe that they’ll be maintained. The other piece is that it’s not just savings have shot up, because overall savings haven’t changed that much; it’s that specifically people are abjuring things like durable goods, purchases, investment in small business, stuff that ties up their assets, and they’re preferring things that feel safer and more liquid like bank accounts.

Ryssdal: You know, just on that, you know, I forget what you call it — 

Posen: No politics, no problem.

Ryssdal: No politics, no problem, right. So the deal has been for 40-plus years now in China that the government will let you get, you know, “rich” as long as you don’t get political. Do you think that that bargain is over now?

Posen: I think it is in people’s minds. And they will try to reinstate it. And we’ve already seen leaders from the Communist Party around Xi say, “Oh, no, we want a vibrant private sector in China.” Oh, you big tech tycoons, you can be reassured.” But it’s hard to be credible once you get to that point. Once Xi has so visibly, forcibly crossed the rubicon, and there’s no signs that he regrets this, I don’t think he can get it back.

Ryssdal: One imagines this piece is being widely read in the halls of Congress and in the White House. And people are seeing, as you point out in this piece, that there may be some opportunity here for the United States. What do you imagine them to be?

Posen: My view is it’s an opportunity for a rethink and a shift from the United States. So under the Trump administration, and a little more responsibly, honestly, but still, under the Biden administration, there has been this very conflictual approach to China. And one part of it in the economic sphere has been excluding people from China, making students and workers feel unwelcome as potential spies, suspecting Chinese investors who are taking over American companies, buying American assets. And I think we want to go the opposite way. During the 1930s facing the fascist regimes, during the Cold War up to the mid-1980s, it wasn’t clear that we were necessarily outperforming them economically; it was clear that our property rights for individuals and safety of individuals’ livelihoods was better. And I think we can use that in the new conflict between — systemic rivalry between China and the U.S., to say we welcome Chinese investment, we welcome Chinese people, we welcome Chinese ideas. And the more we emphasize exit, it’s not going to be like the Berlin Wall, but the more Xi will put up barriers, and the more he puts up barriers, the more he induces people to exit.

Ryssdal: China has, as you say, in this piece, it has now a case of economic long COVID, right? That what Xi Jinping did during zero-COVID is going to have lasting effects for — and these are your words — it’s going to last for years. And I guess we have to point, out just by way of closing our discussion, that that’s not good for the global economy.

Posen: It’s not. Now to be clear, I’m talking about a drag and more instability and less productivity growth, but not the collapse, by any means, of China. But I think the thing to say is it’s not good for the world. It’s not good for a large number of people in the U.S. Who make money selling into China or make money from China assembling pieces of their equipment. It subtracts. And it’s not as destabilizing as we might fear because China has itself become more closed in some ways in recent years. But it shouldn’t be seen as a good thing for China to be economically weakening.

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