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 Business Strategy for
an Era of Political Change

CHARLES S. MACK

QUORUM BOOKS
Business Strategy for
an Era of Political Change
Business Strategy for
an Era of Political Change

CHARLES S. MACK

Foreword by Gregory S. Casey

QUORUM BOOKS
Westport, Connecticut • London
Library of Congress Cataloging-in-Publication Data

Mack, Charles S.
Business strategy for an era of political change / Charles S. Mack ; foreword by
Gregory S. Casey.
p. cm.
Includes bibliographical references and index.
ISBN 1–56720–240–3 (alk. paper)
1. Business and politics—United States. I. Title.
JK467.M23 2001
322'.3'0973—dc21 2001019185
British Library Cataloguing in Publication Data is available.
Copyright
2001 by Charles S. Mack
All rights reserved. No portion of this book may be
reproduced, by any process or technique, without
the express written consent of the publisher.
Library of Congress Catalog Card Number: 2001019185
ISBN: 1–56720–240–3
First published in 2001
Quorum Books, 88 Post Road West, Westport, CT 06881
An imprint of Greenwood Publishing Group, Inc.
www.quorumbooks.com
Printed in the United States of America
TM

The paper used in this book complies with the

Permanent Paper Standard issued by the National
Information Standards Organization (Z39.48–1984).
10 9 8 7 6 5 4 3 2 1
 Behind every successful young attorney there lurks a
proud (and occasionally astonished) parent. In this case the
pride is doubled, because the attorney is wed to a successful and
dedicated practitioner of the citizens’ profession, elective politics.

So, this book is for “little Alice”—aka Alice McQuaid—

for her husband, Rick—and, of course, for the three young
McQuaids, Amanda, Bryan, and Cassie.
Contents

Foreword by Gregory S. Casey xi

Acknowledgments xvii

1. Introduction: The Currents of Change 1

The Acceleration of Change 4
The Evolution of American Politics 6
2. Business and Government in the Global Economy 13
The Development of Globalization 16
The Quandary of Globalism versus Parochialism 22
Parochialism and Regulation 26
3. The America of 2025 35
Population Changes 37
Technology 38
The Economy 40
The International Dimension 44
Political and Social Implications 46
4. The Future of Business–Government Relations:
Three Scenarios of 2025 57
The Populist Democracy 57
The Libertarian Democracy 60
viii Contents

The Competitive Democracy 64

Implications of the Scenarios 68
5. Business and the Political Parties 69
Parties and Political Loyalties 70
Ideological Polarization 72
The Party of Business? 75
The Preconditions for Legislative Success 82
6. The Decline and Fall of the Political Parties 89
The Fatal Factors 92
The Wasting Assets 97
The Price of Reform 107
Tomorrow’s Political Powers 113
7. The Instruments of Politics 121
Politics and Legislation 124
Money and Politics 129
Political Fund-Raising Activities 133
Active Political Participation Programs 142
A Model Corporate and Association Program 145
8. Issue Advocacy 157
Issue Advocacy in Lobbying 158
Issue Advocacy as a Political Instrument 164
Issue Advocacy and the Law 165
Issue Advocacy by Interest Groups 169
The Internet as a Political Instrument 178
9. Long-Term Issue Advocacy Applications 183
International Trade 185
National Savings and Capital Formation 197
Social Security and Immigration 205
Campaign Finance 213
Other Issues 222
10. Conclusion: The Politics of the Future 227
The Impact on the Parties 229
The Role of Major Interest Groups 231
The Business Political Role 233
Contents ix

What Happens Now? 235

The Reformers Ride Again 236
The Strategic Course 239

Afterword 243
Selected Readings 245
Index 249
Foreword

Unlike lawyers, doctors, dentists, engineers, accountants, and other pro-

fessionals, those of us who do politics as a profession rarely get the chance
to make definitive statements that are accepted as facts. Regarding politics,
everyone has an opinion of which they are fully convinced. Few dentists
have to argue with their patients about the need for a root canal. Like
other professions, however, political practitioners do indeed “know” more
than those who only just dabble socially. It is often tough to convince
others that some of what we offer is indeed reality.
Charley Mack’s work is a perceptive and scholarly review of some of
those realities, targeted to enlightened business leaders who already un-
derstand the most basic of truths: American business needs to be involved
in the formation of public policy because the largest single expense for
business is the cost of government in its many forms.
The principal value of Charley’s book to the political discourse of our
time is his willingness to say that which needs to be said to American
business leaders in an instructive and readable manner. It is as thorough
a discussion of the current political situation for business and the possible
future permutations as I have read. I don’t agree entirely with his method
of presentation, nor all the individual conclusions. I’m not particularly
fond of the scenarios of America in 2025 used in Chapter 2. Still, he pres-
ents a compelling case that change is coming and that business can either
shape it or be shaped by it. That message can’t be repeated too often. The
end result is a clear message that American business must reassess its
approach to political involvement or it will continue to spend more and
get less.
With his book, Charley adds perspective regarding the changes going
xii Foreword

on in America and its politics, the impact they will have on the future of
business, and what business can and must do to accommodate those
changes. From my perspective, only a few in business today truly under-
stand the scope of these changes, and even fewer have a plan for dealing
with them. While that is not a negative reflection on the modern CEO’s
desire to focus on the core business operations that make him or her
successful in the near term, it is the recognition that most CEOs tend to
relegate political involvement to the category of “necessary evil.” I’ve had
countless discussions with business leaders who seem bewildered by my
suggestion that politics and grassroots be provided for in their company’s
strategic plan.
Charley bases his book on the logical belief that those who make public
policy have a decisive impact on business. Grasping that reality is essential.
That logically leads to a second reality, that business needs to effectively
involve itself in issue communication and the election of those policy mak-
ers because, in the end, it is the election process that ultimately decides
what the public policies are going to be. As a result, for American business
to survive and prosper in a system originally designed for it to do so,
business must be successful at winning elections.
This all seems very logical. For American business, it is critical. So why
write a book about it?
The answer to that question is the substance of the text.
Charley blends the responsibility of business to represent its interests
into the reality of our republican system of government. In essence, in our
system of government, representatives who make public policy are elected
to represent the interests of the governed. If business doesn’t effectively
participate in communicating its interests, other interest groups will fill the
void.
Fortunately, the bizarre nature of the elections of 2000 raised the Amer-
ican consciousness of the dynamics of the political process. People have a
renewed awareness that we are indeed a nation of competing personal,
professional, and political interests. That makes this text particularly ap-
propriate.
As Charley lays out, America’s political climate is in a period of pro-
found change brought about by demographic, economic, and technological
evolution. Let me bolster his case with some simplified observations of my
own.
Late in the 19th century and into the 20th, this nation moved from a
regional, agrarian economy to a national, industrial economy. The issues
and demographics involved in these economies are considerably different.
The Republicans emerged as the dominant party of the early 20th century
because they mastered the politics of this new economic paradigm. That
changed with the coming of the Great Depression.
The Democrats roared back to political prominence because they mas-
Foreword xiii

tered the politics of President Franklin Roosevelt’s programs of social wel-

fare and direct government economic intervention. Much of that remains
the staple of liberal politics today, enhanced over the years by various
forms of social contracts and the Great Society.
Near the end of the 20th century through today, the national, industrial
economy began to give way to a new information-based, international
economy. As with past economic paradigm shifts, the issues, demograph-
ics, and resulting politics of this new economy are a change from the past,
and neither political party has mastered its complexities. Just a few short
years ago, it was easy to determine a politician’s underlying economic
philosophy by his or her rhetoric on balanced federal budgets, regulation
reform, tax reform, welfare reform, free trade, and windfall profits. Today,
neither the carefully crafted rhetoric of the last two decades nor the issues
to which they relate seem to have the same relevance to a voting public
that has already moved on to the next set of concerns.
The 2000 campaign reflected that new reality. The perennial concern
for social and national security had their places in this campaign as they
always do. But the ability to discern which candidates were decidedly lib-
eral or conservative became more difficult. Beyond the issues of integrity
and style, this was generally waged as a tactical rather than a strategic
campaign. Even the debate on tax reform wasn’t if, but how much and
for whom, and the ever-present wedge of rich vs. poor didn’t carry the
punch it once did.
The emerging international economy, the rise of “new Democrats”
brought on by Bill Clinton, his pronouncement that the “era of big gov-
ernment is over,” the unanimity of support for fiscal solvency, and the
reform of basic government and the subtle rift between social and fiscal
conservatism have made the differences between traditional ideologies,
economic philosophies, and the political parties themselves a lot more
difficult for the general voting public to understand. It is not as easy as
listening to the rhetoric any more. Charley discusses these changes.
Esoteric discussions of these issues by themselves have little relevance
until put into the broader perspective of their impact on the modern elec-
tion process. For business to understand that a fundamental change is
occurring in issues and political rhetoric is only the beginning. The manner
in which these messages are being driven, by whom, to whom, and with
what impact on the modern, dual-income, heavily invested, day-trading
family is at the heart of his message. It makes the entire book relevant.
Charley also does a good job of discussing the changing and declining
role of the political parties, while testifying to the fact that they are still
needed. In a related statement, Jim Wilkerson of the National Republican
Congressional Committee recently said, “We did a poll and there is de-
clining party unity.” USA Today said, “Fewer voters identify themselves
as members of a political party.” While party structures will—and
xiv Foreword

should—continue to have a prominent role in American politics, they may

not have the same preeminent role they once had, particularly with regard
to voter motivation and turnout. That could clearly be seen in the 2000
elections, where voter and grassroots programs driven by interest groups
seemed to grow in prominence.
Charley touches on other elements in our modern society that are al-
tering the conduct of politics, one of which is the Internet. In that regard,
it is important to point out that the Internet’s rise in prominence is relative
to the decline in effectiveness of other methods of message delivery. When
I did my first campaign in 1980, I knew that 60 percent of American house-
holds regularly watched the evening television news and less than 1 per-
cent owned personal computers. The Internet was still some vague
concept. That made the purchase of television time at the news hour an
absolute imperative. By 1996, less than 25 percent of American households
regularly watched the evening news. By November of 2000, twice as many
American households owned personal computers as watched television
network news, and the vast majority of those users were surfing the net.
People now have “personal” conversations via a computer terminal with
people they have never met. “One-on-one” communications once re-
stricted to phone banks and campaign volunteers can now be conducted
by e-mail through well-devised intranets. For those running campaigns or
investing in message delivery, the new dynamics should be pretty clear.
The electronic box might serve as an equalizer in contests where one side
has an ample volunteer base and the other a pervasive electronic network.
While I was the Sergeant at Arms of the U.S. Senate, the delivery of
mail to and from senators’ offices fell under my purview. During my ten-
ure, “mail” went from predominantly paper to predominantly electronic!
The movement was so vast, we were simply unable to retool our technol-
ogy fast enough to accommodate this new form of conversation.
Charley does make the single most important point regarding technol-
ogy: The old ways of pursuing political message delivery in the modern
era are neither a sufficient nor an effective use of new opportunities.
A theme throughout is that business is at a crossroads in the conduct
of its political involvement. I agree. There is more to all this than just
change. There are forces at play in American politics that are actually
reducing the clout of business in determining public policy outcomes, some
self-imposed. He makes a series of statements that frame the parameters
of that decline.
In Chapter 6 he opines that “organizations with ample financial re-
sources but no grassroots strength will play at best a secondary role” in
the future of politics; and yet, to a great degree, American business has
opted out of grassroots in preference to gaining its political clout through
hard dollar contributions to candidates and soft money contributions to
Foreword xv

the political parties. The net result of that course of action is ever-
increasing costs for business political participation with decreasing results.
It would be all too easy and erroneous to simply view this as just another
aspect of the ongoing public discussion of campaign finance reform. Char-
ley offers a significant observation. “It is the curse of reformers that they
seem perpetually incapable of learning the principle of unintended con-
sequences.” No amount of “reform” will or should ever silence the voices
or eliminate the need for interests in a republic to make their wishes
known to policy makers and the public. That is a concept older than the
republic itself.
Let me make one point very clear. Adequate financial resources remain
the single most important part of winning elections. Having said that, how-
ever, in the age of relative financial parity between the parties, it is the
other elements of political activity that make the decisive difference in
close elections. The 2000 election was the second consecutive election cy-
cle in which the control of power in American politics was decided by
razor-thin margins. There is nothing that would lead us to conclude that
that won’t be the case for the foreseeable future. Therefore, an increased
emphasis on the non-financial tools of politics must be pursued.
Regarding decisions on whom to lavish political contributions, those
who disregard long-term issue considerations in deference to personality
or congressional rank only contribute to their own demise. Lobbying is no
antidote for policy makers antagonistic to the basic premises of free en-
terprise from the start. Enough said.
In Chapter 6, Charley also observes, “The injection of soft money has
helped rejuvenate the parties, but it is a therapy with a short half life.”
Again, I agree. Soft dollar contributions are a relatively new phenomenon.
Yet, the amount of soft money raised in 2000 was up 71 percent over 1996
while partisan participation actually declined. Neither party emerged with
a soft dollar advantage in 2000. While both major parties enjoyed the
increased financial resources, the essence of motivating voters has moved
away from parties to the interest groups with whom the American voters
find more affinity. In addition, these interest groups have the increased
ability to communicate with voters at less cost.
Business spent approximately $400 million in 2000, over $120 million
more than the previous cycle, with fewer clear victories. Conversely, the
unions spent about the same in 2000 as they spent in 1998 in dollars re-
ported to the Federal Election Commission, about one-seventh what busi-
ness spent. The union percentage of the total vote rose from 23 percent
in 1998 to 27 percent in 2000 in congressional elections. This is a reflection
not so much on what labor did, but what business failed to do. I subscribe
to the school of thought that the success of the union voter turnout model
results more from a lack of credible competition in the workplace than
the compelling nature of the union message. Obviously, the unions disa-
xvi Foreword

gree. In Chapter 3, Charley asks the question, “If there is little connection
between where people work, where they engage in commercial activity,
and where they live, what is the role of government?” This was said in
reference to a different issue, but I think it has relevance here as well.
Charley peppers the entire book with discussions of the many political
involvement alternatives available to business. What may be missing in his
comments is the evidence that the alternatives he discusses actually work.
In a pre-election poll commissioned by BIPAC, we found some astonish-
ing results. When workers were asked if they had seen, read, or heard
anything from unions or their employers on issues or politics this election,
17 percent said they had heard from unions compared to only 7 percent
from their employers. However, when asked who was the most credible
source, 17 percent said labor, 27 percent said the political parties (both),
and 23 percent said their employers. It is obvious from these results that
despite a nearly three-to-one advantage in union message delivery, em-
ployers still held a significant credibility advantage. This advantage gen-
erally goes unutilized. Where it has been utilized, business holds its own.
Charley discusses both the law and real-world applications of various
political techniques. Knowing what tools are available isn’t nearly as im-
portant as knowing how to actually implement them. That has been one
of business’s biggest obstacles over the last several election cycles. How-
ever, several prominent national business associations including the Na-
tional Association of Manufacturers, the American Chemistry Council, the
National Association of Wholesale Distributors, the Food Marketing In-
stitute, the Associated General Contractors, the National Federation of
Independent Business, and others have rediscovered the value of grass-
roots in both their lobbying efforts and their political activities. These
groups are leading in the effort to reengage business in a dialogue with
those that have the most at stake in continuing prosperity—the employees.
Although many businesses and business groups continue to pursue their
political activities in much the same way they always have, preferring fi-
nancial contributions over effort, Charley’s book provides ample justifi-
cation for every business to reevaluate its political activity, and is an
insightful primer on how to get started. After more than 20 years as a
practicing political operative, I discovered plenty of new material in this
book that I plan to use. If but one major U.S. corporation decides to alter
its approach as a result of this book, I will have considered it well worth
the effort and one more step in the journey to bring American business
back to its rightful role in the American elections process.

The Honorable Gregory S. Casey

President and CEO, Business-Industry
Political Action Committee of America (BIPAC)
Acknowledgments

This is the fourth in a series of books on lobbying, politics, business as-

sociations, and business–government relations overall. Each book since the
first in 1989 has generated ideas that led to the next ones. So, in one sense,
the book in your hands is an extension of work that went into Business,
Politics, and the Practice of Government Relations. In a broader sense,
however, the concepts on which this book is built are the product of four
decades of experience in politics, business, and government relations, and
particularly of my six years as president of the Business–Industry Political
Action Committee. Its members and its talented staff contributed to the
book’s development in ways they never realized.
Several people contributed their personal knowledge and experience in
reviewing drafts of the manuscript. Harry S. Flemming, the CEO of Ad-
ventor Corporation, shared valuable insights based on his extensive ex-
perience in both business and politics. Dr. Lucy Huffman provided helpful
comments on the section discussing national savings and capital formation.
I am grateful to each of them.
I particularly want to express my deep appreciation to Christina L. Ken-
dall for her encouragement and untiring research support. The book could
not have been written without her.
Writing is a form of personal and professional fulfillment for me. Over
the years, two coaches have done what they could to get me to think more
clearly about what I wanted to say and, within the limits of the raw ma-
terial, to make me a better writer. The first is my wife, Alice Barrett Mack,
whose advice and criticisms have improved every page. For her love, con-
stant encouragement, and strong support I am eternally grateful.
The second is Eric Valentine of Quorum Books, who has edited all four
xviii Acknowledgments

of my books with sternness, wisdom, wit, and irrepressible humor. Tutor

and taskmaster, he has helped me convert often inchoate ideas into books
that both of us hope justify the reader’s investment of money and time.
It has been a joy to work with him—well, most of the time.
I would acquit all these intellectual benefactors of any responsibility for
the book’s flaws and faults, if it had any. (Oh, if that were only true!)
Business Strategy for
an Era of Political Change
 CHAPTER 1

Introduction: The Currents of

Change

Change is the process by which the future invades our lives.

—Alvin Toffler

Once upon a time, there was a young lad so fascinated by politics that he
could rattle off election returns and the identities of candidates the way
normal kids spouted baseball statistics and team lineups. That was more
than half a century ago, and politics still holds the fascination of the adult
the boy grew up to be.
Boy and man, the author understands very well how historian Fernand
Braudel felt when he opened his monumental study of “the sea in the
middle of the world” with the words, “I have loved the Mediterranean
with a passion.”1
But unlike Braudel’s work, this book is not a celebration of my passion’s
past so much as an exploration of its future; and like a lover who beholds a
once-great beauty slowly succumb to the ravages of time, I retain the ardor
of my youth even as I witness the deterioration of American politics into
something very different than it has been. Like so many other institutions
and processes in our culture, politics is undergoing significant changes.
The accelerating pace of change will be a hallmark of 21st-century so-
ciety. “The wind of change” will blow through our culture and its insti-
tutions with gale-like force in the coming decades, and few institutions will
receive its gusts and tempests with greater severity than the structures of
political competition. It is difficult to say that these changes will be for the
better, but that does not lessen their probability.
So, this book is about the future of politics and the politics of the future.
2 Business Strategy for an Era of Political Change

It is therefore also about the future of business, though not in the sense
of an economic forecast nor the revealed truth of the business gurus. Much
as some might wish it otherwise, public policy and politics are deeply in-
tertwined. What affects the one affects the other. Ours is an economy of
competitive markets, but hardly one characterized by laissez-faire policies.
The policies of government deeply affect what business does and how it
does it, and politics, because it permeates government, also affects the
conduct and operations of America’s business enterprises, the sharehold-
ers who own them, the executives who direct and manage them, and the
people who work for them.
Politics has always been a significant influence on the business climate
in the United States, more so perhaps than many business people have
cared to accept. Politics is the process through which the policies and
actions of government are made. It is the process that determines who is
to set those policies and take those actions. It is the process that transforms
popular concerns into public issues, and eventually into public policy. Pol-
itics in the American democracy is the bridge that connects the people, or
at least the voters, with their government.
Many Americans regard politics as a shabby process, one that should
play no part in the formation of public policy. The only standard for gov-
ernmental action, they appear to believe, is the public good, the public
interest. The trouble with this thinking is, first, that the concept of the
public interest encompasses all the special and partisan interests in Amer-
ican society and, second, that politics is the primary way all those subsid-
iary interests become translated into governmental decision making.
There are no immaculate conceptions in the formation of public policy.
The entire process is inescapably political by its very nature.
Among the issues influenced by politics are those that profoundly affect
the nation’s businesses, individually and collectively. Business has utilized
the various techniques of lobbying and government relations to influence
the course of many legislative debates, often to great effect. Political fac-
tors, however, shape government policy even more powerfully than lob-
bying. Indeed, much lobbying is really about politics. While both are
means through which business executives can influence how legislation and
regulation impact the fortunes of their companies, it is politics that is the
greater force.
But the politics of the next quarter-century will be quite different from
the politics of the past. Trends and events are in play that will reshape
the entire political environment. They will therefore reshape the way fed-
eral and state governments make policy, and thereby profoundly affect
the nation’s economic enterprises.
American politics has always been conducted through the political par-
ties. The principal theme of this book is that the parties are in a state of
terminal decline, for reasons that are the product of political and tech-
Introduction: The Currents of Change 3

nological developments over the last half-century. The consequences of

this decline have vast significance, for both business and society. As the
parties atrophy, they are being replaced by the great interest groups.
These interests will supplant the parties in the electoral process and be
significant molders of public opinion. Business will surely be one of many
such forces, but whether it will be among the most powerful is an open
question. Achieving that status and role requires a deeper involvement in
traditional political techniques than most companies have heretofore been
willing to entertain. More than that, it requires utilization of the most
powerful political tool to emerge since the development of television. That
tool is issue advocacy, the subject of a substantial part of this book. Issue
advocacy is already used extensively and increasingly to influence both
legislative and electoral outcomes. Business has the resources and capa-
bility to apply this communications technique in novel ways that can re-
shape public opinion for decades to come.
These emerging changes occur in several contexts. One is economic, the
vast process called globalization. Study after study forecasts exponential
growth of an economy that already reaches well beyond traditional na-
tional and regional markets. Yet, the enterprises comprising the global
economy continue to be regulated by governments whose very nature is
defined by fixed geographic borders. The interrelationship of business and
government will necessarily be quite different in the next few decades than
it has been. What that relationship will be, of course, will vary by country.
Our focus in this book is on the factors changing the political and govern-
mental relationship of companies operating in the United States—which
is a rather different group of businesses than “American-owned” compa-
nies, since many of the firms doing business in the United States today
are headquartered in other countries.
Time is the other context in which political change will occur. Time is
unvarying. Change is not. Throughout human recorded history, there have
been periods of rapid change, other eras of slow change, and times of
nearly total dormancy. Sometimes the events that trigger change are al-
most immediately apparent; other times they are recognized only in hind-
sight. The varying historical impacts of major religions provide an
example. Christianity took several centuries to become a major social
force, and only a few devout early believers foresaw the impact Jesus
would have on Western civilization; Christianity’s political impacts took
even longer to take hold. The growth of Buddhism in Asian cultures was
even slower and subtler, but the explosion of Islam and its armies out of
the nomadic desert and into Western Europe was an event no one could
have missed and whose effects endure to this day.
We live in one of those periods of extraordinarily rapid change. How
time and change affect society, politics, and the economy is worth a little
discussion.
4 Business Strategy for an Era of Political Change

THE ACCELERATION OF CHANGE

Time and change are the constants of modern lives. Measured by clocks
and calendars, time proceeds at its fixed and predictable pace. A week
still has seven days, a century 100 years. Measured by the change it brings
in our lives, however, time seems to be an accelerating force.
A thousand years ago, the human cultures in which any of our ancestors
lived were little different at their deaths than at their births, and probably
not much different than the eras of their grandparents. Wars, plagues, and
famines arrived and passed, almost predictably, but afterward life went on
much as it had for centuries.
That stability (or, perhaps, stasis) in Western society ended with the
Renaissance and then the Reformation, and nothing has been the same
since. Change began—social change, economic change, scientific and tech-
nological change, political change—and it has seemed to run at ever-faster
rates with each new era.
The fact of change has long been apparent, at least in hindsight, but its
accelerating pace has been observed by those experiencing it only in recent
decades. Alvin Toffler was perhaps the first to write about it, and that was
only 30 years ago. Since then, there have been formulations like “Moore’s
Law”—that the capability of information technology at a given price dou-
bles every 18 months—that now seem to be, if anything, understated.
Consider the relatively recent past: Two centuries ago, the Industrial
Revolution had not even begun, anesthesia had not been invented, and
the principles of heredity were still undiscovered. One century ago, elec-
tricity and the combustion engine were just becoming prevalent. A mere
quarter-century after that, airplanes had already been used in a world war
and automobiles were filling streets and highways. Halfway through the
20th century, atomic power had been used to end a second major war and
the use of massive computers relying on vacuum tube technology was
growing, but the inventions that enabled computers to vastly multiply their
functions while shrinking their size, the transistor and the silicon chip, still
lay ahead. Twenty-five years ago, the electronic age was well established,
but the first halting steps to develop personal computers and satellite com-
munications were only just being taken. Ten years ago, the Internet was
still only a system that linked academic and Defense Department com-
puters. Five years ago, mobile telephones and palmtop computers, ubiq-
uitous today, were clumsy and unreliable technologies.
Just during the months that this book was being written, the first map
of the human genome was completed, the number of planets identified in
other solar systems began to increase exponentially, and scientists an-
nounced the discovery that perhaps the speed of light was not quite as
absolute as Einstein had thought. Assuredly, between the time this man-
Introduction: The Currents of Change 5

uscript is completed and the book’s publication, there will be other,

equally historic revelations and innovations.
The pace of changes has been nearly as extensive in economics, society,
politics, and so many other aspects of civilization. One need be no older
than middle age to recall the very different time “when air was clean and
sex was dirty”; when it was considered impossible to have full employment
without inflation; when political parties were still the driving engines of
politics; when the Wall Street Journal was the only daily newspaper that
gave serious coverage to business news; when Africa’s demographic di-
lemma was overpopulation and not a ravaging pandemic; when virtually
all American children were born and raised in more-or-less permanent
families comprising two married adults of opposite gender; when those
children left school literate, numerate, and with the skills they needed to
be productive workers; and when relatively few women could (or wanted
to) aspire to careers outside the home.
To be sure, accelerating change has left many elements of our lives
untouched. We still dry ourselves with cotton towels after bathing with a
plumbing system that has not changed in any fundamental way since its
introduction in the 19th century. The technology of the flush toilet is es-
sentially what it always has been. There may be many more television
channels available today, but their intellectual fare remains the same
wasteland. There is always still another crisis in the Middle East (or maybe
just one more chapter in the same old one). American politics is still highly
competitive and the legislative process still rotates around the next elec-
tion, no matter how recent the last one. Flights from Los Angeles to New
York or Tokyo are no shorter than they have been since the invention of
the jet engine. The laws of supply and demand have not yet been repealed,
and business executives are still obsessed with predicting the interest rate
decisions of the Federal Reserve.
A certain amount of stability and predictability is essential to sanity, but
the fact is that there is less and less stability, and faster and faster change.
Not all change is driven by technology, but much of it is—witness the
effects on sexual mores and women’s rights brought about by the invention
of “the pill”; or the sweeping impacts being wrought by the Internet, from
new forms of retailing to the spread of pedophilia, from the rise of e-mail
to the decline in personal privacy. “Revolutionary” is an inadequate de-
scriptor when the revolutions seem to occur every month and promise to
arrive weekly within only a few more, fast-moving years.
Changes like these have pervasive political consequences. The rise of
the religious right and social conservatism, and the gender gap that char-
acterizes the different ways men and women (and single women versus
married ones) vote in elections, have their roots in technological, eco-
nomic, and therefore social change. Francis Fukuyama notes that “The
breakdown of the nuclear family, reflected in rising divorce rates, illegiti-
6 Business Strategy for an Era of Political Change

macy and cohabitation in place of marriage, stems from two sources: the
movement of women into the paid labor force, and the separation of sex
from reproduction, thanks to birth control and abortion.”2
Another of those vast changes is globalization, a development barely
underway as late as 1990. Within 30 years or less, the global economy will
grow from one-fifth to four-fifths of aggregate worldwide gross domestic
product—and global GDP itself is projected to rise from $28 trillion to
over $90 trillion. Globalization, technology, business management inno-
vations, and the productivity improvements they brought about have re-
sulted in an economic expansion of unprecedented length. Low inflation
coexists for the first time with low unemployment. Companies (not all of
them of the “dot.com” sort) arise, make billions for their founders and
investors, and are bought up or perish at dizzying speed. Yet, even as
newspapers are filled with ads from companies begging for workers, the
sidewalks remain filled with the homeless begging for quarters.

THE EVOLUTION OF AMERICAN POLITICS

Politics has also changed, though perhaps less radically, and some of
the changes seem more apparent than real. The 1990s witnessed a shift
from a Republican president and Democratic Congresses to a Democratic
president and Republican Congresses—then, in 2000, to a narrowly
elected Republican president and Congress—followed shortly by Demo-
cratic recapture of the Senate. In recent decades, many American voters
have shifted away from straight-ticket voting to split-ticket voting to stra-
tegic voting—often deliberately opting for divided, and hence weaker gov-
ernment, out of distrust for government and politics. Indeed, some polls
have shown a preference for divided government by a plurality of Amer-
icans.
The same aversion to the political process, very different from the wide-
spread faith in government as the solver of all public problems that per-
sisted into the 1960s, has produced steadily declining voter turnout in
election after election. Millions of Americans enthusiastically cheered on
George W. Bush and Dick Cheney as their designated saviors of the fu-
ture, just as millions of others put equally enthusiastic faith in Al Gore
and Joe Lieberman; but the number of viewers watching the 2000 presi-
dential debates was not much more than half the number who saw the
1960 Kennedy–Nixon debates, and more and more of today’s voters put
what trust they still retain in individual candidates and fewer and fewer
in the political parties that nominated them.
These political phenomena have significant implications for business ex-
ecutives. They are rightly concerned about the actions of governments
because what the public sector does affects the fortunes of companies to
a far greater extent than any other single influence. As business enterprises
Introduction: The Currents of Change 7

of all sizes become increasingly intertwined in the world economy, the

kinds of interaction they have with government will necessarily change.
Businesses whose customers or vendors are spread across several or many
countries have quite different needs and interests than they did when their
operations were wholly domestic. Those differences reflect themselves in
new kinds of issues and in altered governmental relationships.
What will not change is the inherently political nature of government.
Recognizing and interacting with the political forces that shape govern-
mental decision making in the new century is an ever more critical factor
in business success. For those enterprises that intend to prevail in this new
global era, lobbying will be as essential as ever to winning future battles
in the arena of public policy. Lobbying by itself, however, is no longer
sufficient. The reason is that lobbyists deal in the main with an established
cast of characters, with the set of legislators who are already in place.
Politics, on the other hand, is a craft that has the capability of changing
the cast and bringing new actors onto the legislative stage.
Assuring that legislative conflicts over future issues result in outcomes
favorable to business requires the presence of two conditions. The first is
the use of every legitimate means to assure the election of lawmakers
favorable to business interests. The second is cultivation of a body of pub-
lic opinion that understands and supports business positions on tomor-
row’s issues.
Issue advocacy adds a new dimension to politics and lobbying. It is a
means of changing traditional political equations by reaching beyond
elected lawmakers to influence the opinions on specific issues of the voters
who choose those legislators, and in fact to affect voting decisions about
who those legislators should be. Of course, it is not just business that can
make use of this expanded form of politics to determine the outcome of
the issues of tomorrow. The techniques of issue advocacy are available to
many other interest groups and increasingly are being used by them, but
business has the financial resources to apply this dramatic new commu-
nications device more decisively than anyone else.
In this new century, to a far greater extent than the one recently laid
to rest, this multidimensional form of politics will influence the great issues
that can affect the fortunes of major companies, as well as those that set
the fate of smaller enterprises. In consequence, lobbying and government
relations are also changing, partly because they are so intertwined with
politics and partly because they are also beginning to utilize issue advocacy
as a powerful tool of legislative persuasion.
Issue advocacy is altering the terms and conditions of politics in ways
that have only begun to be explored. Other, even more significant devel-
opments are lurking beneath the horizon, likely to emerge within a rela-
tively brief space of time. These are changes in America’s political
institutions and in the arena of democratic political competition.
8 Business Strategy for an Era of Political Change

Political institutions in democracies are not the historical fixtures they

sometimes appear to be. Major political parties, as we have seen in both
Europe and North America, may have long shelf lives but are perishable
nonetheless. The Liberal Party, replaced by the Laborites as one of Brit-
ain’s two major parties, fell into minor party status and eventually was
forced to join with a Labor offshoot; even this merged party, the Liberal
Democrats, is no more than a marginal factor in British politics. Scandals
killed off Italy’s Christian Democratic Party (which for decades was the
country’s dominant political institution) and created new major parties of
both the right and left. The Progressive Conservatives of Canada, for most
of that country’s history one of its two major political parties, has been
almost extinguished in recent elections, largely replaced by a new party,
the Conservative Alliance, an unstable amalgam of the Conservatives’
right wing and a regional party. Mexico’s PRI (the Spanish acronym for
the Institutional Revolutionary Party), for 70 years the only party to hold
power at the national level, may fragment following its loss of the coun-
try’s presidency in the 2000 election.
America’s major parties have not experienced this kind of vulnerability
in almost 150 years, when the Whig Party expired. The coming political
sea change in the United States does not endanger either of the parties
individually so much as it threatens the viability of parties as institutions,
as the nation’s medium of competition for political victory and govern-
mental power.
For reasons discussed in later chapters, the Republican and Democratic
parties have been reduced to the status of mere political brand names,
their once powerful organizations unable to control even the selection of
their nominees or turn out the vote to assure their election. Both major
parties have become less cohesive even as they have grown more ideolog-
ically polarized. They exist today mainly as collection agents for vast sums
of money, which is then used to help any candidates able to manipulate
their party’s nominating processes.
Given these circumstances, it is questionable whether the parties can
endure in anything resembling their present form. It is not that the major
parties have outlived their usefulness, and in fact they have not. They
continue to provide political vehicles for coalitions of interest groups; but
they are consumed by cancers from within and quack cures, such as ab-
olition of soft money, will only hasten their demise. The probability is a
long, slow decline into irrelevance rather than some defiant, flaming Wag-
nerian Götterdämmerung, a departure “not with a bang but a whimper.”
The passing of the political parties is a prospect that no thoughtful cit-
izen should view with equanimity. No doubt, many people will easily re-
strain their grief in contemplating their departure, and perhaps even
bestow a terse eulogy of “good riddance.” The fact, however, is not just
that the Republican and Democratic Parties are aged institutions suffering
Introduction: The Currents of Change 9

from terminal disease. It is the two-party system itself that will die along
with them, and that will be a severe loss to American politics and gover-
nance. There are no third parties with the strength to succeed either
one, nor will there be. Nor is at all likely that either party, let alone both,
will produce its own replacement, as the dying Whigs did in the 1850s in
giving birth to the Republicans, or as Canada’s Conservatives may now
be doing.
The times and circumstances of America in the 21st century are differ-
ent, and in some ways unique. The conditions that are killing the Demo-
cratic and Republican parties will also prevent any minor party from rising
to ascendance. So, as the major parties die off, the two-party system will
disappear with them. That is a distressing consequence. The two-party
system has been the engine of competitive, majoritarian democracy in
America, and its loss will open a period of political instability with which
this country has no guiding experience.
This does not mean that the United States will not remain a democracy
in which all citizens and interests have the constitutional right to speak
out on their own behalf. Nor does it imply that that the system of elections
in which we choose those who will govern will be any less free. Politics
will be, in fact, freer—but also more chaotic. The stability provided by a
two-party system will be replaced by the uncertainties of a multiplicity of
competing interests. That means the election of candidates who will rarely
win a majority of votes, but only more votes than any of their potentially
numerous opponents, in many cases perhaps a third of the total vote or
even less. The alternative is the establishment of a nationwide system of
runoff elections, perhaps like that of France, in which the top two candi-
dates in a first electoral round compete in a second for a majority. Either
way, American politics will operate quite differently than it now does.
Distressing or not, the parties are going off the stage of American pol-
itics, and the only actors with the ability to play their parts are the great
interest groups. These new players include advocacy groups for the aged
because of their vast and growing numbers, for the environment because
of their increasing size and grassroots capability, for social and religious
conservatives and liberal cause groups, for labor, especially the unions
representing public and service employees, and for various minorities.
Among the latter are Latinos, Blacks, and, one day, Whites who will soon
no longer constitute a majority of the population.
These groups have the capability to mobilize large blocs of voters to
their point of view and therefore to elect like-minded political candidates
who can assure favorable legislative outcomes on their issues. Interest
groups are growing in political power because they are now able them-
selves to perform functions that once were unique to the major parties,
but that the parties have now largely lost.
The political role business will play in this new political world is the
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