U.S. Politics Are Dysfunctional: Here's How Industry Competition Theory Can Help Repair the System

0:28This episode is brought to you by Google Chrome. and services. Better products and services equal happier customers, and happy customers equal happy businesses. Win-win. But what if I told you there was a booming$16 billion US industry that thrives off a win-lose scenario? An industry where customers are perpetually dissatisfied and new competitors don't stand a chance. This industry has not only been dominated by a duopoly, that is just two players, for the last 150 years, but the industry itself threatens overall American competitiveness and social progress. You think that industry would never survive?

1:03Welcome to U.S. two-party politics. When former CEO Catherine Gale and Harvard Business School professor Michael Porter took a fresh look at U.S. politics as if it were an industry, they applied Porter's famous Five Forces framework to assess its competitive health. The dynamics between rivals, buyers, suppliers, new entrants, and substitutes are what keep any healthy private sector industry on its toes. However, in the US politics industry, Gale and Porter found unhealthy competition in which the rivals, Republicans and Democrats, do well even if the customers, citizens and voters lose out. They were also surprised to discover that US politics, while dysfunctional, really isn't broken.

1:47In fact, it's doing exactly what it was designed to do. You see, the rules of the system have been intentionally created by and for the entrenched duopoly of Republicans and Democrats to keep themselves in power. They divide their customers, the public, up according to partisan interests. This polarization ensures customer loyalty and reduces accountability. Each party competes to reinforce the division instead of delivering real solutions that would require compromise. Moreover, channels for reaching customers like media coverage and advertising and suppliers like candidates and lobbyists have been and co-opted to serve the duopoly's agenda.

2:23And most customers have very limited influence, primarily because the threat of competition is almost non-existent. The barriers to entry facing new competitors, like a new political party, or substitutes, such as independents, are colossal. And the two rivals actually cooperate to strengthen those barriers. Case in point, no new major political party has emerged since 1854, despite widespread dissatisfaction with the two parties. And yet, the problem is bigger still. The polarization not only affects who gets elected, it also affects what elected officials do once in office, since every decision is driven by the next increasingly partisan election.

3:04Lawmakers vote accordingly, resulting in less bipartisanship, less compromise, and even less getting done in the public interest. Because there's no new competition, there's no accountability for this failure. If politics was run like a free market industry, more competitors, especially innovative ones, could have threatened the Republicans and Democrats duopoly long ago. This made Gail and Porter wonder, could free market principles help redesign this failing system that seemed so set in stone? The answer was a resounding yes. In fact, they found an achievable nonpartisan solution that targets the root of unhealthy competition, revamp our elections with a Final Five voting model, an experiment already underway in a handful of U.S.

3:47cities and states. The first order of business is to broaden the field of candidates. To do so, we would replace our current party-controlled primaries with a single nonpartisan top-five primary, open to anyone, regardless of party registration. All candidates from any party, including independents, would appear on the same ballot. Up to five top finishers, regardless of partisan affiliation, would advance to the general election. Then in November, these five candidates would face off, with the winner selected by ranked choice voting. To back up, we currently have plurality voting, where the winner is whoever gets the most votes, but not necessarily a majority.

4:27Not only can someone be elected with minimal actual support, but plurality voting creates disincentives for new entrants to compete, for fear of spoiling the election by pulling away votes from ideologically similar candidates. By contrast, with ranked choice voting, candidates must receive majority support to win an election. Here's how it would work. Your general election ballot has the names of the five primary winners. You pick your favorite, but, so no votes are wasted, you also make a second, third, fourth, and fifth choice. After the polls close, the first place votes are counted. If one candidate receives more than 50 % of the first place votes, a true majority, the election is over.

5:07But what if one candidate gets only 33 % and the next closest candidate gets 32 %? In today's plurality voting system, the candidate with 33 % of the vote would win. But with ranked choice, the election isn't over yet. In this scenario, the candidate in last place is eliminated, and those votes are automatically transferred to each voter's second choice. Votes are continually redistributed until enough votes push a candidate over the 50 % threshold to win with the broadest possible support. By opening the field to new and dynamic competition, Final Five voting bakes accountability, results, and innovation into the system.

5:47With a steady supply of potential new entrants or substitutes, legislators will have renewed incentive to innovate and deliver results. Their customers, the citizens and voters, are now empowered to hold them accountable at the ballot box. Healthy competition would flip our win-lose system into a win-win that benefits not only all the players involved across the political spectrum but American economic competitiveness overall. Business leaders would stand for nothing less in their own organizations. Why should Americans accept such failure where it matters most?