In Britain and other Western countries, the pro-business policies of governments in the 1980s and 1990s have led to the creation of a large number of new rich, some of whom have become generous political donors. Billionaires play active roles in political funding in some of the 'tiger economies' of Asia. It is too early to proclaim the demise of the political 'fat cat'. The importance of 'fat cats' (rich individuals) was arguably reduced, first, by the rise of institutional financing of political parties (by corporations and by trade unions) and, second, by the spread of public funding of parties and elections from the 1950s onwards and by the introduction of regulations designed to limit large individual contributions, see Funding by Institutions. This was a time when vast fortunes were being made in a number of countries it was the age of the Robber Barons in the United States. In the United States, candidates for the Congress are permitted to spend unlimited amounts of their own money on their personal election campaigns.Īccording to a common interpretation, the heyday of plutocratic funding of political parties in countries such as the United States and Britain was in the late nineteenth and early twentieth centuries. Fifth, the rich are able in some countries to use money to forward their ambitions to gain elective office for themselves.In the United States, the traditional reward for upwardly-mobile millionaires has been an appointment as ambassador. According to some, the system has survived, albeit on a less formal, less easily detected basis. The award of titles in exchange for political contributions was made illegal in 1925. Another way to achieve social success is to donate money to top politicians, thereby receiving as rewards invitations to exclusive gatherings.Įxamples of social payoffs include the titles awarded in the early twentieth century to political contributors in Britain (peerages - carrying the hereditary title of 'Lord' and the right to a seat in the house of Lords baronetcies - the hereditary title of 'Sir', without the entitlement to a seat in the House of Lords and knighthoods - the non - hereditary title of 'Sir'). One traditional method of gaining social access is to contribute handsomely to charities, universities, and symphony orchestras - bodies that will have members of distinguished families on their boards of governors. At times when new fortunes are being made, there sometimes emerges a group of newly rich millionaires who desire to gain social prestige to match their wealth. Third, there are - very occasionally - ideological reasons for contributions a wealthy person may wish to contribute to a cause in which he strongly believes.Second, donations may be given with the object of gaining some specific reward such as a business contract from new government.It is rational for the rich to donate money to avoid the return of a government committed to policies of nationalisation, high taxes for the wealthy, or other measures likely to damage their general interests. First, there is the motive of self-protection.Why do the Rich Make Political Contributions? In the British general election of 1997, one businessman, the late Sir James Goldsmith, gave £20 million of his private fortune to run an anti-European Union campaign. There are a considerable number of British residents whose wealth is at least ten times this figure. For example, the central campaign costs of the two main UK parties (Conservative and Labour) in a modern general election are around the £20 million (US$ 33 million) level. Even though politics is a costly business, a number of the richest men and women in many countries are able - provided they are permitted to do so - to make political donations so large that they will have a distinct impact on the political process. Without drawing Pareto's extreme and pessimistic conclusions, it is reasonable to express alarm about the potential influence of rich donors. By their ability to bribe politicians and to fund their campaigns, the super-rich retained a grip on power, despite 'one person, one vote'. A common criticism of democracy, made around the turn of the Century by anti-democrats such as Italian sociologist, Vilfredo Pareto, was that abuses of the system of financing elections meant that so-called democracies were actually no more than plutocracies. The term 'plutocracy' means government by rich individuals.
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