Securitization and Elections

 Eighth in a Series 

Securitization and Elections 

In installment three of this series, "Securing Elections and Good Governance," we considered the intellectual revolution that occurred in another game of numbers: baseball.  That is, the influence of Allan Roth, Bill James, Billy Beane, and all the other Sabremetricians, summed up in the popular culture by the book-turned-movie Moneyball. 

Now let’s look at another instance of numbers rethinking that can be applied to politics: Wall Street-style securitization.  Investopedia defines it thusly: “Securitization pools or groups debt into portfolios.”  The site adds, “Issuers create marketable financial instruments by merging various financial assets into tranches.” 

 

Okay, so securitization pools dollars (or other currency or asset-class) with an eye toward making the product as liquid and nimble as possible.   And so how might votes be analogous?  Here’s how. 

Yet first, of course, a preface: Nothing here is speaking of buying, or selling, or otherwise illegally transacting over votes.  Nobody here is talking about paying people to vote, or not to vote.  Instead, what’s being described here is a way of thinking about how voters vote, and how their votes can be most influential.  All this at the legal and transparent behest of the voters themselves, with whatever legitimate assist--and importuning--from other political players, including activists and parties.  All with the goal of a more honest and responsive system.  

For instance, in installment four we considered how the voters could choose to hold themselves accountable, and in installment six we looked at specific pledges on policy.  Nothing crooked or corrupt here, just honest thinking about how voters can organize themselves to achieve maximum individual and collective influence.    

So now we can add the Wall Street element, because Wall Street, going back four decades, pioneered the idea of securitizing (also known as collateralizing) mortgages and other instruments.  (Yes, this was a topic treated upon by the same Michael Lewis; long before Moneyball, he published Liar’s Poker.)

Once we know we have a bloc of votes, we know we have something consequential.  And yes, it’s valuable to someone, most obviously, the candidate(s) in the race who wish to win.  But also, of course, interest groups and factions of various kinds.  

Suppose we have identified a bloc, or a tranche, of 10,000 people in a district (or other constituency, including a state or a nation), who feel really strongly about an issue.   They are, to use a familiar phrase, single-issue voters. That issue (taxes, a la Grover Norquist, is one such issue, another issue is abortion, pro or con, and there are myriad others) is likely not the only issue the bloc cares about, but it is pre-eminent.  So if the political candidate is on the right side of that issue as the voting bloc defines it, it’s reasonable that the bloc will go with that candidate.  It’s simple politicking: We agree: vote for me.

What’s evolved are the mechanisms by which that voting bloc can be identified, and tended, and mobilized.  And that mobilization can take on forms both old and new.  For instance, if voters were to agree to vote as a bloc, that would greatly enhance their power, in the same way that the electoral college enhances the power of a given state.  If, say, Georgia votes 51:49 in a presidential election, that narrow margin is exaggerated by the electoral college to be 16 electoral votes for the winner, and zero for the loser.  This all-or-nothing voting is a well recognized phenomenon in political science; it's the sort of power that team play--even among a team of rivals--can exert. 

As we have discussed, and will discuss, vote blocs can be identified using all manner of digital tools, from social media (which is always happy to sell data on its users) to customer relationship management (CRM) software to, perhaps blockchain-y smart contracts.  Plus, of course, whatever emerges from AI.  

Once again, no technological development should obviate the basic constitutional principles of free, fair, and uncorrupt elections, and yet the voters may choose to avail themselves of new technology.  And so, for example, CRM could be used to manage a pledge--such that voters having taken the pledge might feel a psychic obligation to vote with their freely chosen fellows.   This is teamwork in action.  Nothing coercive or crooked, but there's nothing wrong with camaraderie and cohesion.   So this is the sort of power-bloc-ing that could be extended from the electoral college to more common elections, including primaries: the winning candidate gets the benefit of the bloc.  

These days, a good campaign has a good handle on its base voters; the challenge is then two-fold: making sure they all vote, and making sure that the total is enough to win.  Enter the new tech and the sense of the larger political market.  

Here’s where thinking of blocs, or tranches, comes to mind: What does it take to make a bloc really good, or not so good, or bad?  How does one “grade” it?  By voting reliability or propensity?  By ease of being able to pivot, from one issue, or one personality, to another?   Sophisticated analysis will soon enough come up with a rating system that covers all these variables (already has, in fact, in many ways, albeit mostly hidden behind proprietary siloed).   And when that happens, the market for advertisers and other interested parties will become fully liquid.  As in, an interested party—say, again, a group interested in taxes, or abortion, or just about anything—will see that there’s an “AAA” bloc of votes in X district.  That bloc might be big enough to affect a party primary, or perhaps even a general election.  Because, as we saw in the previous installment, there is a lot of money in politics. 

So because of all these millions, billions, and trillions, a marketplace will emerge.   Once again, it’s all transparent, not just to “investors,” but to stakeholders and scrutinizers.  All federal and other regulations would still apply.  It’s just now that we’ve created a new way of thinking about trading money and votes, based on the honest and ethical interest and self-interest of the voters, as individuals and as a group.