The following is a rough transcript which has not been revised by The Jim Rutt Show or Katherine Gehl. Please check with us before using any quotations from this transcript. Thank you.
Jim: Today’s guest is Katherine Gehl. Katherine is a business leader, entrepreneur, author, and speaker. She’s the CEO of Venn Innovations, a new organization focused on powerful and achievable change around a short list of consequential issues requiring breakthrough thinking. The first focus for Venn Innovations is American politics. She’s also the founder of the Institute for Political Innovation, a nonpartisan, nonprofit established to bringing into being a new electoral system called Final Five Voting. Formerly, she was president and CEO of Gehl Foods, a $250 million high-tech food manufacturing company, and has a significant track record in both government service and being on boards and advising other not-for-profits. Welcome, Katherine.
Katherine: Well, thanks for having me, Jim. I’m thrilled to be here.
Jim: This should be a very interesting conversation. I happen to, as my regular listeners know, I read all kinds of random books for all kinds of random reasons. And I stumbled across Katherine’s book, The Politics Industry, How Political Innovation Can Break Partisan Gridlock and Save Our Democracy? And of course, as usual, there’ll be a link to the book on our episode page at jimruttshow.com. And I started to read it. I go, “Damn, this is interesting.” So I remember, I reached out directly or whether my assistant did, but somehow, we got connected and we agreed to do a podcast.
Katherine: And I’m so glad we did, and thanks for reading it.
Jim: Yeah. It was a very good book, very readable. Not too long. I also noted that you have a very famous co-author who used to be a hero of mine, Michael Porter, the famous strategy guy from the Harvard Business School. At first, I said, “No, that can’t be that Michael Porter.” And I looked it up and sure enough, it was. When I was a young entrepreneur, a tech entrepreneur in Boston in the early ’80s, one of my board members was a Harvard Business School professor named Bill Solomon. Hi Bill, if you’re still out there. A wonderful fellow, and he turned us all on to Michael Porter’s book, Competitive Strategy. And that was essentially our bible for thinking about business as a serious system. So when I saw Michael Porter, I go, “No, it couldn’t be.” And I looked it up. Sure enough, it was. That must’ve been a lot of fun working with him.
Katherine: Oh, it was fantastic. And you would have read in the book that it was when I was using the five forces that came out of Michael Porter’s competitive strategy, to figure out how to sell more food products that I ended up doing this parallel analysis about the politics industry. So not only was it fun to work with him, it is just fascinating that the original genesis of everything I do now, came from the five forces.
Jim: Yeah, we’ll talk about the five forces. In fact, as I was creating my show notes, I found myself cutting and pasting the five forces in about seven different places, so that we can refer to them. Very useful framing, and we’ll get to that in just a minute. However, before we get to the substance, you actually start the book with something I have found to be hugely important, and that is the David Foster Wallace story. Why don’t you tell that just briefly?
Katherine: Yes. So there’s two young fish swimming along, and they cross paths with an older fish who looks at them and says, “Morning boys, how’s the water?” And the two young fish keeps swimming along, and then one looks at the other and says, “What the hell is water?” And of course, the point of the story is that we don’t see the things that surround us because to us, our environment is totally normal, and therefore we can’t separate ourselves from it.
And I tell the story, as you know, in the book to say that there is so much that is normal to us about our political system that even though we may be disappointed or upset about the political system, we still don’t see some things that are right in front of us, that if we were able to see them, we might say, “Well, that’s a little crazy. Maybe we shouldn’t do it that way.” And I might call this now my Schoolhouse Rock problem, which is to say that many of us… I don’t know the age of all your listeners, Jim, but many of us grew up with Schoolhouse Rock and the songs about the bill on Capitol Hill, and it all seemed easy and perfect and well-functioning. And so sometimes, we sort of don’t realize that it doesn’t work that way at all.
Jim: And I’ve found this in many areas of potential reform that the first step to reform is seeing that these structures exist, and then realizing these were human constructed systems, often a mix of by design and by chance. Right? And that if we assume… And I actually, in one of my PowerPoint presentations, I have a picture, it’s about monetary reform. And all the same things apply to monetary reform. I have a picture of Moses coming down from Mount Sinai with the tablets, and I say, “Our central banker managed fractional reserve banking system was not brought down from Mount Sinai by Moses. It was something that evolved over time. And as decisions humans made, and humans have the right to change it if they want to.” As soon as I saw that, my eyebrows lit up and go, “That’s exactly right.”
So first, learned to realize people out there that the political system was not brought down from Mount Sinai by Moses, nor frankly was it designed by James Madison at the Constitutional Convention in 1789. Bits and pieces of that still survive, but as Katherine and Michael lay out in the book in great detail, an awful lot of what bedevils our systems are subsequent accretions, many of them not constitutional at all. So learn to see it as a human artifact, and then realize it’s susceptible to human reform is the first step.
Jim: So now, let’s hop into it. One of the things that I love about this analysis is a lot of it is based on things that I’m familiar with from business strategy and business analysis. And one of the framings of course, is that politics as it exists today is an industry. One of the early sections of the book is fundamentals of political industry theory. And it’s a big business, bigger night would have guessed. What number you had was during the 2016 election cycle, money spent just on the federal level was $16 billion. Is that true?
Katherine: Yes. And I haven’t rerun the numbers, but it is undoubtedly much larger business now.
Jim: Yeah. It’s amazing. And most of my business career was fortunately, not involved with government. In fact, I remember my first startup. Got a call one time from the SEC saying they wanted and asked us to put our product on the GSA schedule, and we refused and said, “If you want to buy it, use your credit card like everybody else, God dammit. I’m not going to get it entangled with bunch of Goddam government regulation.” And so I tried to avoid, but one of my businesses was deeply embedded in politics. And in fact, it was all about politics at the very center of it.
Katherine: What was that?
Jim: Network solutions. We ran the domain name system for the whole world back in the good old days.
Katherine: Oh, yeah.
Jim: We were a hideous monopoly supplier with a monopoly granted by the US Commerce Department. And the company was doing a bad job, one of the reasons why they were in trouble, but we got them doing a much better job, but the politics were still there. And even though politics was central to this company, they were spending about $200,000 on political affairs. Within three months, I’d tripled that to $600,000. And I quickly realized that any amount that I could usefully spend in politics was money extremely well spent in terms of return on investment. But I couldn’t figure out ways to spend more than $600,000, which is unfortunately corrupt. That’s not how the world should be. The world should not be governed by who can spend the most money.
And I learned a whole bunch of dirty tricks. We had some great political operatives, spun up astroturf organizations. It was sick. And I’m glad subsequently, none of my businesses were ever engaged in government, but that was a hell of an education in how much money you can spend and how unfortunately, why this thing has grown so big. How much payback there is from this stuff, right?
Katherine: Yeah. In the dysfunctional industry that politics is, there is a lot of payback for unhelpful activities as your own personal experience indicates. As soon as we get into saying politics is a business and there’s a lot of money, people many times assume that I’m going to take a position that there should be no money in politics, that it somehow shouldn’t be a business. And I want to say right from the start that I am a huge capitalist, and I believe in the power of business and competition and profit that can derive from that as being what powers innovation, what often drives results and accountability in any human endeavor. Here’s the thing though. In an industry, you either have an industry that is highly functionally competitive, such that the value of that industry is being shared amongst the players in the industry, but primarily, we are looking at, are the customers better off because of how that industry functions? Which is to say, does the industry do well when the customers do well? And in that case, competition is great.
So what happened when I started looking at politics as an industry, it was this not just, “Oh, it’s a big business,” because that is actually something we’re all pretty much aware of, but it was the clarity that the players in the industry, what we call collectively, the political industrial complex, do well, and in many ways, do better when their ultimate customers, general election voters, are more and more dissatisfied.
So what I try to do with the politics industry and what you and I are going to get in today is not some utopia of politics is going to be filled with people doing the right thing, totally disconnected from whether it’s good for them, or their careers, or for their family’s ability to send their kids to college. It’s going to be saying, “What would it take for politics to work for the people who work in the industry, as in they’d be good jobs, but only to the degree that what they do with their jobs and how they approach them and the decisions they make, end up making it more likely that the customers of the politics industry, meaning the voting public, like what’s coming out from that industry.
Jim: That’s a very nice analysis. Right? And certainly, not necessarily what we’re getting today. I’m going to bring this up a few times just where it’s relevant. But before we go further, why don’t you give us a very short overview of Porter’s five forces?
Katherine: Okay. So Michael Porter at Harvard Business School, considered the father of modern competitive strategy, anybody who’s running a business as you indicated, Jim, really goes to the five forces as one of their basis for figuring out their strategy. And what you do is you look at the different kinds of players that are involved in an industry. So I ran a food manufacturing company and I had my competitors, so we’re at the center of that. We’re the rivals. I’m trying to sell more cheese sauce to go on nachos at more stadiums, and more theaters, and more convenient stores than my competitors are. And we’re competing, and then associated with us as the rivals are the suppliers, so the people that we buy our raw materials from. We also have our distribution systems. We have our customers, both the first level of customers, which might be the stadiums, and then the ultimate customers, the people who are going to eat this product. And we also have the threat of new competitors coming in.
How I said it in my TED Talk was actually that when I was doing my analysis of the five forces, I was looking at a situation where essentially, if I create products that make my customers happy and that are at the right price point and they taste good, then I do well. And if I don’t, then one of my competitors is going to come in to provide a better product and service. And that holds me accountable essentially, to keep improving my products and to keep the price reasonable, et cetera. And I was looking at politics and saying, “Wow, this is fascinating.” Because the rivals, which is, let’s say the two major political parties and all of their associated players, that political industrial complex, is doing phenomenally well, better than ever, as their customers have never been more dissatisfied.
And yet, I say it this way. In any other industry other than politics, if there were only two competitors and 90% of the customers were dissatisfied and the industry was thriving, then a new entrant would come in to give the customers what they wanted because it would be a phenomenal business opportunity, but that never happens in politics. Well, why? Because the barriers to entry are too high. And one reason for that is because our two political parties actually work very well together in one particular way, and that is to behind the scenes, rig the rules of the game to protect themselves jointly from any new competition. And if they don’t have any new competition, they don’t actually have to make us happy because they can do fine without it. And that is the structure that we’re going to change.
Now, I will also note, I want to be clear, I am pro political party. I don’t think our problem is parties. Our problem is not even that we have only two parties. Our problem is that the current two are guaranteed to be the only two ongoingly, regardless of what they do or don’t get done on behalf of the customers. And that’s what we need to disrupt. So that’s where the five forces allowed me to see how screwed up the competition was.
Jim: And that the usual dynamics does not cause the system to come back to equilibrium. See, that is the real systemics problem. As my listeners know, I’m a complexity theory guy in real life. And so I look at complex systems as a series of multiple forces that end up with an emergent result. Right? And in normal market driven economy, as you say, if the two cheese sauce guys keep diluting the sauce down to the point that it runs off your nachos, and I’m sure there’s an economic incentive to do that because the cheese is cheaper to make with more water in it. Then somebody else comes back with stickier sauce and some new person says, “All right, that sucks. [inaudible 00:15:14] start a cheese sauce factory.” And they take business from you. Or people just get tired of cheese sauce on nachos and say, “Hey, I want fresh salsa instead,” and goes and sells the stadiums, some system for delivering salsa in bulk to the nachos.
But that’s not happening in our politics. And as you lay out why, because hey, when you let people make their own rules, it’s not the same as a market economy where the rules are independent of any of the players.
Katherine: Yeah. And Jim, I think you’ll appreciate this. A lot of times when I speak in front of a large audience of business leaders after this becomes clear to them that this is a protected duopoly, someone will invariably come up after and say, “We need to fund an antitrust lawsuit against this political industrial complex.” And then I will have to say, well, as you might imagine, given that they themselves are the ones that make the rules of the game unlike in any other industry, antitrust legislation ever so conveniently does not apply to the politics industry.
Jim: Yeah. Just like most labor regulations do not apply to the congressional staff. I always thought that was a nice little touch.
Katherine: Yeah, there you go.
Jim: Well, if you can, why wouldn’t you, right?
Katherine: Yes. If you can, why wouldn’t you? And so I don’t even mean to make this sound evil. I mean to say, everybody is doing what they are incented to do given the structure. And once we see it for what it is, we the citizens, have the power to step in and alter certain portions of that system that protect the business. Even when the business is making 90% of the people dissatisfied with Congress and making 70% of the people not want a rematch between the two likely presidential candidates this year, we can reset the things that are making that happen, and then that industry will naturally correct itself by continuing to do what makes sense for them. But at this point, it will also make sense for us and for good policy and for problem solving. So nothing wrong with people doing what’s good for them, unless we’ve essentially regulated the industry wrong such that what is good for them is only good for them and bad for the customers.
Jim: Yeah. And then the other thing I love about your approach, unlike some political reformers, is you are no way utopian. You don’t believe everybody’s ever going to agree and that there’s going to be puppies and flowers in the sky and all this crapola. There’s an awful lot of political reformers who whether they know it or not, are utopians. And I’ve always thought that’s utterly ridiculous. And the few people that have actually attempted to try utopianism, it’s always been the road to hell. Pol Pot no doubt thought he was a utopian, and probably Lenin and Hitler too. And so the idea that we’re all going to agree, that’s horse feathers, and what we need to do is have systems to allow us to disagree constructively.
Katherine: Yeah. Some people want to design their recommendations and their plans for a world that works as they wish the world worked. For me, doing this as a former business person, I’ve been very clear since the beginning, we have to design everything for the world the way it really does work. And that’s when you can get power.
Jim: Yep. And then I like when I saw this in the book, I said, “Okay, this is going to be a good book.” Which early on, you used one of your Venn diagrams from your Venn Innovations, to show the intersection of powerful change and achievable change. Again, fair number of reformers, yeah, that’d be nice, but it would require five constitutional amendments. And I go, “Thanks, but no thanks. I’m old. I’ll be dead long before you go anything done.” So you did a good job, I thought, and you laid it out explicitly. This is what you’re going to do, of focusing on those changes, which actually can be achieved without constitutional amendments. And I believe all the ones that you suggested could be done without constitutional amendments.
Katherine: That’s just a requirement of something I want to spend my time on and that I want to recommend other people spend their time on, is that there is going to be an ROI as we say, before I’m dead, before you are dead, before they’re dead. And really interesting to me again, coming from the business world, is how much money gets invested in the nonprofit world and in the political world into things that are never going to happen. So in business, mostly you don’t invest in things that are clearly never going to be successful, but for some reason, there is a lot of investment in things that have no chance in nonprofit. I think it’s because people can feel it’s still a good thing, a right thing.
And sometimes, I actually think there’s more investment in those things because let’s say the nonprofit that is promoting a term limits for Congress can keep raising millions of dollars a year even though term limits for Congress are unconstitutional. So unless we would change constitution, you can never have them. And I’m not saying people shouldn’t work on them. They just shouldn’t promise that $5 million this year is going to make a difference because that’s not going to happen. Whereas $5 billion in, for example, Final Five Voting, would make a huge difference. Yes, same for electoral college.
Again, people can care about those issues, but don’t pretend that they are competing on the same plane with things that you can actually achieve like Final Five Voting, which we’ll talk about. Although the other thing I will tell you is there’s also a huge problem with political reformers working on things that are achievable, but if you achieve them, when you achieve them, they won’t actually change anything. So then I say, “Well, then why are we achieving them?”
Jim: Exactly. Yeah, achievable and powerful. That’s a very nice way to look at. That’s your analysis. And then this is something that most Americans, even the well above average intellectual Americans listening to the Jim Rutt Show, aren’t aware of that a lot of the real problems in our political machinery are not constitutional. These are things that just have accreted along the years. Maybe you could take us through some of the non-constitutional elements that have evolved over time, which are therefore subject to change without constitutional amendments, that you believe are key parts of our problem.
Katherine: Okay. Great. I’ll take you through two, which are the two that Final Five Voting will then solve for. So the first one is something I was just never aware of. This was so water to the fish to me and to, I would think almost everybody. And that is that in this country, we have plurality voting. So I’ll explain in a moment. Go back to when the founders made our great constitution, although it needed some improvements, but fundamentally, really set us on this path of a great democracy. And then after that, they had to deal with all the little rules of democracy. I mean, the constitution, you can get a pocket constitution for a reason because it actually fits in a pocket because it’s super short. But then there’s lots of other things that needed to be managed.
So they needed to actually figure out, so if people are going to elect our leaders, we are not going to have a king, how should we elect them? And there were no other operating democracies in the world. So there weren’t other elections except that they found one example over in Britain. There were some countryside elections in rural Britain, and the rule that they used in Britain was people will vote, and then the person with the most votes will win. And so our founders said, “Oh yeah, this makes sense. Let’s do that. Person with most votes wins.” Now that sounds super logical, but it’s actually a huge problem. But let me first say, so the person who has the most votes wins is the definition of plurality voting, which means you can win with the most votes even if you don’t have a majority, even if you don’t have over 50%. We usually think that they’re the same, but they’re not because think about this, in any race with more than two people, you can win having the most votes even though you don’t have a majority.
So let’s take a race of three people. You could actually win a competition of three people with only 34% of the vote because if the votes split relatively equally and each of the other two got 33%, you’d have the most votes, even though 66% of the people in that election wanted someone other than you, you would win. Now, that doesn’t seem super democratic, I suppose, and I care about that. But the real reason we need to care is because this rule, plurality voting, is the single greatest reason why we have so many lesser of two evils elections, why we’re going to have two candidates in 2024 for the presidency, Trump and Biden, that 70% of the country already says they don’t want. And I’m not even commenting on those candidates as their qualifications or what I think personally. I’m just commenting on that is crazy, that that’s what we’re going to end up with and that there aren’t going to be other choices.
And this is why plurality voting is why so many people turn up at any election and say, “I’ve got to choose a lesser of two evils. I don’t really like any of my candidates.” Because whenever you have with plurality voting, anytime you have a new entrant like a third, they become the spoiler. So most people have sort of heard of this like the spoiler or the wasted vote as in, let’s go way back to 2016 to take current emotions out of it. In 2016, when we had Hillary and Trump, essentially, if you were on the left and you wanted to vote for green party candidate, Jill Stein, you really message to, “Oh my goodness.” Feel free to like Jill Stein, but under no circumstances in this democracy should you actually vote for the person you like, because what you’ll be doing is wasting your vote and spoiling the race for Hillary because you’ll take a vote away from her and accidentally, inadvertently help elect the candidate you like the least, Trump.
And on the other side, if in 2016, you really liked Libertarian candidate, Gary Johnson, the message to you is, “Yeah, feel free to like him, but even in this country of great choices and the leading democracy in the world, don’t actually vote for the guy because you’ll just waste your vote and spoil the election for Trump because you’ll take a vote away from him and inadvertently help elect Hillary.” Plurality voting is the reason why we don’t have competition to serve the voters, to make the customers happy. And that, as I just told you, is an accident dating back to who we copied from when we started. It’s not in the constitution. We can change it any time we want.
Jim: And it’s also worth noting from a comparative perspective that different countries around the world do very different things with regards to this. The UK also has a plurality voting system or also known as first pass the post, and their system converges to two and a fraction party. There’s a few other parties, a few more than we have, but not many. Well, on the other hand, countries like Switzerland have about 30 political parties. Countries like Israel have more than 10 for a country with only 10 million people. Italy has a bunch. They have fairly radically different political systems or parliamentary rather than our system, but they’re clearly democratic countries who are able to have a thriving democracy with relatively many parties. Now, we might end up in such a situation after some of the reforms Katherine’s talking about, and if we did, that’s not necessarily a problem.
Katherine: Although if I could Jim, and we can go back and forth on this a little bit, I actually have, unlike many performers, no specific number. This would be the right number of parties. I actually think it’s perfectly fine to have two major ones as long as I noted a little bit ago, that a new competitor can come in if they’re not doing their job. Because let’s think about how it works in Silicon Valley, for example. If there are two major tech companies in a certain area of technology, but they continue innovating even if the person who creates the new innovation that would benefit the customers, they create it in their garage, either that person grows their new innovation into a third great company with huge market value and takes it public, et cetera, or they get bought by one of the existing two, or their new innovation gets copied assuming it’s legal, by one of the existing two.
But in every case, the benefit of the innovation brought on by the competition makes its way to the customer no matter what actually happens in the industry. But it had to be that that customer could have competed with those top two. And that’s what I think we’ll see in our system, is that whenever the top two are not getting the job done on a particular issue on behalf of certain constituencies, there’ll be some new pressure of competition coming in, which may or may not replace one of them. The reason there are so many parties like 30 and we hear about in Israel and in other systems, is because it’s parliamentary. So I think that in our system, we’ll have sort of the best of both worlds, which is not too many parties, but an opportunity for new competition, even not as a party, even just as independents. And we’ll still have a stable government because we won’t be all fractured in a way that brings the executive down.
So I love America’s constitutional republic with the executive separate, the president separate from the executive branch, combined with a new way of voting because we’re going to have plenty of stability, but still enough competition. And by the way, a competition not just of people, but a competition of ideas. Because in the end, now we’re concerned about who are we electing, but what we really also need to be concerned about is what are they doing, which is what policies are they putting into place? So just want to say, we’ll see how it plays out, but it’s not that we need more parties. We just need the threat of more parties, the threat of competition, and we need that competition of ideas.
Jim: I’m going to push back a little bit on this one, which of course, I often do here on the show, which is I do think that to get the maximum value out of your reforms and similar ideas, there does need to be an ecological niche for multiple parties. And the reason is ideas don’t go from zero to a hundred in a four-year cycle very often, just like progressivism started out in the late 1880s and really didn’t become an electoral success, fully until 1916. It took almost 30 years for it to mature.
And so have an ecological niche that allows minority points of view to maintain visibility for a period of time to one, modify their ideas until they’re more aligned with the public and for the public to get their ideas. So another analogy I use often is garage bands and rock and roll. Right? Even though 99 out of 100 garage bands in rock and roll suck basically, and they’re just going to be entertaining for themselves, to entertain their friends and have fun, if it wasn’t for garage bands, rock and roll would never progress. And so I would at least, like to see an ecosystem in which there is room for garage bands and there’s room for parties that take 30 years to reach maturity where they can contend for victory. So I think that’s a slightly different perspective.
Katherine: No, actually, let me accept your correction. We agree 100%. So I should have been more clear that what I’m talking about, is we don’t need five major parties, five equal power parties. But yes, we need all of that competition. And that’s some of what I was referring to as the competition of ideas, that there will be some parties who may never even after 30 years, take home a win, but they could arise because they’re bringing up an issue that the major parties are completely ignoring. Let’s look at a real life example, one of my favorites. So something I really care about is the national debt, which is now $34 trillion. And it was one of the main reasons I sold my business in 2015, to be able to do this work. And at that point, I think we were only at 17 trillion, and it was reason enough for me to change my life to work on. But here’s the point, when was the last time in this country that we had balanced budgets?
Jim: Back at the Clinton administration.
Katherine: There you go. In the second Clinton administration, and it was a partnership that delivered that between the Clinton administration and the Newt Gingrich led Congress. But why did we get that? Actually, we need to be giving a massive amount of credit to Ross Perot. Because in 1992, Ross Perot, the last real independent who got pretty far in the presidential race, Ross Perot ran on that issue that the debt was too high and he garnered 19% of the general election vote, zero electoral votes. So he is known certainly as a loser. He’s also known potentially as the person who spoiled the race for George Bush, although that is debated. But nonetheless, he’s known as he lost. But here’s who won. The American public won. The customers won because his competition on that issue is what drove both the Republican and democratic parties to add it to their issue set, to make it part of their platform. Because it simply didn’t exist for them before because they didn’t know that’s what the public wanted or they didn’t care that’s what the public wanted.
So basically, neither party wanted to seed that 19% of the electorate to Ross Perot’s growing third party movement. So they decided they better take it on. And it was that electoral pressure that pushed them to do the hard work of solving a complex problem with trade-offs where nobody can get everything they want, which is the definition of every big problem we have. It’s complex. There’s trade-offs. Nobody can get everything. Now the theory says this, okay? My politics industry theory says this, and I’d written about it, et cetera, and when Perot died, I wrote an op-ed about it, but it was just my theory. But on the same day that I wrote my op-ed, Paul Begala, one of Clinton’s top economic advisors, also wrote an op-ed about Perot. And believe it or not, he said the same thing.
And I’m going to roughly quote him. “It is doubtful that we would have solved that issue without the pressure that Perot’s voters brought to the table.” That is the exact definition example of what competition in an industry can do even when that person doesn’t win. Competition had the customers win. And that’s what you’re talking about, I think, about we’re going to have all of these garage bands. And some of the garage bands are going to start to get popular and that’s going to indicate to those in power that they better be looking at that issue. And we’ll have a competition of so many more ideas than we currently have right now between just those two choices.
Jim: Very good. So first of your big non-constitutional problems is plurality voting, also known as first pass the post. What’s the next one?
Katherine: It is another one, non-constitutional. Okay. The next one dates back only to about a hundred years ago, and that is party primaries. So what happened a hundred years ago, basically at the end of the Gilded Age, came about this new movement, the progressive reform movement, which is not related. Don’t think of that as related to the left today. It was a cross partisan group of people who wanted to change things in the country.
And one of the things they did was, for example, change the US Senate. Senators were before the progressive movement, senators were chosen by state houses. They weren’t elected by the people. That’s not the one we’re trying to change though. One of the other things they did is they created party primaries that we still have to this day. And the reason they did that is because they wanted to take power out of the smoke-filled back rooms and give it to the people. Because essentially, what they believed was happening and what was happening is that there was a smoke-filled room filled with certainly a very non-representative sample of people who had power at that time, who would choose the candidates, and then that was pretty much a done deal, who was going to win?
So they said, “Well, this choice of candidates is determining the winner when the public isn’t involved. So let’s instead, let the public have a say in who is the Republican candidate for Senate in Wisconsin, who is the Democratic candidate for Senate in Wisconsin.” So they put those in and it was very well-intentioned. Having said that, over time, it turns out that the party primaries are an enormous reason why we can’t solve any problems because humans, we do what it takes to get a job and to keep a job, and to go higher up in our job. We all do that. And people in politics are exactly the same.
So right now, what any election system does is that’s the system for hiring, who’s going to be in the legislature, who’s going to get those jobs. And our system of hiring right now distorts who wins, but more so, it distorts what people do. And that’s because of party primaries. So here’s what happens. In the party primaries, an 85% approximately of US House districts, party primaries decide who gets the job. What I mean is if it’s a red district, then whoever wins the Republican primary in the summer is guaranteed to win in November. And the same is true if it’s a blue district. Whoever wins the Democratic primary in the summer is guaranteed to win in November. And that is months before all the voters turn out. As of September 13th, 2022, a date that no one really paid attention to, but it was a super important date, because as of that date, 83% of the US House had been chosen because of this phenomenon of the districts being safe. And another fact people don’t really know is that that 83% of the House was chosen by 8% of the voters. That’s it.
Okay. So again, not democratic really, but the reason we really need to care if we’re looking at the results for the customers is because when you’re hired that way by 8% of voters on the left or on the right, and you can be fired by them in two years, they are your bosses. They’re the bosses. So I have a 6-year-old son, so this is how Teddy would say. So they’re the boss of us. So effectively, our current election system makes 8% of the public the boss of us. So what we want to do is change the election system so that the boss of everybody who’s serving is November general election voters. So instead of the decision being made in the summer months before most voters turn out, we need to make sure that nobody wins, that nobody gets hired until November, and that nobody can be fired until the next November that their election is up. And when you change who the bosses are, you can change what people do.
Jim: Yeah, there’s one issue, which you guys do get into in the book that I think, exemplifies. This impacts lots of issues, but this one issue that’s imminently solvable. There’s a consensus approximately what the answer is, but the primary system prevents any useful action, is immigration, right? If you’re in a very red district, if you want to do anything with respect to a reasonable compromise in immigration, you’ll be primaried as they say, by somebody who is an immigration absolutist. If you’re in a blue district and you want to do reasonable immigration reform, you’ll be primaried by a very extreme open borders person, and you may well lose.
And even if you don’t lose, you have to spend a lot of money and a lot of trouble, a lot of time. And so when you talk to these congress critters, particularly those the majority now who are in very polarized districts, being primaried is their fear. And it impacts immigration, it impacts gun control, it probably impacts abortion. It impacts a whole bunch of issues. And this really is a fundamental dynamic. And as you have pointed out very eloquently, this idea that a small number of the most extreme voters in each primary get to fire a candidate of their party in a small voter turnout election is not really very democratic at all.
Katherine: Yeah. And super unhelpful to results. So yes, you are right about immigration and this is the situation for almost all of our complex problems. So go back to the debt, which is what I started with, where Perot changed what was needed there, the broad outlines of the solution to have a rational fiscal policy in the country have been known for decades. Just like by the way, the broad outlines of the solution for a consensus immigration reform have been known for a couple of decades. But people from both parties can’t vote for it or they’ll lose in, as you just noted, their primary. So think about the debt. If the solution includes $1 of benefit to decrease as in decreasing cost, and then the Democrat can’t vote for it because they’re going to get primaried, and then the solution includes $1 of revenue increase the Republican can’t vote for it.
So the solutions that would be sustainable across administrations where nobody gets everything they want, both sides lose. Both sides lose. So if you are in DC and behind closed doors, you can get people, to be honest, there are lots of deals that exist where there’s plenty of agreement. It’s just that they can’t do it because they’ll lose their jobs. And instead of complaining about that, well, they should do it anyway. How about we just do this really radical thing, which is we make, we change the way we hire and fire, so that solving those kinds of problems where there is agreement becomes a good way to win, instead of a good way to lose. And that way, they can do what they need to do and we can get what we need. It’s the only rational way to do it. And since we just talked about the two root causes being really made up rules, we just made them up, which is we made up that we would use plurality voting, we made up that we would use party primaries. And so we can change them and make up rules that would be different.
And look, we do this all the time. So Bud Selig, who was a former commissioner of baseball, was actually an early supporter of Final Five Voting in Wisconsin. Although he wasn’t the commissioner under these new changes of the rules in baseball, let’s think of what just happened. Baseball had a huge problem and they got together and they changed the rules of the game. And now they changed the way the game is played and they changed the outcomes of that game. So that’s true in any human endeavor. Change the rules, change the game, change the outcome of the game, and that is our job as citizens to change the rules, and change the way the game is played, and change the outcomes. I think of it as really understanding that while the constitution is enduring without these hard to get amendments, the rules of the game are something we’re responsible for today, right now. We own that. And if the rules are wrong, it’s up and unhelpful to the country. It’s up to us to get on top of it and change them to rules that would be helpful.
Jim: All right. So you did a great job of explaining these two fundamental non-constitutional structural problems, which make our politics not subject to the normal dynamics of competition, which could reform it. And so what could we do about that, that is both powerful and achievable?
Katherine: Nobody will be surprised to know that what I think we should do about it is change how we hire and fire, change our election system to a new method called Final Five Voting. And I will run over precisely what that is, and then we can get into the details. So Final Five Voting is the umbrella term for two changes to how we elect people. And you have to do both of them together. They are a set that if you do them alone, won’t make the difference that is needed. So first of all, with Final Five Voting, we’re going to get rid of party primaries. And instead on that primary date, we will have a single ballot primary where everybody runs on the same ballot regardless of party, although they’ll still identify their parties, and everybody votes regardless of party registration or their status as an independent. It’s a pick one primary, so you just choose your favorite off the list of all the candidates.
Then when the polls close, add up the votes and the top five finishers will now qualify for the general election. So it’s going to be not just one Democrat, not just one Republican. It could be multiple Republicans, multiple Democrats, plus a green and independent, et cetera. Now you’ve got five going to the general election. We have no idea who’s won. So already, we know the decision was not made in the summer in a low turnout primary. There’s going to be a competition between these five, and between the primary and the general will benefit from that competition of visions, ideas, personalities, and then go into the general election when everybody’s showing up with these five choices. Now that we’ve gotten all of the benefits of competition, we simply in November, need to figure out which one of these candidates should be the winner.
And we can’t use plurality voting for that. Most votes wins because what if we accidentally elected one of those five people with 21% if the votes split relatively equally? Well, that wouldn’t be Democratic certainly, but it just wouldn’t be helpful because then, their bosses would only be that 21% of the electorate. Whereas we want the bosses to be the greatest number of people, a majority of people in the November general electorate. So we needed to find a majority winner. And to do that, we have a really simple method, which is to use runoffs, but to use instant runoffs. So like Georgia, for example, already uses a runoff if nobody in the general election gets 50%, they have people come back like a month later, to vote again between the top two. But we don’t want to make people come back, so we use instant runoffs and that’s exactly like a series of runoffs, but instead of having to keep coming back, each voter casts all their votes at once using a ranked ballot.
And then when the polls close, we use all the information on the ranked ballot to run a series of rounds going from five candidates, dropping off the person in last place, so now you’re down to four, then you’re down to three, and then you’re down to the last two. And you’ll emerge with a result exactly like we’re used to having. James beats Amy by 60 to 40, whatever it is. And the combination then of those two changes is the system called Final Five Voting. So combination once again of a single ballot, open primary, top five finishers advance, and an instant runoff general election to find the majority winner. That’s Final Five Voting, and the benefits are myriad.
Jim: Yes. And there’s already some experimentation with this. A significant number of cities and a few states have adopted the open primary, for instance. And there’s been variations on the rank choice voting, which is another name for the instant runoff. I believe California uses a final two system, which doesn’t really count. Alaska has a final four system, I believe it is. And Maine, I think has just implemented something. I’m not quite sure what it is. I imagine you probably do. So this is something that is not just pie in the sky. It is actually being tried out in small ways.
Katherine: Yeah. So thank you. And there are some real important points we should stress here. So first of all, Alaska has a final four system which is identical to Final Five, but as you might imagine, the top four finishers from the single open primary advance to the general election, instead of five. To a certain degree, that’s because way back before Alaska did their ballot initiative, I and others in the industry thought that four was the right number to advance. I updated the work since then in part because of the game theory that you love, Jim, to recommend that five is the more optimal number to advance to a general election. But essentially, Alaska has the exact design system that we need. There is no other place that has a system that is similar to Final Five Voting. This is a big confusion out there in the debate, a confusion that California is somehow similar, that Maine is similar, and Maine just has RCV, that any of these cities that have ranked choice voting are the same.
And the reason it’s really important to distinguish those is because the purpose of making those changes when it’s not the combination that makes something a final four or final five system is different and the results can be different. Let me describe. So the purpose of Final Five Voting by using these two things in combination, even though it’s the hiring system, the purpose is not to necessarily change who wins an election. The purpose is to change what the winners do when they’re doing their job, when they’re legislating. So the purpose is for them to have more agency and more accountability by being hired in this way and potentially fired in this way, so that they can deal powerfully with those trade-offs on the complex issues of immigration, and debt, and healthcare, et cetera, and still have a chance to win again. And Final Five Voting does that.
And I think a way of really making that clear is that I sometimes give this hypothetical, like if there were a fairy godmother and the fairy godmother said that I could have a choice between A, all perfect people, perfect new people in the Congress, the House and the Senate, but leave the existing rules of their next reelection the same. Or B, have all the existing people and change the rules of their next election to Final Five Voting, which is to say to be hired by a majority in November and have real competition, which one would I choose? Well, I would choose B in a heartbeat. All the existing people with the new incentives, the new bosses and the new competition that is created by Final Five Voting.
If you do anything else, like if you put RCV, rank choice voting, it doesn’t do that. You’ll still elect your person primarily. If it’s a safe red district, you’re still going to elect someone when 8% of people vote in the summer in the Republican primary. So the way they do their job is not going to be any different. If you have just an open primary where you can participate in a primary where you don’t affiliate with the party, I actually think those are bad for the parties and they’re leading to a lot of machinations where Democrats are trying to get a far right candidate that will lose the general, and Republicans are trying to get a far left candidate that will lose the general. So I actually think that just opening primaries is bad for parties, although let me say it’s the only fair thing to do if that’s going to be when the decision is made.
So with Final Five voting, you actually strengthen the parties because they can get the candidate quality they want and need to win generals, but you also make it fair so that all voters actually do get to choose who wins. Long story short, it’s really important for anyone and everyone who likes Final Five Voting to make clear consistently that it is not ranked choice voting. Ranked choice voting has been used in cities, and now it’s used in Maine, for example, and it has not delivered changed results and it has gotten some criticism.
And so we want to really separate from that because Final Five Voting only uses the instant runoff simply to find the majority winner. It’s just the tool that gets us what we really need, which is competition and winners chosen in November. It’s not the point of it. So another way of looking at it is rank choice voting might make things more fair and more representative, but I think of that as the booby prize of political change, because what people really want is better results. So at Final Five Voting, we’re going to be more fair, more representative, but most importantly, we’re going to get better results for the public. So let’s never confuse the two.
Jim: It’s certainly possible. As I understand Final Five Voting, it would use the same algorithm as rank choice voting. It is ranked choice voting on the November election. What makes it different is pairing it with an open primary, as some people call it jungle primary, like California has and a few other states. Isn’t the Final Five the same math as ranked choice voting?
Katherine: Yes, it is in a sense. I mean, candidly, there’s lots of different kinds of rank choice voting, only one of which do we recommend, which is the instant runoff version. So it’s the same in that way. It’s just very different in its utility and in the outcome for citizens and voters when it’s used with five candidates in a general election. When it’s used in a city with 30 candidates on the ballot in a low information, low turnout race, what I think of as an inefficient marketplace, it can change the results in ways that sort of don’t make sense to anybody.
And I’m not saying they shouldn’t do it. I’m just saying it’s not relevant to compare what happens in Sacramento using RCV with 30 people, to what happens in a high turnout, high information race for US Senate with only five people in the November electorate. So if we continue to conflate these things, criticisms that have developed because of rank choice voting’s use with very large fields of candidates and very low information, low turnout races, will reflect badly on Final Five Voting when none of those things would ever happen with Final Five Voting, because we just have five candidates for these high competition races. Does that make sense, Jim?
Jim: Oh, yeah. I mean, that’s very clear to me. It is true that your final five instant runoff, which is the most common form of rank choice voting as you say, there are other ones.
Katherine: Yeah, here it is. You’re right.
Jim: Now interestingly, I had some experience with that when I was a student at MIT being a bunch of nerds. They had always used rank choice voting for student elections. And it was the no primary instant runoff variety. And the city of Cambridge was officially impressed by it that they adopted it. So the city elections in Cambridge are also ranked choice voting, but they are, to your point, there is no two phases. Both our MIT elections and the city of Cambridge couldn’t conceivably have too many candidates where just the runoff process becomes nonsensical when there’s too many candidates and not enough information. And so having the two phases gets to the point where you get down to five that people can actually study and learn and choose rationally why I prefer C over E, and E over A, and et cetera. You can’t do that when you have 30 people on the ballot.
Katherine: I want to note one other thing. So yes, rank choice voting can be a really good way to select a candidate, but not on its own to select a winner in this competitive process. Because what we want to set up for elections, it’s not just how we’re going to pick the winner, but what is the quality and contribution of the election debate process itself going to be, which is why we need to have the two phases. Because we need to narrow the field, so people can pay a great deal of attention once it’s narrowed and the media can pay attention to all of them. Otherwise, the media will just default. If you have 30 people to paying attention to the top two, they always think are going to be the biggest competitors, but here’s an interesting use of it. The Republican Party in Virginia in their last gubernatorial, decided to use instant runoff within their party to select the consensus candidate who would run for the Republican as the Republican nominee for governor, and that’s Glenn Youngkin, and they won.
And one of the reasons why they did that, and I’ve talked to an insider about this, is because as people know, there’s a division in the Republican Party right now where there are different kinds of Republicans. So let’s just call them for our use a Trump Republican, a Romney Republican. And they wanted to figure out in that Republican primary process, they wanted to figure out who can we come together as a consensus candidate on? They didn’t want to nominate someone with 30% of the vote and have 70% of their voters wishing someone else had been nominated. So they used RCV. It got them a candidate that was as evidenced by the fact that he won, who was well suited to appeal in a general electorate. And given that under Final Five Voting, parties will go back to being able to choose their candidates strategically in a fashion that they privately as private organizations determine, they may well end up using an instant runoff process as part of how they figure out which candidate’s going to put them in the best position to win in November.
Jim: So to clarify that, that’s interesting, I hadn’t thought about this, let’s take your final five system where you have an open primary. Anybody who crosses some threshold as specified in the legislation goes into the primary, into the open primary. And then the final five go to the general with the instant runoff form of rank choice voting. Do you envision that the parties might well keep their partisan primaries, and then essentially only allow one of the people in the open primary to use the party label?
Katherine: Fascinating questions. So here’s what we want to think about. What we’re doing in the politics industry is we are freeing the players in the industry to make really good strategic choices that they really can’t make right now. So when they did that progressive reform years ago, a hundred years ago, that we talked about where they created the party primaries, they essentially took away the right of the parties to determine who their standard-bearer should be, and they gave it to the public, and then the public pays for it. Right? The public pays for the party primary process by which then they get their candidates. And sometimes, the public is all allowed to participate, sometimes they aren’t. There’s a lot of different rules. So now what we’re going to say is, “No, no, no parties. You are private organizations and you can select who you want to endorse and campaign for all on your own.” And parties will likely make a varied set of decisions.
So I’ll give you an example. Well, it’s not really helpful to go back and look at existing elections and say, “If you had Final five Voting, it would’ve gone this way.” Because as we know, if the rules of the game are different, people would play the game differently. So they wouldn’t be saying certain things that they say now to win a party primary if that wasn’t what was going to help them win a general.
But I think we can generically think about it this way. If you had a Final Five Voting race in a state for a US Senate race back in 2022, what possibly would happen is that let’s say it’s a purplish state, so it’s going to be competitive in the general, it’s not for sure going to be a Republican or a Democrat, you would probably advance out of the single open primary, a progressive, let’s call it an AOC type Democrat. You would probably also advance a more moderate traditional establishment. Let’s call it a Clinton Democrat. You would probably advance a MAGA Republican. You would probably advance a Romney previous establishment Republican. And then you’re going to advance another person, maybe a green, maybe a libertarian, maybe an independent, maybe someone running like Ross Perot on a single issue like debt deficit, which I would love to see.
Anyway, so you’re going to advance those five. And then if you’re the Republican Party, you have a choice to make. Do you want to choose one of those Republicans that you’re going to go all in behind and only spend on them? Or do you want to in effect, endorse both of them and say they’re both good Republicans? Choose who you want, but run or rank the red campaign and choose Amy first, and Nancy second, because they’re both Republicans.
The party will strategically need to figure out what is best for increasing both the likelihood that a Republican will win and a Republican whose ideas are most aligned with theirs, and someone who can win. So sometimes the Republican Party might wish a certain kind of candidate could win, but know that that candidate will be less competitive in the general election. So they might be incented to endorse someone who is slightly different than their preferred views, but more likely to win. It depends on the local situation. So what we want to do in the politics industry is just make it a highly competitive industry that will actually give the parties the freedom to determine their candidate quality, to determine who’s at the sweet spot of representing their ideals and being able to win an election.
And in the end, that will be better for the parties. They can keep doing well, as in the political industrial complex, and better for the customers because the customers will get these choices. The reason why it is fine to have the parties “determine privately” who the candidates are is because they’re totally held accountable now by the voters. So parties will pick endorsed candidates, but voters, November general election voters, will choose winners. And right now, it’s been still kind of that the parties, if they can manage who’s in the primary, et cetera, they can kind of manage to pick the winner and the voters have no say. So now, we have both doing what they should do. Parties should figure out candidates and voters should have several choices and they pick the winners.
Jim: And to your point about Porter’s rules, new entrance. The nice thing about it is the open primary, anybody gets over a relatively low threshold can contend. And if they can get maybe 20, 21% of the vote or even 18% of the vote, they can make the final five and see what the general public thinks on election day. When I think that is from a Porterian perspective, one of the best things about this is lower the barrier to entry for new thinking into our system. So there’s also some extra constitutional things that are happening in the Congress like the Hastert Rule filibusters, the way committees are run, the way the floor is run, et cetera, which also could be reformed in a way that does not require constitutional amendments and would cause our governance to work a lot better. And if people want to read Katherine’s ideas about that, be sure to read on Katherine Gehl, The Politics Industry, How Political Innovation Can Break Partisan Gridlock and Save Our Democracy? Thank you very much for a very interesting conversation.
Katherine: Thank you very much, Jim. And thanks to your listeners.
Jim: All right.