Not that many people know that The Wizard of Oz, one of America’s most-loved films, is based on the arcane economic world of monetary policy. L Frank Baum’s novel is a disguised critique of the folly of the Gold Standard written in the wake of the 1896 election, at a time when America was deeply divided socially and geographically, when enormous power was wielded by a billionaire class, the so-called Robber Barons.
The election centred on whether America should swap the straitjacket of a gold-backed dollar for the looser cardigan of a silver-backed dollar. As gold is less plentiful and more expensive than silver, opting for a silver-backed currency would cause a devaluation that would inject more dollars into the economy, helping the poor.
The yellow bricks of the Yellow Brick Road, represent the gold bars which paved the way to the Emerald City, the city of green – or greenback, the colloquial term for the dollar. Dorothy represents the wholesome daughter of middle America, literally Kansas. The Scarecrow is the put-upon Midwestern farmer American and the Tin Man is the industrial worker.
Politically, the Democrats, in an alliance with a new party called the Popular Party, representing workers, farmers and the lower middle class, wanted a dollar backed by silver, meaning there would be more dollars around. In contrast, the Republicans represented industrialists, Wall Street and the wealthy, the kind of people who wanted to preserve their dollar wealth and maintain the Gold Standard.
With so much at stake and the country so explicitly divided along class lines, the rich opened their wallets and, for the first time, America’s election was truly swung by money. The Republicans won because they raised more cash.
William McKinley, the victorious Republican candidate, received contributions worth more than $16 million (about $600 million in today’s money). McKinley’s chief fundraiser, Mark Hanna, raised more than $6 million by courting corporations with the promise of a big-business-friendly agenda. Hanna is famously quoted as saying: “There are two things that are important in politics: the first is money and I can’t remember the second one”.
And who do you think the Wizard of Oz represented? Why, Mark Hanna the financier, hiding behind the slogans and conspiring against the ordinary American, embodied by the innocent Dorothy.
The American political scene was set over a century ago. Money matters in American politics, and that adage of the Republicans being for sale while the Democrats are only for rent is no longer strictly accurate.
Today’s Democrats aren’t above a mutually beneficial deal and are in the pockets of big business as much as their opponents. The problem with big money and unrestrained capitalism in politics is so obvious that it doesn’t need to be pointed out, but suffice to say that it is inimical with a properly functioning democracy.
At its core, the promise of democracy is “one man one vote”; but the attraction of capitalism is “one man many votes”, meaning the rich guys get the best things and lots of them, while the poor guy loses out.
Capitalism and democracy are in a constant state of friction. The excesses of capitalism need to be tempered by the equalising nature of democracy; however, too much democracy and redistribution limit the “animal spirits” of capitalism upon which prosperity rests.
Modern western societies are a tug of war between these two alternating ideas where a balance is sought between both; sometimes it’s called social democracy, Christian democracy or centrism but it amounts to the same, a truce.
Unfortunately, the conditions of the truce are influenced by money, which is why big money in elections is problematic. As is the case in any indecent proposal, whoever pays the money expects favours. Money buys policy. That is and always has been the deal. American politics has become the fiefdom of billionaires, the effect of which can only be imagined.
We’ve all seen Elon Musk jumping around Trump’s rally with the physical co-ordination of a homeschooled kid who’s never seen a PE class, but Musk isn’t the only billionaire with a stake in the game. The two US presidential candidates had raised more than $3.8 billion by mid-October. A Financial Times analysis of campaign finance filings found that billionaires have donated at least $695 million, or about 18 per cent of the total. Trump is particularly dependent on US elites, with about a third of his money coming from billionaires compared with about 6 per cent of the funds raised by Harris.
Trump’s finance base is rich but narrow while Harris’s is more broadly based. From January 2023 to mid-October 2024, Joe Biden and Harris outraised Trump ($2.2 billion to Trump’s $1.7 billion). But the rich guys have placed their bets; at least 144 people on the list of 800 US billionaires compiled by Forbes have donated to either candidate.
Billionaires leaning toward Harris may seem incongruous as she often criticises Trump for being too close to the plutocrats, but there are practical reasons why the ultra-wealthy may favour Harris.
As was the case in 1896, if you are rich you want stability – after all, you are doing well from the status quo. A letter signed by more than a dozen billionaires last month endorsing Harris explained their belief that she will “continue to advance fair and predictable policies that support the rule of law, stability, and a sound business environment”. In contrast, although he might cut their tax bills, Trump represents chaos and commotion, which is never good for business.
No matter whether the money comes from the liberal centre or the tear-it-all-down libertarian right, it comes with a price, a sort of pay-to-play cover charge. If you want influence in America you pay for it.
In Europe, strict limits on campaign contributions help curb plutocratic influence. For example, the $1.6 billion Joe Biden spent to win the 2020 presidential election is 70 times more than the sum Emmanuel Macron spent on his 2022 win – despite the fact that the US population is just five times larger than that of France. The total spend across all 12 candidates in the French presidential race was just over €83 million. Germany – a country with more billionaires per head than America – enforces strict donation limits and transparency rules, with caps of €50,000 per donor, reducing the risk of policies favouring an elite few.
Irish elections are subject to strict spending limits. Candidates running for the Dáil can only spend up to a maximum of €38,900 in a three-seat constituency, €48,600 in a four-seater and €58,350 in a five-seater. These numbers are paltry in the context of US elections, where there are no spending limits. In Ireland, donations from individuals or companies to a party are capped at €2,500 per year, while donations to individual candidates are limited to €1,000 per year.
After the alfresco political bribery of the Charlie Haughey and tribunal years, things are more above board and the days of rich guys buying elections in return for explicit special treatment are long gone. By way of contrast, the clear conflict between capitalism and democracy in America is there for all to see. As they say, the US is “the best democracy money can buy”, and the die was cast in 1896 with the election of William McKinley.
In those final days of the 19th century, with their man in the White House and tariffs erected to protect their businesses, America’s billionaire plutocrats must have felt unassailable. But following McKinley’s assassination by an anarchist in 1901, power moved to his vice-president, Teddy Roosevelt, who would turn on the very plutocrats who had financed his campaigns. Sensing that America yearned for equality after years of division and a decade of rich men lording it over the working man, Roosevelt brought the billionaires to heel, regulating them, taxing them and breaking up their monopolies.
A decade after buying the election, the billionaire class was on the skids, accused by Republican president Roosevelt of “predatory capitalism”. Fortunes turned dramatically. Political power slipped away from the plutocrats just when they thought victory was theirs.
Can history repeat itself? I wouldn’t bet against it.