






































Advances in Politics and Economic 

ISSN 2576-1382 (Print) ISSN 2576-1390 (Online) 

Vol. 2, No. 3, 2019 

www.scholink.org/ojs/index.php/ape 

224 
 

Original Paper 

Finance and Political Participation 

Peter Bearse, Ph.D. [Economics]1* 

1 A Peoples and Citizens Congress, Carrabelle, United States 

* Peter Bearse, Ph.D. [Economics], A Peoples and Citizens Congress, Carrabelle, United States 

 

Received: June 28, 2019          Accepted: July 16, 2019        Online Published: July 19, 2019 

doi:10.22158/ape.v2n3p224          URL: http://dx.doi.org/10.22158/ape.v2n3p224 

 

Abstract 

This essay identifies and discusses the factors and forces arising from finance that influence peoples’ 

political participation. It does so at two levels: (1) micro-economic or individual and (2) 

macro-economic and social. We find that both factors and forces at work are significantly adverse to 

political participation at all levels. The prime intermediate factor here is economic inequality, which is 

the subject of a companion essay published earlier. 

Keywords 

financial, participation, investors, assets, stocks, inequality, risk, instability 

 

1. Introduction 

As the last “Great Recession” revealed, financial innovation and game-playing by major financial firms 

serve to generate both financial instability and greater inequality. In his 2019 book entitled SHELL 

GAME: The Story of One Man’s Rant Against the Big Banks in an Attempt to Save the World 

Economy, M.K. Hoffman reveals that the Recession was sparked by a huge jump in oil prices. 

The apocryphal “99%”—small investors among individual citizens if they had money to invest at 

all—had long since become irrelevant players in financial markets. Among the 1% with money to play 

with, not one executive of a major financial company was even indicted, let along convicted of 

financial malpractice. Yet the “1%” associated with the largest organizations served to increase their 

wealth while immiserating millions of Americans. 

 

2. Method 

The method here is twofold: 

(i) Identification of relevant statistics reflecting the distributions of assets, the ways they are invested, 

and the rates of political participation among classes of people by income and wealth. 

(ii) Review of statistical analyses of the latter by researchers who have investigated interrelationships 



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between and among types of political participation and levels of economic inequality. 

 

3. Result 

What needs to be explained is how the “1%” associated with the largest organizations served to 

increase their wealth while immiserating millions of Americans. 

Let’s start with “game playing” by major operators in the financial markets. Look at the choices they 

have as to how profits can be invested (at this point, in no order of priority): 

A. Not “invested” but set aside as retained earnings. 

B. Pay dividends and/or buy the stock of one’s own company. 

C. Buy the stock of other companies. 

D. Buy financial instruments—short-term or long-term, regular or futures markets. 

E. Invest in hard assets, including construction, buildings, work force, equipment and technologies. 

F. Invest in soft assets such as education, information and networking. 

For every “buy” choice, there is a corresponding “sell”. This gives financial operators (hereafter 

abbreviated “FO”s) lots of choices—12 majors in all plus many more that follow. The broad FO 

category includes CEOs, Presidents and CFOs, not only of banks, mutual funds and pension funds of a 

host of primarily “financial” organizations but also of a broad range of non-financial organizations in 

practically every type of industry, both for-profit and non-profit. Thus, the implications of these choices 

have consequences for practically the whole of American society and economy. 

Whether or not profits are employed as any more than say, like money stuffed in a corporate mattress, 

is an important question. Retained earnings can be kept idle, invested (or not) in a low interest return 

mutual fund. They could also be invested in workforce improvements (those not already budgeted, 

pre-profit) such as employee training, employee pension funds (if any) and/or executive and/or other 

employee benefits. As for the latter, there are obviously two of many distributional questions here. Who 

benefits? How large a percentage of retained earnings are invested in “rank and file” employees? 

Inequality redux? 

Now let’s continue to “take it from the top”. B follows A: Pay dividends and/or buy the stock of one’s 

own company? This is usually undesirable from a distributional standpoint. Why? Because payment of 

dividends and/or stock buy backs tend to either support or raise prices of company stocks. Distribution 

of dividends goes to existing share holders—usually a minority proportion of any population. Note, 

however, that “existing” can chang every rapidly in a market where buy or sell trading time is measured 

in micro-seconds through “fast” trades. 

In order, now item C: Buy the stock of other companies? The criticism already noted above pertains 

here as well. The benefits go to shareholders. What about others who have been called “stakeholders”, 

such as members of the community-at-large where companies are located, local and state taxpayers and 

others? 

Item D?—Buy financial instruments—short-term or long-term? Both are presumably “safe”. Earnings 



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from short-term investments of retained earnings would add to those earnings and benefit existing 

shareholders. The same applies to purchases of long-term instruments. The only differences lie in 

degrees of risk and changes in the pool of shareholders. 

As for “degrees of risk”, what about short-term, high-risk investments such as puts and calls in the 

so-called “futures” market? This is an area where company owners can play games they can win or lose 

large. Entire companies can be put at risk and thousands of jobs can be lost through bad choices made 

by owners (some are CEO’s) who have compliant CEO’s (perhaps themselves) and Governing Boards 

who don’t mind owners playing bad hands for high scores. 

E?—Invest in hard assets, including business start-ups or expansions, construction, buildings, work 

force, equipment and technologies? Contrary to the purely financial uses of retained earnings, these 

could bring some greater equity to distributions, especially to the extent that they create new jobs at pay 

levels that can help sustain families. We have already recognized “workforce improvements”. 

Construction always created jobs, albeit mostly short-term, the shortness or length depending on the 

size of a project. Existing buildings are usually purchased for businesses to accommodate additional 

employees. 

Startups always create at least a few jobs. Expansions likewise. Adoption of new technologies, 

including those embodied in equipment, are a double-edged sword. Jobs may be created or destroyed at 

the enterprise level. At the macro-economic level, evidence runs both ways and, overall, is currently 

indecisive. In the long-run, the net impacts of the new digital technologies are more likely to be 

negative. Most of us now aged (except this author) prefer to play with their retirement money and not 

deal with start-ups. 

Should the last have been first? Let’s see with respect to (F): Invest in soft assets such as information 

and networking. Information and technology are now married. Information is completely the venue of 

digital technology. The marriage is now dubbed “ICT”—Information Computer Technology. Thus, the 

impact prognoses promise to create jobs for the well-trained and well-educated. The distributional 

impacts on “blue-collar” workers are likely to be adverse. The iniquitous shifts in the educational sector, 

revealed elsewhere, stand to do nothing to reverse the “adverse”, rather the opposite. 

As suggested at the outset, greater instability is also likely. Why?—Because ups and downs of the 

business cycle are aggravated in the face of global warming and climate change [GWCC]. The 

increasing dependence of the economy on “Finance”—especially upon short-term financial 

transactions—was clearly implied earlier. Now it can be recognized without checking the growing GDP 

proportions owing to “Finance, Insurance of Real Estate” as well as “Services”. The uncertainly of 

investing increased in the face of an increasing frequency of extreme weather events and other natural 

occurrences such as fires and rising sea levels attributable to GWCC.  

 

 

 



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4. Discussion 

This essay has gone a long way towards understanding how inequality and instability are fed by private 

investment and other public/private financial decisions. Unfortunately, not the whole way: There are 

still several dots to be filled to complete documentation of our interactive framework (not yet a 

complete model). The most important among these are: 

➢ Impacts of finance (&c) on what should be but are no longer OUR politics and government 

[especially Congress]. These, well-documented elsewhere, are strongly antithetical to the survival and 

well-being of our democratic republic. 

➢ Impacts of the #1 influence on politics and public policy—people’s participation in politics. See 

articles by this author on “Participation and Populism” and “Participation and Inequality”. 

➢ Detailed interactions between public and private that accentuate the adverse impacts of private 

choices while decreasing even the possibilities of public investments that would ameliorate the latter. A 

lot here, for example, springs from grievous shortcoming of our tax systems, especially at the federal 

level—more than just the recognized, business-as-usual “loopholes”. Thus, this and the former run very 

much together. 

Does a more recent article help to fill these gaps? No, notwithstanding a grandiose title (Note 1). 

Ironically, it pretends to honor the Maximum Power Principle as governing a process that is nothing 

more than the conventional small-bank, small-business lending and currency circulation process 

doctored up with fancy verbiage borrowed from biology. For example: “By putting system resource 

claim tickets (dollars) directly into the hands of entrepreneurs and consumers willing and able to spur 

system growth through the establishment of new cells and distribution systems, it became possible to 

rapidly increase metabolic activity and a rapid replication of existing and novel dissipative structures”. 

The rest goes on to discuss business cycles without even any mention of the term—like a 

biologic-academic version of Keynes’ “animal spirits”. 

“Power” does not figure—not market, institutional or any other. Yet as we have seen, it is central to any 

real-world explanation of what is shaping an increasingly unequal society. Return to the 3rd paragraph 

of this article. The power of financial-sector decision makers, not small investors, is key to how 

retained earnings and other investible assets are employed. 

As far as we ordinary folks are concerned, there are two major options if “We the People” are to prevail 

in the long-run: 

1) Encourage hope, faith and charity and raise our spirits to help create better futures out of our better 

natures; and 

2) Participate in a democratic political process. In the final analysis, this is the only countervailing 

power vs. The rising power of financial executive and finance overall. People in, Money out! 

 

Acknowledgement 

Carmine Gorga, Ph.D., President of Polistics, Inc., an old friend and colleague whose thoughtful input 



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is appreciated. 

 

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Note 

Note 1. Cost of Extinction-Billions. 


