Obama, citizens, moneybags, India's 3G auctions - new democracy!

Obama has been a pioneer in many ways. While, the rise of a Black American with the middle name of "Hussein" has great symbolic significance and has given hope to minorities across the world, his campaign managers have done something else which will have far greater repercussions. Popularization of internet fund-raising!

Till now Democracy is the government of the people, by the people, for the people, funded by rich people. While the power of vested interests has reduced, they still have massive influence. The ability to perform low cost fund transfers on the internet makes it possible to raise large funds from the common citizen. It will lead to democratization of electoral financing and will be giant leap for democracy.

If 100 million Americans donate $10 a pop, there will be enough funds to fund many presidential candidates. Given that US per-capita income is $46,000, it is not an unrealistic expectation. As a result, true mass leaders will be able to compete with money bag fronts - $ for $. The retail investors therefore, have come of age in the market of politics. Of course, the money bags can always bid up and raise more funds, but beyond a limit the marginal returns on extra dollar collected reduces. An American presidential candidate needs low hundred millions - which can be raised from the mass market.

A key tool needed for the success of the internet politics is free flow of internet information. All websites and all email addresses are technically accessible to all. This reduces the power of anti-democratic information brokers such as partisan media and censors.

I think that there are a number of implications of this dynamics:

1. Accelerated political careers: Even very young politicians will be able to grab center-stage by becoming champions on issues of the day. While experience, service record and credibility will always have importance, Obama has shown catching fancy of the people can bear quick results too.

2. Rise of demagogues: Given that masses are now capable of deploying significant political money too, leaders who will take advantage of mass emotions will have more power. This is damaging.

3. Reduced power of lobbies. The ability of moneybags to buy politicians and the people who can influence them will reduce drastically. The way the common citizen can now fund her favorite candidate for president-ship, she can buy lobbyists too. With fragmentation of financing, the power of individual financier will go down.

4. There will be fragmentation of political ideologies. The time is in sight that, Democratic and Republican parties will no longer be there in the current form. Parties will form around a wider spectrum of political agendas and people. There will be niches to serve specific electorates.


I sincerely hope that such democratization of fund raising happens in India too. Therefore, 3G spectrum auctions mean more than better communication to India. They are expected to reduce the cost of internet access and expand the % of people who go online. Hopefully, more will happen.