Opinion: One political party in America is equivalent to 2 or 3 elsewhere

(This post is about politics and has nothing to do with investing.)

Paul Krugman recently commented on his blog that the Republican Party is getting marginalized, with the defection of Arlene Specter to the Democrats, and I spent some time reading some of the commentators (instead of doing something more productive with my life ;). I have to say I disagree with some commentator's opinions about the dominance of two parties in America.

Although two parties dominate America, I would actually say that each party is equivalent 2 or 3 parties in a British-style parliamentary democracy. The lack of choice in American parties is mostly an illusion in my eyes.

Under the American system, there has almost always been only two parties competing. It has ranged from Federalist Party vs Democratic-Republican Party, to Democratic-Republican Party vs Whig Party, to (old) Democratic Party vs (old) Republican Party, to the present Democratic Party vs Republican Party. There are some minor parties such as the Green Party, Libertarian Party, and so on, but they have never influenced American politics.

In British-style systems, being practiced in countries such as Britain, Canada, Israel, India, and so on, there are generally at least 3 parties with significant support, and another 2 to 5 depending on the size of the country. Canada, a fairly small country, has seen 4 fairly dominant parties in the last two or three decades: Liberal Party, Conservative Party, Reform Party (defunct), Parti Quebecois, and New Democratic Party. The popularity and dominance has shifted over time but all of these have played major roles.

I see quite a number of Americans seemingly disgruntled with their choices largely limited to two. I have to say that, although more parties the better, this is not as terrible as it seems.

First, the downside to the American system. The one area where the two-party system hurts America is with the presidency. Americans have little choice—they have to pick between the candidates from the two major parties. In a British-style system, there is no president—even if there were, like in India or Isreal, they are weak positions and largely ceremonial—so the voter does pick among many choice (i.e. the leader of the party with the most votes generally becomes the prime minister and that is the position that is equivalent to a president in America.) So, there is indeed a lack of choice when it comes to the presidency.

When it comes to all other aspects—Congress, Senate, state elections, etc—the situation is not so bad. Even though two parties dominate, each party is made up many factions. The American parties, in my view, is more like an umbrella group that joins two or three factions together. In British-style systems, each faction is a separate party. I'm left-leaning so let me illustrate the left wing.

It's never the same across all countries and I hate to generalize too much but a faction that favours socialist policies would have its own party in Canada (NDP), one that favours the environment would be its own party (Green), while another faction that is liberal but is more free-market oriented may have its own party (Liberal). Generally, it is common to have one that favours labour called Labour as well (but it's not called Labour in Canada.) Obviously you could have a mixture, and you always get mergers and separations, but the main point still stands. Although there is nothing to prevent these factions from forming separate parties in America, they, instead, tend to favour the Democratic Party. Nearly all the voting by the left wing goes to the Democratic Party (similar thing with the right wing.) In most British-style parliamentary democracies, the 3rd or 4th parties can get more than 10% of the vote. In America, the 3rd party would be lucky to get even 3% of the vote. The Democratic Party and the Republican Party span a wide spectrum, far more than any single party in the British-style system.

Another way of looking at it would be to say that the Democratic Party in America spans from the far-left to the center-right. In contrast, Canada's NDP is probably far-left to left, Green is far-left, while liberals are left to center-right. (The labels are somewhat subjective so I can see some disagreeing.)

Perhaps most importantly, the members of the American parties are very independent and do not act as if they are part of one party! There are senators and congresspersons in the Democratic Party who will vote against a major Democratic bill; similarly, Republican senators or congresspersons vote against their own party bill. In British-style systems, this is rare. Liberal members in Canada, for example, would almost always vote for their own bills. In fact, if you are a member of a party and you vote against a bill introduced by your party (say the prime minister was from your party), you can get kicked out of the party! This doesn't always happen but it does happen for bills where failure can be considered no-confidence (e.g. budget bill.) In contrast, in America, it's common to see party members voting against a bill introduced by their own party or their own president.

America may only have two parties but because of the independence of the congresspersons and senators, they are almost like 4 or 5 parties. Combined with the fact that states have more rights in America essentially means that there is a lot more choice and freedom than appears on the surface.


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