Ron Paul's Long Coat-Tails

by Gary North
by Gary North

Recently, an article on this site, "Ron Paul's Long Tail," discussed the shift in marketing that is taking place because of the Internet.

In the past, Pareto's 20/80 law has dominated marketing. About 20% of your sales will produce 80% of your profits. Negatively, 20% of your customers will produce 80% of your complaints.

This ratio has been known for years. It has not been explained in over a century, but wise marketers do not ignore the law.

A new phenomenon – long tail/Remnant/spontaneous order – has appeared as a result of the Internet's cost structure. Amazon makes most of its money from lots of low-selling individual books rather than best-sellers. The 20/80 law no longer universally applies.

In politics, it still applies. That is because politics is a winner-take-all system of coercion. It forbids alternative choices. Only first place counts. This is not the way of the free market. The diversity of market choices lets consumers buy products that are designed to meet their desires. They do not have to choose the lowest common denominator or the lesser of two evils.

At the national level, Pareto's law will remain dominant for a long time. America does not have a parliamentary system, where the long tail phenomenon will become increasingly prominent in political outcomes. Presidential candidates will continue to seek the support of those 20% of the voters who donate 80% of the money, time, and energy. The larger the political arena in a non-parliamentary system, the more difficult it will be to replace Pareto's law with the long tail.

On the other hand, the further down the political junk food chain we go, the more likely that the long tail will eventually replace Pareto. In any given race, Pareto will rule. It's still winner take all. But because of decentralized pieces in a national political mosaic, the long tail is going to become more important. Here's why.

The cost of training people in local politics is falling. So is the cost of getting on a ballot. This is not yet recognized by the two political parties. Previously, the cost of delivering information to people who have ignored politics has been high: printed pieces of paper in the mail. Now, because of the price competition of the Internet, the cost of getting your message to readers is close to free, once you have a data base of e-mail addresses.

Before our eyes, we are seeing Nock's concept of the Remnant taking place nationally because of Ron Paul's stand against state power. We can also describe it Hayek's spontaneous order in action. People are mobilizing behind Ron Paul because the cost of connecting with others of a similar persuasion has fallen as never before in history.

In local races where candidates are few, payoffs are low, and donated time is crucial, an ideologically committed candidate has a huge advantage. Getting elected isn't very expensive. He can get the message out to donors and activists if he has access to an e-mail list of other similarly committed people.

Pareto's law is not just 20/80 at a single level. It all the way up the pyramid of influence. If you get 20% of the top 20%, meaning 4%, you can have influence way beyond what most people would imagine. Then there is 20% of 20% of 20%: that top 0.8%. That is the hard core.

The university system has always operated in terms of an advanced Pareto curve. Oxford and Cambridge have dominated English society for 800 years. Harvard and Yale have mimicked them in the United States. The central message of The Bell Curve is not that races differ in IQ. It is that about 25 universities dominate the training of America's ruling class. These universities share the same outlook. They have enormous influence. This is socially dangerous, the authors argue: too narrow a worldview.

The long tail threatens the long-term operation of this system of Pareto hierarchy. It is undermining the power and influence of the gatekeepers.

In those numerous local campaigns where the public doesn't get excited enough to turn out to vote, the potential for capturing power is much greater than in races where people care more. Because of politics' law of winner take all, Pareto's law will rule in every election, but the cost of mobilizing the decisive 4% is very low for people with access to a data base of ideologically committed local voters.

What I am saying is that Pareto's law will still determine the outcome in any given race: "vote for one of two candidates." Where the long tail will take over is in races where non-Establishment candidates are able to get nominated. This will throw a monkey wrench into the screening system of the national parties at the local level.

The law of large numbers and large budgets favors a Pareto outcome in a national election. But if we consider all of the political offices nationally, the long tail can replace Pareto's law if local candidates have access to email lists of the hard-core four-percenters, or even 0.8% activists.

Ron Paul is now in a position to create a decentralized yet connected network of local activists. The central tool is the zip-code specific national e-mail list. This is what all of his campaign ads should be designed to obtain: a huge, permanent, post-2008 e-mail list.

His movement needs a permanent slogan. Just Vote No might work. Less Is Better appeals to me. So does No . . . How.

Unlike other political movements, this one is inherently decentralized. It is a network, not a hierarchy. The Internet makes this possible. The goal of this movement is to gum up the state's steamroller. In short, Gum-It.

It would be great to have a chewing gum flavor called Dr. Paul's Gum-It. I can think of a slogan: "For people smart enough to chew gum and vote no at the same time."

His long coat-tail offers a way to gum up the system at the local level. Think of a school board that refuses to raise salaries, ever. That is its sole function: to freeze teachers' salaries. No curriculum reform. No innovative programs. No challenge to the existing system. Nothing new at all – just a refusal to raise salaries. We would be back to the great skit 1980 by Dan Ackroyd on Saturday Night Live: "Inflation is our friend." Inflation would take over: eroding public school teachers' futures, year by year.

Think of the local teacher's union. Think of the outrage. Why, the members might even strike. "Solidarity forever!" I hope so. Let them picket. A teacher on a picket line is not in a classroom.

Starve the state. Ron Paul's coat-tails can help us do that.

November 16, 2007

Gary North [send him mail] is the author of Mises on Money. Visit http://www.garynorth.com. He is also the author of a free 20-volume series, An Economic Commentary on the Bible.

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