The Republican Party is Like a Fast Food Chain that Lets its Restaurants Locally Source Meat

McDonald’s is a national brand, but most McDonald’s brand restaurants are locally owned and operated. One interesting fact about McDonald’s franchise arrangements is that each restaurant is required to purchase its meat from the company. Individual restaurants are not allowed to locally source their meat.

Why not? The answer is surely not because McDonald’s is the best at sourcing meat. It seems likely that from time to time, local operators would be able to find higher quality meat at lower prices than the company. And the answer is not that the sourcing of meat provides a profit to the company at the expense of the restaurants. Such a transfer would be capitalized via the other terms of the franchise agreement, so there is no incentive to adopt these terms unless they are efficient.

The real answer is that there is a brand externality. Let’s suppose that one local McDonald’s tries to increase its profit by purchasing extremely low-grade beef. If you stop at this McDonald’s on a road trip and get sick, you might punish all McDonald’s restaurants by refusing to eat at them in the future.

This problem does not plague standalone restaurants. We don’t worry about them locally sourcing their meat—and often, we prefer it. But this is because they have only their own reputation to harm. If they shirk on quality, they bear all of the reputational costs themselves.

The brand externality would also not be a problem if everyone only ever ate at their local McDonald’s. If your local McDonald’s used rotten beef, you wouldn’t go there, and neither would anyone else. Other McDonald’s restaurants would be unaffected. But the fact is, people travel and indeed, that is often when they go to McDonald’s, so the brand externality is an important issue, and the company deals with it by standardizing quality across all McDonald’s restaurants by contract. This contractual arrangement between the central company and the individual restaurants is called a “vertical restraint.”

When I think about why the Republicans lost ground in the 2012 election, I think about beef that is well past its sell-by date. Individual Republican politicians have an incentive to cater to the values of their local electorates, but this can come at the expense of the national Republican brand. Tip O’Neill famously said that all politics is local, but this is no longer true—the advent of cable news and the Internet means that some politics is national, as does the fact that more policy is now decided at the federal level. It’s like we have gone from a situation in which everyone eats only at their local McDonald’s to one where people travel and eat at restaurants around the country: a brand externality has emerged.

Given that national media is not going away, party leaders need to be able to impose vertical restraints on its candidates. They need to be able to ensure that local races boost the national Republican brand, even at the expense of losing local races from time to time. Local politicians may be able to get a local boost in turnout by playing to the prejudices of their bases, but if such activity harms the party on a national level, that is inefficient, and the central party needs to find a way to stop it if it wishes to succeed.

The admittedly oversimplified median voter theorem says that both parties should converge on the preferences of the median voter. To the extent that one party suffers more from brand externalities, the other party will be able to take advantage by converging more rapidly to that position, or by making more effective use of the slack generated by the ineffective party. Democrats are arguably more nationally-minded, and this means that in the age of political brand externalities, they have an advantage. If Republicans want to be an effective party in the 21st century, they need to find a way to impose vertical restraints on those who would abuse their brand.

12 replies to “The Republican Party is Like a Fast Food Chain that Lets its Restaurants Locally Source Meat

  1. Zac Gochenour

    I’ve had the same thoughts (let’s write a paper!) Interestingly it seems that some customers (Republicans) are reacting to the loss by blaming the brand for trying to impose vertical restraints, framing it as “throwing the base under the bus” http://www.businessinsider.com/karl-rove-gop-money-civil-war-republicans-2012-11 .. in any case the GOP seems doomed, and I think brand externalities (and importantly, the changing impact of externalities due to technology) is the right reply to those who would say MVT will keep them competitive.

  2. Jardinero1

    Except that neither party has a brand. Rather, both parties are loose coalitions of patronage groups. Both parties are statist in outlook. The democrats use government to facilitate urban, labor, minority, gay, entertainment, and tech industry privilege seekers. The republicans use government to facilitate primarily white, suburban, religious, agricultural, industrial and resource extraction privilege seekers.

  3. Michael Wiebe

    “Individual Republican politicians have an incentive to cater to the values of their local electorates, but this can come at the expense of the national Republican brand.”

    For example?

  4. Morgan Warstler

    The correct frame is: Todd Akin, and his state party, will ONLY be supported by national party IF Todd Akin has signed off on social issues are best left to states. Todd Akin can be as freaky-deaky as his state GOP wants to let him be with the FULL KNOWLEDGE that he’s only bringing “Social Bacon” to their state.

    Todd’s message becomes: the people of my state want rape victims to have babies, so the US law of the land should be to let my state decide to impose its will. And we KNOW abortion will be provided in California and we’ll live with it.

    Now for many pro-choice advocates living in California, Akin is not a personal threat.

    This is where America’s DNA leads us.

    Also, this conversation better happens at my site, Eli has already punted and admitted I’m correct :)

  5. Morgan Warstler

    Au contraire, https://twitter.com/elidourado/status/268421730408747008

    I’m right simply because the GOP cannot do both ideas.

    The party cannot at national level cannot tell candidate what is acceptable or not for their brand. Period, The end.

    You would be a horrible brand manager.

    Why? to even mention McDonalds – which is not a REPUBLIC. The vision of the GOP is America as a Republic. THAT IS THE BRAND.

    And if your prescription for the REPUBLICan brand is to stop preaching REPUBLIC, you’ve completely lost your conservative footing, if you ever had it.

    The GOP is the ANTI-MCDONALDS. It so favors that local meat can be rotten, that it refuses to guarantee consistency.

    This is also the libertarian position dear boy, don’t get so tweaked on a loss, you lose your head.

    But, you were correct to dump all that in our twitter conversation and accept that the GOP BRAND is state rights, and that they have to force all state parties and candidates to accept it.

    These ideas are whats called MUTUALLY EXCLUSIVE, there can only be one or the other, and yours is silly, and you’ve already granted mine is workable.

    There can be only one Eli. Glad to have you aboard.

    Your next post is to begin: “Since the GOP cannot be McDonalds….”

    —–

    I’m tweaking you a bit, but these are the early days, where it is truly important you think through the groundwork of the arguments you make.

    You prescription is literally death of a party ID by intellectual suicide.

  6. Morgan Warstler

    Notice we can take our new position and fit it directly in with chastened Tea Party:

    “when candidates run on a message of conservative economic policy and limited government, they win.”

    http://www.politico.com/news/stories/1112/83798.html

    Our job (yours and mine) becomes pounding home the national GOP agenda which is state parties and new state candidates AGREE to accept a limited role for Federal Govt on their own social issues.

    This is a WORKABLE GOP brand agenda, one the RNC can bring to bear in short order.

    It is RADICAL. It is aggressive. It is new. You can get behind it with gusto.

    And since it is only ONE SIMPLE DEMAND, it has a much better chance of being agreed to…

  7. johnberk

    It is a good news we have internet and cable tv now. At least we can see who is nominated by each party. I was really disappointed lately about the statements of the Republican candidates about a rape. What I consider dangerous is that Republicans lack any coherent vision, so they try to supply the movement with own, local ideas, which are a great example of close-minded ignorant style.

    Republicans try to constantly reject anything that comes from Obama´s team. They don´t understand that the situation has changed since the 80s. With half of the population near poverty level, it is no longer possible to maintain the conservative liberal ideology. It is the state what has to take care of its citizens. I would say it is a move from private housing towards condominium (as is it explained How to fight economic crisis).

    First of all, we need more educated Republicans. Sarah Palin and others like her have to leave the politics. They need coherent ideology, which is not based on the Bible nor on the Book of Mormon. It has to be based on pragmatism and compromise.

  8. Tony

    I love the analogy to brand/franchising. On the Republican side, you make an (ex post) obvious parallel. On the Democrat side, I’m a little less convinced by “Democrats are arguably more nationally-minded.” Do you have an example where the Democrats have imposed vertical restraints on their local candidates? Or, does the Democratic Party not need to impose vertical restraints because they all think alike on issues that affect brand?

    What I am worried about here: local Democrats in red states likely have made concessions to attract Republican sympathizing voters in their districts, yet we do not see these concessions reported. On the Republican side, we see outrage at the Akins and Mourdocks who take a strong pro-life position (and make subsequent gaffes), and this gains national attention / ire. I can’t tell if the absence of ire for extreme Democrat positions taken by local politicians is lack of media coverage or genuine national mindedness. In other words, are Democrats better at expressing outrage at their opponents, better at avoiding obvious gaffes, or better at promoting the national brand? As someone who studies IO, I would love to be convinced more on the brand side of things if you have some relevant examples (and if it is true, of course).

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