By Daron Acemoglu, Professor of Applied Economics at MIT, Suresh Naidu, Assistant Professor of Economics and Public Affairs at Columbia University, Pascual Restrepo at MIT, and James A Robinson, Professor of Government at Harvard. Originally published at VoxEU
Inequality is currently a prominent topic of debate in Western democracies. In democratic countries, we might expect rising inequality to be partially offset by an increase in political support for redistribution. This column argues that the relationship between democracy, redistribution, and inequality is more complicated than that. Elites in newly democratised countries may hold on to power in other ways, the liberalisation of occupational choice may increase inequality among previously excluded groups, and the middle classes may redistribute income away from the poor as well as the rich.
There is a great deal of concern at the moment about the consequences of rising levels of inequality in North America and Western Europe. Will this lead to an oligarchisation of the political system, and imperil political and social stability? Many find such dynamics puzzling given that it is happening in democratic countries. In democratic societies, there ought to be political mechanisms that can inhibit or reverse large rises in inequality, most likely through the fiscal system. Indeed, one of the most central models in political economy, due originally to Meltzer and Richard (1981), suggests that high inequality in a democracy should lead the politically powerful (in their model the voter at the median of the income distribution) to vote for higher levels of taxes and redistribution, which would partially offset rising inequality.
But before asking about what happens in a democracy, we could start with some even more fundamental questions. Is it correct factually that democracies redistribute more income than dictatorships? When a country becomes democratic, does this tend to increase redistribution and reduce inequality? The existing scholarship on these questions, though vast, is quite contradictory. Historical studies, such as Acemoglu and Robinson (2000) and Lindert (2004), tend to suggest that democratisation increases redistribution and reduces inequality. Using cross-national data, Gil et al. (2004) find no correlation between democracy as measured by the Polity score and any government spending or policy outcome. The evidence on the impact of democracy on inequality is similarly puzzling. An early survey by Sirowy and Inkeles (1990) concludes, “the existing evidence suggests that the level of political democracy as measured at one point in time tends not to be widely associated with lower levels of income inequality” (p. 151), though Rodrik (1999) finds that both the Freedom House and Polity III measures of democracy were positively correlated with average real wages in manufacturing and the share of wages in national income (in specifications that also control for productivity, GDP per capita, and a price index).
In a recent working paper (Acemoglu et al. 2013), we revisit these questions both theoretically and empirically.
Theoretical Nuances
Theoretically, we point out why the relationship between democracy, redistribution, and inequality may be more complex than the discussion above might suggest. First, democracy may be ‘captured’ or ‘constrained’. In particular, even though democracy clearly changes the distribution of de jure power in society, policy outcomes and inequality depend not just on the de jure but also the de facto distribution of power. Acemoglu and Robinson (2008) argue that, under certain circumstances, elites who see their de jure power eroded by democratisation may sufficiently increase their investments in de facto power (e.g. via control of local law enforcement, mobilisation of non-state armed actors, lobbying, and other means of capturing the party system) in order to continue to control the political process. If so, we would not see much impact of democratisation on redistribution and inequality. Similarly, democracy may be constrained by other de jure institutions such as constitutions, conservative political parties, and judiciaries, or by de facto threats of coups, capital flight, or widespread tax evasion by the elite.
Democratisation can also result in ‘inequality-increasing market opportunities’. Nondemocracy may exclude a large fraction of the population from productive occupations (e.g. skilled occupations) and entrepreneurship (including lucrative contracts), as in Apartheid South Africa or the former Soviet Union. To the extent that there is significant heterogeneity within this population, the freedom to take part in economic activities on a more level playing field with the previous elite may actually increase inequality within the excluded or repressed group, and consequently the entire society.
Finally, consistent with Stigler’s ‘Director’s Law’ (1970), democracy may transfer political power to the middle class, rather than the poor. If so, redistribution may increase and inequality may be curtailed only if the middle class is in favour of such redistribution.
But what are the basic robust facts, and do they support any of these mechanisms?
Empirical Evidence
Cross-sectional (cross-national) regressions, or regressions that do not control for country fixed effects, will be heavily confounded with other factors likely to be simultaneously correlated with democracy and inequality. In our work we therefore focus on a consistent panel of countries, and investigate whether countries that become democratic redistribute more and reduce inequality relative to others. We also focus on a consistent definition of democratisation based on Freedom House and Polity indices, building on the work by Papaioannou and Siourounis (2008).
One of the problems of these indices is the significant measurement error, which creates spurious movements in democracy. To minimise the influence of such measurement error, we create a dichotomous measure of democracy using information from both the Freedom House and Polity data sets, as well as other codings of democracies, to resolve ambiguous cases. This leads to a binary measure of democracy for 184 countries annually from 1960 (or post-1960 year of independence) to 2010. We also pay special attention to modeling the dynamics of our outcomes of interest – taxes as a percentage of GDP, and various measures of structural change and inequality.
Our empirical investigation uncovers a number of interesting patterns. First, we find a robust and quantitatively large effect of democracy on tax revenues as a percentage of GDP (and also on total government revenues as a percentage of GDP). The long-run effect of democracy in our preferred specification is about a 16% increase in tax revenues as a fraction of GDP. This pattern is robust to various different econometric techniques and to the inclusion of other potential determinants of taxes, such as unrest, war, and education.
Second, we find an effect of democracy on secondary school enrolment and the extent of structural transformation (e.g. an impact on the nonagricultural shares of employment and output).
Third, however, we find a much more limited effect of democracy on inequality. Even though some measures and some specifications indicate that inequality declines after democratisation, there is no robust pattern in the data (certainly nothing comparable to the results on taxes and government revenue). This may reflect the poorer quality of inequality data. But we also suspect it may be related to the more complex, nuanced theoretical relationships between democracy and inequality pointed out above.
Fourth, we investigate whether there are heterogeneous effects of democracy on taxes and inequality consistent with these more nuanced theoretical relationships. The evidence here points to an inequality-increasing impact of democracy in societies with a high degree of land inequality, which we interpret as evidence of (partial) capture of democratic decision-making by landed elites. We also find that inequality increases following a democratisation in relatively nonagricultural societies, and also when the extent of disequalising economic activities is greater in the global economy as measured by US top income shares (though this effect is less robust). These correlations are consistent with the inequality-inducing effects of access to market opportunities created by democracy. We also find that democracy tends to increase inequality and taxation when the middle class are relatively richer compared to the rich and poor. These correlations are consistent with Director’s Law, which suggests that democracy allows the middle class to redistribute from both the rich and the poor to itself.
Conclusions
These results do suggest that some of our basic intuitions about democracy are right – democracy does represent a real shift in political power away from elites that has first-order consequences for redistribution and government policy. But the impact of democracy on inequality may be more limited than one might have expected.
This might be because recent increases in inequality are ‘market-induced’ in the sense of being caused by technological change. But at the same time, our work also suggests reasons why democracy may not counteract inequality. Most importantly, this may be because, as in the Director’s Law, the middle classes use democracy to redistribute to themselves. Nevertheless, since the increase in inequality in the US has been associated with a significant surge in the share of income accruing to the very rich, compared to both the middle class and the poor, Director’s Law-type mechanisms seem unlikely to be able to explain why policy has not changed to counteract this. Clearly other political mechanisms must be at work, the nature of which requires a great deal of research.
See original article for references
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Well, they’re not really talking about democracy. Only representation which remains untouchable throughout a leglisature’s term. Until people have the power to easily direct their political class to do the things that matter to them, you won’t really have a model of democracy you can test. A marginally responsive oligarchy in a fixed game does not a democracy make.
I think the authors need to really qualify their term, or just use a different one than ‘democracy’. .
Economic democracy, that would help with inequality.
Well said Kurringai.
We vote for a self-serving-self-selected individual who represents us so it’s a poor version of representative democracy at best.
I was going to say something along these lines, but I’m glad it’s the first post. Yes, voting for one or another slate of oligarchs is not democracy.
It’s not that difficult to understand.
Democracy is becoming meaningless because politicians surrendered themselves to the globalised “financial markets” (= the global 1%). This gives the impression that the stockmarkets govern the globe. Margins for political dissent and ideology disappaeared, Politics have been degraded to mere marketing. And most politicians have become part of the system : a kind of polical enterpreneurs – often wealthy.
Sound analysis if you ask me, but that doesn’t explain why no politician with radical distributive ideas has yet been elected in most mayor Western countries, maybe just except for France. Is it perhaps that we’ve been nudged to believe in trickle down effects and what have you all, that the majority vote keeps the inequal system in place?
I don’t think this is quite accurate. Many of the supporters don’t have a grasp of how corrupted the nominal left parties are. Democratic voters really believe Obama is a “tax and spend” Democrat who is being foiled by the GOP.
When they say, “its all about in money in politics,” they mean the its about the influence of money in the other party, not their guy because they AREN’T deluded sheep.
50% of Republicans, this was a couple of years ago, supported higher taxes on the wealthy, so naturally, the Democrats during the holidays extended the Bush/now Obama tax cuts. Democratic voters refuse to believe this or come up with some hair-brained explanation about how it was done for “smart” political reasons.
In their hearts, the voters are electing people who are in favor of the little guy.
Rene,
Why hasn’t any nation elected a real distributive politician? you ask.
My guess is that the gospel of capitalism and of more is a world-wide virus. Most of us buy the give-me-more, and more money, and more capitalism gospel song.
The big recession produced minor wrinkles but no cracks in that picture, surprisingly. The Great Depression produced a few changes including regulation, more reporting, and a safety net, which are all now being challenged.
At any rate, sadly most of the world buys the current gospel – and there appears little prospect of change in that in the US or the world.
Do not underestimate the inertia of the bureaucracy that sits between elected politicians and the people.
My own awakening to this issue was when one right wing government in Norway was replaced by a left wing one.
This new government included a party that had not held a government office before, and party leader was given the position of finance minister.
Upon the official handover of the office key, the former minsters was asked about the competency of the replacement. His reply was “i don’t know about her abilities, but i can vouch for the abilities of her staff”. Meaning that even tho the figurehead had been replaced, the faceless mass of staff in the department was the same one.
How much do you think one person will be able to do again that level of inertia? In particular when the same is true across all the other departments as well?
Ya see, one must CREATE wealth before there is any to distribute and much of wealth is dynamic and easily destroyed (imagine, for example, if Beefy was in charge).
So the answer is justice, not redistribution per se, though certainly some initial redistribution is required.
“Can Democracy Help With Inequality?”
That seems to depend a great deal on ones conception of “democracy”. It genuinely appears to me that the huge increase in inequality in the last several years correlates highly with the corruption of “democracy” into oligarchy over the same period of time.
It’s a huge stretch to suppose that the U.S., for example, really has a “democracy”. To be sure, the general population is allowed to vote, but almost exclusively for the candidates selected by the oligarchy. Virtually all politicians at the federal level are coerced by the oligarchy into supporting its agenda and opposing the interests of the people. The electorate itself is heavily propagandized by the oligarchy, channeled into adversarial factions, and weaseled into voting against its own interests. In every way, the system is corrupted to support the pursuit of greed and domination by the oligarchy.
If you please, just how “democratic” is that? It is easy and perfectly valid to argue that the U.S. political system was specifically designed to limit democracy, and even to prevent it. And over the last several years it has devolved into a sham democracy at best, with all of the forms but few of the effects.
Until recently, in Europe, these effects have been far less pronounced. Compared to the U.S. European countries, and Scandinavian countries in particular, have been far more “democratic”, have been far more egalitarian, have had far less poverty, have better infrastructure, have less crime, waste far less of their resources on military adventurism, and are far better at addressing environmental issues. Naturally, as in the U.S., the oligarchy is doing everything they can to screw them, and have been increasingly successful.
The author’s emphasis on Director’s Law exposes their biases. It supposes that the “middle class”, in a more democratic system, votes for bread and circuses for themselves at the expense of the rich and the detriment of the poor, when in fact it votes for fair wages, for fair working conditions, and for the support and the elevation of the poor. Director’s Law reeks of propaganda designed to portray the wealthy and the poor as victims of the middle class.
Demands to be fairly-paid and well-paid for middle-class labor hardly constitutes victimizing the rich, who still somehow manage, after all, to be rich. And demands for maintaining infrastructure for all, education for all, health care for all, opportunity for all, minority rights for all, social justice for all, hardly constitutes victimization of the poor. But that is how the arguments of the rich are cast.
What do I think of democracy in Amerika? I think it could be a good idea. I think Amerikans should try it.
Until the majority of Amerikans realize they don’t have it and never have, it won’t happen. You have a republic and your vote for the President is not democratic. He/she is voted in by the monied people.
I read this last night before bed and decided not to comment because I didn’t know where to start. If anything this posting is a clear example to me of the bought nature of economists trying to keep or further their propaganda jobs. The last sentence makes it quite clear:
“Clearly other political mechanisms must be at work, the nature of which requires a great deal of research.”
If this isn’t agnotology at work then I don’t know what is…………are we sure we are sure we are sure we are sure that Amerikan democracy is a fiction? Maybe we need more research….grin
Yes, that last line demonstrates either mind-boggling naivete or crass disingenuousness. It all boils down to the issue of “proof” in social science. How do you prove that Obama is a corporate shill? By his actions, would be the logical response. But that’s not good enough for economists or political scientists, at least not when they are saying something that will piss off their best-connected peers. You would literally have to show the bags of cash entering the White House service entrance and Obama’s thank you notes stating who gave the money and for what, to come close to “proving” he’s acting for the FIRE sector and the 1%. The pattern of his actions is not admissible evidence in the court of economic or political opinion. The academic game, like all the other games in this society, is rigged.
I’m convinced that a properly-functioning democracy has a large socialist component to it. “Of the people, by the people, for the people” and several other related socialist-sounding truisms just aren’t what the rich want to hear.
The U.S. hasn’t been a properly-functioning democracy for a long time, if indeed it could be considered anything but a democracy-in-name-only. Most of the activities of the federal government very much appear to consist of busting up other countries and weaseling other countries so transnational corporations can indulge in feeding frenzies. Promoting the welfare of its own people barely enters into it.
Blatant corruption isn’t a feature of a proper democracy because people really hate getting cheated. But it is a feature of corporatist oligarchy, and cheating the people is precisely what they do.
Are Amerikans still pretending the U.S. is a “free country”, or is that just bought-off politicians pandering to the public?
Just because you can periodically vote in a “free and fair” election doesn’t mean that you live in a democracy.
Maybe studies of economic inequality are plugging in the wrong variables into their models. I wonder if increasing automation – discussed in a Wednesday article – may be one culprit. Another culprit may be globalization with its attendant off-shoring and out-sourcing.
Globalization/off-shoring means that top managers in the home country can increase their firm’s profits and revenues while decreasing jobs in the home country. Top managers’ compensation depends heavily on total revenues and profits, so top managers do well – as do other such as equity holders in such firms – while the salary/wages of lower level workers stay level or fall. In short, money goes to those most able to cash in on a firm’s globalization.
Besides automation and globalization/off-shoring, there are likely other variables that influence a country’s economic inequality but I think globalization is a major one.
There will be no stopping rising economic inequality in the US and Europe as long as globalization/off-shoring proceed. The US and Europe are now feeling the pain of economic inequality.
Also, once China and India are fully into off-shoring, they will not tackle their own large economic inequalities unless they look carefully at the effects of globalization/off-shoring on their own people. [I’m very disappointed that China for one has not dealt with the effects of its massive exporting on income inequality among its own people. This is very odd given modern China’s political foundations.]
The problems of economic inequality will find their answer in the country’s politics – e.g., taxation of corporate and individual incomes, entitlement programs such as a guaranteed annual income, etc. We’re not there yet, much less starting to come to a concerted global response.
Yes, but Ford used automation to cut costs AND RAISE WAGES. There is nothing inevitable in the rich gobbling up all the productivity gains. It is a choice the political system allows them and that a contempt for a disempowered working class guarantees. What happened was a surrender of the political, intellectual, and cultural institutions to the needs and ideas of the corporate owner/manager class. I never liked Lenin but it is the pure manifestation of his ideas of “economism” among the wage-earning classes. They took temporary boosts in their standards of living under Reagan and Clinton and surrendered everything else to the owners. This was as true in the universities as it was in the UAW. Now, when the devil turns round, to paraphrase Sir Thomas in A Man for All Seasons, and all the institutions are knocked flat and only money counts, where will we stand in the winds that will blow then?
James,
Amen. I also never like Lenin.
What, you thought the Dictatorship of the Proletariat would be a model for achieving equal distribution of wealth? All that’s happened, most likely, is you have Party muckity mucks and their cronies acting as the interlocking board of director muckity mucks and THEIR cronies do in the West, ie, enriching themselves and theirs at everyone else’s expense. I’m pretty sure “From each according to his abilities…blah, blah, blah…” is a trivial workaround.
=severe lack of accountability.
I suspect the level and scope of unionization in the workplace in an industrialized country and how it translates into sociopolitical power have more to do with reducing income inequality than the authors’ very narrow definition of “democracy”. Political democracy without some semblance of economic democracy is an empty suit. But are we talking about agricultural or industrial societies because if there’s no surplus, redistribution is a moot issue.
The fact that unionization rates in Sweden back in the 70s approached 90% or more and included both blue and white collar employment in both the private and public sectors and this labor movement played a dominant role in the Social Democratic Party that governed Sweden from 1932 to 1976 provides a better explanation of why Sweden, and the Scandinavian countries in general, are deemed more egalitarian and democratic than elsewhere – the epitomes of the welfare state. There are sociocultural factors involved as well that reduced the fractious cross-cutting cleavages like ethnicity, religion, and regional differences that have plagued other countries and blunted the primacy of CLASS.
As has been pointed out above, in this country if one distinguishes a republican form of government from democracy, then this country has never qualified as the latter. And as anyone who has read Federalist #10 and then examined the US Constitution will realize, the Founding Fathers were not “democrats” but an oligarchy comprised of mercantile and landed elites who feared the “mob” and designed their government to make it extremely difficult for the majority of the propertyless to find expression. Then too, individualism and liberty have been emphasized by such elites at the expense of social equality coupled with a preference for market-based solutions in pursuit of individual freedom and liberty.
The fact that so few “democracies” have ever really existed or that their history has been buried and has to be retold/rediscovered is unnerving. Athenian democracy – the purported model – becomes problematic by 21st Century standards. For the Athenians who voted were a relatively small homogeneous group of MEN with limited economic stratification who made a clear distinction between politics and commerce. Likewise, the “things” [local assemblies] of Northern Europe come to mind. But both examples occurred before industrialization and before the disparities of wealth and power had become so large as to make redistribution an issue. That may be why the very question of “democracy” and redistribution cannot be answered with the precision the authors’ would like.
Mickey in Akron,
You’re right – unionization is an effective tool to fight income inequality. As a country we seem to have been moving away from unionization since the mid 1980s. That’s unfortunate. As a country we’d be very stupid to remove the right of workers to organize and bargain collectively.
However, I do see us returning to unionization – but don’t ask me when. It may take some time for the US to restore workers’ rights.
My initial reaction is: bu++sh+++! “Democracy” is not an accurate description of any system of government I know of. We have the U .S., Iran, Israel, Venezuela, Chile, Russia, Ukraine, Italy, France, UK, Sweden and so on that all have very different democratic institutions both de jure and de facto and it is the latter that is most important. The U.S. is a Constitutional Republic with some democratic institutions but most U.S. institutions are non-democratic and, indeed, anti-democratic. Some governing systems have a democratic component but most institutions, like corporations (the dominant institutions in the U.S.), churches, and nearly all business entities have absolutely no democratic component to their governance other than some regulations which have a small and usually indirect democratic component.
It is typical of academics today who are, increasingly, illiterate in other areas (they just don’t have time to look into them due to increasing competition in academic circles), to want clear metrics thus you combine “democracy” (a very vague and undefined term) and “income inequality” (a term that you can attach numbers too, yay!) to make a finding that is meaningless but looks good on your CV and shows you can crunch numbers with the best of them. Economics is, to me and my late father who was an economist (University of Chicago, UC Berkeley), a largely invalid academic field to the extent that it thinks economics is about numbers and equations–because human society and human beings are not numbers!
Each of the societies I name above have different realpolitik arrangements. If I threaten my councilman with death if he votes against my wishes then all the votes he got mean nothing (to go to the extreme) and if you think this can’t happen, think again–I’ve seen something of that sort in real life in parts of the U.S. (in the old days) that were dominated by the Mafia. I’m sure there are many places where politicians face offers they cannot refuse in real “democracies.” But the most important point is that even without my crude example it is culture (the sum total of all factors) that determines income inequality (to those of us who have traveled) not some theoretical construct. Income inequality is high in the U.S. because people believe that income equates with virtue in the classical definition of the term although I think this may be changing.
That was my initial reaction too. And still is my takeaway. But one of the assertions raised and interesting question that relates to the polity of the firms making up the economy.
“But the most important point is that even without my crude example it is culture (the sum total of all factors) that determines income inequality (to those of us who have traveled) not some theoretical construct.”
This is very true, yet culture can be said to be a living thing that constantly changes. Globalization in particular hastens and influences that change, and given America’s skill at exporting culture (and propaganda) such changes are mostly for the worst. I don’t think that it’s a coincidence that European embrace of neoliberalism (at least among its “elites”) coincided with the expansion of McDonalds into a global enterprise, the spread of Hollywood “hero” movies (think Dirty Harry and Arnold), and America’s focus on the individual over the group. Given all that, I see the quest for equality more as a cultural struggle than economic and political one.
I share your contempt for economics. The universities of the old country churns out more economists and business/management/consulting majors (often of the Austrian and neoliberal flavor) per capita than any other EU state. Not coincidentally it is also the poorest county in the EU.
There is a very strong critique in academe along your lines Bangor. Dan Sperber springs to mind with an argument that we make easy arguments not good ones. 30 years ago I was researching in management educational evaluation. We knew economics was a farce then, but thought it rational enough to ‘mend’. Management theories were thought merely fit for ridicule. What happened was a total dismantling of critical work and a mass expansion of the textbook teaching we knew to be useless. This was cheap, but the real reason it happened was it was so easy for “academics” with no work experience and only the ability to stay a chapter ahead of their classes. The expansion of HE also brought many students barely capable of study and the replacement of exams by essays with answers easily bought on the internet or copied from the texts. Degrees became easier than older qualifications for university entrance.
Classic chestnuts include questions like ‘critically evaluate process and content theories of motivation at work’. Hardly anyone can answer this on life experience, but nearly all can copy chapter three of the relevant text with a little thesaurus method. You will know less about real motivation than you did at the start and have had no chance to discuss whether people are motivated to work, forced into it and so on. These academics have merely produced a sophisticated version of this mode of study. I’d hazard a guess (one I’d bet on) that I’d find very similar papers through a little google scholar.
This raises some questions about the operational definitions in the study for “inequality”, “rich”, “middle class”, “poor”.
And unstudied is the nature of the resulting taxation that generates the larger revenues in more democratic countries. Another item to study is the class assignments of the democratic representatives who are creating the de jure system of taxation. And then there is the equality or inequality among the people with the power to set their own salaries–operationally, the people who allocate funds to wages and salaries, set the budget size for wages and salaries, and distribute the levels of wages and salaries in fact among the employees of the firm. If there is a bias to the middle class it will be there and it will be related to the size of firms in the economy. Inequality should increase and be biased toward the rich as the concentration of economic power in firms increases. It should also increase to the extent that the power to set one’s salary is devolved in large firms to smaller management units that have only the requirement of returning large earnings to larger consolidating units of the firm. These managers might be middle class by ensuring that those who work for them remain poor.
“First, democracy may be ‘captured’ or ‘constrained’.”
Captured or constrained democracy is not democracy at all, so the authors of this piece could have saved all of us time by just stopping there.
Regular citizens deserve better than this conclusion: “since the increase in inequality in the US has been associated with a significant surge in the share of income accruing to the very rich, compared to both the middle class and the poor, Director’s Law-type mechanisms seem unlikely to be able to explain why policy has not changed to counteract this. Clearly other political mechanisms must be at work, the nature of which requires a great deal of research.”
The authors, apparently esteemed and well-compensated academics all, could learn something of those political mechanisms from any one of Greg Coleridge’s posts at his Create Real Democracy blog, for instance:
http://createrealdemocracy.wordpress.com/2014/02/07/banking-on-never-ending-power-and-rights/
Remember the episode in The Simpsons where a character (looking very much like Arnold Schwarzenegger) was tied high on a pole with poison acid gas floating up at him and protected only by a pair of goggles? He started repeating, “The goggles, they do nothing!”, which for some reason was hilarious.
Well, the infrastructure of democracies, what we call “checks and balances”, after a 40 plus year assault, they do nothing! or precious little to protect the “will of the people” or their interests from corruption. We have no effective way of expressing choice since the political machinery of representation has been corrupted. We have a sham representation and we have no functioning system of justice that will rein in these abuses. Our system of democracy is as bankrupt as the people corrupting it are rich.
Democracy suffers from being fragile, easy to manipulate and structurally indifferent to the outcome.
+100 for making use of that particular Simpsons reference. Very apt.
In that episode, they are making the Radioactive Man film. Arnold has the lead role, and one scene calls for his character to get drenched in toxic waste. To assure his safety, the production crew provides him with a pair of safety goggles. The toxic waste is released and Arnie, much to his chagrin, discovers that “the goggles do nothing!”
“Democracy” is like those goggles. Sure, in particular situations they might help, but when you’re being overrun with toxic waste they do nothing. Democracy, however defined, might lead to more taxation, but what are those taxes purchasing…and from whom? That’s the question that the above analysis doesn’t address, but it seems important to me.
And I have to say, the contention that the “middle class” uses its political power to redistribute wealth to itself from both rich and poor doesn’t seem to bear much resemblance to what’s been going on in this country for the last 5 decades or so. We’ve been given a pair a safety goggles in hopes that we won’t notice the flood of filth around us.
If you exclude social security and medicare taxes, then taxes almost exclusively purchase stuff for the 1%. Oh and I include the military industrial complex as toys for the 1%.
SS and Medicare are the working classes subsidy of ITSELF, that do have somewhat greater benefit to what they want to call “middle class” portion of those working people.
There is no such actor as “the middle class.” There are persons who cast the votes, and, as Stalin said, decide nothing, while those who count the votes decide everything. Those who are in charge are those who take charge, and those who take charge are those who have special and particular advantages to gain by doing so. Political “scientists” teach us to call them are an “elite”, though they are really just a loathsome conspiracy of devious and designing persons.
Nicely put Diptherio, both the analogy and the link. I had forgotten the circumstances of the episode, only remembering that is was side splittingly funny when I saw it. Even though just a cartoon, it was someone’s intense misfortune unfolding, yet at the same time it had that pro-wrestling quality of fakery to it (after all it was about Arnold) except the part about the woefully inadequate goggles. Hard to explain.
Anyway, indeed, democracy = those goggles in the face of the avalanche of toxic corporate sludge we are dealing with. I wonder if democracy doesn’t require cottage industry, or mostly cottage industry, as well as smaller populations for “good soil” or would it still be so fragile and susceptible to effects of corruption?
As to this article, it strikes me as a sort of Mr. McGoo’s morning walk in the unexploded shells and minefields of our system.
GRAND PLAN
The Obama Administration is hitting Medicare to reduce the deficit.
Blood pressure medicine $24 to $59. Many others big increases.
Low Income Social Security recipients will be hurting big time.
MEANS TEST to take the rich off the programs. I know several very rich
who get them.
Bush tax cut costs $3 trillion so far with 35% to top 1%.
How much has Payroll Tax Cut added to deficit?
Two wars $3 Trillion.
Increase the tax on estates and huge incomes.
Jobs + Minimum Wage increase.
The political problem with Means Test is that if people above the Means Test cuttoff are told they get no Social Security even though they paid into it, they will ask why they should pay?
Means Testing is a clever wedge driven into the SS FICA taxpayer base to crack and then destroy social consensus to pay FICA taxes in order to recieve SS benefits upon retirement.
The practical problem with Means Test is that under Means Test the bar will be lowered and lowered. When I go to retire under a Means Test regime I will be told that if I have a house AND a car then I have too much means to deserve or need the SS which I spent my working lifetime paying FICA taxes for. I will be told that I have to sell my house and live in my car and then I will qualify for SS, but only after I have spent all the house-sale money. THAT is the future which the Means Test conspirators are secretly designing.
Walter and others above note the problem in this analysis with the definition of democracy. Much economic analysis fails on this and similar problems in definition. The Athenian Democracy, of course, arose in a slave economy, along with lots of fine rhetoric that did nothing about slavery or sexism. Joseph Heller’s ‘Picture This’ has a really witty, yet factual account.
It would be interesting to know what our personal notions of democracy consist of. I’ve ended up thinking I never get to vote on anything that matters to me. With creaking bones, partial dentures and age generally, I’d like to vote for death with dignity, a world-wide international service project on a living wage for the unemployed aimed at developing social capital, the democratisation of armed services and police – my list goes on and on without coming to anything I can actually vote for. We get some stuff I would have voted for, like gay and minority rights, rights for the majority (women), abortion (though one can hardly be ‘for’ this) – much of which came about when the democratic majority would have been against these sensible freedoms. I’d want to go much further with such as our main media newsrooms having a 50% disability quota. This is just me and may be a minority report, but as a thought experiment we can all do, it might just tell us just how we are defining democracy.
In the UK I can vote Tory to ensure the rich get richer, Labour for the same reason, UKIP on latent racism and little Englander Europhobia, Liberal to get really disappointed or Green in harmless protest. In 1924 I could have voted for ED Morel on a radical democratic foreign policy ticket. In terms of wealth redistribution, I can’t vote against the massive welfare given to the rich, for guaranteed income and so on. Nor can I do anything about the chronic ideological state of media and education that produces voting dupes or the already owned global constitution. Thus I think this academic research fails for analytic reasons (I reject its epistemology).
It’s worth just touching on another political issue. All redistribution would rely, in standard politics, on a set of representatives controlling the economy through what Weber called a lytric system. We quickly lose control of leaders, whether we elect them or not. Control of the money always produces mad corporatism, whether of Mao starving his own people to export grain or financial crooks. I joined the Labour Party to vote Blair in only to find I’d been deceived by the Iron Lady in drag. Whatever these academics are on about, it’s surely based on a fantasy democracy and evades the best argument we could have about a fair distribution of wealth. More functionaries of existing power, but what would it be to write and talk other than as functionaries? We are not allowed to vote for a global protection of work conditions, yet can shuffle to the ballot to vote in people also powerless to do anything on this less they offend demons of “competition” beyond our city walls. Give social mice conditions of affluence and you’ll find their King still keeps the majority in poverty to maintain his position. In mouse and human societies the song ‘here comes the new boss just like the old boss’ rings true. A sensible constitution would prevent this and this is what we’d need for redistribution and a new quality of life. Mao’s daughter has $750 million salted away, Blair is a bag-man for JP Morgan, Cameron comes from a line paid millions to compensate them for giving up slaves – we might look at why politics of all kinds lead to perverse redistribution to the wealthy.
““First, democracy may be ‘captured’ or ‘constrained’.”
Captured or constrained democracy is not democracy at all, so the authors of this piece could have saved all of us time by just stopping there.”
I agree 100%!! What “further study” is needed to understand the near total kleptocratic control over this “democracy?!?” As James Levy points out these “social scientists” would require politicians to self-report that their actions were indeed bought and paid for before they would dream of regarding them as “captured.”
The disconnect between well-paid academics and the real world is often disconcerting. I am acquainted with a philosophy professor at Cornell who likes to think of himself as a sophisticated Marxist. A few years back, during the height of the Verizon strike, I mentioned to him that I was encouraged by the resolve shown by folks on the picket lines in Providence and New York. “What picket lines?”, he asked. He was completely unaware of the most significant labor action to occur in the Northeast for years!! To his credit, he was somewhat embarrassed by his ignorance– but I remember thinking at the time that Chris Hedges was actually understating the problems he described in Death of the Liberal Class.
It seems to me that “Inequality” is a multi-dimensional circumstance which might be treated with several different possible remedies. The most pressing is the poor wages of the working poor. We are in desperate need of an increased minimum wage and enforcement of wage and hour rules. The blight of the stagnating economic prospects of the middle class might be addressed by controls on globalization and enhanced unionization. The obscene incomes of the 1% represents more a moral than economic problem. Many great charitable objectives can be funded by the enormous wealth of these folks. But then there’s the Leona Helmsleys and the Koch brothers of the world. Seems to me we need transparency and controls on Wall Street and what the super rich can do with their money
I’ll simply point out that in a roughly equal society, usury will quickly result in inequality – especially if combined with government-backed credit creation since the latter drives people into debt.
Otoh, common stock as private money requires no usury, nor fractional reserves, nor deposit insurance, nor a legal tender lender of last resort nor any other government privileges AND IS DEMOCRATIC!*
But let’s continue with usury for stolen purchasing power rather than just sharing and equity for all, eh?
*Yes only per share but in a roughly equal society everyone would own roughly equal shares. So now restitution is required too in the form of the equal redistribution of the common stock of all large companies. What a mess the Hamiltonians have created!
http://www.asip.org.ar/en/content/why-don%E2%80%99t-we-tax-rich-inequality-legislative-malapportionment-and-personal-income-taxation-a
A little tedious, but at least evidence some academics notice rich elites can capture our politics and block legislation that threatens their money. Issues on democracy and income distribution have been discussed since Aristotle. I’ve read the full paper now and don’t feel it adds to the necessary debate at all. Focus on expanding HE by focusing resources there instead of earlier raises inequality. Did you get chance to vote on that folks?
I wasn’t much influenced by creationists in my biological research. I think I can justify that. I’m not sure economists can do the same when they keep producing papers that dismiss our real political condition out of hand.
In this democracy, Eric Holder looks the other way.
In this democracy, Edward Snowden can’t come home.
In this democracy, the bankers are bailed instead of jailed.
In this democracy, millions of jobs are sent overseas.
In this democracy, people keep electing the same types of people – liars and salesmen!
It’s been said that you really always get what you want. You might argue that you don’t, but in the end, if you think about it, you do get what you want.
So how come no one is getting “really” angry? I think it’s because this particular elite is well-schooled in the principle that if you just give people enough, enough credits/entitlements/welfare/free medical/food stamps/minimum wage raise, etc., they will keep quiet. And you know what? They are! They don’t really care that the elite are socializing their losses or ruining the country, so long as they are getting their share.
All of these programs serve to keep the frogs happy in their hot water pot. They will start protesting just before the water hits a boil.
—–
Edward Snowden gives a remarkable interview (first time interviewed by the German press). Very intelligent young man.
http://www.liveleak.com/view?i=f93_1390833151
“So how come no one is getting ‘really angry’? Thomas Jefferson briefly but eloquently addressed this in the Declaration of Independence:
“Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object, evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.”
― Thomas Jefferson, The Declaration of Independence
In that case, the British had made several attempts to change the government in the preceeding years without providing guarantees. Royal governors paid by colonial legislatures were more pliant than governors paid by the crown, interested in headline numbers and getting back across the pond as soon as possible. The British weren’t being evil all the time, but they were dramatically changing the power structure where every adult, non slave male was a land owner. Suffrage was basically 40%.
No one group has done that, except maybe Obozo with TPP which is why Reid nixed it, while peddling what was widely considered to be inferior tea. Yes, the tea dumped into the Boston Harbor was not well liked.
Too many people simply blame the other party can continue to cling to the belief that the guy they voted for is a good guy instead projecting the anger at others. The British were the other for practical purposes despite cultural similarities. They lived across t h e At antic. As simple as this sounds, this matters.
Yep but we can count on the problem getting worse because the system SEEMS just on the surface so change will be resisted until the injustice becomes undeniable.
Yep. It’s what I’ve found. We all have our widescreen and, so far, plenty to eat.
Charles Hugh Smith’s article entitled “The Mafia State of Mind”:
“When there is no other choice but submission, when voting for either party yields the same results, the mafia state of mind reigns supreme. The mafia state of mind exists in all ideological flavors–socialist, capitalist, communist. The mafia state of mind is simple: leave the populace no choice but submission, enforce monopolies of control and power, and then extract and extort to your heart’s content.
Once the mafia state of mind has seeped into every nook and cranny of the society and economy, it’s not even recognized as corruption: it’s simply the way the system works. And so the residents of nominal democracies in Asia, Europe and the Americas do not even realize how thoroughly corrupted their societies and economies really are; they cling to the illusions of choice even as their incomes, wealth and political influence are funneled into the hands of various elites by overlapping extortion rackets.”
http://www.oftwominds.com/blogfeb14/mafia-mind2-14.html
The paradox of liberal education: Liberal education is supposed to free the mind, but how, exactly might it do that?
Einstein said, “Education is what remains when you have forgotten everything you learned in school.”
Once when we were young, we went to university, took courses in economics and political philosophy, and learned to comprehend articles like this.
Education finally came, after years of post-graduate life experience, when we could no longer recall, and so were finally freed, from the illusion that such study may have been worthwhile. When we finally realized we were taught to contemplate imaginary causes (like “democracy” and the “state”) and imaginary effects (like “income inequality”). How could I reasonably expect to have income inequality with all other persons in some imaginary political community, when I can’t even manage to achieve income equality with myself in the real world, from one week to the next?
Along the same lines as many above.
The article and the references rest on one basic assumption:
That inequality is the accepted norm, usual state of affairs, an inevitable outcome of personal gifts / performance / background / actions / or something – part of nature as we know it, if not a gift.
That this state of affairs is just a fact of life – some ppl will earn million(s) a year, others only 20K, some nothing at all, is accepted.
The next step is to shout that something *should be done* to even out these disparities, usually in the form of taxation and state redistribution in cash (no tax, tax stipends, state paid med care, etc.), but not only, as across the board from state and the private sector: charity, compensatory programs, educational efforts, scholarships, programs for the young keen, etc.
The paper does not define ‘democracy’, it is just a buzz word it slips in.
The US, for ex. is not a ‘democracy’ but a Republic with some (useless) representation. Countries (…OECD) vary greatly in what input citizens can have, or exercise. Nobody knows what a ‘true’ democracy would look like.
Likewise, the concept of ‘dictatorship’ is taken for granted.
?? those BAD countries like Iraq (Saddam, but now..?), Iran (that guy, you know, who it now?), Russia! that’s a dictatorship! Venezuela, communist regime, etc. I need not go on. Bahrein, Saudi Arabia, Israel are never called dictatorships. The contrast (whatever it might be) is not gone into.
Floating sheep has some trivial and amusing data about the use of the terms democracy / dictatorship.
http://tinyurl.com/ylgltuh
Few features of our political structures are “democratic”.
Chris Hedges discussion in his book “Death of the Liberal Class” is instructive. He describes the destruction of the 5 pillars of progressive change: labor unions, press, churches, universities and the Democratic Party.
Hedges argues that healthy change for a society can only be real and sustainable if these social movements for change never achieve formal positions of power. Power is always corrupting. i.e.,for those in power, the goal of perpetuating their power often supercedes any goals to improve “public good”.
It sounds like the authors had a preconceived thesis about the narrow minded ass beating hard working and meritocratic middle class paying itself first, in defiance of the parasitic upper and lower classes, and then threw together a bunch of technocratic drivel to prove it. I don’t know if I buy that, but that preconceived thesis has resonated with people enough to have been given a label:
http://en.wikipedia.org/wiki/Producerism
This is also more or less the result of the New Deal as political historian Ira Katznelson sees it in his book, “When Affirmative Action was White: An Untold History of Racial Inequality in Twentieth-Century America.” The basic outlines of his policy analysis can be found in this review:
http://www.nytimes.com/2005/08/28/books/review/28KOTZL.html?pagewanted=all&_r=0
Of course, the southern good ole boy Democratic Congress that crafted the New Deal wasn’t in fact particularly “democratic,” by which I mean “representative.”
If it had been more democratic, perhaps we would live in a different country today.
Maybe even a country with a less racially stratified class hierarchy, and probably therefore also one with less whining about “identity politics.” Certainly, people have advanced the thesis that the upper class in the form of the Democratic Party is making appeals to the historically excluded as a means of distraction while it screws the white middle / working class back into the pre-New Deal Stone Age.
All things considered, I suppose I’ve seen less plausible collections of conspiracy theories in my day.
Marxists governments typically characterize themselves as “democratic”. They are also invariably oppressive and ruled by an elite who peck their way to the top in no different manner than members of elites in other societies who arise the same way: by arse-kissing the existing members of the elite.
The idea that democracy levels society economically is a myth born of theory but never observed in the real world.
What matters is the objective intention of the tax system. If taxpayers are the primary beneficiaries of taxes paid, you get one kind of society. If taxpayers are only economic donors to others who contribute little or no tax, you get another. Nothing to do with “democracy”, either way.
Except everyone pays taxes, directly or indirectly.
Besides the purpose of Federal taxes is to increase the demand for fiat thereby reducing price inflation, not to raise revenue for the monetary sovereign.
Ain’tcha know nuthin?
Except failure to earn income avoids Federal income tax, the only major Federal Tax I know of, so fiat must be valuable for reasons other than Federal Taxation? And indeed it is – for State and local taxes and for paying the bankers usury for the debt they force us in to.
Taxes originated long ago as a way to pay for government . The gov has nothing to show for justification of taxing people with little or no income . Gov propaganda shows that the ” rich ” pay most of the federal income taxes . Who exactly is paying how much ? The truth is that the rich shadow government rulers ( eg. Warren Buffet ) pay little or nothing for government and sometimes even get net pay from the gov . The very rich hire 50,000 $ a year tax lawyers – not mere accountants – to get out of paying for government . It is more than simply irrational that the greatest beneficiaries of government pay the least for it . People , especially politicians , avoid grabbing the bulls by the horns because it is potentially lethal . Who owns the military-security-industrial complex if not the ultra-rich ?
Many institutions in our democracies have origins much older than modern democracy and have never been ceded to democratic control. In polls we nearly always, as a public, say we want more equal shares and also demonstrate we don’t know how unfair the real situation is. There is no analysis of the conditions in which democratic voting might help us away from current extremes and be based on more factual choice protocols, including evidence from social epidemiology that highly unequal societies are bad for our health. We would have to be able to choose what we get to vote for to know whether democracy makes any difference.
‘Democracy’ as defined in the current United States is largely irrelevant when it comes to inequality.
It’s supply and demand. The only sure way to reduce inequality is to have a tight labor market. When even janitors and truck drivers are in short supply, every class of labor has some real bargaining power. Wages are overall high, the wage structure is relatively flat, and profits for the rich are low.
If a business requires BOTH a janitor and an engineer to function, and both classes of labor are in short supply, then both will tend to do well.
When there are a hundred desperate people competing for every job, wages for the many will be low, and profits for the rich will be maximized. The labor market will also be skewed: a very few workers with unusual abilities (championship athletes, star musicians) will command premier wages, yet everyone else whose talents are more common – even if they are high in the absolute – will do poorly.
Now Switzerland is a true democracy. The Swiss people themselves get to control their own immigration/population policy, not the rich. Funny, most elite opinion considers real democracy – where important things like population policy, war policy, bank bailouts etc. are decided by the people themselves – to be somehow fascist. Go figure.
Supply and demand, people. Supply and demand.
Jesus this thing is a sleeping pill. I mean really. It makes my mind wander after reading a few paragraphs . Howw can anybody think this makes any sense. It makes no sense. Even more research would not make sense. But it might make money! For the researchers. And for beer and pizza shops. That wouldn’t be bad, actually. Give these dudes some money already! They need it. You can’t research something if you can’t make sense.
It might makes sense if they realized inequality can increase and everybody can be better off. That is, if everybody start out dirt poor together and then some get rich and some get middle class and some stay poor. Well, inequality increases but almost everybody better off.
Also, the authors just assume GDP. As if it’s just there. They should remember the Odd Couple when Felix took Oscar to small clains court at night and put him on the stand. And interrogated him under oath. And when Oscar answered a question saying he “assume’ some fact, Felix wrote ASSUME on the black board and said “When you assume, you make an ASS out of U and ME.” QED
Seriously Yves are you trying to grind us all to intellectual death with this academic mumbo jumbo? I don’t want to assume that’s why I asking. What about that raccoon in Masschussets? What does it think about this topic? haha
I’m going to hazard the assumption that most Americans are quite comfortable with economic inequality. If someone works harder, has a better idea, or just plain gets lucky we believe that they should have more than the lazy guy around the corner who’s always shirking his tasks. Our present concerns over ‘inequality’ hide far more ominous problems with the distribution of wealth and income in our society. Measures of ‘inequality’ and similarly measures of ‘democracy’ as presented in this post, obscure and shift attention from these underlying problems. I fully agree with psychohistorian’s assertion that this post is one more work of agnotology presented to pull our attention away from the issues that should concern us.
Our ‘inequality’ rewards a very few with wealth and income far beyond their ability to enjoy or make use it to satisfy their needs for material goods. I don’t accept that there’s never enough wealth or income to satisfy human desires for material goods. Wealth and income in our society can buy much more than material goods and it’s the lust for these other things which – some – people can never satisfy. In our culture money buys power, respect and self-worth, beauty, longevity, excellence beyond others, culture, wisdom, popularity, death, destruction, and many other things money has no moral right to buy. None of these things should ever have been put on sale in our marketplace, or in any marketplace.
Our ‘inequality’ rewards the very many with too little to live their lives in all the fullness that the great wealth of our society could afford for all. The very many live with too little of their own time, too little ability to create, too little food, too little comfort of home and family, too little opportunity to succeed at working harder, coming up with a better idea, or getting lucky… too little hope. Our ‘inequality’ leaves homeless and hungry in a land of plenty. Our ‘inequality’ gives the very few free reign to destroy even our collective futures.
And what of our place in the world? Our inequality lets a very few spread discord and war to line their pockets, kill our youth, and spread destruction and death to all corners of the world. We make shameful use of the gifts and greatness we are so fortunate to inherit as a people. The world faces a most serious threat and our inequality empowers the very few to assure the increase of that threat. As the largest and most powerful of the great powers [yes I am an American exceptionalist but I would also welcome the exceptionalism of other great nations in a competition toward excellence] we should feel obligated to lead the world toward mitigating the coming disasters resulting from global warming. As the largest and most powerful of the great powers we should work to help all humankind live the fullness of life that every child should deserve as birth right in a world of plenty. If that plenty becomes less, we should share more, and we can still have enough inequality to reward those who work harder, have a better idea, or just plain get lucky.
How? That’s topic for further discussion. The tools are old and proven and readily available for repairing this ‘inequality’ and ‘democracy’. We are missing the will.
Is democracy consistent with inequality is the wrong question. The correct question is what kind of a society do you want for yourself and each other.
As others have pointed out, the authors aren’t really talking about what they purport to be talking about or measuring what they say they are measuring. This gives an otherworldly quality to their writing, as if they were describing conditions in some parallel universe.
One aspect of this is the embedded assumption that democracy and equality are separable. What is conveniently left out is that democracy is based on a social compact, and that social compact inherently places limits on inequality. If the social compact is violated as ours has been, then we are left only with the forms and not the substance of democracy.
It is important to realize that splitting democracy from equality echoes the scission of the economy from its social purposes. The point in both is to advance a neoliberal/kleptocratic agenda under cover of a fictive “objectivity” or description.