WHISNANT: The United States of oligarchy

Our current economic climate fosters inequality

Six years after the onset of the financial crisis, America’s basic truisms are all but extinct. It’s become cliché to question whether or not the country is still a place of equal opportunity, and unabashed proclamations of the “American Dream” are often met with resigned eyerolls rather than patriotic cheers. While there’s been much discussion about the effects of wealth inequality on economics, two recent works suggest inequality will extinguish the American idea of democracy altogether if we continue down our current path.

Writing in “Perspectives on Politics,” Princeton and Northwestern political scientists Martin Gilens and Benjamin I. Page find that “economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence.” Examining 1,779 policy issues since the Reagan years, Gilens and Page find the opinions of voters in the top 10 percent of income distribution are 15 times more important to forming policy outcomes as compared to opinions of those in the bottom 90 percent. Gilens writes in the Boston Review that his findings also suggest “both parties are inclined to ignore the public. Both seek to control government, and strong partisan control by either leads to policy-making with little regard for the preferences of the governed.”

Because preferences of elites and average voters sometimes line up, the bias of the political process towards the rich is often masked, but given a divergence in opinion across the income distribution, elites win the debate with precious few exceptions. Compounded with research from the University of Connecticut that the Senate almost exclusively responds to the preferences of the wealthy, there is a strong empirical basis for widespread disillusionment with government. Gilens and Page note that the United States still retains the elections, free speech, and voting rights that are crucial to democracy, but the research does not support the United States being a truly representative democracy, in any meaningful sense.

While these studies shed needed light on our present political system, French economist Thomas Piketty’s “Capital in the Twenty-First Century” is a troubling analysis of where we are headed. Piketty writes, “When the rate of return on capital exceeds the rate of growth of output and income, as it did in the nineteenth century and seems quite likely to do again in the twenty-first, capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based.” As advanced economies continue to stagnate, wealthy investors will grow wealthier as the working and middle classes see their standards of living flatline and then eventually deteriorate. Per Piketty’s analysis, the 20th century’s two world wars and the responses to them brought about a great convergence of income distribution that led to a broad-based middle class unlike the world had ever seen before, but since the 1970s, the troubling trends in 19th century capitalism are reasserting themselves with a vengeance worldwide.

Most disturbingly, Piketty predicts the death of the “self-made man” at the hands of what he calls “patrimonial capitalism.” Because wealth is increasingly concentrated in the hands of a few, hereditary family dynasties will increasingly emerge and talented, hard-working individuals without means will increasingly lack opportunities to innovate and thrive. He sees this trend crystallizing in the middle and later parts of the coming century, but we can already see it beginning: six of the top 10 wealthiest Americans are members of the Walton or Koch families.

Piketty’s work has gained notoriety across the political spectrum, with liberal economist Paul Krugman calling Piketty’s work a wake-up call to a “New Gilded Age,” conservative writer James Pethokoukis citing economic growth as an essential remedy to the problems Piketty foresees, and the neoliberal staff of The Economist conceding, “Those of us who would like to preserve the market system need to grapple with that sort of dynamic [of inequality].” Whatever your position on Piketty’s conclusions, the data he marshals is impossible to dismiss.

Despite (or because of) the severity of the problems and the capture of the political system by wealth, the solutions Piketty presents are not easy to enact. His suggested remedies, a global tax on wealth and high estate taxes, are likely to strike the U.S. voting public as “socialist” and un-American. Piketty may not even have the right answers, but if nothing is done, the United States in the year 2050 might also look un-American in ways we can’t even imagine.

Gray Whisnant is an Opinion Columnist for The Cavalier Daily. He can be reached at g.whisnant@cavalierdaily.com.

Published April 23, 2014 in Opinion

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