Louis D. Brandeis, the American jurist, famously warned: “We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.”
His cri de coeur was inspired by an indignant observation of the shenanigans of America’s robber barons during the Gilded Age. Today, we live in a data-driven age, and some careful students of the connection between money and politics have now amassed a powerful body of evidence to support Brandeis’s moral claim. A lot of it is assembled in a report by the progressive research organization Demos, published this week.
One of the most striking findings is the extent to which economic power translates into political power. Institutionally, this is an era of unprecedented democracy – one of the triumphs of the 20th century has been the extension of voting rights to all adults in a lot of the world.
But even in the United States, it turns out that those rights do not translate into much actual political power. David Callahan, co-author of “Stacked Deck,” the Demos report, describes the superrich as “supercitizens, with an outsized footprint in the public square.”
“I think most Americans believe in the idea of political equality,” Dr. Callahan told me. “That idea is obviously corrupted when in 2012, one guy, Sheldon Adelson, can make more political donations than the residents of 12 states put together.”
The Demos study draws in part on the quantitative research of Martin Gilens, a professor of politics at Princeton University, in New Jersey, and author of Affluence and Influence: Economic Inequality and Political Power in America. Dr. Gilens, who focused on the divide between the top 10 per cent and everyone else, found a high degree of what he calls political inequality.
“I looked at lots of survey data that indicated what people at different income levels wanted the government to do, and then I looked at what the government did,” Dr. Gilens explained.
“For people at the top 10 per cent, you could predict what the government would do based on their preferences,” he said. “But when the preferences of people at lower income levels diverged from the affluent, that had no impact at all on the policies that were adopted. That was true not only for the poor but for the middle class as well.”
Dr. Gilens is a social scientist who is careful to stick to his data. But he told me he was “definitely surprised by the extent of the inequality.”
“If you value democracy, if you value the ability of people at all levels of income to shape government, which is what it means to be a democracy, then, yes, you should be very worried,” he said.
One reason this “political inequality” is significant is that it turns out the rich and the rest have different political preferences. These do not split easily along traditional partisan lines – in fact, one of Dr. Gilens’s findings is that political inequality persists whether Democrats or Republicans are in charge. And in certain areas, like defence policy, there is no class divide.
But on an important set of economic issues – deficit reduction, the minimum wage, free trade, regulation and progressive taxation – the affluent are more conservative than everyone else.
“None of this might matter if the wealthy and the rest of the public had the same public policy preferences,” Dr. Callahan said. “But as we document, the wealthy do have very different policy preferences, particularly in the sphere of economic and fiscal policy and on trade and globalization. You see this on issues like taxation, or the minimum wage, or the general role of the government in society.”
This gap in policy preferences, the Demos report argues, is the explanation for one of the most puzzling and worrying consequences of rising income inequality – its correlation with falling social mobility. Alan Krueger, the head of President Barack Obama’s Council of Economic Advisers, calls this the Great Gatsby Curve, and it is the most compelling reason to be worried about the growing chasm between the top and everyone else.
That link, which has best been documented by the Canadian economist Miles Corak, is mysterious. After all, a lot of today’s rising inequality has been driven by benign forces like the technology revolution and, as a result, today’s plutocrats are more likely to be self-made than they were three decades ago.
But once they become rich supercitizens, the Demos report argues, those at the top of the economic heap use their power to support policies that diminish social mobility. This is not because of malign intent – there is no cabal of fat cats in top hats smoking cigars and plotting how to keep the proletariat down. Indeed, education, a key to social mobility, is a stated priority for the affluent.
The catch comes when there is a choice between personal self-interest, often in the form of lower taxes, and the expensive institutions of greater social mobility. And that is when the supercitizens opt to pull up the opportunity ladder behind them.
Beyond the campus green, Americans can be squeamish about viewing policy choices through the prism of economic self-interest. It is much more comforting to imagine the country is engaged in a high-minded and technocratic debate about what works best to serve the common good.
But that’s not what’s happening. The supercitizens are very effectively pursuing their own self-interest. Social opportunity, and even democracy, are under threat as a result.