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March 30, 2014 4:59 pm
Is inequality bad for US democracy? Not according to the US Supreme Court. In the next few weeks America’s apex court is likely to remove what remains of post-Watergate limits on campaign finance.
In 2010 it did away with the biggest restriction by giving corporations the same rights to free speech as people. Now it looks set to scrap ceilings on what individuals can give to candidates and parties. In a less unequal society, the downside would be limited. But in an economy where the top 1 per cent of the population owns more than a third of national wealth, it corrodes the republic from which such riches sprung. People fret about America’s 1 per cent economy. They should worry more about its 1 per cent democracy.
Both ends of the spectrum should be concerned about the rising US oligarchy. Last week several Republican presidential hopefuls trekked to Las Vegas to pay their respects to Sheldon Adelson, the gaming billionaire, who owns casinos in Nevada, Macau and Singapore. Mr Adelson wants to ban online gambling because he sees it as a threat to his vast offline empire. He is prepared to throw tens of millions of dollars at whoever will take up his cause. In practice, mainstream candidates, such as Jeb Bush, the former governor of Florida, and Scott Walker, the governor of Wisconsin, are likely to smell a rat. That means the money will probably go to a Christian conservative such as Rick Santorum, who is fanatical enough to tarnish his party’s electability. If one man and his millions can alter a party’s nomination, he can wreck the party. Genuine conservatives ought to worry.
They should be concerned too about Tom Steyer, the liberal hedge fund billionaire who plans to spend $100m on the upcoming midterm elections on candidates who promise to tackle global warming. The rights and wrongs of Mr Steyer’s stance are beside the point. His aim is to bend the national debate to his will and ensure that President Barack Obama – whom he has hosted for election fundraising events – denies permission for the Keystone XL pipeline from Canada. Republicans with longer memories might cast their minds back to 1996 when Bill Clinton skirted close to breaking the law by giving generous donors overnight stays in the Lincoln bedroom at the White House.
When money can so easily penetrate the official home of the US commander-in-chief, democracy suffers. The uncomfortable truth is that both US parties are up for rent. Patriots of all stripes should be troubled.
America was forged in opposition to the aristocratic corruption of Europe. Today, inherited wealth is more entrenched in the US than it is in almost every corner of the old world. So too are legacy places at Ivy League universities that were once such wellsprings of US meritocracy.
Today, inherited wealth is more entrenched in the US than it is in almost every corner of the old world
In politics too, dynasty has rarely been more entrenched. It would be little surprise were the 2016 election to turn into a contest between Hillary Clinton and Mr Bush. Seven of the past nine presidential elections have featured a member of the Bush or Clinton families. Next time could make it eight out of 10.
Both families benefit hugely from the networks of donors they have cultivated over the decades. It goes without saying that their donors have done pretty well too. The story continues. George P Bush, Jeb’s son, is running for land commissioner in Texas. Many believe Mrs Clinton’s daughter, Chelsea, is preparing the ground for her own future in US politics.
Of course, dynasty is not only about money. In a celebrity-driven age it also brings valuable name recognition. Moreover, money is not enough on its own to change election outcomes. The infamous Koch brothers, Charles and David, who own the second-largest private corporation in the US, spent tens of millions on the 2012 presidential without avail – as did Mr Adelson. And US democracy is still capable of extraordinary upsets, notably Mr Obama’s emergence from nowhere to dislodge Mrs Clinton in 2008.
Yet he may be the exception that proves the rule. Mr Obama campaigned on a promise to drive the money-changers from the temple. His efforts have come to naught. Aside from a nominal ban on permitting lobbyists to work in his administration, Mr Obama has been unable to stem the flood of spending since the 2010 Supreme Court ruling. It is on his watch that US inequality has regained the levels last seen in the Great Gatsby era of the 1920s.
The debate continues to rage among economists over whether such extremes of inequality harm US growth prospects. Some say the fact that the bulk of income goes to the top 1 per cent reduces growth because it undermines the middle-class consumer engine. Others say that such outsized gains offer an incentive to risk-takers to work on the next generation of technological breakthroughs.
There are strong merits to both arguments. But the debate is far too important to be left to economists. In a society where the median net wealth is $113,000 per family, can it be healthy that the median for members of Congress is more than $1m apiece? Should one person one vote be replaced by one dollar one vote? Most economists agree that the effects of technology and globalisation will result in even more inequality in the years ahead, perhaps spectacularly so. The only real countervailing force is politics.
It would be a tragedy for US democracy were its political system to act as a spur, rather than a check, on the extremes of our age.
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