The Price of Inequality: How Today's Divided Society Endangers Our Future (22 page)

While the days of outright exclusion from the voting process are mostly behind us in the United States, there remains a steady stream of initiatives to limit participation, invariably targeting the poor and less well connected. Authorities can use even more subtle methods to discourage certain groups’ political participation, whether it is conducting inadequate voter outreach to poor or immigrant neighborhoods, poorly staffing polling places, or preventing some felons from voting. In some cases, it is difficult to distinguish neglect from willful disenfranchisement, but the effects are the same: depressing voter turnout, often of a targeted group. These measures will chip away at voter participation, even when they do not present absolute barriers to registering or voting—especially among the least privileged parts of the population, where enthusiasm for voting is already low and mistrust of the official system runs high. The result is that one in four of those eligible to vote—51 million Americans or more—are not registered.
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On the other hand, certain measures can make it easier to register and will make it more likely that those who are qualified to vote do so. Allowing individuals to register to vote at the same time that they apply for a driver’s license lowers transactions cost, and thus facilitates voter registration. More flexible schedules at polling centers and more voting booths facilitate the act of voting itself.

These attempts at disenfranchisement have a double effect. To the extent that they succeed, they ensure that the voices of some citizens are not heard; and the perception that there is such a struggle to reverse a long-accepted principle that all citizens have effective access to the vote reinforces disillusionment in the political system and increases political alienation.

Disempowerment

We saw earlier how the rules of the economic game, set by the political process, stack the cards in favor of the 1 percent. So too for the rules of the political game. The perception that they are set in ways that are unfair—that they give disproportionate power to economic elites, in a way that further strengthens the economic power of those at the top—reinforces political alienation and a sense of disempowerment and disillusionment. The sense of disempowerment occurs at myriad levels of engagement with government.

The 2010 decision in the case of
Citizens United v. Federal Election Commission
, in which the Supreme Court essentially approved unbridled corporate campaign spending, represented a milestone in the disempowerment of ordinary Americans.
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The decision allows corporations and unions to exercise “free speech” in supporting candidates and causes in elections to the same degree as individual human beings. Since corporations have many millions of times the resources of the vast majority of individual Americans, the decision has the potential to create a class of super-wealthy political campaigners with a one-dimensional political interest: enhancing their profits.

It was hard to justify the Court’s decision on philosophical terms. Corporations are legal entities, created for a specific purpose and endowed by man-made laws with specific rights and obligations. They have the advantage, for instance, of limited liability, but in certain instances the corporate veil can be pierced. There can still be individual culpability for criminal acts. But corporations aren’t people, and they don’t have any
inalienable
rights. The Supreme Court, in giving them carte blanche to shape power and our political system, seemed to think otherwise.

The Court’s decision in balancing the interests of free speech with the interests of a balanced democracy, gave short shrift to the latter. It is generally recognized that providing money (support) conditional on a candidate’s providing a favor (supporting a bill) is corruption. Corruption undermines faith in our democracy. But there is little difference between that and what actually occurs—candidates who, say, support a bill that an oil company wants to have immunity from liability from an oil spill are given money, and the candidate, and everyone else, knows that that money will be withdrawn if he votes differently. There is no
formal
quid pro quo; but the effect is the same. And most importantly, the perception by ordinary citizens is the same, so it weakens faith in our democracy little less than blatant corruption does.
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The Court’s action was, in a sense, just another reflection of the success of the moneyed interests in creating a system of “one dollar one vote”: they had succeeded in electing politicians who in turn appointed judges who would enshrine a corporation’s right to unbridled spending in the political arena.
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The rules of the political game can also make individuals feel, rightly, that they are disenfranchised. Gerrymandering can make it more likely that an individual’s vote
doesn’t
count: the outlines of voting districts are drawn so that the outcome of the election is almost preordained. The filibuster gives inordinate power to a minority of senators. In the past, it was used with discretion. There was an understanding that it would be used only on issues that were of intense concern: ironically, it was used most frequently to stop the passage of civil rights laws that would ensure everyone the right to vote. But those days are gone. Now the filibuster is used as a matter of course to obstruct legislation.
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Later we’ll discuss one more example of disempowerment, the role of the Federal Reserve Bank in setting macroeconomic policy. Government has entrusted the responsibility for a matter of vital concern to ordinary citizens—monetary policy, which affects the level of unemployment and economic activity—to a group that consists in significant measure of those elected by banks and the business community themselves, with insufficient democratic accountability.

The pattern of growing inequality in the United States may be particularly bad for our democracy. There is a widespread understanding that the middle class is the backbone of our democracy. The poor are often so alienated that getting them to vote proves especially hard. The rich don’t need a rule of law; they can and do shape the economic and political processes to work for themselves
.
The middle class is most likely to understand why voting is so important in a democracy and why a
fair
rule of law is necessary for our economy and society. In the middle of the last century, its members believed that the economic and political system was basically fair, and their belief in “civic engagement” was seemingly rewarded by a burst of growth that benefited them—and everyone else. But now all that is changing. As we saw in chapter 3, the polarization of our labor market has been hollowing out the middle class, and the dwindling middle class is itself becoming disillusioned with a political process that is obviously not serving its members well.

Why we should care

In this chapter we have described the construction of a political system that, though nominally based on the principle of one person one vote, has turned out to serve the interests of those at the top. Another vicious circle has been set in play: political rules of the game have not only
directly
benefited those at the top, ensuring that they have a disproportionate voice, but have also created a political process that
indirectly
gives them even more power. We have identified a whole series of forces contributing to the disillusionment with politics and distrust of the political system. The yawning divide in our society has made it difficult to reach compromise, contributing to our political gridlock.

This, in turn, has contributed to undermining trust in our institutions, both their effectiveness and their fairness. Attempts at disenfranchisement, a recognition that our political and economic systems are unfair, the knowledge that the flow of information is controlled by a media that itself is controlled by those at the top, and the apparent role of money in politics, reflected in unbridled campaign contributions, have only enhanced disillusionment with our political system. Disillusionment has decreased political participation, especially at the bottom, every bit as effectively as the outright attempts at disenfranchisement in tilting the electorate toward the top. This has provided more scope for influence of those in the 1 percent and their money—reinforcing the lack of trust, and the disillusionment. With such disillusionment, it costs money to get out the vote—and efforts to get out the vote can be targeted at those whose interests coincide with the top.

The effect can be seen in the United States, where voter turnout looks dismal in comparison with that of other advanced societies. Average voter turnout for the presidential elections has been 57 percent in recent years,
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but voting for the House of Representatives in nonpresidential years has averaged only 37.5 percent.
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Given the extent of youth disillusionment—especially after the 2008 elections, when expectations were so high—it is no wonder that in the 2010 election youth turnout was even more dismal, at around 20 percent.
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Turnouts in primary elections are even poorer—and biased
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—with the result that the electoral choices voters face in the general elections seem disappointing, contributing in turn to low voter turnout in those elections.

Disillusionment with our political system—and the belief that it is unfair—can give rise to agitation outside the political system, evidenced in the Occupy Wall Street movement. When this then leads to a reform of the political system, the effects can be positive. When the political system rebuffs these reforms, it reinforces alienation.

Earlier in the chapter, I discussed the importance of trust, cooperation, social capital, and a sense of fairness to the functioning of the economy and society more generally. These failures in our political system have important spillovers. It is another channel through which our society and our economy will pay a great price for the high and growing inequality.

Reforming our political process

Most Americans now realize how essential it is that our political process be reformed in ways that make it more responsive to the wishes of the majority and that diminish the power of money. We have described how the political rules of the game give those at the top outsize influence. Changing the rules of the game can create a more democratic democracy.

We can, and should, for instance, change the rules to make sure the electorate reflects our citizenry—stopping the efforts at disenfranchisement, making it easier, even for the poor, to vote. Practices like gerrymandering, designed to reduce the responsiveness of the political system, need to be circumscribed. So must practices like revolving doors (which allow someone from the banking sector to move smoothly between Wall Street and Washington and back to Wall Street). Rules like mandatory voting (as in Australia) lead, not surprisingly, to higher voter participation, and a greater likelihood that the outcomes of elections reflect the views of society more generally.
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Most importantly, there is a need for campaign finance reform. Even if
Citizens United
is not reversed, corporations should be allowed to make campaign contributions only if their owners—the shareholders—vote to do so. It shouldn’t be just left to the top managers, who have used their power not merely to pay themselves outsize rewards but then also to use their power to maintain a system that allows them to do so. And the government should use its financial resources to make sure that there is a level playing field in the “marketplace of ideas,” or at least a more level playing field than exists today.
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We know what to do—and even if the reforms would not fully create the one-person-one-vote democracy that we would like, they could move us in that direction. But efforts to do so have been stymied, for the obvious reason: moneyed interests have the incentives and resources to ensure that the system continues to serve those interests. When I was chair of the Council of Economic Advisers, the Clinton administration made a valiant effort to curb the need for campaign finance. The public owns the airwaves that the TV stations use. Rather than giving these away to the TV stations without restriction—a blatant form of corporate welfare—we should sell access to them; and we could sell it with the condition that a certain amount of airtime be made available for campaign advertising. With free advertising politicians would need less money, and we could constrain those accepting the free advertising in the amount and nature of campaign contributions that they accepted. But the TV stations that make such money from campaign advertising—and from their free gifts of spectrum—vehemently and successfully opposed the reform.

The evisceration of our democracy

Democracy—at least as most of us conceive of it—is based on the principle of one person one vote. Much of the political rhetoric focuses on the “middle” “independent” voter, as standard political theory suggests should be the case. But no one would suggest that the outcome of America’s politics really reflects the median voter’s interests. The median voter has no interest in corporate welfare. The median voter didn’t prevail in the battle over financial regulatory reform, where the vast majority (some two-thirds according to some opinion polls)
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wanted tighter regulation, but the big banks didn’t. In the end, we got regulatory reform that was like Swiss cheese—full of holes, exceptions, and exemptions that couldn’t be justified by any set of principles. There was no good reason for tighter consumer protection on all loans
except
auto loans; it was just that those lenders succeeded in making the necessary political investments.

It was no wonder that the House Financial Services Committee, charged with writing the new regulations, had sixty-one members, almost 15 percent of all the representatives. The Dodd-Frank bill passed in 2010 represented a carefully balanced compromise between the ten biggest banks and the 200 million Americans who wanted tighter regulation. (History, I am afraid, will prove that the vast majority of Americans were right.)