Inequality

Jonathan Chait, a senior editor at The New Republic, has just published The Big Con: The True Story of How Washington Got Hoodwinked and Hijacked by Crackpot Economics. Following are some excerpts that appeared in The New Republic:

On February 2006, the conservative journal Policy Review published an essay that was shockingly heretical, though perhaps unintentionally so. In it, Carles Boix of the University of Chicago argued that there is a link between democracy and economic equality:

In an unequal society, the majority resents its diminished status. It harbors the expectation of employing elections to drastically overturn its condition. In turn, the wealthy minority fears the outcome that may follow from free elections and the assertion of majority rule. As a result, it resorts to authoritarian institutions to guarantee its social and economic advantage.

Of the many taboos that prevail among conservatives, the one forbidding any serious discussion of inequality is perhaps the strictest. Any forthright examination of this topic will lead one quickly to the realization that American society has been spreading apart rapidly for three decades and that Republican economic policies have without a doubt contributed mightily to this gulf. So conservatives usually ignore the subject of inequality, except perhaps to minimize its scale or importance.

Why, then, did Policy Review, which is published by the staunchly conservative Hoover Institution, open its pages to such apostasy? Well, it didn't intend to. Boix's essay (which was brilliant and widely discussed) concerned the inculcation of democracy abroad and did not deal directly with the United States. And the circumstances Boix envisioned--mainly, developing countries attempting a transition to democracy--are different from those in an advanced democracy. Americans, fortunately, do not have to worry about kleptocrats, political violence, and massive vote fraud.

But, while Boix's theory may be less applicable to the United States than it is to the Third World, it is still somewhat true. Indeed, this theory offers an uncannily precise description of what has happened in American politics over the last 30 years. The business lobbyists have turned the Republican Party into a kind of machine dedicated unwaveringly to protecting and expanding the wealth of the very rich. As it has pursued this goal ever more single-mindedly, the right has by necessity grown ever more hostile to majoritarian decision-making for the obvious reason that it's hard to enlist the public behind an agenda designed to benefit a tiny minority. The old ways of conducting politics have broken down in the face of this onslaught. The mores of the old Washington establishment--the assumption of some basic intellectual goodwill on both sides, the focus on character over substance, the belief in compromise--all developed during an era when there were few ideological differences between the parties. The old ways may have done a decent job of safeguarding the national interest when the great moderate consensus prevailed, but they have proven unequal to the challenge of a more ideological time.

All this has happened at the same time as a massive increase in income inequality, which is exactly what Boix's theory would predict. In the same essay, Boix marvels at the fortunes amassed by autocratic ruling elites throughout history:

Rulers such as the Bourbons, the Tudors, or the Sauds seize an important part of their subjects' assets. For example, at the death of Augustus (14 a.d.), the top 1/10,000 of the Roman Empire's households received 1 percent of all income. In Mughal India around 1600 a.d., the top 1/10,000th received 5 percent of all income.

Presumably, readers looking at these numbers are supposed to gape in astonishment at the sheer inequity of those autocratic regimes. But the numbers are less astonishing when you compare them to those in the contemporary United States, which Boix does not. As of 2004, the top one-ten-thousandth of Americans earned over 3 percent of the national income--a somewhat smaller share than that earned by the Mughal elite but several times higher than that enjoyed by the wealthiest Romans.

Meanwhile, the gap between Americans and Mughals is closing rapidly. Since the late '70s, the share of national income going to the top 1 percent has doubled. The share of the top 0.1 percent has tripled, and the share of the top 0.01 percent has quadrupled. This gulf was widened precisely at the same time that the right, growing ever more plutocratic and suspicious of popular demands, was battering away at the culture of American democracy. Many people have looked at the depredations of the Bush era--the bizarre cult of personality, the anti-intellectual demagoguery, the incessant flouting of norms, the prostrate media--as the product of the president's character, or Karl Rove's machinations. But it is, in the main, the consequence of a cult-like fringe taking control of a political party and using it to wage class warfare on behalf of a tiny minority.