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Extreme Inequality and State Capture: The Crisis of Liberal Democracy in The United States

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Abstract

This essay looks behind the failure of representation by the party system and the deep political polarization that marks the rise of populism within liberal democracies to examine two of the basic causes for the 2016 success of Donald Trump: extreme inequality and the exceptional manipulability of the US electoral system. Populism on the right can be found on both sides of the Atlantic, but it is especially dangerous when compared to Western Europe. The interaction between the extremity of US inequality and its uniquely unrepresentative electoral institutions has permitted bigotry to become the platform and strategy of one of its two mainstream political parties, the Republican Party. While this appears to privilege visible “identity” as the main cleavage in the US, this is deceptive, drawing attention away from the central driver of crisis: the concentration of wealth at the very top that permits the capture of democratic institutions.

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Notes

  1. As Walt (2011) writes: “Among great powers, thinking you are special is the norm, not the exception.” Stephen M. Walt, “The Myth of American Exceptionalism,” Foreign Policy, October 11, 2011, available at: https://foreignpolicy.com/2011/10/11/the-myth-of-american-exceptionalism/.

  2. People living in the US own almost half of the 650 million civilian-owned guns in the world; Americans own more guns per capita (89) than any other country in the world, followed by Yemen (55); though it makes up only 5% of the world’s population, it has well over 30% of the world’s mass shootings. Finally, gun homicide rates are more than 25 times greater than in any other wealthy country. Available at: https://edition.cnn.com/2017/10/03/americas/us-gun-statistics/index.html.

  3. One has only to note the tremendous rise in white nationalism, the political gender gap (which threatens to become a chasm!), and the unusual religiosity that characterizes the US, which helps to account for the dramatic rise in anti-Semitism. These divisions are not addressed here, but their importance cannot be minimized. Take religiosity, which is the least known factor outside the US. In 2014, 80% of Americans identified themselves as Christians, and the US is the only wealthy country (out of 102 surveyed) that is an extreme statistical outlier when it comes to measures of national wealth and religiosity. This bewilders other wealthy countries. In Great Britain, for example, where a minuscule 6% report that they pray, the fact that 55% in the US reports engagement in prayer represents a huge difference. US adults pray far more than people in any other wealthy country (Fahmy 2018).

  4. Yet, the ownership of stocks is very highly concentrated at the top, and certain subgroups are notably less likely to own stocks, including those without a college education, younger Americans, unmarried Americans, African–Americans, and Hispanics (Jones 2017).

  5. In 2016, the median wealth of lower income families was 42% less than immediately prior to the recession in 2007 and the median wealth of middle-income families was 33% lower, leaving the net worth of these families comparable to 1989 levels, upper income families also had 75 times the wealth of lower income families in 2016, compared with 28 times the wealth in 1983. (Kochhar and Cilluffo 2017).

  6. The next five countries by the number of billionaires are China (251), Germany (120), India (84), Russia (77), and Hong Kong (64). Compared to Forbes' survey 1 year ago, China demonstrated the largest gain in billionaires, adding 38 new billionaires to the ranking. The wealth held by the world's billionaires jumped by nearly $1 trillion in 2016, and as a group, they have more money than the GDP of Germany or Japan. (Frank 2017.).

  7. There is a gender gap in financial outcomes—women exhibit roughly 20% lower levels of income, spending, and liquid assets, and slightly higher credit card debt burden than men overall. Over a lifetime, this makes the accumulation of capital more difficult unless it is either inherited or the result of partnering (JP Morgan Chase and Company 2017).

  8. For the definition of “Middle-income” households, see: http://www.pewsocialtrends.org/2015/12/09/the-american-middle-class-is-losing-ground.

  9. In contrast, among middle-income families, the share with zero net worth or in debt increased from 2007 to 2016, from 6% to 9% among whites, 9–18% among blacks, and 9–13% among Hispanics.

  10. The National Center for Health Statistics said that 63,600 people died of drug overdoses in 2016. Note that these are “legal” drugs. Insys Therapeurtics, which makes the powerful fentanyl-based drug, SUBSYS, gave huge kickbacks to doctors who prescribed this medication to patients, as did other companies. (Case and Deaton 2015).

  11. Strikingly, in countries where Trump won, the death rate had grown nearly 8% higher between 2000 and 2015, and it was 15% higher in countries that swung more heavily Republican than in 2008! (Bor 2017).

  12. By this, I mean the belief of business interests and increasingly politicians that a package of policies—including the deregulation of business and finance, sharp and painful cuts in social spending, a reduction of taxes on the wealthy, as well as new normative framework regarding the superiority of the market—was the solution to all economic problems (Cerny 2018). This model has two major flaws: it creates a “triple economic hemorrhage” of spending on imports, manufacturing job losses, and off-shoring of investment, which in turn produced the widespread reliance on growing debt and asset price inflation (Palley 2011).

  13. First-past-the post two-party systems are supposed to moderate fringe opinions and not permit the election of an authoritarian, and this was considered the strong suit of the US for years, but now the two-party system is considered “the problem”.

  14. Of the world’s 100 richest billionaires, 36 are US citizens and, thus, eligible to massively donate to candidates and other political committees here. Open Secrets Blog found that 30 of those did so, contributing a total of $184.4 million. Most of this went to Republicans. Eight of these billionaire families are megadonors, giving $102 million to Republican causes and $74 million to Democrats https://www.opensecrets.org/news/2017/03/richest-billionaires-are-top-political-spenders.

  15. Because the Senate was established through the so-called “Connecticut Compromise” to give each state two votes, California, the largest state, has two senators for a population of almost 40 million, but so does little Delaware, with a population of well less than one million. This was originally done to protect the franchise for white male property owners, and it has meant that the Senate historically impeded the abolition of slavery, anti-lynching laws, the advance of civil rights, and access to health care.

  16. Asia has replaced Latin America as the biggest source of new immigrants, and net migration from Mexico turned negative after the 2008 crisis (despite the false picture painted by Trump).

  17. While the US remains home to more Christians than any other country, the percentage of Americans identifying as Christians dropped from 78% in 2007 to 70% in 2017, leaving a full 30% excluded from the definition of a Christian nation. By contrast, the religiously unaffiliated have surged 7% points in that time span to make up 23% of US adults last year.

  18. In 2017, only 43% of Americans identified as white and Christian, and only 30% as white and Protestant. Furthermore, fewer than one in five (17%) Americans identify as white evangelical Protestant, down from nearly one-quarter (23%) a decade ago (PRRI 2017).

  19. Every decade, each state in the US redraws congressional maps after each 10-year census. In theory, this redistricting is supposed to ensure that all districts are equally populated and representative. However, in effect, it gives politicians the opportunity to draw a new district in their own favor by manipulating the map. While both parties engage in this practice, this gerrymandering was especially egregious in 2010.

  20. This the REDistricting MAjority Project (REDMAP), which focused critical resources on legislative chambers in states, projected to gain or lose congressional seats in 2011 based on Census data. By 2013, they had taken the house. http://www.redistrictingmajorityproject.com. This also explains the controversy over the Trump administration’s attempted manipulation of the forthcoming census. Michael wines and emily baumgaertner, “At least at least twelve states to sue trump administration over census citizenship question,” New York Times, March 28, 2018. For a look at the plan itself, see https://www.documentcloud.org/documents/4366661-Redistricting-2010-Preparing-for-Success.html. For an excellent portrayal of the plan and its relationship with dark money, see David Daley, “How he Republicans rigged Congress—new documents reveal an untold story,” Salon, February 6, 2018.

  21. In Milwaukee County, which has a large African–American population, 6000 fewer votes were cast in 2016 than in 2012. To put it another way, Clinton received 43,000 fewer votes in that county than Barack Obama did—a number that is nearly double Trump’s margin of victory in all of Wisconsin. Jeffrey Toobin, “The Real Voting Scandal of 2016,” The New Yorker, December 12, 2016.

  22. https://www.bridgemi.com/public-sector/gerrymandering-michigan-among-nations-worst-new-test-claims.

  23. This does not consider North Carolina (where African–American turnout declined more than 8%, even though other Southern states without voter suppression laws saw huge increases of more than 18%), purges of Ohio voter lists (which removed at least 200,000 voters), and Florida.

  24. Between 1985 and 2008, the wealthiest 400 Americans saw the percentage of their income paid in federal income taxes drop from 29% to 18%, according to data from the Internal Revenue Service. David Kocieniewsku, “Since 1980 s, the Kindest of Tax Cuts for the Rich” New York Times, January 18, 2012. The 2017 Trump taxes also very disproportionately benefit the wealthiest. The Republican-backed overhaul of the tax code, which passed and was signed into law in December, was found to be the most-lobbied issue of 2017, with nearly 1400 groups lobbying for or against the legislation.

  25. Thus, for example, 82% of Americans think that wealthy people have too much power and influence in Washington; 69% think that large businesses have too much power and influence in Washington; 78% of likely voters support stronger rules and enforcement on the financial industry; 59% and 43% of republicans—think corporations make “too much profit;” and 82% think economic inequality is a “very big” (48%) or “moderately big” (34%) problem. Even 69% of Republicans share this view. Finally, 96% of Americans—including 96% of Republicans—believe money in politics is to blame for the dysfunction of the US political system. The figures cited here come from surveys conducted by Gallup, Pew, and other reputable polling organizations on the key issues facing the nation. These are from 2017 to 2018 and are national polls https://prospect.org/article/most-americans-are-liberal-even-if-they-don%E2%80%99t-know-it.

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  1. Stanford University, Stanford, USA

    Terry Lynn Karl

  2. Fudan University, Shanghai, China

    Terry Lynn Karl

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  1. Terry Lynn Karl
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Correspondence to Terry Lynn Karl.

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Terry Lynn Karl, Emeritus Professor of Political Science at Stanford University and Honorary Fudan Scholar at Fudan IAS, Fudan University, Email: tkarl@stanford.edu Paper prepared for the conference “The Crisis of Western Liberal/Representative Democracy?” at Fudan IAS, Fudan University, Shanghai, China, Oct. 27–28, 2018. Cite as forthcoming in Special Issue of the Chinese Political Science Review (forthcoming).

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Karl, T.L. Extreme Inequality and State Capture: The Crisis of Liberal Democracy in The United States. Chin. Polit. Sci. Rev. 4, 164–187 (2019). https://doi.org/10.1007/s41111-019-00122-4

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