Tue, Sep 05, 2023 page9

• Fixing inequality and saving democracy

  Unfettered liberal capitalism and social injustices threaten to undo democratic gains, but with the right political and economic reforms, democracies can become more inclusive, while catering less to corporations and the rich

  • By Joseph Stiglitz
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  There has been much handwringing about the retreat of democracy and the rise of authoritarianism in the past few years — and for good reason. From Hungarian Prime Minister Viktor Orban to former Brazilian president Jair Bolsonaro and former US president Donald Trump, there is a growing list of authoritarians and would-be autocrats who channel a curious form of right-wing populism. Although they promise to protect ordinary citizens and preserve longstanding national values, they pursue policies that protect the powerful and trash longstanding norms — and leave the rest trying to explain their appeal.

  While there are many explanations, one that stands out is the growth of inequality, a problem stemming from modern neoliberal capitalism, which can also be linked in many ways to the erosion of democracy. Economic inequality inevitably leads to political inequality, albeit to varying degrees across countries. In a country like the US, which has virtually no constraints on campaign contributions, “one person, one vote” has morphed into “one dollar, one vote.”

  This political inequality is self-reinforcing, leading to policies that further entrench economic inequality. Tax policies favor the rich, the education system favors the already privileged, and inadequately designed and enforced antitrust regulation tends to give corporations free rein to amass and exploit market power.

  

  Illustration: Yusha

  Moreover, since the media is dominated by private companies owned by plutocrats such as Rupert Murdoch, much of the mainstream discourse tends to entrench the same trends. News consumers thus have long been told that taxing the rich harms economic growth, that inheritance taxes are levies on death and so forth.

  More recently, traditional media controlled by the super-rich have been joined by social-media companies controlled by the super-rich, except that the latter are even less constrained in spreading misinformation. Thanks to Section 230 of the US’ 1996 Communications Decency Act, US-based companies cannot be held liable for third-party content hosted on their platforms — or for most of the other social harms they cause (not least to teenage girls).

  In this context of capitalism without accountability, is it surprising that so many people view the growing concentration of wealth with suspicion, or that they believe the system is rigged? The pervasive feeling that democracy has delivered unfair outcomes has undermined confidence in democracy and led some to conclude that alternative systems might produce better results.

  This is an old debate. Seventy-five years ago, many wondered whether democracies could grow as fast as authoritarian regimes. Now, many are asking the same question about which system “delivers” greater fairness. Yet this debate is unfolding in a world where the wealthy have the tools to shape national and global thinking, sometimes with outright lies (“The election was stolen” or “The voting machines were rigged” — a falsehood that cost Fox News US$787 million).

  One of the results has been deepening polarization, which hampers the functioning of democracy — especially in countries such as the US, with its winner-take-all presidential elections. By the time Trump was elected in 2016 with a minority of the popular vote, US politics, which once favored problem-solving through compromise, had become a bald-faced partisan power struggle, a wrestling match where at least one side seems to believe there should be no rules.

  When polarization becomes so excessive, it will often seem as though the stakes are too high to concede anything. Rather than looking for common ground, those in power will use the means at their disposal to entrench their own positions — as US Republicans have done openly through gerrymandering and measures to suppress voter turnout.

  Democracies work best when the perceived stakes are neither too low nor too high (if they are too low, people will feel little need to participate in the democratic process at all). There are design choices that democracies can make to improve the chances of hitting this happy medium.

  For example, parliamentary systems encourage coalition building and often give power to centrists, rather than extremists. Mandatory and ranked-choice voting also have been shown to help in this respect, as does the presence of a committed, protected civil service.

  The US has long held itself up as a democratic beacon. Although there has always been hypocrisy — from then-US president Ronald Reagan cozying up to former Chilean president Augusto Pinochet, to US President Joe Biden failing to distance himself from Saudi Arabia or denounce the anti-Muslim bigotry of Indian Prime Minister Narendra Modi’s administration — the US at least embodied a shared set of political values.

  Now, economic and political inequality have grown so extreme that many are rejecting democracy. This is fertile ground for authoritarianism, especially for the kind of right-wing populism that Trump, Bolsonaro and the rest represent. However, such leaders have shown that they have none of the answers that discontented voters are seeking. On the contrary, the policies they enact when given power only make matters worse.

  Rather than looking elsewhere for alternatives, people need to look inward, at their own systems. With the right reforms, democracies can become more inclusive, more responsive to citizens, and less responsive to the corporations and rich individuals who hold the purse strings.

  Salvaging politics also will require equally dramatic economic reforms. We can begin to enhance the well-being of all citizens fairly — and take the wind out of populists’ sails — only when we leave neoliberal capitalism behind and do a much better job at creating the shared prosperity that we acclaim.

  Joseph Stiglitz, a Nobel laureate in economics, is a university professor at Columbia University and cochair of the Independent Commission for the Reform of International Corporate Taxation.

  Copyright: Project Syndicate
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