The Dark Side of Democracy: How Wealth Influences Rules and Responsibilities

Introduction

Democracy is often idealized as a system where the majority rules and the rights and responsibilities of citizens are clearly defined. However, as illustrated by various research studies and examples, the influence of wealth and power can significantly alter the democratic process. In this article, we delve into how wealth influences the determination of rights and responsibilities in democracy, and the potential for loopholes in the system that benefit the affluent.

Elite Influence vs. Public Interest

A study by Gilens and Page (2014) demonstrated that the preferences of average citizens have little to no influence on public policy compared to the economic elites. When economic elites and business interests differ from the preferences of the majority, it is the elites’ views that dominate.

For instance, the research showed that the preferences of the top 10% of income distribution had a significant impact on policy decisions, while those of the average voter had virtually no effect. This finding suggests a profound asymmetry in democratic governance, where the ordinary citizens’ rights and responsibilities are often secondary to the interests of the wealthy and powerful.

The Rich Rule

In his book, To carry out that test Gilens and Page ran a horse race between the preferences of average voters and those of economic elites – defined as individuals at the top tenth percentile of the income distribution – to see which voters exert greater influence. They found that the effect of the average voter drops to insignificant levels while that of economic elites remains substantial. This indicates that the decisions of democracy are often dominated by the economic elites who shape policies in their favor, often at the expense of the broader public.

Globalization and Its Discontents

Joseph E. Stiglitz’s critique of the globalization of our discontent highlights how trade negotiations prioritize the interests of multinational corporations over those of workers and ordinary citizens. US trade negotiators, driven by corporate agendas, often favor agreements that benefit large businesses rather than the general public.

Stiglitz argues that the negotiation process is closed, and the interests of the rich and powerful are prioritized. Trade agreements are drafted behind closed doors, and the public is left to grapple with the consequences of policies that only serve a narrow elite.

The Tax System and Democracy

Democratic societies rely on the principle of fair taxation, where everyone contributes their fair share. However, the rich often find ways to avoid paying their fair share, leading to an unfair tax system. Mitt Romney’s fair share argument, as discussed in the book, Mitt Romney’s Fair Share, highlights the issue bluntly.

If presidents and their circle do not pay their fair share of taxes, how can we expect the rest of society to? In an essay discussing this issue, Joseph E. Stiglitz argues that the tax system serves as a check on the broader population, but fails to do so for the wealthy.

A billionaire investor like Warren Buffett advocates for a fair tax system, arguing that his income is taxed at a lower rate than that of his secretary. He points out that this system is fundamentally flawed, and this issue is particularly blatant in the case of Romney, who does not recognize the distortion created by different tax rates for speculation versus hard work.

The Consequences

The consequences of such a system are significant. If the wealthy avoid paying their fair share of taxes, the tax system either collapses or becomes more intrusive and coercive. Both alternatives are unacceptable in a healthy democracy. The idea of a fair and equitable society becomes strained when the rules are written to benefit the affluent, leading to a breakdown in the trust and cooperation needed for democracy to function.

Warren Buffett’s argument that a system should not tax his income at a lower rate than that of his secretary is a powerful critique of the current system. Romney’s stance, if taken to advocate for higher taxes for the rich, could have far-reaching implications for the democratic process.

Conclusion

Democracy is a system designed to serve the majority, but the reality is often different. Wealth and power can influence the rules and responsibilities that are determined within a democratic framework. It is crucial to address these issues and find ways to ensure that the democratic process is inclusive and fair. Only then can the rights and responsibilities of all citizens be truly respected and protected.

Keyword: democracy, wealth influence, political power