The Lesson We Need to Teach Our Nation’s Rich
We will not let your wealth come at the expense of our children’s future.
Can democracy survive and thrive in our troubled 21st century? That question certainly deserves our most careful consideration, and this week “presidents, prime ministers, and kings” from over 100 nations gathered virtually in a “Summit for Democracy” to do that considering.
The U.S. State Department hosted this first-ever global democracy confab and promised at the outset “to show how democracies can deliver on the issues that matter most to people,” everything from “strengthening accountable governance” to “enabling lives of dignity.”
Toward that effort, President Biden pledged in his opening summit address, the United States will invest over $400 million in programs to bolster democratic reforms worldwide and defend fair and free elections. We can together, Biden encouraged his fellow heads of state, check “the backward slide of rights and democracy” and “once more lead the march of human progress and human freedom forward.”
“I believe,” the president solemnly stressed, “we can do that.”
But plenty of observers worldwide don’t feel that Biden’s democracy summit has much of a shot at delivering on its noble goals. The United States — a nation that sports 33 brand-new state laws that make voting more difficult — is going to lead a global democratic renewal? With what credibility?
Other nations, notes Washington Post analyst Greg Sargent, have been watching “political violence rising and openly autocratic currents surging” within the United States. To the world at large, America’s political system “appears paralyzed,” totally incapable of “fixing itself,” let alone leading a charge for deeper democracy.
Biden did openly acknowledge at the summit the skepticism that’s greeted his democracy initiative. But he defended his effort as absolutely essential nonetheless. The world’s rising autocratic tide has made democracy renewal, Biden contended, “an urgent matter.”
“In my view,” he declared, “this is the defining challenge of our time.”
Biden’s declaration came ironically on the same morning that media the world over were showcasing a competing candidate for “defining challenge of our time.” The occasion for that showcase: the release of a landmark report on the maldistribution of global income and wealth from the world’s top scholars on extreme economic inequality.
These scholars — a cross-national group inspired by the work of the French economist Thomas Piketty — earlier this week released their World Inequality Report 2022, a chilling, stat-packed exploration into the concentration of the world’s wealth.
The income gap between the world’s tenth and poorest 50 half, this massive new World Inequality Report relates, has nearly doubled over the past two decades. The billionaire share of world wealth, meanwhile, has more than tripled.
But the new data become even more revealing — and revolting — when we compare income and wealth distributions within specific nations and regions, and the new World Inequality Report 2022 lets us track those comparisons over time. Inequality, as report lead author Lucas Chancel puts it, has become “a political choice” that the United States, perhaps more than any other nation, has chosen.
A century ago, the USA bettered Europe on all the core distributional metrics. In 1920 Europe’s richest 1 percent held a whopping 50 percent of the continent’s wealth. America’s top 1 percent held a substantial but distinctly smaller 41 percent share.
By 1970, after years of struggles that empowered working people and limited plutocratic privilege, both Europe and the United States had narrowed the wealth gap between their awesomely affluent and households of modest means. In Europe, the top 1 percent wealth share fell by over half, from 50 to 23 percent, between 1920 and 1970. The wealth share of America’s richest 1 percent dropped over those same years to an almost identical 24 percent.
But over the past half-century, particularly since the early 1980s, European and American distributional patterns have starkly diverged.
In the United States, the new World Inequality Report relates, deregulation, privatizations, and attacks on tax progressivity have all “contributed to a formidable rise” in the fortunes of the nation’s most affluent, as has the shrinking clout of America’s unions. The U.S. top 1 percent’s wealth share has jumped from less than a quarter of the nation’s total wealth in 1970 to 35 percent, more than a third, in 2020.
In Europe, by contrast, unions have remained key social and economic players over the past half-century, tax rates on high incomes have declined less precipitously, and lawmakers haven’t rushed to privatize and deregulate. The result: In Europe, the top 1 percent wealth share has actually declined between 1970 and 2020, from 23 to 22 percent.
And the bottom 50 percent? The bottom half of Europe’s population held 5 percent of European wealth in 2020, five times the bottom half’s wealth share in 1920. A century ago, America’s bottom half also held a mere 1 percent of the nation’s wealth. The bottom half’s 2020 wealth share: that same 1 percent.
Access to numbers like these, the World Inequality Report’s authors suggest, will always be “critical for democracy.”
“In our view,” their report posits, “the lack of transparency about income and wealth inequalities seriously undermines the possibilities for peaceful democratic discussion in today’s globalized economy.”
Without this transparency, the World Inequality Report concludes, having “an informed debate” about inequality — and what to do about it — becomes “very difficult.” And without that “informed debate” about inequality, many acute political observers would add, democracies themselves may have no future.
Small-d democrats in the United States have been warning about the direct link between rising inequality and receding democracy ever since the original Gilded Age. Louis Brandeis, the brilliant Progressive Era reformer named to the U.S. Supreme Court in 1916, put the matter starkly.
“We must make our choice,” Brandeis reflected. “We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.”
Why can’t we? Most modern political commentators see money in politics as the prime danger that inequality poses. The rich, if they become too rich, become too powerful as well. The dollars they drop on their favored candidates and causes begin to regularly overwhelm any opposition those candidates and causes may engender.
Reformers have advanced a variety of proposals to counter the influence of — rich people’s — money in politics. A recent example: The For the People Act passed by the House of Representatives earlier this year “would crack down,” notes the Campaign Legal Center’s Adav Noti, “on many of the abusive financial practices that distort legislative outcomes and directly corrupt our representative democracy.”
But such reforms, as welcome as they may be, leave grand private fortunes in the hands of a few, and those fortunes, left intact, cannot help but corrode and corrupt our attempts at democratic dialogue and decision making. We’ll only make lasting progress against this corruption, as the British political scientist Harold Laski argued in the 1920s, when we recognize concentrated wealth itself as the primary problem in a deeply unequal democracy.
“A State divided into a small number of rich and a large number of poor,” Laski observed in his influential Grammar of Politics, “will always develop a government manipulated by the rich to protect the amenities represented by their property.”
To practice real democracy, in short, we need to limit inequality. That does not mean abandoning efforts to change the political rules. Serious rule-changing efforts like the “For the People Act” can throw the armies of great wealth off balance — and, in the process, create political space for working to narrow the inequality that stains our societies.
But we need to go further than fine-tuning election rules. So argue the political theorists who’ve dug deep into the nexus between inequality and autocracy. Some of the most perceptive of these analysts, not surprisingly, have hailed from Latin America, the world’s most unequal region for most of modern history.
Extreme inequality, Argentina’s Carlos Vilas has argued, creates a danger to democracy that goes far beyond electoral power imbalances. Democracies, he points out, require citizens. To be a citizen, in any democratic sense, individuals must have autonomy, be free to speak their own minds. Most all nations that call themselves democracies have written the right to speak freely into their basic constitutions. But this right, on paper, does not guarantee individuals the autonomy necessary to speak freely. People who fear losing their jobs should they speak what they see to be truth do not feel autonomous — or free. They feel dependent on others.
To feel autonomous and free, individuals need to enjoy at least a basic level of economic security. This security, in turn, requires certain limits on the behavior of a society’s most powerful economic actors. If corporate CEOs can threaten to pull up stakes and move elsewhere unless their current communities deliver the subsidies these CEOs seek, individuals in these communities will not behave freely. The decisions they make will be made under duress, not in the democratic spirit of free and open debate.
The more inequality, the more duress. The more wealth concentrates, the more dependent those without it become on those who have it. In our world’s most severely unequal societies, these dependencies force people without wealth onto their knees, turn them into submissive clients looking for powerful patrons.
“Patron-client relations of domination and subordination,” notes Carlos Vilas, “tend to substitute for relations among equals.”
In environments like this, many of the most dominated, the most deprived, come to believe that only the most powerful of patrons can guarantee their security. In societies deeply split economically, people also become less and less able to visualize life on the opposite side of the economic divide. People increasingly identify only with kith and kin, their own narrow religious or ethnic group, not with any broader community.
Amid these social dynamics, all sense of “shared belonging” to a single common society tends to fade. Democracy, to thrive, needs this sense of shared belonging, the conviction that you and your adversary, however much you disagree, share some elemental basic interests. In severely unequal societies, few feel these common interests. Democracy withers. Historically, Carlos Vilas observes, Latin America’s two most consistently democratic nations — Uruguay and Costa Rica — have also been Latin America’s two most equal nations.
We the people of the United States, almost 250 years ago, made a choice to practice democracy. We have “practiced” democracy ever since. Maybe someday we’ll get it right. But that day will only come, the evidence suggests, when we have a less, a significantly less, unequal nation.
The Biden administration’s “Summit for Democracy” initiative has so far failed to make that point. We can. We must.
Sam Pizzigati co-edits Inequality.org. His latest books include The Case for a Maximum Wage and The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970. Follow him at @Too_Much_Online.
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