While the world's richest have seen a dip in their stock holdings, those on the bottom of the wealth scale will bear the heaviest burden of the crisis.
A new study argues that the United States no longer operates as a democratic society where the majority rules.
A new study that will appear in the fall 2014 issue of Perspectives on Politics concludes that the United States is no longer a democracy. Instead, the authors say we have become an oligarchy, and a pretty corrupt one at that.
“Despite the seemingly strong empirical support in previous studies for theories of majoritarian democracy,” the authors state, “our analyses suggest that majorities of the American public actually have little influence over the policies our government adopts.”
The study provides compelling evidence that the United States government does not represent the interests of the majority of our country’s citizens but is instead ruled by the rich and powerful.
The researchers pored over nearly 2,000 Congressional policies that were enacted and then compared these policies to the expressed preferences of three groups: average Americans (50th percentile of income), affluent Americans (90th percentile) and large special interest groups, according to a report in the Telegraph.
The report’s conclusion? That the United States is dominated by its economic elite.
That depressing conclusion is confirmed by a wealth of both anecdotal and survey data.
In the wake of the Great Recession, the Securities and Exchange Commission came in for plenty of criticism from academics and pundits who faulted its lax financial regulation. Few of those critiques, however, were as blunt and biting as the one recently issued by retiring SEC lawyer James Kidney.
Kidney joined the SEC in 1986 and has been there ever since. The speech he delivered at his retirement party last month has garnered considerable attention.
Kidney campaigned unsuccessfully within the agency to bring charges against more executives, especially in the SEC’s case against Goldman Sachs. According to a copy of his remarks that found its way to Bloomberg News, Kidney characterized the SEC as “an agency that polices the broken windows on the street level and rarely goes to the penthouse floors.”
What happens on those rare occasions when they do venture to the penthouse? The usual outcome according to Kidney is “extensive negotiation and weakening.”
Kidney also accused his superiors of being more focused on getting high-paying jobs after their government service than on bringing difficult cases. The agency’s penalties, he said, have become “at most a tollbooth on the bankster turnpike.”
Kidney’s remarks serve as a reminder that no senior executive at a major financial firm has gone to jail; for that matter, the SEC has brought civil charges against only a handful.
The revolving door between government agencies and those they are supposed to be regulating is a clear impediment to vigorous enforcement of the laws. [pullquote] The revolving door between government agencies and regulators is an impediment to vigorous enforcement of the laws [/pullquote]
Such anecdotal evidence of the influence of the rich and powerful is supported by hard research. French Economist Gabriel Zucman recently examined international data on what economists call investment positions (each country reports its assets abroad and foreign-owned assets at home). He found that the numbers didn’t add up. Globally, according to the reports, liabilities substantially outnumbered assets. Since that’s mathematically impossible, Zucman investigated further.
He concluded that the world’s wealthy are using tax havens, including Swiss banks, to hide at least $4.5 trillion but more likely $6 trillion from the tax collectors. That’s $6,000,000,000,000—close to six percent of the entire world’s gross economic output for one year.
In other words, as one pundit noted, not chickenfeed.
Another recent study confirms the continuing erosion of the American middle class. On April 22, The New York Times reported that the American middle class, once “the most affluent in the world,” can no longer claim that distinction. [pullquote] The American middle-class, once the most affluent in the world, can no longer claim that distinction [/pullquote]
Not only is Canada’s middle-class doing much better than America’s, the authors argued, but the poor in Europe are also earning more than the poor in America.
The evidence is clear. Today we are being governed by wealthy oligarchs, who aren’t even beneficent. What’s ours is theirs, what’s theirs is theirs–and they aren’t sharing.
What’s that old political slogan? It’s time for a change.
Sheila Suess Kennedy, J.D. is Professor of Law and Public Policy in the School of Public and Environmental Affairs at Indiana University Purdue University at Indianapolis. Her scholarly publications include eight books and numerous law review and journal articles. Professor Kennedy is a columnist for the Indianapolis Business Journal and a frequent lecturer, public speaker and contributor to popular periodicals. She blogs at www.sheilakennedy.net