Inequality rising and democracy under seige

Inequality rising and democracy under seige

There has been much handwringing about the retreat of democracy and the rise of authoritarianism in recent years -- and for good reason. From Hungarian Prime Minister Viktor Orbán to former Brazilian president Jair Bolsonaro and former US president Donald Trump, we have a growing list of authoritarians and would-be autocrats who channel a curious form of right-wing populism. Though 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 of us 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 United States, 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. Tax policies favour the rich, the education system favours the already privileged, and inadequately designed and enforced antitrust regulation tends to give corporations free rein to amass and exploit market power. Moreover, since the media is dominated by private companies owned by plutocrats like 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, 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 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, should we be surprised that so many people view the growing concentration of wealth with suspicion, or that they believe the system is rigged?

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.

One of the results has been deepening polarisation, which hampers the functioning of democracy -- especially in countries like the US, with its winner-take-all elections. By the time Mr Trump was elected in 2016 with a minority of the popular vote, American politics, which once favoured 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 polarisation 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 the 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. 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.

The US has long held itself up as a democratic beacon. Though there has always been hypocrisy -- from Ronald Reagan cosying up to Augusto Pinochet, to Joe Biden failing to distance himself from Saudi Arabia or denounce the anti-Muslim bigotry of Indian Prime Minister Narendra Modi's government -- America at least embodied a shared set of political values.

But 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 Mr Trump, Mr Bolsonaro, and the rest represent. But 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.

With the right reforms, democracies can become more inclusive, more responsive to citizens. But salvaging our politics also will require equally dramatic economic reforms. We can begin to enhance the well-being of all citizens fairly only when we leave neoliberal capitalism behind and do a much better job at creating the shared prosperity we acclaim. ©2023 Project Syndicate

Joseph E Stiglitz, a Nobel laureate in economics, is a University Professor at Columbia University and Co-Chair of the Independent Commission for the Reform of International Corporate Taxation.

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