Tag Archives: economic inequality

By Luke Brinker

Veteran political journalist Elizabeth Drew’s essay on the rise of super PACs and their impact on the 2012 campaign concludes on an ominous note:

Citizens are now faced with evidence of the growing power of organized moneyed interests in the electoral system at the same time that the nation is more aware than ever that the inequality among income groups has grown dramatically and economic difficulties are persistent. This is a dangerous brew. Political power is shifting to the very monied interests that four decades of reform effort have tried to contain. The election system is being reshaped by the Super PACs and the greatly increased power of those who contribute to them to choose the candidates who best suit their purposes. But little attention is being paid to the fact that our system of electing a president is under siege. While the political press is excitedly telling us how the polls on Friday compare with the ones on Tuesday, little notice is taken of the danger to the democratic system itself.

Much of the citizenry has become more restive—less accepting of the way things are. Can an election that’s being subjected to such seriously self-interested contortions be accepted by the public as having been arrived at in a fair manner? And what will happen if it can’t?

All of these are valid points. Indeed, empirical evidence buttresses Drew’s concern that in this age of money-soaked politics, the voices of the 99 percent are drowned out. In a recent paper, Princeton University political scientist Martin Gillens found that the policy preferences of the rich are most salient among policymakers. (Although, as Matthew Yglesias argued, this may be attributable to socialization; presidents and members of Congress tend to go to the same schools and live in the same neighborhoods as the elite.) The question, then, is whether money itself produces policy outcomes that ignore vital issues of income inequality and basic fairness.

As Drew notes in her piece, the recent history of campaign finance reform began in the wake of the Watergate scandal. Congress passed a law in 1974 establishing public financing for presidential campaigns and limiting both the amount of money individuals could give to campaigns and the amount congressional campaigns could spend. The Supreme Court upheld the law in its 1976 Buckley v. Valeo decision.

Somewhat paradoxically, the pre-Buckley era was the Augustan Age for American egalitarianism. In his book Supercapitalism, economist Robert Reich writes that “[i]n 1963, Congress passed six out of ten bills designed to reduce economic inequality. In 1979, it passed four out of seven … [and] in 1991, two out of seven” (p. 166). In other words, policymakers did more to address the concerns of the lower, working, and middle classes back when rich donors could give unlimited amounts of money directly to campaigns.

What distinguishes 1963 from 1991 or 2012 is that American labor has witnessed its power diminish significantly since mid-century. While public sector employees remain relatively strongly unionized (37 percent belonged to a union in 2011, according to the Bureau of Labor Statistics), the unionization rate among private sector workers was a mere 6.9 percent. In 2010, the overall unionization rate (including public and private sector workers) was 12.3 percent. Contrast that with the mid-1950s, when 35 percent of American workers belonged to a labor union. This was the context in which John Kenneth Galbraith wrote American Capitalism, in which the Harvard economist introduced the concept of “countervailing power.” In the American system, Galbraith wrote, the trifecta of big business, big labor, and big government worked both to plan the national economy and to counter-balance each other, so that no one force became too overweening in its grip on the nation. Fast forward to 2012, and there is no “big labor” of which to speak. Defenders of super PACs invariably respond to liberal critiques of corporate money in politics by pointing out, correctly, that unions are also permitted unlimited donations to super PACs. But to pretend that unions have anywhere near the clout of American corporations is disingenuous.

Part of labor’s decline can be explained by the forces of globalization; in a global economy with cheap Chinese labor readily available, unions pushing for increased wages and benefits have less bargaining power. These global economic realities simply did not exist at mid-century. Yet conscious political choices have also played an essential role in weakening unions. Take Wisconsin Gov. Scott Walker’s move last year to strip state employees of their collective bargaining rights. Take Ohio Gov. John Kasich’s (voter-overturned) decision to do the same. Take Gov. Mitch Daniels’s signing of Indiana’s new right to work law, which effectively means that employees can free-ride on unions, benefiting from the concessions and benefits that union leaders win but not having to pay membership dues. These policies emerge thanks to political actors, not impersonal economic forces.

There’s much to be said for reining in money in politics. When Sheldon Adelson and his wife can keep Newt Gingrich’s presidential campaign alive simply by writing a $10 million check to a  Gingrich super PAC, it is not unreasonable to worry about the decline of citizen power in our democracy. But elections are about who gets to make policy, and if policies that reduce inequality and pursue greater fairness are what we care about, we could do a lot worse than to realize that money itself is not the root of our present woes.

Update: As Steven Greenhouse of the New York Times reports, the BLS has just released unionization figures for 2011, and the decline continues. Last year, the overall unionization rate was 11.8 percent.