by Charlotte Phillips
“So distribution should undo excess, and each man have
enough” - William Shakespeare
Economic inequality is the accumulation of individual
differences in economic resources across an entire country2. There is an
apparent paradox when it comes to economic inequality in capitalist
democracies: the majority should have the political power via their equally
valued votes to reform a political system into one that treats them more
equitably. Totalitarian states such as North Korea contrast this. Their
political system leads to a situation whereby political inequality directly
causes economic inequality, and there is no mechanism to redress this.
Theoretically, democracies should have significantly lower economic inequality
levels. In many cases they do. Why, then, is economic inequality so prevalent
across the Western democratized world? And why does it constitute a political
problem? The destructive cycle of economic inequality has been treated with
relative indifference by governments across the world, despite overwhelming
evidence to suggest that not only is inequality a political problem, but that
there are political solutions.
But what constitutes a political problem? The word
“problem” naturally implies negativity, so perhaps to fulfil the rubric of
“political problem”, economic inequality needs to be having a negative effect
on politics. But this demands an answer to the much less temporal question of
what, exactly, is politics? This essay will focus on three of the main
components of ‘politics’ as a concept: the political ideology and setup, the politicians
and policy makers who run this setup, and the population whom it affects. A
discussion of the ramifications of economic inequality will aim to demonstrate
that economic inequality is truly a political issue, that has significant
effects on each of those components.
Nobel-prize winning economist Joseph Stiglitz warned that
democracy is “in peril” due to economic inequality3. It is easy to cast aside
inequality as an occurrence limited to developing countries that are rife with
corruption and poverty. Yet in industrial democracies, even those considered
liberal, severe economic disproportion is damaging the political systems that
we uphold as the fundamentally fairest form of polity.
One of the most basic demonstrations of this is the
direct negative correlation between inequality and a population’s democratic
engagement. Abstention levels of poorer American citizens during elections are
significantly high2. The United States has the highest levels of income
inequality of all the advanced, industrial states, with the bottom 40% of the
population earning just 0.3% of national income. At the other end of the
spectrum, the richest 0.1% (some 16000 households) earn 5% of national income4.
This stratification sharply divides Americans into distinct socioeconomic
groups, which are far less fluid than many politicians of the day would like to
admit. The concentration of power and influence over political decisions often
lies with the wealthy, because money can be used to influence the media,
politicians themselves, and a host of other factors affecting the political
process3. Where rich individuals are especially rich in comparison to poor
individuals, the poorer citizens have comparatively less power, influence and
therefore interest in their political system. Indeed, a cross-national research
study found that “those in the highest income quintile are 68% more likely to
participate [in elections] than the lowest-income individuals”4. Furthermore,
countries with a lower Gini coefficient have far lower abstention levels. The
Gini coefficient is the standard numeric measure of economic inequality in a
country, calculated so that if 10% of the population earn 10% of the national
income, and 20% earn 20% of the income, and so on, the Gini coefficient is 0-
perfectly equal. A Gini coefficient of 1 would apply in a hypothetical
situation whereby one individual earns the entirety of a nation’s income5.
‘One person one vote’ seems to be making an unhindered
transition to ‘one dollar one vote’. This is not an issue limited to the United
States. Across the democratized world, the preeminence of the wealthy voter
against the disadvantaged voter reduces the incentive for poorer voters to use
their enfranchisement. The unfortunate irony is that for many poorer citizens, or
even ‘middle-class’ citizens, a more liberal or left-wing government could
reverse some of these barriers and increase efficacy, through implementation of
increasingly progressive taxes and policies that typically benefit those on
lower incomes. But if these voters don’t vote, a government that could benefit
them cannot get into power. Without sustained efforts at reducing economic
inequality and reigniting political interest, one side of the political
spectrum will hold an intrinsic advantage over the other. This clearly contests
the elemental democratic values that are so prized by advocates of democracy.
Although disillusionment, with the consequence of
unenforced disenfranchisement, is a significant issue, an alternative outlet
for dissatisfaction with economic inequality is a gravitation towards the
alluring promises of populist politicians. Those who are seemingly fed up with
‘the establishment’- the precise definition of which seems to be perpetually
ambiguous- can be attracted towards the “unrealistic promises of change”
offered by political demagogues3. The proof of this can be seen with the
unexpected switch of many Labour voters and would-be Labour voters to UKIP in
the United Kingdom’s 2015 general election6, the unprecedented rise of Donald
Trump, and the increasing popularity of France’s answer to Nigel Farage, Marine
Le Pen7. As with all politicians, but more intensely with this kind of
politician, there is a huge difference between what is pledged and what can
actually be delivered. Hence the people can only be disappointed, and the
system can only be damaged by those who exaggerate in a ploy for power. The
unlikely event of populist rule would almost inevitably lead to increases in
economic inequality, after regressive policies further the immiseration of
lower-income classes.
The breakdown of democratic process due to economic
inequality is not limited to disempowerment and discontent amongst voters. In
2010, following the case of Citizens United v. Federal Election Commission, the
American Supreme Court approved unlimited corporate campaign spending, allowing
companies and businesses to support political candidates in elections.
Individuals are allowed to use their own funds to this end (which also raises
concerns about the undue influence of the very rich), but corporations,
especially American multinational corporations, have overwhelmingly more
resources than the ordinary American3. Millions, if not billions of dollars
have been and will be spent taking advantage of this new law. The people who
run these corporations will not be making decisions based not on what is best
for the majority of Americans, but on which candidates will support policies
that benefit their company. There is clear potential for a forging of a
profit-motivated, highly influential elite who play politicians like puppets
with their generous, or not so generous, campaign donations. This will only
create further social divisions, and heighten the issue of the magnitude of a
few people’s preferences far outweighing the efficacy that these preferences
should have.
Making an informed political decision is highly valued
amongst the democratized states of the world. A key tool for this is the media.
Although it must be clear to all that there is hardly such a thing as unbiased
media, the sources of these biases have serious implications in terms of
economic inequality. Those members of society who are extremely rich have
resources with which they can control a variety of media outlets, whether
through buying them or bribing those who own them3. The heavy political biases
of newspapers, for example, trickle down from the people who run and own them
at the top level. If these rich and powerful people choose to spread a
pro-Conservative message, or a pro-Republican message, the information that the
majority of the public receive is skewed amongst spin and subliminal messages.
Of course, bias in the favour of more liberal politics is present too. When we
consider the influence of the rich, for example Rupert Murdoch, amongst a
variety of mediums- television, social media, outright advertising campaigns9-
it is clear that the views are neither accurate or representative of the
majority of the public. Informed decision making is a cornerstone of our
democracies: the worse economic inequality gets, the less informed our
decisions will become. The result is less democratic societies.
The public perception of economic inequality itself also
has important meanings for how it plays out as a political problem. Politicians
have great power over this; whether or not they draw attention to inequality in
election campaigns and policy making, for example, and the statements that they
give out about the subject to the media. In America, we can see two contrasting
politicians releasing contrasting opinions regarding inequality. Mitt Romney,
runner for the Republican presidential candidacy (twice), once said that
“inequality is the kind of thing that should be discussed quietly and
privately”10. This is in stark contradiction to the words of Barack Obama, who
said that “rising inequality and declining mobility are bad for our
democracy”11. Statements such as these have significant influence over how much
pressure governments are under to try and reduce economic inequalities, an
action that will benefit those globally who are less well off.
The psychological concept of equilibrium fictions is
relevant here. This proposes that “individuals process information that is
consistent with their prior beliefs differently from how they process
information that is inconsistent”12. In this context, this means that political
views and information that are in line with pre-existing beliefs are less
likely to be ignored and more likely to be reinforced as true. Therefore, the
skewed perceptions that exist regarding income inequality in America pose a
real problem for the politicians that aim to do something to abate the issue.
Research reveals Americans believe that the bottom two income quintiles (40% of
the population) earn 10% of the total national income. In reality, that figure
is just 0.3%13. Perceptions of economic mobility are also highly inaccurate.
Americans believe that they live in a far more economically mobile society than
they actually reside in: they estimate a 43% likelihood of a person born into
the lowest quintile moving up into the top three quintiles, when the true
figure is much lower, at 30%14. In America, it is the Democrat party that are
more likely to want to reduce inequality and raise it as an issue; Obama’s
comments are a case in point. But if the public perceive this issue to be far
less serious than it actually is, the message of the Republican party (a
general feeling that economic mobility and inequality are low and that the
‘American Dream’ is alive and kicking)15 will be reinforced as the truth in the
electorate’s minds, because of the preconceptions that they already have and
the effects of equilibrium fictions. The illusion that anything is possible
reigns, but of course for every rags-to-riches story there are millions of
rags-to-rags-to-rags-again stories that aren’t publicised. Hence, again, one
side of the political spectrum is at an inherent advantage to the other.
Furthermore, there is the inevitable problem of a lack of
understanding about the extent of income inequality leading to a lack of drive
to sort out the problem, which in turn causes inequality to carry on slipping
towards, in extreme cases, third-world levels. America is the most economically
unequal industrialized society2, and without serious intervention, this could
worsen to a situation whereby America is known for being as economically
unequal and immobile as many of the most corrupt developing countries in the
world. If nothing else provides sufficient incentive to take action, the threat
of losing a reputation as a free and democratic society with equal opportunity
for all should be enough for any country to want to lessen economic inequality.
High levels of income and economic inequality within a
country correlate with high levels of political violence. The precise nature of
political violence is subject to a significant lack of consensus amongst those
studying it, generally because of the ambiguities suggested by the term- is it
a positive or negative occurrence? What counts as violent? Indeed, what counts
as political?16 For the purposes of the analysis of the economic
inequality/political violence nexus, political violence can be described as
violence outside of state control that is politically motivated. This includes
revolutions, civil war, riots and strikes but excludes crime and warfare17.
Although a myriad of other factors means that “uncomfortable ambiguity prevails
with regard to the relationship between income inequality and political
violence”18, the link seems to have been steadfast for centuries. Whether we
take the succession of European revolutions that occurred throughout the late
1840s as our example, or the more recent Arab Spring uprisings throughout the
Middle East, it seems that less egalitarian societies are far more susceptible
to political upheaval by the citizens. This is a hypothesis that has been
theorized and developed greatly by political philosophers and scientists, which
is arguably a reason in itself to consider the link substantial and relevant19.
Relative deprivation theory is a sociological view of
social movement, in which people take action for social change with the aim of
acquiring something- wealth, status, opportunity- that others have and that
they believe they should also acquire. The theory proposes that it is people’s
evaluations of what others have, and what they believe they should possess,
that stimulates them to join social movements20. Advocates of relative
deprivation argue that “relative deprivation is considered to be the necessary
precondition for civil strife of any kind”21. Economic inequality almost
guarantees relative deprivation. Citizens may take a “utilitarian justification”
approach to taking violent action, in which they feel economic inequality is
severe enough to justify violence and that this is the only effective way of
achieving emancipation from economic and political restrictions18. Hence, if
this relative deprivation leads to civil strife in the form of political
violence, we have an undeniably political issue that has stemmed directly from
the unequal allocation of income and resources.
The Marxist theory of rebellion also argues that economic
inequality is prerequisite for revolution. Marx maintained that economic
exploitation (“the expropriation of surplus value by capitalists from workers”)
leads to immiseration of the proletariat class, which in turn increases the
likelihood that impoverished workers will violently challenge the state22.
Class polarization in more developed countries has receded since Marx’s time;
but this does not render the theory completely obsolete. Although macroeconomic
policies that attempt to redistribute incomes and the introduction of the
welfare state has reduced the chances of those on lower incomes staging a form
of revolution3, the principal can be demonstrated through the example of civil
service and public sector cuts. When the UK government implemented austerity cuts
leading to pension cutbacks and pay changes amongst NHS staff and teachers from
2010, it led to a series of strikes and demonstrations that illustrated the
discontent felt by those affected23, 24.Whether or not the policies were
justified is irrelevant here: what is clear to see is that those who felt they
were being underpaid, had received a worsening of conditions, or were worried
about their economic situation, carried out action to show these concerns. We
can see here perhaps a combination of relative deprivation and the Marxist
theory of rebellion, admittedly watered-down and not carried out by the
capitalists who were the anathema of Marx.
In a democratic and relatively peaceful country such as
the UK, strikes and peaceful protests are generally the parameters of potential
political action. In more economically unequal countries, political violence
can take a more damaging and extreme form. Coups, terrorism and other methods
of showing political aggravation can be highly impacting for both governments
and those who are governed. Political instability goes hand in hand with
economic instability: a government struggling at the hands of political
violence cannot effectively control an economy25. Here, then, we have another
of the numerous vicious circles that apply when discussing economic inequality:
the element of inequality leads to political instability and violence, which
intensifies and aggravates the economy of that country, leading inexorably to a
worsening of the situation of economic inequality. A worsening of the economy
is not the only result of political violence. A diminished role on the world
stage is inevitable: if a state cannot maintain peace within its own borders,
it is unreasonable to expect it to be able to assist in maintaining and promoting
international peace.
There are some counter-arguments to the proposal that
economic inequality is the driving force behind political violence. It has been
hypothesized, for example, that political conflict is inevitable because the
factors that contribute to it are inherent in all societies26. However, this
can be countered with the idea that if political conflict happens in all
societies, this simply means we are yet to find a societal model that does not
lead to unacceptably high levels of economic inequality. If poverty exists, the
society is too unequal- we shouldn’t accept economic inequality leading to
political violence as something inherent, but learn and develop each system we
live in to find a better solution. Democracies are generally considered the
fairest format for the running of a state. But they are by no means perfect,
and the future will mean a development and refinement of the way we carry out
politics27. Hopefully this evolution of society will create global systems that
promote the reduction of economic inequality.
Politics, politicians and policies are the only way,
globally and domestically, we can tackle rising levels of inequality that are
damaging prosperity and political processes. Reducing inequality not only
reduces political problems, it can bring huge political benefits. Politicians
are the people with the potential to develop individual countries, and the
world as a whole, to become a fairer and more economically equal community.
The favoured argument against economic inequality being a
problem, trickle-down economics, is deeply flawed- it is an illusion.
Trickle-down economics proposes that when those at the top of the economic pile
have more wealth and income, this ‘trickles down’ to those in lower income
quintiles through the creation of new jobs and the general expansion of the
economy28. At least in America, despite fairly consistent positive economic
growth over the past few decades, income increases have almost only benefited
the top 1%. Incomes of the middle and lower earners have fallen whilst the
incomes of those at the very top have risen hugely29. This is not the fault of
those workers who are in the middle and the bottom. Low earners, especially
those at the very lowest income quintile, are often stigmatised for not working
hard enough or not trying harder to find a superior job. Economists and
psychologists have worked together to show that “living under scarcity often
leads to choices that exacerbate the conditions of scarcity...The stress of not
having enough money...impair[s] the ability to take decisions that would help
alleviate the situation”3. An example would be the decision not to vote; an
action that could potentially help “alleviate” the situation of deprivation.
This highlights the crucial role of social welfare and progressive,
redistributive taxes in our societies.
Progressive taxation is a form of tax in which, as income
rises, a higher proportion of that income is taxed5. The advocates of
minimising progressive taxation argue it has a disincentive effect on workers,
by discouraging them from wanting to become more productive and earn more.
However, when the data is analysed, this viewpoint fails to hold credibility.
Under American President Carter, the top marginal tax rate was 70%. This fell to
just 28% under the Reagan administration30. Reagan justified this by claiming
that tax revenues would increase as there would be higher incentive to increase
income. In reality, tax revenues fell drastically and the budget deficit
increased3. Progressive taxation correlates with stable levels of economic
growth, showing that decreasing economic inequality through redistribution, and
having an expanding economy, are not incompatible31. Brazil has been striving
to reduce economic inequality through both progressive taxation and increased
welfare programs to lower hunger and poverty. Brazil’s economy has grown
exponentially, and although it is still a highly unequal society, it proves
that concerted efforts by government can make an effective change without jeopardising
economic growth32. In fact, lower inequality will mean a more productive
workforce, more capable of providing the economic growth coveted by governments
and economies. Poorer workers who are able to afford health care due to lower
taxes will be able to spend more time at work, because they are not ill. This
could partially explain why the United Kingdom hasn’t fallen quite as far into
the trap of inequality as America has: the National Health Service provides
free health care treatment for all, meaning that poorer citizens do not have to
worry financially about falling ill or injuring themselves. Easier access to
healthcare achieved through a more egalitarian society will lead to a healthier
and happier population. This in turn could have a positive effect on the
aforementioned problem of political disillusionment, illiteracy and
disinterest. Healthier, happier, more fairly paid people are more likely to
want to participate in elections and campaigns.
Progressive taxation and a rigorous system of social
security are key policies that need to be implemented to tackle economic
inequality. But other efficacious measures can also be taken by governments.
The use of GDP- Gross Domestic Product- as a key indicator of economic strength
is a decision that could be changed politically. GDP measures the total output
of an economy: all goods and services produced and bought5. Although using GDP
has its strengths, the weaknesses are many, notably that GDP misrepresents
economic inequality. GDP could be increasing, yet the vast majority of a
country’s citizens could not be experiencing any benefits- they could even be
worse off3. Other disparities are also not reflected in GDP; for example,
levels of education, how pleasant the environment is, and the level of
healthcare provision in a country. GDP figures allow politicians and people to
ignore inequality. Therefore, inequality will continue and worsen if GDP
continues to be the primary measure of economic success, because it contributes
to the aforementioned skewed perceptions of economic inequality that are so
harmful for attempts at reducing it. Perhaps an international move towards
using the Gini coefficient of a country to rate economic prosperity would
trigger global stimulation to reduce inequality. Although this is unlikely in a
market-driven, globalised world, it is not an idea completely incompatible with
current political and economic setup. It would certainly ensure a more
humanitarian attitude across international politics; an attitude that few could
deny would be welcome.
Ensuring thorough anti-discrimination acts, on all bases-
gender, race, class, sexuality and so on- will help to promote a culture of
equality and this will help to publicly support the reduction in economic
inequality that is so needed. It is against the democratic values of equality
of opportunity to discriminate on any grounds, including economically. Some may
argue that it is flawed morals that leads to economic inequality- people should
just be more charitable. They should, but creating a global culture whereby
this is the norm rather than the exception is a truly political task.
Politics is about organising an effective community.
‘Effective’ is subject to interpretation, but the belief that this means equal
opportunity, democratic values, and above all social mobility is key. Some
degree of wealth inequality is both inevitable and not a significant political
problem. To some extent, it can act as a stimulus for mobility. But high levels
of economic inequality bring huge problems to countries globally: the breakdown
of political systems, political violence, and discontent amongst significant
proportions of the population. The corollary here is that significant economic
inequality is incompatible with running an effective community, in which all
have an equal opportunity to prosper. Politics both suffers the symptoms and
can provide the cure; we just need to cultivate the drive and ambition
necessary to reduce economic inequality and channel it into political
strategies. Economic inequality is an inextricably political issue with
inextricably political approaches, as the titular message of political
scientist Harold Lasswell’s book so eloquently summarises- Politics: Who Gets
What, When, How33.
Bibliography
Shakespeare, W. (1997). King Lear (Wordsworth Classics).
United Kingdom: Wordsworth Editions.
Solt, F. (2008). Economic Inequality and Democratic
Political Engagement. American Journal of Political Science, 52(1), 48-60
Stiglitz, J. E. (2012). The Price of Inequality. London: Penguin Books.
Davidai, S, and Gilovich, T. (2015). Building a More
Mobile America- One Income Quintile at a Time. Perspectives on Psychological
Science, 10(1), 60-71 Blink, J. and Dorton, I. (2012). Economics Course
Companion for the IB Diploma. Oxford: Oxford University Press.
McKnight, D. (2013). Murdoch’s Politics: How One Man’s
Thirst For Wealth and Power Shapes our World. Pluto Press.
Office of Press Secretary. (2013). Remarks by the
president on economic mobility. Retrieved from www.whitehouse.gov/the-press-office/2013/12/04/remarks-president-economic-mobility
Hoff, K. and Stiglitz, J.E. (2010). Equilibrium Fictions:
A Cognitive Approach to Societal Rigidity. American Economic Review, 100(2),
141-146. Cited in Stiglitz, J. E. (2012). The Price of Inequality. London:
Penguin Books.
Norton, M.I., and Ariely, D. (2011). Building a better
America- One wealth quintile at a time. Perspectives on Psychological Science,
6, 9-12. Cited in Davidai, S, and Gilovich, T. (2015). Building a More Mobile
America- One Income Quintile at a Time. Perspectives on Psychological Science,
10(1), 60-71 Pew Economic Mobility Project. (2012). Pursuing the American
dream: Economic mobility across generations. Cited in Davidai, S, and Gilovich,
T. (2015). Building a More Mobile America- One Income Quintile at a Time.
Perspectives on Psychological Science, 10(1), 60-71 www.bloomberg.com/politics/articles/2015-11-12/rising-income-inequality-causes-republicans-to-shift-rhetoric-but-not-policy
Mars, P. (1975) The Nature of Political Violence. Social
and Economic Studies, 24(2), 221-38 www.wwnorton.com/college/polisci/compol4/ch/07/chapterReview.aspx
Schock, K. (1996). A Conjunctural Model of Political
Conflict: The Impact of Political Opportunities on the Relationship between
Economic Inequality and Violent Political Conflict. The Journal of Conflict
Resolution, 40(1), 98-133 Lichbach, M. I. (1989). An Evaluation of “Does
Economic Inequality Breed Political Conflict?” Studies. World Politics, 41(4),
431-470
Gurr, T. R. (1970). Why Men Rebel. Princeton, NJ:
Princeton University Press.
Marx, K. (1887) 1967. Capital: A critique of political
economy. 3 vols. Edited by F. Engels. Reprint, New York: International
Publishers. Cited in Schock, K. (1996). A Conjunctural Model of Political
Conflict: The Impact of Political Opportunities on the Relationship between
Economic Inequality and Violent Political Conflict. The Journal of Conflict
Resolution, 40(1), 98-133 www.telegraph.co.uk/news/2016/03/16/how-much-are-junior-doctors-paid-and-why-are-they-threatening-to/
Bodea, C. and Elbadawi, I. A. (2008). Political Violence
and Economic Growth. Retrieved from
elibrary.worldbank.org/doi/abs/10.1596/1813-9450-4692#/doi/book/10.1596/1813-9450-4692
Oberschall, A. (1973). Social conflict and social
movements. Englewood Cliffs, NJ: Prentice Hall.
Runciman, D. (2014). Politics. London: Profile Books Ltd.
Ardnt, H. W. (1983). The “Trickle-Down” Myth, Economic
Development and Cultural Change, 32(1), 1-10 CBO, ‘Trends in The Distribution
of Household Income’. Cited in Stiglitz, J. E. (2012). The Price of Inequality.
London: Penguin Books.
Weller, C. E. and Rao, M. (2008). Can Progressive
Taxation Contribute to Economic Development? Political Economy Research
Institute, Working Paper Series, 176.
World Bank Indicators, cited in Stiglitz, J. E. (2012).
The Price of Inequality. London: Penguin Books.
Lasswell, H. (1936). Politics: Who Gets What, When, How.
New York: Cleveland.
Comments
Post a Comment
Comments with names are more likely to be published.