Many of us are aware of the consequences of inequality for the economy, but we tend to be less aware of the consequences for the democratic process. One group of political scientists focus on how public policies, especially those that have been more favorable to business interests, have only exacerbated inequality. But another group focuses on how inequality only results in policies more favorable to business interests precisely because public officials tend to be more responsive to those groups with more money.
There is no question that inequality has increased due to policies on taxation favorable to the wealthy, redistribution unfavorable to the poor, and labor legislation unfavorable to workers, especially union members. At the same time, failure to raise the minimum wage has also contributed to rising inequality. And yet, as inequality grows and the very top of the distribution, most notably the top .1 percent of the top 1 percent, pulls away from the rest of the country, it only becomes a foregone conclusion that policies pursued will be even more favorable to the wealthy.
Most of us would agree that a truly democratic process is one in which elected officials are responsive to the preferences of democratic majorities, regardless of income levels. More and more studies show that members of Congress are more responsive to affluent voters than they are to less affluent voters. Those at the bottom of the distribution are also less likely to vote than those in the middle and those at the top. Because poor people are less likely to vote than more affluent people, it only becomes a foregone conclusion that elected officials will be more responsive to the preferences of those affluent voters who vote.
Inequality is a matter of efficiency to the extent that the disappearance of the middle class which it represents means that over time the economy will contract because there is reduced aggregate demand for goods and services. But it is also a matter of preserving basic democracy. When Alexis De Tocqueville wrote about democracy in America in the early part of the Nineteenth Century, he observed that relative economic equality was the major ingredient in the maintenance of social harmony that sustained American democracy. This meant that individuals confronted one another as equals whereby each was independent and each was of similar importance. Equality of condition, however, involved social equality and assumed a roughly equal distribution of wealth and income. By rough distribution he meant the absence of extremes at the top and the bottom.
Unequal distribution of wealth and income is actually dangerous to democracy for a couple of reasons. The first is that it adversely affects individuals’ ability to participate in the democratic process on an equal footing. This only leads to procedural inequality to the extent that those lacking in wealth and income may not enjoy the same access to political and policy officials enjoyed by those possessing greater wealth and income. With greater concentration of wealth at the top, those at the top are in a better position to use their wealth toward the attainment of their political and other ideological objectives. In recent years, those at the top of the distribution have enjoyed inordinate power and have been able to shape the rules of the game in favor of those with more resources.
The second reason is that inequality, especially in its extreme form of poverty, deprives us of our capabilities, which are required for personal autonomy. Those with more resources are often better positioned to pursue their goals and objectives, while those with fewer resources find that their ability to pursue their goals and objectives is limited as a result. But these capabilities, as economist and philosopher Amartya Sen has called them, are important for another reason. A democracy, especially as its legitimacy and power are derived from popular consent, assumes that individuals have the capacity to reason for themselves — to deliberate in the public square — and to act on that capacity in a responsible manner. They cannot, however, effectively participate, whether it be in full policy discussions or selecting their own representatives, if they have been deprived of their capabilities.
As democracy requires that individuals act on their agency, human agency, i.e. their capabilities, must be protected. But this human agency also presupposes that basic material needs will have been met, which of course they cannot be if wages are so low that individuals cannot adequately maintain themselves, let alone support a family. Democracy also requires a measure of trust between people, and growing inequality only threatens that trust, as various groups, mainly those at the bottom, experience alienation and perceive the system to not be fair.
Various democratic theorists have postulated that when the distribution becomes so unequal, circumstances are ripe for revolution. To stave off revolution, political elites then seek to redistribute wealth and income in order to quiet the masses. The same theory also postulates that authoritarian regimes in the face of unrest are more likely to become more democratic by extending franchise. Again this is intended to stave off revolution. As they can now vote they are more likely to select those who will pursue policies of redistribution.
Of course, as this happens it only awakens those on the right that seek to fight both: movements towards greater democracy and efforts to redistribute. We can see this happening in the nature of contemporary American politics with both sides demonizing each other. The nonpartisan Tax Policy Center recently released a report that claimed that inequality has actually been reduced through President Obama’s tax policies. As a result, the average after-tax income of those at the top was reduced somewhat while the average after-tax income of those at the bottom remained the same. Consequently, the ratio between the two declined.
There is no doubt that we can reduce inequality by taking away from the very top, but inequality could also be reduced in such a way that we develop the capabilities of those at the bottom simply by boosting their incomes. We don’t engender greater trust simply by punishing those with more; we do it by enabling those at the bottom. At a minimum, a policy such as a higher minimum wage that boosts the wages of those at the bottom, and also helps the middle class through its ripple effects, will go a long way towards developing the capabilities of individuals in such a way that serves democracy. But it will also better reduce inequality in a way which is preferable to redistribution. This too will further democracy if by lowering inequality and restoring the middle class we can achieve the rough equality that De Tocqueville so admired about this country.
Oren Levin-Waldman is professor of public policy in the School for Public Affairs at Metropolitan College of New York (email@example.com ) and author of several books on wage policy. They include the just published: Wage Policy, Income Distribution and Democratic Theory (http://www.routledge.com/books/details/9780415779715/#reviews); The Political Economy of the Living Wage: A Study of Four Cities (M.E. Sharpe 2005); and The Case of the Minimum Wage: Competing Policy Models (SUNY Press 2001). He is a researcher for the Employment Policy Research Network (EPRN), and some of his work can be found at http://www.employmentpolicy.org/people/oren-levin-waldman