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How to fix American democracy

From debt culture to the donor class

How to fix american democracy

The storming of the capitol was only a flashpoint; American democracy was already broken. Since the 1970s, the US government has constantly enacted laws to disenfranchise the American people, culminating with the unlimited funding of US parties by private business. To save American democracy the economics must change: Christian Sarkar and Philip Kotler set out their manifesto.

 

The sight of a mob climbing up the stairs of the Capitol building earlier in January shattered the illusion of democracy that we have been living under our entire adult lives.  Here we are.  A second gilded age in America: a healthcare system that does not care about public health, and a government that is not for or by the people.  The richest citizens are actively engaged in destroying the common good (it turns out that an anti-tax group funded by billionaires was the biggest backer of the move to overturn the US election results). The wheels are coming off our democracy.

My friends from around the world shake their heads.  “What’s wrong with you guys?” they ask.

The answer is that democracy simply cannot coexist with the form of the US economy we see at present. Put simply, corporate and business interests have too much power in the United States. Until this changes, American democracy will remain broken.

Corporate and business interests have too much power in the United States. Until this changes, American democracy will remain broken.

 

How Did We Get Here?

Trump was only a small part of the problem. As former President Jimmy Carter said, the US is “an oligarchy with unlimited political bribery.” In their ground-breaking book, The Politics Industry, Katherine Gehl and Michael Porter tell us that the American political system is working exactly how it is designed to work. It is simply not designed to benefit ordinary citizens. They explain how the US political system is a private industry dominated by a textbook duopoly—the Democrats and the Republicans—and plagued and perverted by unhealthy competition between the players. It is incapable of delivering solutions to America's key economic and social challenges. In fact, they say, there is virtually no connection between our political leaders solving problems and getting reelected.

But how did the ‘world’s greatest democracy’ get here in the first place? To answer this, we must look to history. In The Creation and Destruction of the Great American Middle Class (1930-2010) Stanley F. Stasch’s explains how the following events handed the power of the people of the United States directly to corporate and business interests:

 

The 1970s - credit card debt, student loans and for-profit healthcare

The problem with American democracy began in earnest in the 1970s. Now a hot topic which is likely to surface under Biden, this was when a program of government-guaranteed student loans rewarded bankers at the expense of students. In the same period, a new bankruptcy law favored the rich over the middle and lower classes, and the Supreme Court allowed banks to charge extreme interest rates on credit card balances. The ordinary people of America were pushed into debt on unfair terms to the benefit of those who were already rich.

But how did the ‘world’s greatest democracy’ get here in the first place? To answer this, we must look to history.

The seeds of the current crisis in American healthcare were also planted in the 1970s. Through the Health Maintenance Organization Act of 1973, President Nixon allowed medical insurance agencies, hospitals, clinics and even doctors to function as for-profit business entities instead of the service organizations they were intended to be. The current debate over ‘medicare for all’ touches on only one aspect of the deep, anti-democratic problems with US healthcare. Even those who are covered by insurance are ‘served’ by a system in which their health is not the end-goal.

 

The 1980s - income inequality and the end of fair media

Under Reagan in the 1980s, financial reforms to disenfranchise ordinary Americans economically continued. Pension plans were replaced with 401(k) plans which decimated retirement incomes and the government eliminated three important banking regulations, the absence of which increased income inequality and eventually led to the housing crisis and the financial crash of 2008.

The intensely partisan nature of American news media - the root cause of the cries of ‘fake news!’ on both sides - can also be traced to the 1980s. The Federal Communications Commission (FCC) stopped enforcing the so-called Fairness Doctrine for TV and radio stations. The demise of this rule - which required broadcasters to present a variety of views on issues of public importance - paved the way for the explosion of emotive, conservative talk radio in the late 1980s and 1990s, which later served as a model for Fox News.

 

The 1990s and 2000s - Corporations go global and start funding political campaigns

The reforms which took economic and political power away from ordinary Americans in these two decades are too numerous to detail here. Overall, CEOs were enabled to pay themselves huge salaries (attempts to cap this failed) and actions against corporations by groups of citizens were made much more difficult. Of particular note is the exclusion of waiters and waitresses from the minimum wage, making them dependent on tips to avoid poverty.

Uniquely, however, these decades created a system in which mega-rich, multinational corporations became the backers of American political parties. Under Bush in the 1990s - alongside tax cuts for the rich and bailing out the failed banks after the housing crisis (while ordinary Americans went into bankruptcy) - Congress passed laws to facilitate the globalisation of American corporations. Congress’s new treaty facilitated the outsourcing of U.S. manufacturing jobs to China and increased imports from China. Congress and the president allowed U.S. companies to transform themselves into global corporations and move high tech jobs to foreign countries.

US corporations were freed from a link to American workers but their link to American politics intensified greatly. In the Citizens United case, The Supreme Court under Chief Justice Roberts ruled that corporations and other business-like organizations were no longer restrained when contributing to a politician’s campaign fund. They were now free to spend as much money as they wished to support or defeat any candidate for any office. This opened the floodgates for the Koch Brothers, the Mercers, and other donors in the billionaire class to influence elections at an unprecedented level. This was the death knell for American democracy, placing the power of political persuasion and the whole party-system under the control of mega-rich corporate interests rather than the American people.

 

Was anything different under Trump?

The pattern continued under the Trump administration, mainly through the deregulation of industry against the public or environmental good. A few highlights would be the repeal of Net Neutrality (the principle that Internet service providers (ISPs) must treat all Internet communications equally), the nullification of of a rule allowing class action lawsuits against banks and credit card companies and the nullification of the rule that required mining companies to disclose payments to the US or foriegn governments.

As we can see, the last half-century has seen a steady and systemic corruption of all our government institutions, the transfer of democratic power away from the people, and their enslavement to a system of debt without fair recourse. That’s our flywheel of corruption – made in the USA.

News graph

If we are going to save democracy from total plutocracy, we need to consider at least seven changes.

So what can we do?

Here's a manifesto to save democracy in the United States.  Beyond lip-service, it is questionable whether any politician (or their sponsors) will support even one point. But if we are going to save democracy from total plutocracy, we need to consider at least seven changes:

1. Get money out of politics. In the US, we must repeal the Citizens’ United decision of the Supreme Court saying that corporations are persons and that they are entitled to spend what they want during elections. It is crucial that Citizens United be reversed either by a subsequent Supreme Court ruling or by Congress.

2. Abolish gerrymandering. The US must create a fairness policy that dictates the shaping of Congressional voting districts which overwhelmingly favor incumbents. Voting districts must be re-designed by independent groups rather than by partisan state legislative bodies.

3. End the Electoral College, Bring in Proportional Representation. Many states turn over all their electoral college votes to the party that received the majority, thus cancelling the representativeness of voter interests. Instead, they should proportion the state’s Electoral College votes and this will bring the final Electoral College vote closer to the popular vote.

4. Fight fake news. Bring back the Fairness Doctrine for TV and radio stations. The FCC should learn from Ofcom and establish two missing standards that all licensed news broadcasters must follow — "due impartiality" and "due accuracy."

5. Breakup monopolies.  Enough is enough. It’s time to revisit major federal antitrust legislations including the Sherman Act of 1890, the Clayton Act of 1914, and the Federal Trade Commission Act of 1914, and bring back the capability of the federal government to handle unfair trade or business practices.

6. Audit the Pentagon.  Like all unaccountable businesses, the Department of Defense drains the Treasury without any oversight from the public. What happened to zero-based budgeting?

7.Stop tax evasion.  It’s time to tax the rich, inherited wealth, and the offshore shell companies that do business in the US, yet pay little or nothing in the way of taxes.

Although the survey of the legislation since the 1970s paints a deeply depressing picture of the state of American democracy, the problems are not insurmountable. These points of action would have real, lasting benefits for the American people and their polity. The question is, with corporate interests already so ingrained in politics, would these changes ever make it through the system?

 

See www.fixcapitalism.com and www.wicked7.org.

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Al Errington 28 January 2021

Article presumes US had real democracy to begin with. US has lots of elections but elections are only a tool of democracy, not evidence of democracy. US has lots of politics, politics is the bane of democracy. Politics is the opportunism & corruption that is allowed & supported by poor governance. Democracy needs good governance, good governance is effective direction, delegation & accountability with no place for politics.

Minnie_ Wonder 26 January 2021

Great article. Very refreshing to hear something other than 'trump is bad' but that is not 'there are dark forces of money behind politics' without any explanation. Will be visiting your blog.