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Using the tools of democracy to address economic inequality

Chris Witko, , ,

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Chris Witko
Chris Witko

Democracy and inequality have been at odds for as long as democracy as has existed. As the gap between rich and poor widens, so too does trust in political institutions and faith in democracy itself.

Chris Witko, associate director of Penn State’s School of Public Policy and author of The New Economic Populism: How States Respond to Economic Inequality, argues that states can step in to address economic inequality while the federal government is embattled in political polarization.

Witko argues that democracy and capitalism will never fully be reconciled, but lessening economic inequality will go a long way toward strengthening democracy.

Additional Information

The New Economic Populism: How States Respond to Economic Inequality

The Conversation: States are on the front lines of fighting inequality

Penn State School of Public Policy

Discussion/Reflection Questions

  • What is the relationship between democracy and economic inequality?
  • Whose responsibility is it to address inequality?
  • What policies should be taken in order to reduce inequality?
  • Do you think that individual states are doing enough to reduce inequality?
  • Do you think that multiple states adopting politics like minimum wage increases will spur federal action?

Interview Highlights

[6:02] Why are income inequality and democracy closely linked?

We are going to have some inequality in a capitalist system, but when we are in a democratic capitalist system that assumes some level of equality, there is a concern when you have extreme levels of extreme inequality.

[6:53] Talking about problems of Democracy in United States, do you agree with the statement that we can’t start to fix what is wrong with democracy until we address the issue of inequality?

Yes. When you see the extremes of wealth and inequality, you see that wealthy people can use their money for politics, so that generates an unequal political influence.

[7:50] Whose job to fix the problem of inequality?

In the United States we tend to think that the public is not concerned about inequality and that’s relatively true in comparison with Europe, but according to survey data, the public is really concerned about inequality and they want the government to do something to fix it.

[10:15] If public opinion really does supports action on inequality, why isn’t it moving forward?

The polarization is preventing anything getting done, and when you have big interests and the wealthy has gib influence in politics, that makes it really hard to get any chance of getting any egalitarian policy in Washington DC.

[13:09] How can we use the tools of democracy to fight inequality?

We do have in the states that we don’t have in Washington DC is direct democracy, in which desires from majority are expressed, but sometimes terrible policies can restrict rights from minorities.

[14:30] If a state want to take action either in minimum wage or thru the earning income tax, it is a tipping point to take action at the federal level?

Yes. We have seen it in the past. A lot os states has a higher income wage than the federal minimum wage an at this point it is natural that there’s not an opposition at the federal level because a lot of businesses are already adjusted to that level of income wage.

[15:17] What is the Earned Income tax Credit? How that it be a solution for that states that are looking to solve inequalities?

It’s a tax credit that comes back to workers who don’t earn a lot of money so you can actually end up getting cash back from the government when you file your tax return. That’s something that started at the federal level and then has proliferated down to the states and now the states are doing more to expand their earned income tax credits. It’s another policy tool that you can use in a more conservative area where maybe you don’t want to increase taxes on the wealthy, but you want to bring up the incomes of lower income workers.

[16:49] Can you talk about how populism fits into this inequality conversation?

The public is concerned about inequality and a lot of the policies that would actually address inequality or that we’ve used in the past to reduce inequality are actually really popular with the public. Minimum wage increases and tax increases on Millionaires and billionaires are very popular with the public. There are policies that a majority of the people want and we’re not really getting them in Washington DC due to the political dynamics there, but some of the states are actually doing this.

[17:44] What are those points in history that let large-scale changes, like the New Deal, to move forward?

What happened during the New Deal is a unique set of circumstances, you had a massive congressional majority of Democrats, Franklin Roosevelt’s terrible economy and people were ready for action, but we don’t want to have another Great Depression. With those political conditions we really did see the federal government pioneering new policies to address problems and we’re not seeing that because you have the the influence of the wealthy and politics in Washington DC, which is similar in some states but not as great in other states, so the states have more room for action and you have the mass of polarization in Washington DC which prevents anything from getting done.

[19:54] Can people try to do in their own way to make progress on some of these issues?

Voter turnout is really important to the types of policy. We need to do more to mobilize lower income voters, so any supporting organizations to make that happen is a good idea.

[20:59] Is there any type of ideal that we should be looking for?

No. I don’t think we can specify a mathematical point at which we’re good and within 2 percentage of points of this it’s bad, and that’s part of the danger of this situation. You never know when things have gotten too extreme. I don’t think many Americans would support everybody earning the same income or pure equality and that’s not going to happen, but just avoiding extremes of inequalities.

[23:11] How things like the Affordable Care Act and some of the other kind of more drastic proposals like Medicare for All are a factor?

The Affordable Care Act is interesting because it is one of the few real major egalitarians policies that we’ve seen enacted. There are some problems with how the ACA was designed. We’re seeing a similar logic where liberal states expanded medicaid right away, but even some of the more conservative states have done so through the particularly, through the initiative, but in some some cases not even through the initiative.

[24:36] Do you think that we can really do anything to move forward on addressing inequality without talking about the current state of campaign finance and the influence of money in politics?

Yes. Stricter campaign finance laws would probably be a good thing. The problem is right now the Supreme Court and a lot of state courts are really against regulating money in politics. The other thing we can do is to just try to increase money from other voices into the system.

 

 

When the “business of business” bleeds into politics

Forrest Briscoe, , ,

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What is the role of a corporation in a democracy? If you asked Milton Friedman, the answer would be none at all. He famously said in the 1970s that the only corporate social responsibility a company has is to turn a profit for its shareholders.

Forrest Briscoe
Forrest Briscoe

Some 40 years later, the answer to that question looks very different. Companies are increasingly stepping up to fill what they perceive to be a void left by polarized and paralyzed government. In the past year, we’ve seen Patagonia advocating to protect national parks from the Trump administration and Dick’s Sporting Goods banning the sale of assault weapons after the Parkland shooting. These organizations wield a lot of power, both financially and in swaying public opinion.

Forrest Briscoe, a professor of management in Penn State’s Smeal College of Business, has been studying the gradual closing of the gaps between business, government, and civil society and talks with us about what it means for employees, for companies, and for consumers.

The echo chambers we experience among our friends and our media may be bleeding over into the workplace — which has some serious implications for democracy. In a tight job market, a company’s political beliefs may even be a deciding factor when someone is considering multiple job offers.

The space between business, government, and civic life is closing faster than you think. We argue that it’s not necessarily a bad thing, but something that we should be aware of as workers, consumers, and democratic citizens.

Interview Highlights

[5:00] How have we gone through this change of corporations being single minded on profit to now being concerned with activism?

Forrest: We’ve come from a time where the idea of business doing something other than business would detract from their efforts of profit. A key characteristic which has changed over time is the fact that business and government aren’t these completely separated spheres like they used to be years ago.

[6:36] What are the factors that would impact a businesses decision to get involved with a certain cause?

Forrest: Sometimes companies will be forced to change because they’re being targeted by activists. However, we’re now seeing those at the top of companies wanting to actually reach out to these social movements. So we’re seeing effects work in both directions. Also, companies might see profit opportunities by embracing a certain cause or campaign. Another persuasion tactic is this use of benchmark competition that some movements have tapped into. For example, we see that LBGTQ groups have created rankings of the most friendly companies to their cause. This touches upon an driving interest amongst businesses, which is to beat their competition in some benchmark test.

[13:00] Do you think there is a danger in companies becoming too homogenous in political views as they get more and more involved in politics?

Forrest: Yes, and this is something we’ve been trying to study in our research. Any institution can have a varying amount of diversity along lines of political ideology. If this is paired with functional communication, it can be productive like a democracy. However, without the right culture, you can have a Balkanized effect where the company struggles with constant conflict along these ideological differences. I also worry about companies becoming too aligned with partisan ideas. If this continues, we could see a worsening of the partisan divided if our companies join the divide along with those in government.

[16:00] Can you address the consumer side of this issue?

Forrest: With boycotts, I think their increased numbers, but remoteness as to actual buying habits could reduce their overall effectiveness. There is also a new phenomenon known as “buycotts” where people are supporting those who they agree with ideologically by only doing business with the.