Democracy in Freefall
Creating a loyal base by offering emotionally charged appeals, partisan outrage and selective (or alternative) facts to small, narrowly segmented target audiences is a highly profitable media strategy. But it has had a disastrous impact upon America’s once-functioning Democracy.
Since Donald Trump ascended to the Presidency, America’s pundit class have been gnashing their teeth and wailing about Democracy in Crisis. Most of it is personality focused and tribal in nature; the other side’s actions are undermining my side’s interests. For the establishment, Donald Trump is the obvious odious villain; flaunting both conservative and progressive principles and undermining the institutions of our government. But Donald Trump is not the cause of our eroding political process. He is a result of it. No matter how offensive, or even dangerous you may find him personally, focusing on his outrageous persona and behavior diverts us from addressing the underlying problem.
Democracy is failing in America. Despite pretensions otherwise, both of America’s political parties have abandoned the search for majority consensus and are attempting to govern with support from increasingly strident and shrinking minorities. They are not seeking to manage and solve the complex challenges of our modern society. They are seeking POWER — and breaking the fabric of society in pursuit of it.
Republicans returned to power by whipping up fear, xenophobia and protectionist tendencies among white middle and lower-class Americans whose wages and living standards have been stagnant or declining for decades. Their controlling principle is the flawed belief they can turn back the clock and restore the low-tax, small government utopia that shimmers as a mirage in their highly selective memories. The policies they are advancing are in direct conflict with Trump’s promises that brought them back to power.
Democrats’ controlling principle is that benevolent government can manage society to better outcomes. A substantial majority of American citizens are highly skeptical of that premise based upon both instinct and experience. Nevertheless, in pursuit of that goal Democrats carefully target niche special interest constituencies that exist just outside America’s mainstream — minority communities and activists of all stripes — and woo them with largely undeliverable policy promises; promises which exacerbate the fears of the Republican base and fail to motivate independents.
In practice, both parties are plutocrats, far more conscientious about protecting the narrow interests of their donors than their voting constituents. Apparently promises are for voters; policies are for donors.
America’s Founding Fathers were famously suspicious of Democracy. They feared the tyranny of the majority — afraid the aristocracy’s historical prerogatives for confiscating wealth and limiting liberties would simply be transferred to the voting public. But it is doubtful the Founders ever conceived of a time when America’s political leadership would so openly ignore its responsibility to serve the majority.
Our dominant political parties pursue and wield power by aiming flawed and inflammatory messages at roughly a quarter of the population, simultaneously stimulating either enmity or distrust from the remaining three quarters. Donald Trump defeated the establishment politicians who dominate both parties by marshalling support from a mere 27% of eligible voters. Hillary Clinton lost the presidency with 28% of eligible voters. While a handful of voters cast protest third party ballots, fully 41% of eligible voters abandoned the polls entirely in 2016. The media exacerbates the problem by treating the spectacle like a sports contest, picking sides, debating strategy and tactics, and feeding their shrinking audiences’ passions and predispositions instead of their intellect; framing every issue as a binary choice. It is far, far easier to attract eyeballs and votes with controversial headlines and twitter-length soundbites that tell people what they want to believe than it is to challenge ingrained misconceptions. But by doing so we are inflicting great damage on our society.
Among developed countries America ranks near the bottom in both voter turnout and trust in government. Yet neither party seems either ready to acknowledge how out of step they are with the broader public or prepared to look beyond existing policy choices in search of a more unifying and productive vision for America. As a nation we persist in claiming we are the world’s leading Democracy… which doesn’t hold out much hope for Democracy.
The underlying problem is an influence our Founding Fathers also feared; they broadly opposed party politics and politicized decision-making of partisan factions. They believed in representative government in which the best and brightest, the most respected and responsible citizens served on behalf of their communities to cooperatively identify and pursue the common good. They would be appalled to witness the hyper-partisan rancor and binary thinking that has come to permeate the political system they established.
As our elected officials rely upon progressively fewer and more radicalized voters for support, it becomes harder and harder to govern responsibly. When the primary political imperative is not to seek the common good and shared consensus, but to protect the party by catering to the opinions of a minority base it doesn’t just make compromise more difficult to obtain, it undermines the very ability to think clearly about complex problems and apply innovative thinking to the challenges at hand. The echo chambers created by increasingly fragmented and partisan media operating on both social and commercial publishing platforms have only made the situation worse. The current political climate encourages politicians to become willfully blind to any perspective or alternative that does not align with the party’s core dogma — regardless of how flawed it may be.
Publicly considering fresh ideas has become heretical; actually changing one’s mind has become political suicide. But arguing intransigently over mutually flawed ideas is not the path to progress because the solutions for America’s most severe and intransigent challenges do not lie in either party’s dogma, or even between them, but outside the thinking of both.
“Progress is impossible without change, and those who cannot change their minds, can’t change anything.” — George Bernard Shaw
If you examine the deadlocks in policy debate, invariably you will find they arise because our political class protects the flawed dogma of their existing supporters while ignoring all inconvenient facts, observations and insights which could lead to broader consensual solutions.
Consider the status of three of our most contentious political issues:
Immigration
The vast majority of Americans recognize that our immigration system is arbitrary, inconsistent, subject to abuse, and in need of comprehensive reform. Research data suggests there are somewhere between 11 and 12.5 million illegal immigrants residing in the United States with 2/3 of the adults among them resident for ten years or more. Roughly 8 million illegal immigrants are participants in the U.S. workforce, representing approximately 5% of the total workforce. In excess of 1.8 million (some claim over 3.0 million) of these illegal immigrants were brought to the U.S. as children, the so-called “Dreamers”; many having no recollection or connection to life in a prior country. Few Americans think this situation is appropriate or sustainable.
Our immigration situation did not arise by accident. Our policies and practices encourage and reward illegal immigration. For years we’ve turned a blind eye as entire industries rely upon, and often exploit, illegal workers in order to suppress wages and consumer costs; but we’ve refused to implement reforms to facilitate and regulate their legal inflow. We entice them with the American Dream and then look the other way and feign shock and outrage when they break the law in order to pursue it. Our policy of granting full citizenship rights to American born children of non-citizens, both legal and illegal, is nearly unique among world nations. It is understandable in historical context, it was the legal framework that guaranteed the descendants of slaves the rights of citizenship, but it is a significant factor encouraging and rewarding the continuing disregard for legislative immigration controls.
America was built by immigrants and in most circles its reputation as a melting pot of diverse races and cultures is cited as an historic strength. Despite that reputation, however, Americans’ view of immigration was never simple or devoid of prejudice. America’s earliest settlements may have been founded by immigrants looking for religious freedom and a more just society, but it was the freedom to settle in like-minded communities, not to mingle directly with others who held different beliefs — and the view of exactly what constitutes a just society has evolved over time. The Constitutional protections, for religion and race, voting rights, property rights and privacy and against discriminatory treatment on multiple fronts came later — often much later and generally only after extended dispute and social unrest. Each new wave of immigrants that arrived was faced with discrimination from the wave that preceded them.
Our elected leaders acknowledge and bemoan the dysfunction of current policies. But because the issue has become valuable as a defining dispute between the parties’ bases instead of addressing the issue rationally they promote extreme visions and neglect the under-lying challenges and legitimate concerns of the moderate center.
President Trump and a small minority of activists desire to enforce mass deportation. A combination of fear and nationalistic/ethnic bias leads them to view our immigrant population as scofflaws and criminals stealing jobs and the American Dream from “real” Americans. The extremes of the rhetoric they use are predominately false. The massive majority of our immigrant population, legal and illegal, are hard-working people who are documented to have lower crime and incarceration rates than the population as a whole. Multiple studies suggest that by second generation the immigrant population achieves levels of education, home-ownership, and income that exceed the median levels for the general population.
Mainstream economists broadly agree that the influx of legal immigrants is productive, healthy and necessary to invigorate our workforce and offset the demographic impact of an aging population and declining national birthrates. But Republicans largely ignore those observations and refuse to address meaningful reforms; because exacerbating fear and xenophobia has proven to be a highly effective means of energizing a key component of their voting constituency.
Liberals are disdainful and dismissive of the fears and biases that motivate the extreme right, and so aggressive in their rejection of those ideas that they have been insensitive to the legitimate concerns of the moderate center. In their fervor to counter radical anti-immigrant views, liberals advocate sanctuary policies and a business-as-usual approach that reflexively rejects even moderate proposals and often seems to imply a greater interest in supporting the interests of non-citizens than establishing more rational policies and restoring the rule of law. Last year Democrats chose to draw a line in the sand and briefly defund the government over Dreamers — a strange priority that did little to broaden their appeal beyond the already faithful, but hardened opposition from the right and distrust from the center.
The mainstream public shows little interest in punishing the Dreamers, or any of the productively employed illegals now in the country, but they are deeply uncomfortable with the lack of a coherent policy enforcing America’s borders and sympathetic to arguments that suggest illegal immigration imposes social costs and depresses wages for U.S. citizens. Many have deeply mixed feelings about our immigrant communities, legal and illegal. If our elected representatives viewed their constituents to be the public as a whole they would be attempting to provide thoughtful leadership aimed at reconciling the conflict and resolving the challenges. But since elections now hinge upon motivating the extremes, instead of seeking consensual solutions both sides openly inflame the conflict.
By catering to extremists on both sides we make it exponentially more difficult to find common ground and cooperative solutions.
Healthcare / Insurance
There is an underlying fallacy in viewing America’s healthcare challenges as an insurance problem. It is doubtful we can ever make real progress on healthcare until our leadership acknowledges that while floods and fires may be comparable to broken bones and car accidents they are radically different from chronic illness and preventive care; thus, an insurance pricing model will never lead to more efficient healthcare delivery without leaving the poor and chronically ill behind.
America pays massively more than the rest of the world for healthcare with results that are no better and in many ways demonstrably worse. But we resist assessing and addressing what it is about our healthcare delivery system that results in higher costs. We blame it on fraud, overuse and inefficiency, but it is almost all related to the excessive cost of services delivered. We created the dysfunction in our healthcare industry with tax policies that encourage businesses to make healthcare a benefit of employment and by disavowing government responsibility for managing healthcare’s unique challenges. We embedded systemic mis incentives that drive up the cost of services — many of them openly protected by politicians on both side of the aisle.
Obamacare ignored the cost problems and focused narrowly on increasing access; using government subsidies to force more people into the already dysfunctional insurance market while simultaneously destabilizing that market by banning risk-based pricing. But if you don’t have risk-based pricing, you don’t really have an insurance product and forcing more people into the system exacerbated the cost problems. Republicans show no interest in understanding or addressing the underlying cost problem either, apparently convinced that if government simply reduces its financial and regulatory involvement the same market forces which created the problem will miraculously solve it. Grasping onto the ideological dogma that posits free markets will always lead to more efficient outcomes, conservatives squeeze their eyes shut and ignore the special circumstances that undermine healthcare markets and make procedures and services in America massively more expensive than across the rest of the world.
Not long ago Rand Paul gave a remarkably concise and coherent interview explaining how market competition has driven the cost of laser eye surgery down while increasing access. But he entirely missed the point of his own example when he failed to acknowledge that corrective vision surgery is an elective procedure — a feature which makes it unique from the massive bulk of medical care. Healthcare in modern society is not a free market. Perhaps Senator Paul actually believes that the entirety of our healthcare system would be improved if those who can’t afford care simply don’t receive it. But if so, it represents a radical minority view and he’s very careful not to state it directly out loud.
America’s healthcare system needs to be fixed. But neither Republicans or Democrats exhibit the slightest interest in actually confronting its underlying problems. The most obvious and critical problem is that insurance pricing is a massively inefficient cost-sharing mechanism, which does not work at all if it is disconnected from pre-existing conditions and quantifiable risk. We need to stop describing healthcare providers as insurance companies — and make them perform and compete as medical care providers — focused on reducing the cost of services.
Leadership on both sides of the aisle seem to be actively avoiding any effort to reduce the cost of healthcare delivery. The only difference seems to be that as delivery costs keep rising Democrats want the government to pay for it while Republicans want the poor and ailing to go without.
As with immigration, instead of focusing on clarifying and resolving the underlying challenges, our political class seems intent on exacerbating the misconceptions held by their respective constituents. Why do both parties ignore the underlying problem? Perhaps they’re blinded by their tribal instincts and partisan platforms? Or perhaps they feel an obligation to protect the profits of the corporations that expend hundreds of millions annually on campaign contributions and lobbying efforts? But both the Obamacare insurance mandate and the GOP’s efforts to return to laissez faire deregulation are deeply misguided policy choices that avoid and exacerbate the problem by clinging to failing strategies.
Economic Inequality
Conservatives aren’t wrong in believing that tax reform can stimulate economic growth and prosperity. But the legislation passed last year by Congress placed incentives almost precisely backward. Congress funded massive tax cuts to billionaires and corporations by reducing support services for the working class and adding $1.5 trillion to the national debt. Instead of reforming the structural flaws in tax policy that have been responsible for increasing income and wealth inequality in America, they are doubling down on their failed trickle-down dogma in a manner that will accelerate rising inequality. In the short run it has fueled and inflated a market bubble. So long as politicians and the media examine and report market indexes as proxies for economic prosperity, they may cheer and applaud their apparent accomplishment. But it will not end well.
The concentration of income and wealth in America has reached extremes not seen since the Gilded Age. The fact of that increasing concentration has been widely documented. The cause has been studiously ignored — by both the right and the left. In his highly respected best seller, Capital in the Twenty-First Century, Thomas Piketty diligently examines how income and wealth become inexorably more concentrated when the financial returns on capital (income earned from investment) exceed overall economic growth rates. What he and other political and academic leaders of economic theory fail to examine and acknowledge is the role modern tax policy plays in creating that dynamic. Modern tax policy is structurally biased to reduce the tax burden applied to capital income. Worse yet, it is biased and sheltered in a manner that runs contrary to core principles of both Capitalism and Democracy.
Where in our public debate can you find the counter-arguments to this central flaw of modern tax policy? Nowhere. Because Democrats support the same bias. Conservatives and progressives have carved out fixed and inflexible opposing positions, arguing over tax rates while ignoring the structural preferences most responsible for growing inequality. As with immigration and healthcare, by fixating on what their most extreme supporters already believe our political leadership blind themselves to better alternative solutions.
Conservatives are desperate to believe that smaller government and lower taxes offer the path to prosperity. It is deeply flawed — but hopeful dogma. Democrats lost their legislative influence because they countered with no hope. Democrats have offered no meaningful tax reform alternatives except the Status Quo or Nanny State Redistribution. The status quo is unacceptable and overt redistributional advocacy alienates 3/4 of the American public.
Instead of advocating redistribution, liberal politicians should be illuminating how structural tax preferences have been redistributing wealth and income upward for decades. Attacking those preferences as undemocratic, anti-capitalist and economically destabilizing cronyism would offer a compelling and effective counter argument to flawed conservative dogma. But it needs to be coupled with an alternative strategy for stimulating growth. If we want to stimulate our economy in a more efficient and democratic manner we need to be challenging the preferential treatment of capital — and illuminating how economically inefficient it is even under conservative principles.
Demand is the Primary driver of the Economy. Investment is Secondary; real, but of subordinate importance. Thus, it seems obvious that inflating the tax burden on earned income so we can throw hundreds of billions in tax breaks at capital defies logic (and, frankly, experience). Throwing tax preferences and monetary stimulus at capital builds asset bubbles — not jobs. We need to stop thinking in binary terms and explore alternative options. If we honored our own core principles we would be equalizing the tax burden between capital and labor so that we could cut taxes on labor and stimulate demand.
Consider a simple hypothesis and allegation:
Structural tax preferences aimed at inflating and protecting existing wealth (quietly ignored and protected by Republicans and Democrats alike) undermine core principles of both Capitalism and Democracy. They distort investment incentives by subsidizing returns on unproductive capital.
Removing misguided structural tax preferences toward illiquid and unproductive assets would trigger a rapid and aggressive redeployment of private capital. If merely 3% of the nation’s $97 Trillion national wealth were redeployed it would unleash a $3 Trillion stimulus program funded entirely with private capital — while simultaneously stabilizing our annual deficits and national debt.
If society were run like a business, responsible leadership would be tripping over themselves to either refute or prove that allegation. But the hyper-partisan atmosphere in Washington has become so toxic that both parties spend all their time defending their base instead of examining fresh perspectives. Or perhaps they are simply protecting their campaign donors?
Self-Delusion Writ Large
The great dysfunction of our leadership culture in Washington is the fact that both parties prefer sticking with bad ideas that please the fringe minorities they rely upon for votes and funding rather than exploring why their policies keep failing. They bicker pointlessly over the same bad binary choices. They narrow their view and lock themselves into political positions when they ought to be expanding their view and seeking fresh solutions.
Change is difficult. It is a fundamental element of human nature that we instinctively tend to force new facts into our existing view of the world. We also instinctively reject facts that fail to fit; and modern media’s transition toward overt partisanship and situational truth exacerbate that tendency. Facts matter. Intentions matter. If the objectives of our political leaders are merely to amass a sufficient plurality of electoral voters to obtain and hold power, then mining Facebook data in order to manipulate the fears and misconceptions of carefully targeted minority factions offers a viable path to achieving that goal. The judicial decision-making process of sowing doubt, suppressing evidence, distorting facts, jerrymandering and voter suppression (jury managing in a parallel context) all become fair game for an increasingly unprincipled political class.
However, if the intention and goal is to serve the common good then finding the best answer and assembling a majority consensus become the guiding objectives. For this, we need a decision-making process that is more closely aligned with the scientific method. Facts need to be relied upon; proven or disproven, and incorporated into policy. Principles likewise. Inconvenient facts cannot simply be discarded or dismissed; a single accurately documented fact can serve to disprove a scientific theory. So too political and economic theory. Politics should not be pursued like religion. Dogma must be challenged. If we believe in equal rights, equal treatment and equal opportunity we should be examining and challenging policies that apply preferential or differential treatment and result in systemically unequal outcomes.
Good governance is not about which minority’s faction controls power. It is about efficiently serving the common good. Toward that end the democratic process of seeking a majority consensus of interest, opinion and belief is a critical tool. There will always be a tension between fact and belief. Some will hold opinions so strongly as to be essentially unshakeable, right or wrong. But it should be self-evident to both parties that when their policies fail to resonate with more than 27% or 28% of the population they are doing a disservice to the country they have pledged to serve. Democracy cannot exist under minority control.
Better policies cannot be found in an echo chamber. Better policies cannot be found by ignoring facts and denigrating all who disagree. It is hard for me to look at the facts and arguments outlined above and conclude that either party has a viable answer to these intractable challenges. Yet they are not insurmountable problems. If our national leadership would stop seeking to exacerbate our divides and cater to minorities, Democracy might yet recover.
Donald Trump’s presidency should serve as a wake-up call for America. His erratic and autocratic behavior, and his unprincipled, corrupt transactional approach to policy is appalling. But it is not the cause of our decline into political dysfunction. It is a manifestation of how dangerous that dysfunction has become.