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Fat Cats in paradise: Why private wealth is a political issue

The future of liberal democracy is threatened unless growing inequality and the culture of wealthy entitlement it creates are effectively tackled

Jacqueline Best, SPERI Honorary Research Fellow & Professor of Political Studies, University of Ottawa

Jacqueline BestThis year’s Fat Cat Thursday arrived on January 4 in the UK, reminding us that it just took three days for the CEOs of Britain’s big companies to earn more than an average worker will gain from an entire year’s labour. Even as this event points towards the growing disparity between the very rich and everyone else in the UK, it also raises serious questions about the health of liberal democracy—not just in Britain but around the world.

One of my favourite recent New Yorker cartoons shows two men in business suits looking out from a lavish corner office, as one says to the other, ‘Part of me is going to miss liberal democracy.’

Although we’re not quite there yet, the dark tone of the cartoon reminds us that the economic ‘haves’ can be just as likely to become disaffected with democratic politics as the ‘have-nots’ often singled out as the source of populist pressures (in fact, elites have historically been the most important factor behind de-democratization, as Charles Tilly notes in a recent book).

Reading that New Yorker cartoon, it is hard not to imagine that at least one of those businessmen is likely to be a good friend of President Trump’s. He’s turning conflict of interest into performance art, talking up his daughter’s clothing line and getting national park gift shops to sell Trump branded wine.

Yet, while Trump and entourage demonstrate a particularly brazen willingness to blur the line between public office and private gain, the problem is a much wider one — with echoes in Canada, the UK, and around the world.

The problem of inequality is a global one. The recently released World Inequality Report shows that global inequality is growing to ‘extreme levels.’ Here in Canada, where I work and live, and where we like to feel virtuous by comparing ourselves to the United States, recent census data has revealed that earnings inequality has continued to grow over the last decade, while the top 1% increased their share of total income in 2015.

Even as Justin Trudeau’s Liberal government has talked a good line about tackling inequality and helping the middle class, concerns about possible conflicts of interest keep plaguing his government. Not only have several of his ministers used loopholes in the ethics regulations to maintain more control over their assets than would be allowed under a more stringent blind trust, but the Prime Minister himself accepted a free vacation on the Aga Khan’s private island, in clear contravention to ethics rules.

Such potential conflicts of interest create the possibility that public office holders will be swayed by their private interests as asset-holders as they make decisions designed to serve the public good. Why bother being an engaged citizen when you don’t know whether those making the decisions are pursuing their own private interests or the public good?

While the British press may not have been as full of debates about potential government conflicts of interest in recent months, it has carried another story—the Paradise papers—that raises equally serious concerns about the effects of excessive wealth on political culture. These papers tell us that many of the public figures who speak and act in the name of the public good use tax havens to avoid paying their fair share. Why bother buying into a democratic system requiring that we all do our part by paying taxes when those with the most power are actively avoiding doing so?

Both Canadian conflict of interest scandals and British revelations in the Paradise Papers about the increasing reliance on tax havens are quasi-legal strategies for giving the wealthy an unfair advantage in a system where we are all supposed to be equal as citizens. Each of these strategies works in a different way to undermine the democratic culture that makes our political system work. In the process, they further blur the line between public good and private gain, eroding the trust that makes democratic politics viable.

Of course, the line that we draw between public and private in a liberal democracy is always something of a fiction. Liberal political thought tells us that everyone is an equal citizen in the public domain, with an equal right to participate politically. Liberalism is also based on the premise that we should be free to pursue wealth accumulation in our private lives, meaning that we will often be quite unequal in economic terms.

In theory, this private inequality should not affect our formal public equality as voting citizens. In practice, things are rather different, as wealth often translates into a greater political voice — as any government that has tried to put a halfway house into an affluent neighbourhood will tell you.

Money does talk politically, and in the process, it can corrode the democratic system. As economist Branko Milanovic explains, ‘the higher the inequality, the more likely we are to move away from democracy toward plutocracy.’

To keep a democracy alive, and to ensure that everyone has a meaningful voice and stake in the political system, we must do two things. We must work to keep those private inequalities from getting too large (via public education, social programs, a progressive tax system, etc.). And we must work to minimize the ways in which private inequalities translate into unequal influence (via election financing laws, conflict of interest provisions, etc.).

Although politicians in both Canada and the UK may sometimes say the right things about reducing inequality, their actions bely the pervasiveness of a political culture that exempts the wealthy from their responsibilities to keep the polity alive.

As that New Yorker cartoon reminds us, unless we start taking the problem of inequality much more seriously now, and begin to challenge this culture of wealthy entitlement, we may soon find ourselves thinking nostalgically of the ‘good old days’ of liberal democracy.

A version of this blog post was first published on the CIPS Blog.

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