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Money and the Rules of American Politics

By David Schultz

We all grew up playing games—board games, video games, sports or whatever. Games have rules and they determine how the activity should be played. We assume the rules are neutral and do not favor anyone in particular. Fair rules mean equal chances or opportunities for all to win, whether it is to succeed and score the American Dream or compete for political influence. Yet the rules of justice, the fairness of the law and democracy in the United States are becoming increasingly unfair and compromised by the staggering economic inequality and lack of mobility.

The rules of justice are not always neutral. The Innocence Project has demonstrated how often the criminal justice process yields false positives; convicting individuals of crimes they did not commit only to have DNA or other evidence exonerate them. Increasingly, social science evidence demonstrates the unreliability of eyewitness identifications or shows racial biases in the criminal justice system. This is demonstrated with statistics on racial profiling and sentencing disparities. Feminists have pointed to a persistent patriarchal bias in the American legal system that favors a male perspective and others such as Marc Galanter note how “repeat players” generally make out better in the civil law system than those who are “one shotters.”

These examples reveal that rules of the legal system are outcome determinative and processes are not neutral. The rules of justice are not neutral and the rules of the game (or of any institution) determine how the game is played and influences who wins. It also shows that the rules can be easily manipulated or constrained by background injustices that render fair or neutral application impossible. Procedural rules actually reflect substantive values. Rules reflect values; they reflect what is deemed important. And what is important in America is money–especially who has it or not.

moneyA 2011 Congressional Budget Office study found that the after-tax income gap (and this includes after calculating in transfers payments and welfare) between the top 1% of the population and everyone else more than tripled since 1979. Between 1973 and 2007, after-tax income for the top 1% increased by 275%. For the bottom quintile it was merely 18% , while for middle class or middle three quintiles it increased by not quite 40%. According to the Census Bureau, the median family income fell in 2012 from $51,100 to $51,017, with the average American earning less now than they did in real dollars in 1989. However, there is some good news. Since 2009, the income of the wealthiest 1% has increased by 31%.

But income only tells part of the story. Maldistributions in wealth are exacerbating and growing.According to the Institute for Policy Studies, the top 1% controls almost 34% of the wealth in the country, with half of the population possessing less than 3% in 2007. The racial disparities for wealth mirror those of income. Since 2007 the wealth gap has increased as the value of American homes–the single largest source of wealth for most Americans– has eroded. Studies such as the Survey of Consumer Finances by the Federal Reserve Board have similarly concluded that the wealth gap has increased since the 1980s.

According to an April 2013 Pew Research Center report titled “A Rise in Wealth for the Wealthy; Declines for the Lower 93%,” since the crash of 2008 the “mean net worth of households in the upper 7% of the wealth distribution rose by an estimated 28%, while the mean net worth of households in the lower 93% dropped by 4%.” The richest have recovered nicely from the Great Recession, the rest of us have not done so well. Moreover, the income gap has a racial component. A recent Census Bureau report stated that in 2012 the median household income for Whites was $57,009, for Hispanics it was $39,005 and for Blacks it was $33,321.

The wealth disparities across race were even worse. A policy brief from Brandeis University’s Institute on Assets and Social Policy found that over the last 25 years, the wealth gap between African-Americans and Whites tripled from $85,000 in 1984 to $236,500 in 2009. For the few African-Americans and Whites at the same income level, the latter had wealth at least three if not more times that of the former.

Finally, the gender gap in income persists. According to the Census Bureau, women still only make 77 cents on the dollar compared to males, with this percentage having remained frozen for years. The median income of a female household in 2001 was $34,340, falling to $34,002 in 2012. While for male households it was $50,602 in 2011, falling to $48,634 in 2011.

No matter how you slice it, the rich are getting richer and the rest of us are getting not just relatively poorer, but absolutely poorer, with women and people of color taking even a harder hit.  But why? The Census Bureau notes several factors, but perhaps most importantly, the federal tax structure is less progressive and more regressive now than 30 years ago. Capital gains taxes are lower, as are taxes on the rich. More taxes come from regressive federal payroll taxes than before. Overall, the tax structure does little to rectify inequalities in income; instead it extenuates and exacerbates the growing inequalities already occurring in the economy.

So how and why is this economic inequality and lack of mobility relevant to the law? Quite simply, as pointed out in my new book Election Law and Democratic Theory, the United States accepts as legitimate the ability of individuals and organizations to convert their economic advantages into political influence. Political power is increasingly allocated on the basis of money. The United States has become a market-based democracy. While markets may be a great way to distribute sailboats, no one thinks justice should be allocated that way by judges. The same should be the case with power and influence in campaigns, elections, and in the basic operations of American democracy. Unfortunately, that is not the case. The rich dominate political giving, the candidates or groups with the most money generally win and there are powerful correspondences between the preferences of the wealthy and policy outcomes in the United States.

The economic inequalities in America have become self-fulfilling. The affluent have more resources and influence and are now using their political power to reinforce their advantages through laws that prevent others from succeeding.

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The American Society for Public Administration is the largest and most prominent professional association for public administration. It is dedicated to advancing the art, science, teaching and practice of public and non-profit administration.

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