Project Syndicate
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Is growing wealth inequality really the main reason American politics has become so dysfunctional?
Oligarchy Is a Symptom, Not a Cause
Author: Jeffrey Frankel
It has become a common refrain among Americans that the US political system is broken. The question is how it reached this point—and how to get US politics back on track.
Many factors have contributed to the current mess. Some, such as the gerrymandering of congressional districts, are straightforward and cry out for reform. But none can be identified as a single fundamental exogenous cause of all the others, let alone explain why this deterioration has happened now.
Some argue otherwise. From distinguished economists to Democratic Socialists, a growing chorus claims that the root cause of the problems plaguing US politics is heightened income inequality, which has allowed for the emergence of a self-perpetuating oligarchy. Fixing US politics, they conclude, begins with narrowing the wealth gap.
It is true that inequality has increased, is highly undesirable, and warrants a policy response, beginning with relatively simple steps like expanding the Earned Income Tax Credit and increasing access to health care through the Affordable Care Act (Obamacare). It is also true that the top 0.01% have been able to perpetuate their wealth across generations by successfully advocating for regressive steps, such as the near-dismantling of the estate tax. And it is true that there is too much money in politics: the Supreme Court’s Citizens United decision, which eliminated campaign-finance restrictions for corporations, was a wrong turn.
But none of this adds up to a chain of causality that can bear the weight of the claim that inequality is the root cause of America’s political troubles. For starters, wealth is not necessarily correlated with right-wing or conservative politics. Yes, many of the ultra-rich—the top 0.01%—have sold their souls to the right-wing politicians who promise to cut their taxes. But in general, higher incomes and education levels are correlated with more liberal politics. Blue states have higher incomes than red states, and blue counties have higher incomes than red counties within the same state.
Moreover, Donald Trump does not owe his political rise—which culminated in his victory in the 2016 presidential election—to campaign contributions. The media gave him all the free publicity he needed. In any case, the idea that campaign contributions have a major effect on electoral outcomes is not supported by statistical evidence, especially in cases where the candidate is already well-known to the electorate.
To be sure, campaign spending could still have an effect on a politician’s behavior, simply because the politician believes it affects electoral outcomes. And this is to say nothing of the possibility—widely reported in the age of Trump—that money goes directly into politicians’ own pockets. But none of this means that the wealthy can buy elections.
Even if inequality does contribute to a rightward political shift, the diagnosis alone cannot restore sanity to US politics. Resentment of wealthy elites does not necessarily lead to good electoral outcomes. In 2016, Trump persuaded voters who felt “left behind” to support him by convincing them that he would defend their interests against nefarious “elites.” Once in office, he benefited the rich instead. Yet, in 2024, he was re-elected with a plurality of the popular vote.
Today, Democratic Socialists are positioning themselves as the real champions of workers—and liberal political activists are increasingly embracing them. But support for far-left politicians in the Democratic primaries or as third-party candidates is a surefire way to get Republicans elected. Without Ralph Nader, Republican George W. Bush would not have defeated Democrat Al Gore in the 2000 presidential election. The median voter theorem still stands.
A better explanation for the deepening political dysfunction in the US is that different groups of voters believe different facts. This reflects two influences: modern algorithms that expose each individual only to news sources that tell them what they want to hear, and the eternal human tendency to overgeneralize from information that is plainly visible, without considering that other information is being obscured from them.
This proposition is my inexpert attempt to group together the sources of systematic errors explored by psychologists and behavioral economists: anchoring, confirmation bias, the availability heuristic, and related phenomena. These psychological attributes are embedded in human brains. But that does not mean they cannot be resisted. The key is better critical-thinking skills, which can be taught in schools.
Many of the prescriptions sound simple: Don’t believe everything you hear. When you read an article or watch a video, look for footnotes or links to reputable sources. If they don’t exist, don’t pass along the ideas as if they were facts. Include credible citations in your own work. Don’t assume that correlation equals causation. Get outside the echo chambers and expose yourself to venues where people communicate with others out of their comfort zone.
These might not sound like the makings of a political strategy. But improved critical-thinking skills are a prerequisite to progress, including on inequality. It will be impossible to build support for policies like progressive taxation or universal health care if the public does not understand them or their effects. As long as systematic perception errors are as acute as they are today, any effort to increase the political salience of inequality could produce more Trump votes just as easily as it could strengthen support for progressive policies.
Even if such policies are implemented, leading to progress on income redistribution, this will not necessarily generate a virtuous circle of restored political sanity and good policies. The knock-on effects of reducing the flow of campaign finance to conservatives will not necessarily get progressives elected and thus do not carry as much self-reinforcing power as some appear to believe.
By contrast, an effort to teach people to think critically would be self-reinforcing, as it would bolster political support for science, expertise, and rationality. As policies got better, so would outcomes, including with regard to inequality. Crucially, however, lower inequality would be an outcome, not a starting point.
Credits: Project Syndicate