Fighting Inequality in the New Gilded Age
September 16, 2014
Sep 16, 2014
17 Min read time
Restoring genuine democracy must go beyond campaign finance.
Aerialist over Niagra Falls, 1890. Photograph: Thiophene Guy.
White Collar Government: The Hidden Role of Class in Economic Policy Making
The Promise of Participation: Experiments in Participatory Governance in Honduras and Guatemala
Daniel Altschuler and Javier Corrales
Making Democracy Fun: How Game Design Can Empower Citizens and Transform Politics
In the years since the financial crisis, the realities of rapid economic recovery for some and stagnant wages for most has made increasingly clear that we live in a new Gilded Age: one marked by growing income inequality, decreasing social mobility, and concentrated corporate power. At the same time, we face an increasingly dysfunctional political system, apparently incapable of addressing these fundamental economic challenges.
This is not the first time the country has been caught in this confluence of economic inequality and political dysfunction. The first Gilded Age, in the late nineteenth century, experienced a similar moment of economic upheaval, instability, inequality, rising corporate power, and unresponsive government. These challenges triggered some of the most powerful reform movements in American history: the labor and antitrust movements, the Populist movement of agrarian reformers, and the Progressive movement of urban social and economic reformers. These reformers were not perfect—their record on racial and ethnic inequality is especially glaring—but they were enormously successful in creating new institutions and ideas that reshaped our economy and our politics. In particular, many of them were convinced that to address economic inequality, they had to first democratize politics, creating more robust forms of accountability and popular sovereignty against the influence of economic and political elites.
Contemporary social science is following in these footsteps. In 2001, well before the financial crisis and the Great Recession, the American Political Science Association convened a task force of leading scholars to diagnose the root causes of economic inequality and their implications for American democracy. The scholarship that emerged—from thinkers like Larry Bartels, Martin Gilens, Jacob Hacker, and Suzanne Mettler—launched the social science of this new Gilded Age. These studies argued that legislative policy is more responsive to the preferences of wealthier citizens; that social welfare policies hidden in the tax code are too obscure to generate supporters; that the disparities in organizational resources and power between business interests and organized labor explains the eroding support for inequality-reducing policies.
Restoring genuine democracy in the face of deep-seated disparities must go beyond campaign finance.
This literature established two key premises for today’s Gilded Age. First, economic inequality has political origins, in policy shifts that have reduced how progressive taxes are, deregulated many industries, weakened organized labor, and eroded the social safety net. Second, the remedy for economic inequality therefore necessarily involves addressing political inequality, in particular by improving electoral participation by the poor and working class or expanding their ability to generate political pressure on equal terms.
Campaign finance reform has emerged as the central political reform cause, addressing this core concern. But restoring genuine democracy in the face of deep-seated disparities in wealth and political power must go beyond campaign finance. While the social science and political conversation deepens our diagnosis of the problems of economic inequality and the hollowing out of the post-crisis economy, we need to broaden our discussion of the range of democratizing reforms needed to create a more responsive and accountable government—which in turn can enable meaningful economic reform. A series of recent studies suggests a shift in exactly this direction: from the diagnosis of the problems of inequality, to a focus on the institutional reforms needed to enable a more responsive political system
• • •
With his new book, White Collar Government: The Hidden Role of Class in Economic Policy-Making (2013), Nicholas Carnes argues that there is a third, even more important source of elite political influence: the dominance of upper class individuals in the composition of legislatures themselves. Despite the considerable external pressures of donors, constituent preferences, parties, and interest groups, legislators still possess significant discretion, and as a result their personal views about economic policy matter. Legislators of different class backgrounds, Carnes demonstrates, have distinct views on everything from labor to welfare programs and anti-poverty policies, to the very idea of government itself. On unemployment, labor rights, tax policy, and corporate protections, many of the central economic policy issues of our time involve a cleavage between wealthy and working class interests. The underrepresentation of the working class results in an underrepresentation of working class interests, exacerbating income inequality. “Whether our political system listens to one voice or another depends not just on who’s doing the talking or how loud they are,” writes Carnes; “it also depends on who’s doing the listening.”
The intuition that class skews politics is mainstream by now, but Carnes provides a novel account of the mechanics of class identity in public policy. The issue for Carnes is not income levels so much as occupational background—the ways in which policymakers have earned their living in the past. Work, in his view, is what most centrally shapes daily life, and as a result, political attitudes. Carnes shows that working-class backgrounds—having the experience of working in occupations that provide little material security and generally require less formal education—characterizes 65 percent of American families, but are vastly underrepresented in Congress. This has major repercussions for Congress’ political views and outcomes. Even when controlling for differences in party affiliation, constituencies, campaign contribution sources, and demographic factors, legislators with working-class backgrounds are systematically more liberal on economics—in both their individual voting records and political attitudes towards issues like the role of government and the importance of social safety net policies. (Interestingly, Carnes also finds that there is no statistically significant relationship between working-class backgrounds and having more socially conservative views on issues like gay rights among legislators—a corollary that raises questions about the liberal unease about economic populism.)
In real-world terms, turning the tables would have a major impact. If Congress’s class composition reflected the country as a whole, Carnes estimates it would be more labor-friendly and less business-friendly—enough to flip approximately six major legislative policy issues per term. If we were to reweight the last few Congresses to reflect the country’s actual class composition (while retaining other partisan and geographic features), a host of corporate-friendly liability shields and tax incentives would have failed, as would the Bush tax cuts of 2001 and 2003 and the financial bailout. At the state and city level, where there is more variation among legislator backgrounds, Carnes estimates that a 10 percentage point increase in the percent of working-class legislators corresponds to a 4–5 percentage point increase in the share of budget expenditures devoted to social welfare programs, even controlling for fiscal resources, poverty rates, partisan balance, racial composition, and union density.
White-collar legislators—those with more professional working experiences, whether private sector or non-profit—are more likely to underplay working-class interests. Drawing on anonymous surveys of legislators, Carnes suggests that, as with similar studies about implicit bias along gender or racial lines, white-collar legislators are perfectly aware of the proposals and arguments in favor of policies that would serve working class needs; the problem is that they perceive business and labor activities in ways that tend to favor business interests, while they infer (incorrectly) that the majority of their constituents share these views. The problem is not a lack of information, but rather the interpretation of the information on hand: “Our white collar government is not ignorant about the needs of the working class,” writes Carnes. “It simply views those needs through white-collar lenses.” Furthermore, while the few blue-collar legislators do propose, sponsor, and drive economically progressive legislation, these efforts are rarely successful—which Carnes attributes to the sheer lack of working-class votes in Congress. These chapters are the most tentative in Carnes’ book, because of the relative paucity of good anonymous survey data of legislators; nevertheless, Carnes’ findings are suggestive.
If Congress’s class composition reflected the country as a whole, it would be more labor-friendly and less business-friendly.
Carnes represents a second wave of political science studies into Gilded Age politics: not only must we address the disparities in the “inputs” to policymaking—disparities in campaign financing, the resourcing and sophistication of organized interests, and electoral participation; we must also fundamentally alter the composition of our policymakers to reflect more accurately the balance of working class experiences. Democracy cannot thrive so long as those who govern are systematically drawn from a different class background as the public as a whole. Indeed, Carnes calls for creating a pipeline of working-class political talent through the party system: he notes that working-class candidates are just as politically informed and tend to draw as much political support as others; the problem is that so few of them run in the first place—they account for only two percent of House candidates.
Yet this remedy highlights an important limitation of Carnes’ argument—and of the broader social science of inequality more generally: these studies focus too narrowly on electoral and legislative politics. Of course these are central features in a democracy. Much of the day-to-day business of governing takes place outside of these arenas, in regulatory agencies, and in local governments. The prospects for democratic renewal depend as much on equalizing political voice in these spaces as well. These alternative arenas also may provide a more fruitful terrain than elections or Congress to empower working class and poorer citizens, and in turn to drive economic policies that can address inequality. This is where another emerging literature raises useful lessons for the task of democratic reform, from the world of international innovations in participatory governance.
• • •
Gilded Age thinkers, from John Dewey to Louis Brandeis, espoused the virtues of wider democratic participation. But in the modern era, while theories of participatory democracy were hotly debated in the 1960s and 1970s by thinkers like Carole Pateman, the recent cutting edge of participatory governance has been in developing countries. Participatory governance initially emerged as an effort to build the political power of the poor specifically to combat the same kinds of deep economic inequalities that are front and center in American politics today. This in turn would help them hold governments (and donors) to account, and drive more egalitarian approaches to economic development and economic policy. The most famous of these experiments happened in Porto Alegre, Brazil, where the city created a dramatic new process whereby residents themselves form committees to allocate the city budget.
Not all of these experiments have been successful—in many cases the official support for participation co-opts governance into a thin form of public relations. But the idea of participation has become a mainstream part of governance reform, and there is a growing body of scholarship on how genuine participation can be achieved. Many studies of participatory governance highlight the ways it can shape outcomes: by increasing accountability in government service provision, or raising investments in common infrastructure and social services, for example.
In The Promise of Participation: Experiments in Participatory Governance in Honduras and Guatemala (2013), Daniel Altschuler and Javier Corrales focus similar questions to those animating Carnes’ account: What institutional contexts enable ordinary citizens—especially poorer ones—to expand their representation in decision-making? What expands their knowledge of issues, their political networks, and their willingness to participate more broadly to advocate for their interests? To gain traction on this question, they undertook the first large-scale study of participatory governance, examining the nation-wide community-managed schools program in Honduras and Guatemala. These programs operated in areas that conventionally might be considered inhospitable to participatory governance: poor, rural districts. These programs engaged parents by giving them management and administrative duties in the daily activities of the school. In both countries, the programs were established to both address pervasive disparities in educational attainment, and to improve the accountability of government officials in delivering basic services to the poor.
Through extensive survey data and on-the-ground fieldwork in Honduras and Guatemala, Altschuler and Corrales find that participation in the community-managed schools program did in fact increase participants’ knowledge and broader political engagement, even accounting for differences in class and education, and in rural, unequal, and inhospitable settings. Participation generated what Altschuler and Corrales call “spillovers,” increasing the capacity of lay citizens to engage in political action in other contexts as well. Ordinary citizens participated more when they viewed the school councils as effective and credible—when, for instance, council membership rotated regularly rather than being dominated by established local elites. Participation and skills-building were also more likely where the state provided funding and training support than where state support was lukewarm, where patronage and local elite came to dominate the councils, and where the time burden of participation too great.
The community-managed schools program ultimately collapsed in Guatemala when the state gradually came to oppose the program, undercutting its power and resources before closing it down. In Honduras, the program survived, but only as a result of its narrower scope: it did relatively little to threaten the existing structures of patronage and the existing teacher unions. But these institutional factors are not the only points of concern in enabling ordinary citizens to better represent their concerns in policy-making; a lot rides as well on the internal dynamics of these participatory forums themselves.
• • •
In Making Democracy Fun: How Game Design Can Empower Citizens and Transform Politics, Lerner takes a practitioners’ look at participatory governance. Lerner is the Executive Director of the Participatory Budgeting Project, a non-profit dedicated to adapting participatory budgeting systems and implementing them in cities such as New York, Chicago, and Boston. Where Altschuler and Corrales are primarily concerned with the macro-institutional contexts that make participatory governance systems work well, Lerner’s insights revolve around the micro-practices of how to make participation effective at the face-to-face level.
The heart of Lerner’s book is an account of his experiences in Rosario, Argentina, which alongside Porto Alegre has been one of the leading innovators in participatory governance. In 1998, Rosario created a Children’s Council, with subsidiary children’s councils in each district. These councils were run by local youth to develop policies for the city’s young people. The Council instituted a day of play in public spaces with fairs, a “Monument to Ideas”, installed new benches, and expanded green spaces in parks. The “Theater of the Oppressed” used art and drama to engage audiences to think about the social dimensions of children’s rights. In another program, Rosario Habitat, a community-based participatory forum, tackled controversial—and at times, violent—conflicts over land use and infrastructure development in the city’s shantytowns. Prior attempts to engage residents had been unsuccessful, with little communication with residents, policymakers developed plans that were deeply unpopular and left the concerns of many new families in the shantytowns unaddressed until it was too late. The Rosario Habitat program, however, was successful because it made deeper investment in participation. Residents of the shantytowns collectively developed a plan that identified where sewage systems, water pipes, roads, and other basic infrastructure would be built, and which residents would have to relocate to new plots of land.
The lessons of game design, Lerner suggests, tell us how to make the business of governing enticing, through puzzles, visualizations, “just-in-time” information that indicate players’ status and progress towards goals, and open-ended but achievable challenges. Just as designers behind immersive complex games like World of Warcraft, democratic reformers should use these tactics to entice engagement, channel it towards productive outcomes, and build skills. Games, for Lerner, are not trivial; they are serious business, engaging individuals and enticing them to participate in policymaking.
What made these programs work effectively as channels for representing the interests of marginalized groups stems from how the participants engaged with one another and with policymakers in the room. In both cases, participants developed collectively shared goals and rules for resolving disagreements. This made the forums themselves more legitimate, and participants more willing to invest in the process. Some games can provide a way to break down preexisting biases and build a common dialogue. In the Habitat program, participants were asked to solve a jigsaw puzzle in small groups, only to discover that each group’s puzzle could only be solved by collaborating with other groups who possessed a crucial missing piece. Other games were effective in eliciting individual participant’s ideas and values, such as the use of art by Children’s Councils to help children articulate their views of what public spaces ought to look like.
The lessons of game design, Lerner suggests, tell us how to make the business of governing enticing.
But the frame of game design is somewhat misleading, obscuring more fundamental factors—apparent in Lerner’s own account—that enabled the success of these participatory mechanisms. As Lerner notes, Rosario, a shipping port of over 1 million residents, has a strong tradition of progressive politics, with a robust labor movement. The Socialist Party came into power in the mid-1990s and embarked on a sustained program to improve health, sanitation, and city infrastructure, social reforms, and expressed a commitment to participatory democratic programs, from participatory budgeting to worker-owned cooperative firms. One of the most crucial factors identified by Altschuler and Corrales in effective participatory governance—the presence of external political support—was already in place.
These participatory forums also benefited from political, technical, and financial support from the state and possessed real decisional power—making participation in them more worthwhile and more likely (again consistent with Altschuler and Corrales’ arguments). The Children’s Council had decision-making power over a number of policy areas. The Rosario Habitat participatory planning process directly produced a new land use and infrastructure development plan, including adjudications over which individuals would relocate to new plots to make room for roads or pipes. State policy mandated many of the key policies, such as the requirement that all shantytown residents be granted title to a new house on equally plots of land. Where these efforts failed—as in some public space redesigns pursued by the Children’s Council, and prior efforts to engage shantytown residents—it was because these participatory efforts were not respected or followed by other policymakers.
While fun definitely helps, it seems from the first-hand accounts in the book that efficacy is what really matters. The games employed in these participatory workshops—puzzles, team-building exercises, visualizations, map exercises, and role-playing—worked as techniques to spur activity, engagement, creativity, and active learning. But the fact that these forums had real decision-making authority created an incentive to participate. The value of the games and exercises stemmed from the ways in which the empowered individuals to learn, to identify challenges or disagreements, solve problems, and make judgments. Lerner himself suggests as much. The value of games, he explains, is ultimately from the ways in which they “create meaningful human experiences,” where participation is more than simply speaking into a microphone or writing a letter.
• • •
Our recent experience of economic inequality has fueled the rise of a new social science of economic inequality and oligarchy, most recently and famously captured in the debates over Thomas Piketty’s Capital in the Twenty-First Century. But we also need a constructive account of what a more responsive and representative democratic politics looks like, and how to achieve it. Reformers coming out of the Gilded Age of the late nineteenth century similarly located the roots of economic inequality in political inequality. The era of Standard Oil and J.P. Morgan (the man, before the firm), and of widening income inequality was also the era of dysfunctional machine politics and a conservative Supreme Court that stymied social reform. These challenges fueled reform movements that struggled to restore popular sovereignty and genuine democracy—proposing everything from antitrust restraints on corporate power, to the first campaign finance systems, to new procedures for popular elections of Senators, party primaries, and direct democratic referenda. It was during this period that state and federal governments experimented with antitrust laws, rate regulation, and labor regulation. Many of the economic ideas first developed out of this ferment came to fruition in the New Deal.
Today we see the echoes of this zeal in the debates around campaign finance reform and the problem of “too-big-to-fail” banks. But reviving genuine democratic equality to address economic inequality requires a broader view of potential democratizing reforms. Carnes reminds us that the identity of who governs matters as much for class and economic policy as for any other dimension of representation. But Altschuler, Corrales, and Lerner suggest as well the importance of looking outside legislatures. Governing involves more than writing statutes; it is solving disputes, administering social services, implementing directives at the local level. And these are spaces where the prospects for greater political power—especially on the part of economically marginalized groups—may even be greater than at national scale legislatures. The proliferation of open government efforts in the United States—from governmental transparencyto engaging citizens to report potholes—suggests a growing reform interest in creating alternative channels for participation and representation. But too often these efforts are more limited than their rhetoric, focusing more narrowly on making existing policies well known or efficient, rather than empowering participants to challenge and reshape them. These books underscore that genuine democratic reform requires actually empowering ordinary citizens to drive the business of governing.
While we have you...
...we need your help. While reading Fighting Inequality in the New Gilded Age by K. Sabeel Rahman, you might have noticed the absence of paywalls at Boston Review. We are committed to staying free for all our readers. We've also gone one step further and become completely ad-free. This means you will always be able to read us without roadblocks or barriers to entry. It also means that we rely on you, our readers, for support. If you like what you read here, pledge your support to keep it free for everyone by making a tax-deductible donation.
September 16, 2014
17 Min read time