The myth of US democracy
The power of the pharmaceutical lobby ensures that the cost of drugs in the US is highest in the world
The writer is vice-chancellor of the Pakistan Institute of Development Economics. He holds a PhD in Economics from Stanford University
The vision of a government of the people, by the people and for the people is enchanting, and powerfully attractive to masses yearning to be free. However, the title of Nobel laureate Joseph Stiglitz’s book, Of the 1%, by the 1%, and for the 1% is a far more accurate description of the reality of US democracy. Prophetically, Eisenhower had warned against the threat to democracy posed by the powerful military-industrial complex. Today the power of a tiny minority to control the US, and thence the world, exceeds his worst nightmares.
In 2010, the US Supreme Court ruled to allow corporations to spend money on political campaigns. In 2014, the Supreme Court removed certain limits from such political spending, effectively making it legal for corporations to buy elections. It is now reported that industrialist mega-donors, the Koch brothers, are planning spend close to a billion dollars to fund their favourite candidates in the 2016 elections. Of course, these changes in the law only reflect the underlying force, which is the strong increase in the power and wealth of the top one per cent since the 1980s. Stiglitz notes that 25 years ago the richest one per cent of Americans took 12 per cent of the yearly income, whereas today the share has doubled to 25 per cent. While a full description would fill a book, we provide some illustrations of the amazing laws passed against the interests of the majority. Such laws would have had no chance in a genuine democracy.
The power of the pharmaceutical lobby ensures that the cost of drugs in the US is highest in the world. Congressman Tauzin played a key role in getting the Medicare Prescription Drug Bill passed, which is a trillion dollar give-away to drug-makers. This bill prohibits the US government from negotiating lower drug prices and bans the import of cheaper, identical drugs. Two months after getting the bill passed, Tauzin resigned from Congress and got a $2 million job with the organisation, Pharmaceutical Research and Manufacturers of America. Similar sinecures were provided to several of his congressional associates who helped get the bill passed, in an unusual congressional session at 3am. While this bill stands out as the most expensive, more than 1,500 bills favoured by the pharmaceutical lobby have passed in Congress in the past decade.
The power of small lobbies to control Congress was brought home by the recent mass shooting in Oregon. President Obama openly expressed anger and frustration that despite dozens of shootings, the tiny but well-funded National Rifles Association has blocked all possible gun control laws. Even though the majority of the nation favours such laws, congressmen consider it political suicide to oppose free access to guns. A similar holy cow status is enjoyed by Israel — many politicians and journalists have been forced to issue public apologies for simply stating facts about the Israeli occupation of Palestine. In general, the majority of the US public is opposed to foreign wars like Iraq and Afghanistan, but US foreign policy is not governed by the wishes of the majority.
In a plutocracy, money rules. Banks have the most, and often speculate with depositors’ money. If they win, that’s great for them; if they lose, then someone else pays. In wake of the Great Depression, caused by such gambles, the Glass-Steagall bill prohibited speculation by banks. In 1999, the Act was repealed, and in 2000, the Commodity Futures Modernization Act removed many restrictions on banks, and created a trillion-dollar unregulated shadow banking industry. Banks took advantage of this freedom to speculate heavily, resulting in the Global Financial Crisis in 2007. In the aftermath, the majority of the public was in favour of punishing bankers, but Congress was firmly in favour of trillion-dollar bailouts at the expense of the public. Since then, banks have gone on to enjoy massive profits, while millions remain homeless, hungry and unemployed. Consider the glaring contrast with Iceland where 26 high level bankers have been jailed, while no banker in the US has even been charged with a crime. Even Donald Trump, one of the plutocrats, has acknowledged publicly that “the system was broken” and he could buy favours from politicians by contributing to their campaigns.
While many have commented on the death of democracy in the US, none are optimistic about the future prospects of the bottom 99 per cent. For us in Pakistan, as we struggle to plant the seeds of democracy, the lesson is to avoid blind imitation, and create greater genuine participation at the grass roots level. Only in this way can we avoid a concentration of power at the top that leads to elite capture of democracy. Ultimately, eternal vigilance is the price of freedom.
Published in The Express Tribune, November 2nd, 2015.
In 2010, the US Supreme Court ruled to allow corporations to spend money on political campaigns. In 2014, the Supreme Court removed certain limits from such political spending, effectively making it legal for corporations to buy elections. It is now reported that industrialist mega-donors, the Koch brothers, are planning spend close to a billion dollars to fund their favourite candidates in the 2016 elections. Of course, these changes in the law only reflect the underlying force, which is the strong increase in the power and wealth of the top one per cent since the 1980s. Stiglitz notes that 25 years ago the richest one per cent of Americans took 12 per cent of the yearly income, whereas today the share has doubled to 25 per cent. While a full description would fill a book, we provide some illustrations of the amazing laws passed against the interests of the majority. Such laws would have had no chance in a genuine democracy.
The power of the pharmaceutical lobby ensures that the cost of drugs in the US is highest in the world. Congressman Tauzin played a key role in getting the Medicare Prescription Drug Bill passed, which is a trillion dollar give-away to drug-makers. This bill prohibits the US government from negotiating lower drug prices and bans the import of cheaper, identical drugs. Two months after getting the bill passed, Tauzin resigned from Congress and got a $2 million job with the organisation, Pharmaceutical Research and Manufacturers of America. Similar sinecures were provided to several of his congressional associates who helped get the bill passed, in an unusual congressional session at 3am. While this bill stands out as the most expensive, more than 1,500 bills favoured by the pharmaceutical lobby have passed in Congress in the past decade.
The power of small lobbies to control Congress was brought home by the recent mass shooting in Oregon. President Obama openly expressed anger and frustration that despite dozens of shootings, the tiny but well-funded National Rifles Association has blocked all possible gun control laws. Even though the majority of the nation favours such laws, congressmen consider it political suicide to oppose free access to guns. A similar holy cow status is enjoyed by Israel — many politicians and journalists have been forced to issue public apologies for simply stating facts about the Israeli occupation of Palestine. In general, the majority of the US public is opposed to foreign wars like Iraq and Afghanistan, but US foreign policy is not governed by the wishes of the majority.
In a plutocracy, money rules. Banks have the most, and often speculate with depositors’ money. If they win, that’s great for them; if they lose, then someone else pays. In wake of the Great Depression, caused by such gambles, the Glass-Steagall bill prohibited speculation by banks. In 1999, the Act was repealed, and in 2000, the Commodity Futures Modernization Act removed many restrictions on banks, and created a trillion-dollar unregulated shadow banking industry. Banks took advantage of this freedom to speculate heavily, resulting in the Global Financial Crisis in 2007. In the aftermath, the majority of the public was in favour of punishing bankers, but Congress was firmly in favour of trillion-dollar bailouts at the expense of the public. Since then, banks have gone on to enjoy massive profits, while millions remain homeless, hungry and unemployed. Consider the glaring contrast with Iceland where 26 high level bankers have been jailed, while no banker in the US has even been charged with a crime. Even Donald Trump, one of the plutocrats, has acknowledged publicly that “the system was broken” and he could buy favours from politicians by contributing to their campaigns.
While many have commented on the death of democracy in the US, none are optimistic about the future prospects of the bottom 99 per cent. For us in Pakistan, as we struggle to plant the seeds of democracy, the lesson is to avoid blind imitation, and create greater genuine participation at the grass roots level. Only in this way can we avoid a concentration of power at the top that leads to elite capture of democracy. Ultimately, eternal vigilance is the price of freedom.
Published in The Express Tribune, November 2nd, 2015.