Tuesday, July 29, 2014
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Democracy in Tea Party America

BERKELEY – When the French politician and moral philosopher Alexis de Tocqueville published the first volume of his Democracy in America in 1835, he did so because he thought that France was in big trouble and could learn much from America. So one can only wonder what he would have made of the Republican National Convention in Tampa, Florida.

For Tocqueville, the grab for centralized power by the absolutist Bourbon monarchs, followed by the French Revolution and Napoleon’s Empire, had destroyed the good with the bad in France’s neo-feudal order. Decades later, the new order was still in flux.

In Tocqueville’s imagination, at least, the old order’s subjects had been eager to protect their particular liberties and jealous of their spheres of independence. They understood that they were embedded in a web of obligations, powers, responsibilities, and privileges that was as large as France itself. Among the French of 1835, however, “the doctrine of self-interest” had produced “egotism…no less blind.” Having “destroyed an aristocracy,” the French were “inclined to survey its ruins with complacency.”

To the “sick” France of 1835, Tocqueville counterposed healthy America, where attachment to the idea that people should pursue their self-interest was no less strong, but was different. The difference, he thought, was that Americans understood that they could not flourish unless their neighbors prospered as well. Thus, Americans pursued their self-interest, but in a way that was “rightly understood.”

Tocqueville noted that “Americans are fond of explaining…[how] regard for themselves constantly prompts them to assist each other, and inclines them willingly to sacrifice a portion of their time and property to the general welfare.” The French, by contrast, faced a future in which “it is difficult to foresee to what pitch of stupid excesses their egotism may lead them,” and “into what disgrace and wretchedness they would plunge themselves, lest they should have to sacrifice something of their own well-being to the prosperity of their fellow-creatures.”

For Tocqueville, France’s sickness in 1835 stemmed from its Bourbon patrimony of a top-down, command-and-control government, whereas America’s health consisted in its bottom-up, grassroots-democratic government. Give the local community enough control over its own affairs, Tocqueville argued, and one “will see at a glance…the close tie which unites private to general interest.” It was “local freedom which leads a great number of citizens to value the affection of their neighbors and of their kindred, perpetually brings men together, and forces them to help one another, in spite of the propensities which sever them.”

Nearly two centuries have passed since Tocqueville wrote his masterpiece. The connection between the general interest and the private interest of individual Americans has, if anything, become much stronger, even if their private interest is tied to a post office box in the Cayman Islands. Indeed, no private-equity fortunes were made over the past generation without investing in or trading with the prosperous North Atlantic industrial core of the world economy.

But the mechanisms that individuals can use to join with their immediate neighbors in political action that makes a difference in their lives have become much weaker. If, say, 25% of the 1,000 households in the 30-block Brookside “fiberhood” in Kansas City, Missouri, pre-subscribe, Google will provide all 1,000 with the opportunity to get very cheap, very fast Internet service very soon. But that is the proverbial exception that proves the rule.

And the Republicans gathered in Tampa to celebrate the rule – to say that the America that Tocqueville saw no longer exists: Americans no longer believe that the wealth of the rich rests on the prosperity of the rest. Rather, the rich owe their wealth solely to their own luck and effort. The rich – and only the rich – “built” what they have. The willingness to sacrifice some part of their private interest to support the public interest damages the souls and portfolios of the 1%.

Perhaps the moral and intellectual tide will be reversed, and America will remain exceptional for the reasons that Tocqueville identified two centuries ago. Otherwise, Tocqueville would surely say of Americans today what he said of the French then. The main difference is that it has become all too easy “to foresee to what pitch of stupid excesses their egotism may lead them” and “into what disgrace and wretchedness they would plunge themselves.”

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  1. CommentedLawrence Marshall

    There is a variation of the Prisoner's Dilema game which is played in groups using money as a reward. I have seen it played this way several times and each time the groups who cooperated in every round ended up with more money as a group while in the other groups some individuals ended up with more money than any member of the cooperator group, but the groups as a whole did not end up with as much money and the variation between the "richest" members of the non-cooperative group and the "poorest" members was much larger than in the cooperator groups. This simple game supports Toqueville's observations about America and France. In a nation, cooperation does not have to mean "tax the rich" as some comments have concluded. It simply means that those who are financially successful should reinvest their gains in their own society or community. This also applies to treating all of humanity as a community since we now live in a truely global community where investments in another part of the world can enhance the quality of life in our local communities by increasing the exchange of goods and ideas.

  2. CommentedSteve Fuller

    This isn't about taxes, Prof. DeLong has written an essay about shared prosperity, saying that at one time Americans understood that when we all prosper it makes for a better society. In the last paragraph he writes that most Americans no longer believe that the wealth of the rich came from the prosperity of the rest.

    What Tocqueville saw in 1835 America no longer drives the richest Americans, who see their success as individual accomplishments, without help from broader society. The richest American no longer see their wealth coming from the toil of others.

    Henry Ford, certianly a Capitalist, saw early on that what was needed was demand for his product, in a shocking move raised wages to $5 per day in his factories. He was able to see that shared prosperity would make him even more wealthy. And it worked.

    Since the richest Americans no longer see a benefit in sharing the wealth, the middle class will continue to decline, and so will the United States of America.

  3. CommentedFriedrich Böllhoff

    It is easy to talk about redistribution of income. Take from the 1% to the benefit of those in need. But I think, the numbers don't add up, at least not for Germany.

    Germany currently has a bit less than 82 million people and a bit more than 40 million households, so 1% would be around 820.000 people or 400.000 households. In 2007 among the 38,6 million income taxpayers there were 16.846 with a taxable income of more than a million €, they paid 17,95 billion (8,5%) of the overall income tax of 211 billion €. Their income was 51,6 billion € (https://www.destatis.de/DE/ZahlenFakten/GesellschaftStaat/OeffentlicheFinanzenSteuern/Steuern/LohnEinkommensteuer/Tabellen/DreijLohnEinkommensteuerstatistik.html).

    If you want to cover 1% of income taxpayers you need to go down to somewhere between 125.000 and 250.000 €. Hardly those who come to mind when someone talks about the very rich.

    On the other hand, social benefits in 2010 added up to more than 760 billion €, 30,4% of GDP. It was an increase of more than 15 billion compared to 2009 (https://www.destatis.de/DE/ZahlenFakten/GesellschaftStaat/Soziales/Sozialbudget/Tabellen/SozialbudgetLeistung2009_2010.html?nn=50850).

  4. CommentedGary Marshall

    Hello Brad,

    How about you work on solutions and leave the politics to the politicians. Its a nasty business and no place for a distinguished and dignified scientist like yourself, if that's what you are.

    GM

  5. CommentedFrank O'Callaghan

    The historical evidence is conclusive. The more egalitarian and democratic the society, the better it does in the long term. Even the exceptional atypical cases such as Singapore move towards greater democratic fabric.

    Of course a cooperative enterprise of society using all of the resources tends to be more productive and responsible as compared to one where we create mass unemployment, poverty and vast wealth too great to be consumed in a hundred lifetimes.

      CommentedMark Pitts

      @Frank - I don't think most would agree that the evidence is conclusive either way.

      In fact until very recently most people were comparing socialist countries to capitalist countries, and Europe to the US, and coming to the conclusion that more inequality is the price of better economic performance.

  6. CommentedMark Pitts

    The professor intends to mislead his readers.

    While saving his strongest statement to advocate higher taxes on the wealthy, as an economist he knows that the proposed tax increases on the rich are of virtually no importance for the country or the economy.

    For example, the proposed Buffet Rule would raise only enough annual revenue to cover only 1/4 to 1/2 of 1% of the annual deficit.

    Raising taxes on the rich may have great symbolic (and political) appeal, but it is an issue of no importance for the middle class or the poor.

      CommentedA. T.

      @Gary Marshall,

      The starving masses are what humanity would have been had we not trusted our judgement to implement imperfect solutions (and then improve them).

      Not sure about the relevance of everything else you wrote (and why consider income taxes only?), but you seem to be under the impression that whatever one's current market-determined earnings are, they are the (objectively) 'true' earnings and are independent of the SPECIFIC decided upon rules under which the economy functions. That, in other words, economic power and social power, political power, and moral power are somehow not fungible. This is demonstrably not true. Even looking at the US alone, the rules governing the economy were quite different in 1809, 1889, 1949, and 2009 and, consequently, so were what different people could earn.

      There are no good reasons to ever stop reevaluating our past judgements and trying to figure out how they can be improved. Only obedience, cowardice, and laziness.

      CommentedGary Marshall

      Hello AT,

      Are those naked and starving masses on the Savannah the ones that only contribute 2% of the total income tax paid in the US? Or is it the 1% that contribute 8%? I am not sure.

      Or are those the ones that showed up at Occupy Wall Street, the revolutionary movement that only but a few malcontents joined?

      You have your revolution, but the only valid one will be among those 1%ers that pay inordinate amounts of income tax to the corrupt politicians and their employ who squander most of it.

      GM

      CommentedA. T.

      @Gary Marshall,

      People determine externalities. The same way we determine anything. Indeed, it is our ability to determine things (and our ability to improve this ability), that has allowed us to be more prosperous right now than starving, naked, and ignorant on the savannah. Will we be able to do always do everything perfectly? Of course not. But the disadvantages to strongly centralised econo-political systems are clear as day.

      On your second point, it is indeed common for success to decrease charity and increase indifference to the suffering of those below. However, the link is far from absolute. Just look at the abuses in slums (no success, plenty of callousness) or people such as your preferred example of Bill Gates (plenty of success, plenty of charity).

      CommentedGary Marshall

      Hello AT,

      And who determines what an 'externality' is and its attendant fees? Is it the same corrupt people that determine that productive people must give a far greater percentage of their property and income to the governing authority? Is it is the same organization that takes so much of the property of others and puts it to such poor use?

      Sounds like you would wish to revenge yourself on the success of others because you yourself have failed or managed only meager returns. The great and glorious socialist mind at work. Envy indeed.

      Only losers side with losers. Sounds like you would have prospered among the arrogant, murderous, simpleton rabble of Paris so many years ago.

      GM

      GM

      CommentedA. T.

      @Gary Marshall,

      To me, taxes have two purposes:

      1. 'Passing around the hat' for contributions to common purchases.
      2. Accounting for the externalities in places of market failure, to make sure that the allocation of costs and benefits
      is not distorted.

      Neither case is punishment. The first is actually buying a good, while the second makes sure that private actors do not causelessly punish or damage one another.

      CommentedGary Marshall

      AT,

      What is the purpose of a tax?

      I would think it is to raise funds for public expenditures.

      Only a leftist would consider it as a punishment inflicted upon those who garner or produce an excess by their own abilities. Such thoughts are the product of a brute. And we can find such brutes proliferating in governments throughout the world.

      Brad DeLong tearfully observes his prescribed policies and beliefs favouring big corrupt and squandering failing in Europe and all over the world as do so many daft and chronic socialists. All he can respond with is a childish slur and despicable contempt for those that can easily produce fruit, profit, and wealth for the owners of companies as well as their employees.

      Thank God such gifted people are so unlike those found in DeLong's cherished government.

      If there weren't or they were a timid bunch, well we would all be living in the Soviet Union or its present equivalent, North Korea.

      GM

      GM

      CommentedA. T.

      The purpose of a lot of the wealth taxes (also estate taxes, financial transaction taxes) is not to raise revenue. It is to ensure that externalities are correctly accounted for, raising the born costs for specific activities to their true costs (or, at least, a better approximation thereof), thereby either disincentivising those activities outright, or shifting the locations where those activities are incentivised.

  7. CommentedMatthew Cowan

    This paragraph is a mischaracterization that takes the argument in an obtuse direction.

    The ability to build one's own future was always at the core of the American experiment. Some left otherwise comfortable situations in Europe to go work long, hard hours just so they could own their own plot of land.

    Ownership of property, especially real estate, is a driving incentive to forge a strong community. People who own nothing have little to lose when the social structure melts down and revolution ensues.

    The Founding Fathers were mostly wealthy land-owners, whereas the leaders of the French Revolution were disgruntled members of the Third Estate. Thus, the American Revolution was about protecting rights from a foreign power and the French Revolution was about vindication against the ruling class.

    Because many of the Founding Fathers were also self-made men, they understood the political and legal framework that was needed to defend that ability for all others in society. They loved these principles and put their lives on the line for them.

    The French, by contrast, were poor and oppressed by a system that subjected all interests to the public, which took the form of the monarchy. They hated the ruling class and the forced subjection to the public interest and killed those in power in a brutal manner.

    Republicans see that the America that Tocqueville saw is in danger from what has, to many, become as much a foreign power as the British of old: Washington DC. The Obama Administration has clearly pushed to subject the people's will to various things it believes to be in the public interest. The Republican rebuttle is that the public interest is better served by limiting government intervention and eliminating legislative coercion of the people.

  8. CommentedMark Pitts

    As usual, Prof. DeLong gets the economic facts wrong (kind of surprising for someone who is paid to get economic facts right).

    The Democratic Party has proposed raising taxes on all who make over $200K/$250K. No amount of misinformation can make a wage earner at the level part of the 1%.

      CommentedMark Pitts

      @Brendan. Perhaps you are right, but nothing is accomplished by criticizing only one of the two parties, especially without offering an alternative.

      In any case, taxes on the 1% are economically irrelevant.

      CommentedBrendan Moriarty

      Perhaps you inferred from Prof. Delong that "the Republican position is to protect only the 1%, and not any of the 99%" but I, however, found no such implication. I see his article more as an analysis of the justifications/rhetoric that the Republicans use. There is no mention of Republican policies. Secondly, you're assuming that Prof. Delong supports the Democrat's tax plan. What I took from this article is that the ideas that drive current policy need to shift and the "correct" policies will subsequently follow.

      CommentedMark Pitts

      Prof. Delong strong implies that the Republican position is to protect only the 1%, and not any of the 99%.
      However, I cannot completely disagree with you since the professor chose his words exceedingly carefully so that one can deny any such implication when the facts are pointed out.

      CommentedMichael Pointer

      You're objecting to factual inaccuracy in a claim that Prof. DeLong does not even make. Perhaps you can educate everyone else to the passage in the essay where your criticism is relevant.

  9. CommentedA. T.

    Wealth entrenches over time... and then tries to justify that entrenchment to itself, with ever increasing desperation. The advantage of America 200 years was that it was still a relatively blank slate, still missing inescapable hierarchies (at least among certain groups of people). Once entrenchment takes place, it only ever reverses itself through cataclysmic events, and even then success is very rare.

      CommentedA. T.

      @Gary Marshall,

      No, just in the sense of middle-class folk rising to significant, unilaterally empowered heights.

      Again, we definitely have more limits o how high one can rise than we used to. Does not matter if you are the richest person, the CEO of the biggest corporation, the President of the country or whatever else – your power (and ability to acquire more power) runs into a ceiling in a way that it did not in the 18th Century. And the world is BETTER for it. My argument is that the ceiling is still a bit too high (though it can certainly be made too low, and that is a danger to watch for... and REVERSE as soon as evidence for it is found), and that reducing it further would make the world better still.

      CommentedGary Marshall

      Hello AT,

      Well at least you are honest.

      Are Gates and Jobs Cromwell and Napoleon?

      The question reveals more about you than it does about the subject.

      Well, why not tell us how the dictator Napoleon, leading the belligerent France, responsible for so much bloodshed, famine, disease, and death across Europe compares with Bill Gates, who by luck happened to have an expedient in computer code at the right time in the right place?

      How does a company that offers a product that people need and purchase freely compare with a despotism that can do as it please?

      Why not throw in some comparisons with Hitler and Stalin as well.

      GM



      CommentedA. T.

      @Gary Marshall,

      The longer a system is imbalanced, and (consequently) the larger those imbalances are, the more painful their eventual resolution will be. The French revolution was incredibly painful, but it was *the* spark without which (or something of equivalent pain and violence) the modern systems of econo-political organisation would have never emerged.

      As to Jobs and Gates, are they really all that different from Cromwell and Napoleon? An economic system designed for a small number of all-controlling elites is rather similar to a political system designed for a small-number of all-controlling elites, and in both cases inheritance is important but by no means all-defining. The fact that winners can be meritorious in no way undermines the observations of the gross inefficiency of systems designed for winner-takes-all.

      CommentedGary Marshall

      AT,

      The bloody butchery of the French Revolution had more to do with the mobs of Paris running amok, dictating to towns and cities beyond their yoke, and striving for power.

      Not even the renowned revolutionaries themselves were safe from the sword of the former allies.

      I don't consider Gates, Jobs, and so many other wealthy
      Americans having made their fortunes in the recent past as the old elites. Do you? The old elites are generally a fiction conjured up by ignorant people rushing to defend the most absurd ideas, especially the socialist ones.

      GM

      CommentedA. T.

      @Mark Pitts, see the point about "cataclysmic events". Wealth can be 'de-entrenched' in the occasional periods of rapid political (French revolution), technological (industrial revolution), or economic (globalisation) changes. All instances involve the underlying rules/environment being shaken up to such a degree that the old elites have trouble adapting.

      The fact that the countries you mention are NEWLY capitalistic is important. The US (and Europe) were also a hell of a lot more dynamic when they were NEWLY capitalistic, but this has as much to do with the new (no one has figured out how to dominate and centralise yet) as with the capitalism (a system that is, in principle, more decentralised than most).

      CommentedMark Pitts

      If "wealth entrenches over time," how have nearly a billion people in newly capitalistic countries escaped poverty in the last 30 years ???

      Stated differently, the middle class has doubled over the last 30 years, and virtually all the new entrants have come from the poor.

  10. CommentedProcyon Mukherjee

    I do not know what leads Brad DeLong to imagine an America that abrogates itself from the ineluctable touch of democracy, which had nurtured its citizens through good times and bad to a higher purpose, which is freedom to do better continually. There is no reason to believe that the touch is lost to the charades of a one-sided view of a fractured polity that tends to believe in the wisdom of ignorance.

    There is fresh hope in the analysis recently posted in Harvard magazine article, Can America Compete
    http://harvardmagazine.com/2012/09/can-america-compete, which makes it amply clear where the malaise lies. It is not in the principles of democracy or its application, it is rather in the changing rhetoric of our times where investors have assumed the role of speculators and businesses instead of looking at products and processes and customers have gone to entertaining the wisdom of the crowds.
    There is hope, perhaps only in America, where else can the world look at for leadership?

    Procyon Mukherjee

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