How Inequality Creates Tyranny

Part One: Inequality

Significant inequality harms freedom as democracy, that is, political self-rule by the people, and it leads to conditions in which tyranny becomes desirable. Understanding how inequality undermines democracy helps explain both Trump and Sanders. 

Let’s start with two facts.

1) Our society is characterized by significant inequality (of wealth – that’s my focus).

2) Our society disagrees on whether this is bad.

Why? Because one can reasonably disagree. So let's start with the idea that inequality is not bad. 

An argument for Inequality

Significant inequality arises primarily from market activity.

The success of our economy and social system is heavily dependent on the free market. Regulation should protect the market from itself (e.g. prevent fraud, etc.) not make it less free, and thus effective, for moral reasons. Attempts to do this harm the market and end up making us poorer in the long-term, which no one wants. Thus extensive and invasive regulations and government intervention, like caps on pay and wealth distribution, not only hurt the economy, but they fail to achieve their goal of making the system more just.

The prime example of this is CEO pay, particularly on Wall Street. Yes, investment bankers and others are paid a lot. But that is because their pay is correlated to performance. In other words, the main reason we have inequality is because the market intelligently recognizes massive differences in value creation, and people are poorer or wealthy accordingly. A banker creates a large amount of wealth, on which all of us in some way depend, via loans, pensions, etc. A teacher or doctor or welder create value, too, but much less, so they are paid less than bankers, CEOs, etc.

In short, inequality is an inevitable, if perhaps unpleasant, result of a system that allocates rewards based on merit, with merit here meaning economic value, and rewards meaning wealth. So our system is just – tampering with it to change its outcomes will create a more unjust system and a poorer one, and no one wants that.

This is a serious and intelligent argument; those who advocate versions of it should feel free to correct me if they think the way I have presented it is unfair. My goal is to present a summary of a path of thinking that is reasonable, not to misrepresent it for rhetorical purposes. We’ll come back to this argument at the end.

What about the argument against inequality? Let's start with some assumptions.

Part Two: Against Inequality

Three Premises

1) People generally keep wealth and try to extend it through their family, i.e., it is not normal for the wealthy to make themselves less wealthy, and thus not reasonable to expect this.

2) Wealth tends to concentrate and is not spread evenly through society. This is mainly because existing wealth confers advantages on its possessors and their children, which are preserved (see 1) and extended, resulting in more advantages.

3) Both 1 and 2 are normal; there is nothing strange about them, and most of us would act the same if we had wealth (imagine if you could help your child get into Harvard because you had been to Harvard: would you help them?) My point is description, not demonizing.  

The Argument against Inequality

Wealth is power. Stark differences in power make co-existence difficult, particularly in close proximity. Even the tamest bear or gorilla would be frightening to live with for most people. Why? Most viscerally, because such animals are so powerful that they could by accident, or in one instance of anger, destroy us—and that makes us uncomfortable and fearful. In addition, stark power differences are simply unpleasant if one is on the weak end. If you had a nice middle class house next to a 40 room mansion, it would probably make you feel uncomfortable. Moreover, we tend to associate with those like us, resulting in a sorting based on traits like class, wealth, and culture. These are two independent forces (desires for commonality and familiarity in our surroundings – i.e., that they be like us – and fear and displeasure at the experience of power difference at close proximity) that result in the same thing: a separation of groups in any society, with the wealthy being a class apart.

Now, there are constraints on how separate groups can be based on how variable the degrees of power are in the society. If the most wealthy person has only four times as much wealth as the least wealthy (this is the cap Plato suggests in his book the Laws), for example, there is inequality but it is relatively modest, and it does not lead to total separation. If there is no cap at all, then power differences through wealth will accrue as much as wealth does, which means: the very wealthiest will live apart from the rest of society and have a degree of power so great it constitutes a different quality of power and life. This has always been how the super-rich have lived. Historically, they have justified this status through claims to nobility or royalty. These same people tend to constitute or disproportionately control the ruling class of society, for the obvious reason that they are the most powerful.

Americans don’t like this and never have; we are constitutionally allergic to monarchy and aristocracy in their European forms. We respect wealthy people who have earned their wealth, but with this crucial condition: that we think we are capable, meaning us or our children, of achieving through hard work what the wealthy have achieved.

If all wealth, or most of the positions of the most wealthy, seem out of reach to average Americans, this undermines our ideal of social mobility, which we link to freedom.

In addition, because wealth is power, and because wealth is concentrated and the wealthy tend to rule or have disproportionate power over ruling, the wealthy and the political class tend to either be identical or functionally identical in 1) how separate they are from the rest of society and 2) how close they are to each other. For our purposes, they are identical (Hillary Clinton is worth 40+ million, according to Forbes)

Proximity tends to mean shared interests. If we are neighbors, we have shared interests with respect to taxes, how nice the area is, etc. Now, the wealthy, like the rest of us, have an interest in preserving and extending their wealth, an interest they share with each other. The difference between them and everyone is how much power they can use, based on their wealth, to do this.

The result is as obvious as it is troubling: a small group of people will have wildly disproportionate power to advance their own interests. Given that their interests, based on how separated they are from the rest of society, are different from the rest of society, we should not expect the interests of the wealthy to be the same as the interests of the poor or middle class. They are not; often they conflict. Take corporations as an analogy

It is the job, legally speaking, of corporations to create profit for their shareholders. It is not their job to act like Mother Teresa, and it is silly to fault them for not doing so. But what’s in the interest of a corporation can be at odds with the interests of a local community (see this article for a harrowing example) or an individual. The corporation, with no nefarious intent, but simply by being run well as a corporation, can thus end up embattled with communities or private citizens. Now here is the relevance of the analogy: corporations, like the wealthy, obviously have a huge advantage when it comes to advancing their own interests against an individual or small community. I’m not saying corporations, or the wealthy, are evil (most American want to be wealthy, after all, but they don’t think that means they want to be evil): the point is, they are powerful, and this makes them hard to control, hard to be close to, if you are different from them, and hard to integrate into a harmonious social order.

Everything I have said is pretty normal, from the perspective of the history of political philosophy.  The question the analysis raises is this:

How can you have a democratic society in which you have such a huge power gap?

The answer is, you can’t.

I know of no major political philosopher who thought unchecked wealth in a society was a good idea; most would say the opposite. Plato, for example, thought greed was the greatest cause of faction and social disorder.

So, we have significant, truly staggering inequality in our society. The question was, is this bad? Let’s now answer the question. First, bad for what or whom? Not bad for wealthy, obviously.

But: bad for society, that is, the social fabric of which we are all parts? Yes.

Why? Because our society is built on the idea that individual citizens exercise power and control of themselves and society through elected representatives. This process requires that there be some comparability of power between the vote of a poor or middle class person and the vote of an extremely wealthy person. That, in turn, requires a legal and political system that prevents money from exercising a significant role in the political process. If it did, as people have always understood, it will corrupt the process, weaken or nullify the power of poorer voters, and turn the ostensibly democratic representatives into agents of money, resulting in oligarchy, that is, the rule of money, rather than the rule of the people, democracy.

The political class and the wealthy are functionally identical, which means they do not have highly divergent interests, as groups, especially compared to the poor and the middle class. So, hope from Washington insiders to solve this problem can only arise from a failure to understand this commonality of interests or a rejection of this commonality.

Now we return to the economic argument in favor of inequality. What is the matter with that argument? Nothing more fundamental than this implicit premise: that what is good for capitalism is necessarily compatible with a healthy democracy. Privileging the economy, money, over any other dimension of society is, note this, obviously good for the economy.

Historically, however, the domain of wealth creation has been socially regulated by people’s common assent to what a good life in their society looks like. In our society, the good life minimally should like something that preserves our society, that is, renders it a functioning self-governing, people-ruled, not money-controlled, political system. Massive wealth inequality seems to be in tension with this, as we have seen.

Significant inequality is thus bad for our society.

Part III: From Inequality to Tyranny

As corollary, we can now see why Donald Trump and Bernie Sanders are so popular.

Sanders’ whole campaign centers on inequality, and appeals to people suffering on the wrong side of it or morally allied to them; the most pervasive criticism, even from the left, of Sanders, is that his ideas are “impractical,” meaning specifically, liable to make our country poorer. Let’s be frank: based on what we have seen, that is not only true, even if he cannot admit this for political reasons (or perhaps really doesn’t believe it), but it’s what we should expect. The justification for it is simple, from Sanders’ perspective: morality. Sanders essentially runs a campaign based on morality vs. the economy. But the political parties have agreed between themselves that no one should really tamper with the reign of the economy, because that’s why and how they are all wealthy and in power. Would Sanders really do it? Could he? Etc. These are the questions that haunt Sanders’ supports and opponents, for different reasons.

Trump is an outsider to Washington and has showed he is willing to screw the establishment in his own party. People like that. Why? Because the entire premise of his campaign, a premise Trump enacts through every offensive violation of our political sensibilities and cultural norms is this: the system is broke, so screw the rules of the system. Only an idiot, so he implies (or says), would try to fix a broken system with its own broken tools.

Note that, on our analysis, that premise is right, even if not for the reason Trump’s supporters think it is. The system is broken; it is utterly unfair in its current configuration towards the poor and the middle class; and it is, indeed, highly unreasonable and Pollyannish to expect the people who made that system that way and benefit from it to fix it. So break the system. Is that terrifying? Yes, I think so.

But it seems this is what both Trump and Sanders are offering—to break the establishment, even if they differ on how, for what reason, to what end, etc.

I do not claim this is original; it accords with other analyses.

But, it does mean the long dismissal of Trump, especially by insiders, is a profound mistake: many regular Americans really do think the establishment is broken, and are very angry, and reasonable on both counts, for other candidates clearly have no intention to break the system.

Sanders and Trump split the terms of my analysis, each behaving as if the problem was primarily either the wealthy (Sanders) or the political class (Trump), as if one could separate these and use the one to correct the other. If both are closer to each other than to the rest of the country, no such attempt is likely to work.

My argument has merely been that inequality is bad. En route to the conclusion we discovered it is so bad that we have good reason to think our political system does not work properly, and is likely currently democratic only relatively (compared to much less free countries), but judged by our own political norms, only in name.

Wealth rules in our society.

Plato thought tyranny was the natural corruption of democracy, as the rule of the people can devolve into chaos and this chaos requires order, offered by a strong leader whom the people then elect.

We have a mixed system, designed to preserve the best of democracy (rule of the people), monarchy (rule of a single executive), and aristocracy (rule of the best), roughly represented by the congress (those the people deem best to representatively rule for them), the executive branch (monarch, checked by congress, elected by the people), and the judiciary (the most aristocratic: least directly elected by the people, most explicitly elected based on merit). Sufficient money in any one of the three will unbalance the system. We have inordinate amounts of money in at least the executive and legislative branches, thereby affecting in turn the judiciary.

I would suggest then we have a mixed form of bad government. A mixture of oligarchy (rule of money) that heightens the frustration and chaotic impulses of the people (democracy) leading them to seek for a strong ruler to bring order through the executive branch (tyranny).

The pleasant analysis: we are democratic republic with some problems.

The sober analysis: we are a high-functioning democratic oligarchy with strong hankerings towards tyranny.