Richard Cooke in Australia’s Monthly magazine:
In the United States, what you might call the “bore in the bar” theory of democracy – that it’s all bullshit – is starting to look more persuasive. In academia, it’s called the “Economic Elite Domination” model: the unhappy idea that democracies are oligarchies in drag. This theory was once unpopular but is now resurging, partly on the back of disquieting research by two American political scientists, Martin Gilens and Benjamin Page. After an analysis of 1779 legislative outcomes over a 20-year period, the researchers determined that “economic elites and organised groups representing business interests have substantial independent impacts on US government policy, while mass-based interest groups and average citizens have little or no independent influence”.
Little or no independent influence. Stew on that for a moment. [emphasis added]
Several years ago I read Jeffrey A. Winters‘ book Oligarchy (New York: Cambridge University Press, 2011). For Winters, economic elites rely on “wealth defense” via finance and tax advisers who establish low-tax, offshore structures to circumvent national tax codes. The United States and Australia are examples of Winters’ civil oligarchies in which a surface layer of democratic rhetoric hides the “wealth defense” reality. In some ways Winters updates arguments that I read two decades ago in the left-wing writings of Bertram Gross and Noam Chomsky.
Cooke acknowledges that news polls of politicians now rarely work. The asylum seeker / refugees issue is used by the major parties as wedge politics, and by the Greens as an identity-defining cause. Privatisation is opposed in news polls but remains popular when political advisers learn from asset management firms. Social issues such as gay marriage and voluntary euthanasia have undergone a progressive shift. Cooke notes that Australia is now caught in a temporal weirdness like Picnic At Hanging Rock:
It’s a strange contradiction. In economic terms, most of us value a vision of an Australia from the past, protected from the uncertainties of deregulation, more closed to immigration, and with the government more heavily involved in the economy. On the social side, our vision seems decades into the future. Taken together, they describe a place that’s nowhere to be seen. [emphasis added]
This “nowhere place” is a flux of different beliefs, values systems, and visions of preferred national futures.
Cooke finds a source of political renewal in independent candidates and the micro-parties. This appears reassuring but viewed through Winters’ analysis it is largely noise. One of the underlying reasons — and why Thomas Piketty’s Capital in the Twenty-First Century (Boston, MA: Harvard University Press, 2014) is a global bestseller — is that there is a growing wealth inequality between the political class and the Australian electorate that they represent. Cooke ends his piece noting the mutual derision that elite politicians and the general public hold each-other in. There’s no way out: it’s a closed system with little prospect of real change. In Winters’ world the oligarchs simply buy out or play off the independent candidates and micro-parties whilst retaining control of the real power and resources.
The potential way out of this is not necessarily what Cooke advocates but rather a Nineteen Eighty-Four / Matrix / Zizek-ian awakening from these fantasies into the Real. Cooke’s Australians have a protectionist vision because economic growth for many has been based on speculative asset bubbles, and consumer debt that hedges low wage growth and rising inflation on food and living costs. In other words, as Winters would predict, the economic gains of the oligarchical class have not translated to the general populace in terms of owing wealth-generating assets with high return compositions (a useful primer on asset class returns). Cooke’s Australians rely on taxable salaries; the oligarchical class relies on capital gains income and legal tax minimisation structures.
Cooke would do his Monthly readers a greater service if he explained the oligarchs’ strategies and how the legal tax minimisation strategies worked. For that, there’s always the annual CCH Australian Master Tax Guide and Tax Institute membership. The rest of us can start to cultivate greater financial sovereignty through tracking what we spend our money on, and what wealth-creating assets we create or can invest in.