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Screenings and Meanings

By Gerald Schmitz

03/28/2018

SCapitalism and democracy: for the money or the many?

Gerald Schmitz

Saving Capitalism
Dark Money

In every political system, even a democracy, the rich tend to hold more political power. The danger is that this political power will be used to promote policies that further cement the economic power of the rich. The higher the inequality, the more likely we are to move away from democracy toward plutocracy.
— Branko Milanovic, The Guardian, May 2, 2017

Economic inequality is widespread and to some extent inevitable. It is our belief, however, that if rising inequality is not properly monitored and addressed, it can lead to various sorts of political, economic, and social catastrophes.
— World Inequality Report 2018, p. 4.

We are on the way to becoming a two-tiered society, composed of a few winners, and a larger group of Americans left behind, whose anger and whose disillusionment is easily manipulated. Once unbottled, mass resentment can poison the very fabric of society, the moral integrity of a society, replacing ambition with envy, replacing tolerance with hate.
— Robert Reich, Nov. 22, 1994

According to the World Inequality Report 2018 the rise in wealth inequality has “been very large in the United States, where the top 1 per cent wealth share rose from 22 per cent in 1980 to 39 per cent in 2014. Most of that increase in inequality was due to the rise of the top 0.1 per cent wealth owners.” The Economist Newsdesk of December 2018 observed that: “most Americans believe there is too much inequality. But they underestimate just how much of it there is. The average American puts the current ratio of CEO to unskilled worker pay at 30-to-one; their preference is for about seven-to-one. But the actual CEO-unskilled wage ratio in America is 354 to one.” Research has also found that many Americans don’t trust governments to do much about the problem and are skeptical about redistributive remedies.

Robert Reich, a professor of public policy at the University of California, Berkley, who was labour secretary in the first Clinton administration cabinet, has spent decades analyzing inequality in America and trying to convince his fellow citizens to do something about it so as to avoid the ill effects of a nation increasingly divided by the bottom line. His prescient warning from 1994, cited above, seems even more pertinent today as we count the consequences that occur when populist anger boils over.

Reich’s important work and public advocacy was previously the subject of director Jacob Kornbluth’s 2013 documentary Inequality for All, which won a special jury ward at the Sundance film festival. Together with co-director Sari Gilman, Kornbluth brings Reich’s bracing message back to the screen in the Netflix documentary Saving Capitalism, which began streaming in late November 2017. While drawing on Reich’s 2015 book Saving Capitalism: For the Many, Not the Few, including information illustrated through clever animation, the film gets its energy and urgency through accompanying the diminutive professor — a veritable “little guy for the little guy” — as he takes his ideas on the road into the heartland to meet with ordinary people who will never read his books.

Reich validates the anger that many Americans feel and asks, “How can we make our voices heard?” If the system is perceived to be rigged in favour of the already privileged, it’s important to understand how, he insists. Few ideas have poisoned the minds of people more than the idea of free markets in the abstract because it is governments that set the rules in which they operate, and those rules “reflect the interests of those who have the most power.” Corporate interests, supported by an army of legislative lobbyists, have gained growing influence relative to the declining influence of labour. (A recent comparison shows that corporations spent $34 on lobbying governments for every $1 spent by unions and all public-interest groups.)

Who speaks for those with little economic power? Small wonder that there has been a big loss of public trust in government. Reich recalls his time in government as a “tough slog” in losing battles to curb corporate subsidies. At the time he warned of the dangers of mass resentment and targeting scapegoats. He worries about this continuing to build, driving wedges between people, and being exploited for cynical political advantage.

Reich argues that the pro-free market ideology of minimal government is misleading, since the evidence shows how the well-connected have been able to use government to their advantage. For example, in the aftermath of the 2008 financial crisis, it was the public treasury that was stuck with the costs of enormous bailouts. In the end Main Street suffered a lot more than Wall Street. As money has flooded into political campaigns, it favours donors with deep pockets. When assessing government action (or inaction), “Who benefits?” is a critical question. Reich criticizes the Trump administration’s tax reforms for further tilting the economic playing field toward the rich. He cites a research study which found that the preferences of average Americans have almost no impact on public policy outcomes.

Reich doesn’t just preach to the converted. He engages in stimulating exchanges with business people, Republican voters, and a conservative Republican congressman who shares his concern about the distorting effects of “crony capitalism.” A common thread he finds across these conversations is that democracy is not working as it should when the interests of ordinary people are ignored.

What is the answer? The temptation toward an authoritarian populism — trusting in a big man at the top to be the people’s voice — is a dangerous path, Reich warns, because “democracy is a very fragile thing.” Rather, he sees hope in efforts at grassroots mobilization by citizens seeking to reclaim their economy and democracy. And, as this ebullient down-to-earth prof urges his students, have fun while doing so. Given the dark scenarios dominating our news cycles, it’s a welcome upbeat note on which to end this timely film that deserves a wide viewership.

Another aspect of that dark side is the influx of large sums of outside money from disguised sources to influence American elections at all levels. Kimberly Reed’s Sundance documentary Dark Money (http://www.darkmoneyfilm.com/), six years in the making, adds to the analysis in Jane Mayer’s eponymous 2016 book on the subject through a penetrating examination of what has happened in the conservative “red” state of Montana. Corruption scandals in this resource-dependent state led to the enactment of corrupt practices and campaign finance laws over a century ago. But since the 2010 U.S. Supreme Court decision in the “Citizens United” case against the Federal Election Commission (FEC), which granted “free speech” rights to unlimited corporate money, the floodgates opened and legal challenges have overturned state finance laws.

Dark Money reveals in detail the ways in which outside corporate interests pushing a hard-right libertarian agenda have used such money flows, often through deceptive front organizations with benign titles (e.g. the Western Tradition Partnership, Americans for Prosperity) to control legislatures and even courts where judges are elected. Attacking regulations and disclosure requirements, the goal is the covert manipulation of public policy.

Sparsely populated Montana, with a history of citizen legislators, has seen vast sums of outside money from hidden sources deployed in electoral contests, often targeting moderate Republicans as well as Democrats. One speaks of the use of “shock and awe electoral bombing” tactics. Why bother lobbying when it’s possible to, in effect, buy compliant officeholders. Pressures can also be brought against independent media and to limit investigations into what is, in effect, legalized bribery. At the federal level former FEC chair Anne Ravel laments how its oversight role has been neutralized.

Fortunately citizens, politicians, and journalists are fighting back and claiming some successes. When John Adams, Montana’s ace investigative reporter on the dark money trail, lost his newspaper job and was briefly homeless, he didn’t quit but instead founded an online news site: https://montanafreepress.org/. (On a national level see also https://www.followthemoney.org/, http://www.opensecrets.org/, and the Wisconsin-based centre for Media and Democracy: https://www.prwatch.org/.) Reed also profiles the dogged work of others in Montana, including its Commissioner of Political Practices and a former attorney general. In 2015 a new campaign finance disclosure law was passed and a former legislator convicted of finance violations.

Given the gross and growing inequalities in American society, and the billions of dollars spent by moneyed interests for political purposes, the democratic challenge is clear for those who still believe in, to paraphrase Lincoln, government of, by and for the people.