Democracy and Wealth


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Louis Dembitz Brandeis was an American lawyer and associate justice on the Supreme Court of the United States from 1916 to 1939. He graduated Harvard Law School in 1876 with the highest grade in the school’s history, a record that would stand for 80 years. After graduation he settled in Boston and opened his own firm. Although, like all businesses it has undergone a number of evolutionary changes, Brandeis’ firm is still practicing today under the moniker of Nutter McLennan & Fish.

Beginning somewhere in the early 1890s Brandeis began to make a name for himself as a champion of progressive social causes. In an article he wrote for the Harvard Law Review entitled “Right to Privacy” he all but created the notion of privacy now so enshrined in the laws of nearly every democratic nation. In 1914 he would publish the book “Other People’s Money and How The Bankers Use It.” The book was an exposé on how banks use investment funds to promote and consolidate various businesses and industries at the expense of smaller corporations and sole proprietorships to prevent competition. He harshly criticized investment bankers who controlled large amounts of money deposited by middle class customers and used it build monopolies like Rail Roads and large industrial manufacturers that prevented those same middle class business owners from rising too high up the economic ladder.

By 1916 Brandeis’ work had caught the eye of then U.S. President Woodrow Wilson who nominated him to the Supreme Court. For the next 23 years Brandeis would preside over human rights complaints, break-up monopolies and tirelessly work to maintain the democracy of wealth in America. Although appointed by a Progressive Democrat, Brandeis was not a social activist in the way we think of them today. He would be more accurately described as a free market stalwart who believed in open opportunity and sought to limit the power of corporations and the concentration of wealth.

Trickle Down Economics

eattherichIn the 1980s Ronald Reagan popularized the term “Trickle Down Economics.” It is the theory that says benefits for the wealthy trickle down to everyone else. These benefits are usually tax breaks for businesses and other high-income earners. In theory these people use the cash from these tax breaks to expand business growth and thus benefit the rest of society.

At least that’s the theory.

In practice Trickle Down Economics serves to increase economic inequality and concentrate wealth in the hands of a lucky few. In a social welfare state, like America and just about every other democracy worldwide, Trickle Down Economics places too much of the burden for funding government social programs on the middle and lower classes. By giving tax breaks to the wealthy, without cutting social programs the cost must be borne by the very people the programs claim to support. So when you give people free access to universal health care, to use one example, and then increase their taxes to pay for it, any gains they receive through so called Trickle Down economics are cancelled out. The middle-class are no further ahead, the poor feel the pinch and the rich, who could afford to pay for their own health care anyway, laugh all the way to the bank.

The Winner Takes All

The problem lies in the very nature of democracy itself. When the majority of people want free health care, they vote for it and the government is forced to provide it. But then everyone also wants to vote for lower taxes. This is where the power of wealth skews society and serves the real purpose of Trickle Down Economics.

americandreamEveryone is an optimist. The American dream is built on the premise that if I work hard enough, I too can become wealthy one day. The proponents of Trickle Down Economics know this so they wrap it in a form of patriotism saying that by offering tax breaks to the wealthy the government is actually promoting a form of national pride, motivating people to take risks, start businesses and build the economy. “It’s the American way.”

In 1995, economists Robert H. Frank and Philip J. Cook published the book “The Winner Take All Society” The sub-title of the book is a succinct description of their main thesis: “How More and More Americans Compete for Ever Fewer and Bigger Prizes, Encouraging Economic Waste, Income Inequality, and an Impoverished Cultural Life”. The practice of Trickle Down economics has created the winner take all society. Democracy has become nothing more than a selfish pursuit of personal gain that resembles a snake eating its own tail.

The society that Louis Brandeis envisioned in the 1930s has come to fruition. We no longer have democracy in the way it was originally intended in its place we now have something far more sinister even than a dictatorship. What we have now is a pseudo-democracy that serves the interests of wealth, not even wealthy people, just wealth. The human element has been completely removed. In the interests of self promotion, people have voted themselves out of the system. Now it’s all about money, my money, your money and most importantly, other people’s money, and how it can serve me.

Brandeis was right. But it’s not too late. The question now is what kind of society do we want to live in?

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