Democracy and crony capitalism

Ever since the introduction of “VOX POPULI VOX DIE /SUPREMA LA” the world has witnessed varied forms of democracy ranging from single party democracy as practiced in parts of Africa to multi party democracy which again went into two modes.

Presidential form of democracy where people directly elect the leader of the country and Parliamentary form of democracy where elected representatives choose their leader to lead the country – A British Style.

Over a period of time the VOX Populi principle underwent metamorphic change due the pressure of the population growth and the need to cater for their employment and welfare. Governments decided to take up projects of large scale under socialistic form of government while governments propagating private investments looked for enterprising entrepreneurs to tackle economic growth. This lead to the emergence of powerful MNCs who extended their area of operation to other capital friendly countries.

With democracy deeply entrenching itself well across the continents , various pressure groups representing varied interests started exerting influence on the Government that today we really wonder whether the interests of an average voter is taken care of in governmental decisions. Will an erosion of the power of the average voter’s right to influence government decisions pose a threat to the democratic system of governance?

Against this background, a look at the American Scenario where democracy is deeply embedded gives interesting facts. Social scientists in the Unites States are concerned about the overwhelming power of money being used to influence governmental decisions.

A study by Mr. Martin Gilens, a political scientist at Princeton University and Benjamin Page of Northwestern University divides the groups that have influence on government function into following spectrums.

1. Average Voters
2. Elite individuals
3. Interest groups representing wishes of different voter segments
4. Interest group advocating for particular policies ( like pro business group)

Based on an analysis of 1779 policy initiatives over 20 years, authors Gilens and Page conclude that a majority of citizens have little or no influence on policy decisions of the Government. They say “When a majority of citizens disagrees with the elite groups or organized interests they generally lose.”

Wealthy interests have the ability to block the changes adverse to them. The author’s claim that “If policy making is dominated by powerful business organizations and a small number of affluent Americans “as they found, “America’s claims to being a democratic society are seriously threatened.”

According to Ruy Teixeira of the New York Times political inequality aggravates economic inequality.
Paul Pierson and Jacob Hacker have in their book “Winner take All politics” have attributed the inequalities cropping in American societies to the American Political system where way back from 1970s big businesses and conservative ideologues organized themselves to dilute regulations and tax policies that were earlier enacted for fair distribution of wealth. Thus a political system concerned with the welfare of the middle class has been hijacked by the super rich.

Lobbying has been part of American Political system. Over the years the lobbying has become sophisticated and so are campaign donations which have played a key role in influencing policy makers. There is a silent undercurrent of remorse about a $110 trillion owned by top 1% of the population.

Elizabeth Warren, an influential democratic senator believes that big banks had overwhelming influence when policy makers handled 2008 financial crash and says “when the economy crashed in 2008; we saved the big banks on Wall Street. We didn't do enough for working families”.

While participation by all sections for the benefit of all was the object of the foundation on which democracy was established, hijacking policy decisions by vested interests ruins the scope and paves way for a totalitarian state.

With this alarm on the system of democracy facing a real threat, suggestions are also being made to rebuilding a democracy that serves the interests of the many rather than just those of the wealthy few.
But however Americans’ attempt to build a more perfect system is being addressed seriously by understanding of the hard realities.

The introduction of Affordable Care Act which raised taxes on very high income groups and utilizes the extra revenue to expand medical aid and provide subsidies on exchanges to be sued for the benefit of lower income adults is a silver lining.

There is Sanskrit proverb which says “Yatha Raja Thatha Praja.” Like the king so are the subjects reminding that peoples’ morals are influenced by the Ruler. But in democracy the reverse rule applies as the people are the king makers and if moral standards of the people in a society are low you cannot expect a leader with high moral standards to emanate from them.

As a reminder of the need for high moral values on rulers there is an interesting incident that happened in Kansas Senate when Minister Joe Wright was invited to open the new session of the Senate. His prayers were not on expected lines. The senate heard the following prayers.

"Heavenly Father, we come before you today to ask your forgiveness and to seek your direction and guidance. We know Your Word says, "Woe to those who call evil good", but that is exactly what we have done. We have lost our spiritual equilibrium and reversed our values.

* We have exploited the poor and called it the lottery.
* We have rewarded laziness and called it welfare.
* We have killed our unborn and called it choice.
* We have shot anti-abortionists and called it justifiable.
* We have neglected to discipline our children and called it building self-esteem.
* We have abused power and called it politics.
* We have coveted our neighbour's possessions and called it ambition.
* We have polluted the air with profanity and pornography and called it freedom of expression.
* We have ridiculed the time-honoured values of our forefathers and called it enlightenment.

Search us, Oh, God, and know our hearts today; cleanse us from every sin and set us free. Amen!"

The response was immediate. A number of legislators walked out during the prayer in protest.

But in 6 short weeks, Central Christian Church, where Rev. Wright is pastor, logged more than 5,000 phone calls with only 47 of those calls responding negatively and became an internationally acclaimed prayer showing the undercurrent of frustrations prevailing in the society.

The American wake up call, to rebuild democracy with high moral values is the result of a prolonged diagnosis of a few section of the society having influence on decisions.

This need has also been echoed by the British Prime Minister David Cameroon.

While commemorating the 800th Anniversary of Magna Carta he emphasized on developing vales such as -a belief in freedom, tolerance of others, accepting personal and social responsibilities and upholding rule of law.

He said “We are bringing proper narrative history back to curriculum, so our children really learn …..“
In India, the world’s largest democracy, crony capitalism ,where the rich and the influential are alleged to have received land, natural resources in return for pay offs to venal politicians became a major issue in the recent elections which saw a change of guard at the Parliament- the ruling helm.

In the words of Reserve Bank of India Governor Mr. Raghuram Rajan, who has served in the IMF before, “Crony Capitalism” kills transparency and competition and is harmful to free enterprise, opportunity and economic growth.

What is the Solution? The prime place will be the seats of learning-Alma Mater. Yes, we need to develop strong morals at the grass root level of younger citizens at their educational centers. But the current system of education is commercialized.

Can such a commercialised education rise to the occasion and produce youths with high morals and sound principles to carry democracy to its ultimate object of goodness to every citizen?
The author is a Chartered Accountant

By S. Srinath