Monday, October 31, 2011

Connecting the Dots from the Electoral System to Income Inequality

It warms my heart to see how the Occupy Wall Street has taken hold. At long last, people have realized that the politics of economic growth are conceived to enrich the top 1% of the population at the expense of the bottom 99%.

However, one huge question remains: how do you fix the system?

The answer is that you have to change the electoral system that enables a small minority to effectively buy the politicians that will do their bidding. To do this, we have to get rid of selecting our elected representatives by the single member plurality method more popularly known as first-past-the-post.

If ever there was a voting system designed to favor rent seeking, the economic term for buying favors, it is first-past-the-post. I love the name because the horse race allusion captures what happens in the stands at a race track: being able to pick the winner backed by a significant wager pays off handsomely.

Let us remember that there is no greater return on investment in countries that use first-past-the-post than making a financial contribution to a political party coupled with a post election lobbying campaign. In the market, competition is fierce and investments to increase market share or profitability are fraught with uncertainty as competitors try to gain advantage in a zero-sum game. So, instead of trying to tip the entire playing field in one's direction, it is much easier to increase profits by getting those who set the rules of the game to intercede on one's behalf with a government contract, favorable legislation, or fiscal policy.

This is how the top 1% reap the lion's share of the nation's wealth. They hedge their bets, so it doesn't matter who wins the election. Both parties that offer government options to the electorate are funded by or by those who owe their social standing to the one per centers. Consequently, electoral campaigns come and go, focusing on peripheral issues, leaving in place the cumulative gains that the constant lobbying piles up for those in the upper most echelons of the society.

Indeed, accumulating favors is relatively easy to do when polling data tells you where the political parties stand relative to one another and all that is required is to pick which candidate will garner the most votes in each single electoral district. No messy formulas that award seats on the basis of the popular vote. Few surprises with regard to which candidate from which party will get elected. As a result, it is not difficult to identify who needs to be influenced in order to obtain preferential treatment and a cosy symbiotic relationship between politicians and their financiers comes about.

No wonder the anachronistic first-past-the-post resists attempts to replace it with other electoral systems that give better representation of the popular vote. To change the voting system, especially for one that gives proportional representation, increases the uncertainty of the results and consequently increases the risk of getting a return from one's campaign contribution.

In fact, multiparty coalitions are much more difficult to influence since there is no one who can wield authority in a unilateral fashion. Moreover, when everything has to be negotiated, there are no guarantees that the negotiated agreement will deliver the goods. In the process of negotiation, one's preferred outcome may fall off the table in the process of reaching an agreement.

To change the political economy so that there is a more equitable distribution of a nation's wealth, the demos, in other words the 99% who are effectively under-represented, must ensure that the transfer of political power from the electorate to elected officials that occurs as a result of election is done in a truly democratic fashion.

This will not occur as long as the first-past-the-post system is in place. To change the distribution of wealth, people must disable the political institution that enables the concentration of wealth in the first place.

1 comment:

  1. Wonderfully well put! I would love to see more entries on this topic from like-minded bloggers. It will be difficult to convince the oh-so stable masses of the electorate but, the more open discussion there is, the more voting citizens will be convinced and start pushing for change themselves.


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