A more in-depth description of how elites maintain status quo ante

A while back I wrote a post called A populist interpretation of the latest Boom-Bust cycle that used a passage from Jared Diamond’s Pulitzer Prize-winning Guns, Germs and Steel on kleptocracy as a jumping-off point for a larger discussion about wealth distribution. The overall gist was that almost all societies have unequal distributions of income and wealth. Most often, this distribution is not fluid i.e. those at the top of the pile tend to stay there.  At that time, I argued the current distribution in the U.S. was not leading to better long-term economic outcomes as we are saddled with large private sector debts that can only mean lower growth in the absence of miraculous productivity gains.

And contrary to official American propaganda, intergenerational shifts in wealth distribution are lower in the U.S. than other G-7 countries (see study as a pdf here). (Wikipedia’s entry on social mobility is a good jumping-off point on this topic).

So, putting arguments of efficiency and equity aside, a relatively wide income/wealth dispersion is the current state of affairs in the U.S. and all other industrialized nations. That is the reality. (For the record, there are good efficiency arguments.) The question I want to ask here is how do ‘economic/social elites’ justify the status quo in order to maintain the distribution or even increase their take?  Diamond’s passage does a good job of identifying the methods. So, here are longer excerpts of what he says.

By now, it should be obvious that chiefdoms introduced the dilemma fundamental to all centrally governed, non egalitarian societies. At best, they do good by providing expensive services impossible to contract for on an individual basis. At worst, they function unabashedly as kleptocracies, transferring net wealth from commoners to upper classes…The difference between a kleptocrat and a wise statesman, between a robber baron and a public benefactor, is merely one of degree: a matter of just how large a percentage of the tribute extracted from producers is retained by the elite, and how much the commoners like the public uses to which the redistributed tribute is put.

If you think about the tea-party movement’s anti-government angle, it is loosely based on the sentiments expressed here of a government moving down the slippery slope into kleptocrat territory. The same is true again from the populist left.  The examples Diamond then gives are instructive.

We consider President Mobutu of Zaire [now the Democratic Republic of Congo] a kleptocrat because he keeps too much tribute (the equivalent of tens of billions of dollars) and redistributes too little tribute (no functioning telephone system in Zaire). We consider George Washington a statesman because he spent tax money on widely admired programs and did not enrich himself as President. Nevertheless, George Washington was born into wealth, which is much more unequally distributed in the United States than in New Guinea villages.

For any ranked society, whether a chiefdom or a state, one thus has to ask: why do the commoners tolerate the transfers of the fruits of their hard labor to kleptocrats?

The question here – as it pertains to the debate in the U.S.  – is first and foremost about government policy in levelling the playing field. But it is also implicitly about government size because if you believe that your government is enriching kleptocrats, then you may want to limit its size. The focus on policy versus size is what divides the left and right wing populist movements.

Then Diamond comes to the heart the question at hand:

What should an elite do to gain popular support while maintaining a more comfortable lifestyle than commoners? Kleptocrats throughout the ages have resorted to a mixture of four solutions:

1. Disarm the populace, and arm the elite. That’s much easier in these days of high-tech weaponry, produced only on industrial plants and easily monopolized by an elite, than in ancient times of spears and clubs easily made at home.
2. Make the masses happy by redistributing much of the tribute received, in popular ways…
3. Use the monopoly of force to promote happiness, by maintaining public order and curbing violence. This is potentially a big and underappreciated advantage of centralized societies over noncentralized ones…
4. The remaining way for kleptocrats to gain public support is to construct an ideology or religion justifying kleptocracy. Bands and tribes already had supernatural beliefs, just as do modern established religions. But the supernatural beliefs of bands and tribes did not serve to justify central authority, justify transfer of wealth, or maintain peace between unrelated individuals…

In the context of the U.S., I associate the four methods this way:

1. The rise of the military-industrial complex is instrumental in disarming the populace as Diamond suggests.
2. Bridges to nowhere, earmarks, or protectionism are common ways of making the masses happy by redistributing the tribute. I’m sure you can think of a thousand other ways.
3. Despite having won Word War II, the U.S. is in a perpetual state of war.  It justified huge military expenditures because of the Soviet Union, China and the threat of communism during the Cold War. However, this has now been replaced by the War on Terrorism and the justification for military expenditures equivalent to the rest of the world combined remains (see here and here). Americans understanding is that these expenditures keep them safe.
4. I would argue that free market ideology has been distorted by elites as a means of justifying kleptocracy. See Deregulation as crony capitalism. 

This last point is where I expect the most pushback because the rhetoric is so ingrained. Yet, all of these points require examination. I think we have reached a point where the size and function of government is critical. I have written two posts in the past on this: A brief philosophical argument about the role of government and A few thoughts about the limitations of government. My general take in slogan form is “limited government with an eye to the specific needs of the day.”  But I would be interested in hearing some of your views on both what the right questions are as well as the right answers.