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11th April 2023 (7 Topics)

How money can influence power and politics of a democracy?


According to a study on Norway’s democracy, following the same methodology used for the U.S. and India, to assess the extent of policy unresponsiveness in a democracy that has ‘gone furthest in reducing economic inequality and restricting money in politics’.

About the Dilemma:

  • One of the reasons that democracy is held to be superior to other forms of governance is the promise it holds out that every citizen will have equal say in policy-making.
  • This would indeed be the case in a perfect democracy where every individual is politically equal.
  • But in the real world, no democracy is perfect, and what has typically been observed is that the affluent enjoy a disproportionately greater say in policy-making compared to the average citizen.

The Gilens Model:

  • Martin Gilens an American political scientist in his 2012 study has found that in the U.S., public policy decidedly favoured the preferences of the affluent, rather than of the poor and the middle classes.
  • American democracy, however, has certain unique features, such as the heavy reliance of political parties on private campaign donations, which might make it far more unresponsive to the non-affluent.
  • According to him, in the countries like Germany, Netherlands and Sweden, the policy was once again found to be skewed in favour of the preferences of the affluent.

Comparing Gilens model for Norwegian democracy:

  • Norway, too, public policy skewed towards the preferences of the affluent, their influence was by no means exclusive, and the opinions of the poor and the middle classes also found expression in government decisions.
  • Secondly, the study revealed that on economic issues, the preferences of both the poor and the rich seemed to matter almost equally.
  • Most interestingly, the opinions of the highly educated were found to be strongly related to policy outcomes regardless of whether they were rich or poor.
  • Clearly, in a social democracy like Norway, the link between money and politics was much weaker than in the U.S. and in India.

What are the outcomes of the study?

  • As a result, policies favoured by the poor have a “better chance at being maintained or even expanded by the government” and there is often a self-reinforcing component by which new policy gains for the poor are more easily achieved over time.
  • The second effect of redistributive welfarism is that Norway has one of the lowest levels of income inequality in the world, which essentially means less of a resource advantage for the affluent to be used (in whichever way possible) to influence politics.
  • In India, for instance, we have the exact opposite scenario, where electoral bonds empower wealthy private entities to make astronomical donations to political parties with zero transparency in terms of who gave how much money to which party or candidate.
  • Understandably, inequality and policies known to worsen inequality have been gaining ground in India in recent years.

Conclusion drawn:

  • The study concludes by pointing out that although policy-making in democracies overall (including Norway), tended to skew in favour of the affluent, thereby violating the basic democratic principle of political equality, the Norway example demonstrated two things
    • One, in a welfarist social democracy with low inequality, education was a stronger predictor of responsiveness than income; and
    • Two, restricting how money can be used to influence elections, and strengthening countervailing forces (such as trade unions) might change the balance of power

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