2016 Theme #2: the Hollow Shell of Democracy

January 5, 2016

This week I am addressing themes I see playing out in 2016.

A number of systemic, structural forces are intersecting in 2016. One is the hollowing out of democracy globally.

Democracy has three distinct states of being: formal, in actual practice and informal. Nations that claim the mantle of democracy typically mix features of all three varieties.

Formal democracy is the machinery of legislation and elections. Actual practice is how the machinery functions in the real world. Informal democracy is advocacy via direct action--protests, local movements and spontaneous mass expressions of outrage/disavowal of the status quo.

Formal democracies are being hollowed out. Within the hollow shell of formal democracy, wealthy elites purchase influence and lobbyists so regulation and legislation either actively advance their interests or imposes limits that are easily bypassed or negated in actual practice

For example, the formal machinery of democracy generates tax statutes, but in actual practice, super-wealthy individuals and entities are laws unto themselves: The Oligarch Tax Bracket: How The Tax Rate For The Wealthiest 400 Americans Plunged From 27% To 17% (Zero Hedge)

For the Wealthiest, a Private Tax System That Saves Them Billions (New York Times)

With inequality at its highest levels in nearly a century and public debate rising over whether the government should respond to it through higher taxes on the wealthy, the very richest Americans have financed a sophisticated and astonishingly effective apparatus for shielding their fortunes. Some call it the “income defense industry,” consisting of a high-priced phalanx of lawyers, estate planners, lobbyists and anti-tax activists who exploit and defend a dizzying array of tax maneuvers, virtually none of them available to taxpayers of more modest means.

In recent years, this apparatus has become one of the most powerful avenues of influence for wealthy Americans of all political stripes

Each of the top 400 earners took home, on average, about $336 million in 2012, the latest year for which data is available. If the bulk of that money had been paid out as salary or wages, as it is for the typical American, the tax obligations of those wealthy taxpayers could have more than doubled.

Instead, much of their income came from convoluted partnerships and high-end investment funds. Other earnings accrued in opaque family trusts and foreign shell corporations, beyond the reach of the tax authorities.

The combination of cost and complexity has had a profound effect, tax experts said. Whatever tax rates Congress sets, the actual rates paid by the ultra-wealthy tend to fall over time as they exploit their numerous advantages.

Charting the American Oligarchy – How 0.01% of the Population Contributes 42% of All Campaign Cash (Mike Krieger)

The problem is not limited to the U.S.A.: concentrated wealth is buying political power in every formal democracy.

The hollow shell of formal democracy is being filled with an informal but very real authoritarianism. The citizenry of the hollowed-out democracies have not formally approved an authoritarian state, but the government on every level (national, regional and local) is imposing an unaccountable authoritarianism on the powerless citizenry.

This informal authoritarianism has many manifestations. First and foremost, no formal democratic approval of the authoritarian measures have been approved.

For example, the voters of California did not directly approve the state's predatory, Orwellian policy of illegal seizure with a formal vote. The state of California simply adopted this authoritarian policy of first we seize your money and then you can beg us to give some of it back to you--maybe:

Welcome to the Predatory State of California--Even If You Don't Live There

This is part and parcel of government's authoritarian policy of civil seizure: Pay Our Pensions Or We'll Throw You in Jail: the Legalization of Looting (March 19, 2014)

Another example is imposing high administrative fees for wrongdoing that is not adjucated in a court of law. The state bureaucracy decides the citizen didn't meet some administrative standard and imposes a huge fee. In real practice, the appeal process is absurdly complex and slow, meaning most people have neither the time nor inclination to redress administrative wrongs.

The third form of democracy is informal gatherings of outraged/oppressed citizens: spontaneous demonstrations, workers protesting the plant closing without paying wages due, etc.

Governments quickly grasp the risk that such informal street democracy will reveal the truth--that the nation's formal democracy is nothing but a hollow shell--and so the state either hurries to buy off the protesters with promises, or it sends in the storm-troopers (police, National Guard, civilian thugs hired by local government or its private-sector cronies) to bash heads and herd the protesters into gulags.

Democracy is now a travesty of a mockery of a sham, a hollow shell of PR and propaganda designed to confuse and distract the citizenry--the citizenry that is being crushed beneath the authoritarian rule that has expanded to fill the hollow shell of formal democracy.

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