Abstract
Historically, social and economic grievances resulted in sociopolitical instability, which served as a medium of institutional changes in the evolution of Western Europe toward a more inclusive regime. In today's democratic capitalism, however, a great many interest groups have burgeoned and acquired political power to seek their own interest at the expense of the welfare of the general public. Interest groups thrive on a tacit agreement with those members of the political body whose primary interest lies in their own aggrandizement. Such agreement inevitably leads to excessive claims on public resources, interferes with the market system by perpetuating rent in many sectors of the economy, erodes the moral values of trust and respect, and causes moral hazard among the legislators by undermining budgetary discipline. Moreover, the inevitable friction among the legislators often results in gridlock in public decision making. The democratic capitalism thus is losing on both ends: the market efficiency and political efficacy, with reduced prospect of economic growth. This paper attempts to explain these phenomena as a strategic equilibrium of the major players in the politico-economic arena.
Highlights
In today’s world of normative pluralism, people exercise political power through their participation in groups of like-minded individuals
The purpose of this paper is to investigate the implications of democratic inclusivity, in the context of the U.S economy and society, for the Federal budget and the growth of its deficit as well as for the collateral damages that such inclusivity entails in regard to economic efficiency and the equity of income and wealth distribution
The randomness of where each actor belongs at birth, and the special individuals or institutions whose consent is required for any policy, makes these dualities even more unfair, morally unacceptable, and certainly incompatible with the very concept of democracy – because the levels of income and wealth are positively related with political power (Bartels 2008; Gilens 2012)
Summary
In today’s world of normative pluralism, people exercise political power through their participation in groups of like-minded individuals. The members of these groups and their representatives are the main political agents, who develop and broker both social inclusivity and the necessary social capital to advance their causes They manifest the will and interests of the private sector, be it groups of individuals, firm(s), or institutions. The state has fallen into the hands of powerful rent seekers who cultivate the circumstances of embedding their interests into favorable institutional structures and prevent the state from solving problems that promote the welfare of the public In the process, this alliance results in reduced economic efficiency and increased inequity of income and wealth distribution, that jointly affect economic growth and, thereby, become new sources of socio-political instability. The Invisible Hand of Rent Seeking morally incompatible with the democratic ideal of social justice and could become, once more, responsible for similar turmoil and resentment that caused the downfall of democracy in Europe during the 1920s and 1930s
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