America Is Not a Democracy, but an Economic Oligarchy

“What’s in a name?”

Modern life causes me often to consider that Shakespearian question. We’re immersed in a never-ending stream of words, images and ideas deliberately designed to trick us into believing things that are only partly true, or not true at all.

The science of modern advertising is the prime example. In that world, representation and imagery are everything. The actual content of the things pitched to us is secondary, or irrelevant.

I’ve long believed that the same is true of our political life. We’re bombarded with adjectives — “liberty,” “freedom,” “democracy” — but our daily experience of life belies them. How can we be called “free” when the U.S. government is able to steal our property, murder us, search and seize our private effects and throw our own children into jail?

Now, a study from one of America’s most prestigious universities confirms what many of us already knew: America is not a democracy at all.

“Who Really Rules?”

Researchers Martin Gilens and Benjamin I. Page of Princeton recently published the results of a careful review of more than 1,800 different U.S. policy initiatives from 1981 to 2002. They found that “economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy while mass-based interest groups and average citizens have little or no independent influence.”

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To some, this may seem unremarkable, even unobjectionable. After all, who cares what the average person wants? Isn’t it better to focus on the needs of businesses and corporations, which bear the weight of driving our economy?

Think again. There’s a clear connection between concentration of political power in the hands of an economic oligarchy and the decline of our own liberties. It’s a decline that’s gone so far that many people have concluded that the time to abandon ship has arrived.

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Cui Bono?

I always start with that question — who benefits? And in today’s America, the answer is clear: not us.  Consider the way state power is being used — and not used — in our country today:

  • Individual taxpayers are vastly more likely to be investigated, prosecuted and/or penalized for tax issues than corporations or high net-worth individuals. The U.S. “oligarchy” insulates itself from tax enforcement by retaining expert lawyers and making targeted donations to legislators, both of which grant them effective immunity from the tax laws the rest of us must obey.
  • Civil asset forfeiture is overwhelmingly aimed at low- to middle-income Americans rather than the drug kingpins and money launderers for whom the government says it was designed. Again, the threat of having to tangle with good lawyers and the prospect of damaging lucrative donor relationships with congressmen and senators keep the Justice Department and other enforcement agencies focused on the defenseless majority.
  • If you or I commit mercantile fraud — say, by knowingly misrepresenting the quality or provenance of goods we sell or services we provide — we can expect civil or criminal action against us. America’s bankers, on the other hand, sold an entire generation of investors financial products that were known to be worthless, or were designed to fail. Except for a few isolated rogues like Bernie Madoff, not one of them has seen the inside of a courtroom.

It’s not just about money, either. Every time a government agency decides to look the other way when a powerful person or organization breaks the law or purchases special treatment, its employees take away the message that laws are optional and can be broken with impunity. That in turn breeds an arrogant and reckless disregard for the rights of those not powerful enough to fight back. I’ve seen this in many countries in my global travels: A culture of corruption breeds official contempt for the innocent man and woman in the street.

A Secure Place in the Sun

Another thing I’ve observed in my travels is the loss of attachment to one’s home country as a result of this sort of oligarchic corruption of democracy. People who feel powerless in the face of abuse by elites and their lackeys in government either turn their anger at others (immigrants or a neighboring country) or they simply pack up and leave. America itself is full of people who came here to escape corrupt, unresponsive government at home.

What about us? Fortunately, there are a few places that still respect the principle of equal justice before the law, transparent, accountable democracy and the rights of the individual.

I’ll be visiting one of them — Uruguay — in March for our annual Offshore Investment Summit. Take the words of the professors from Princeton to heart … and join us.

Kind regards,
Ted Baumann Sovereign Investor
Ted Baumann
Offshore and Asset Protection Editor