The future of American democracy?

Carola Binder, Shock Values: Prices and Inflation in American Democracy. University of Chicago Press. 2024. pp. 352. $35.00 (hbk). ISBN: 978-0226833095. $34.99 (ebk). ISBN: 978-0226833101 Angus Deaton, Economics in America: An Immigrant Economist Explores the Land of Inequality. Princeton University Press. 2023. pp. 280. £20.00 (hbk). ISBN: 978-0691247625. £14.99 (pbk). ISBN: 978-0691247847. £14.00 (ebk). ISBN: 978-0691247854 “Our democracy is on the ballot” this November, according to US Vice President Kamala Harris.1 Whether it is or whether this is simply electoral rhetoric, can democracy survive where, we are told every four years, it is only one result away from extinction? When one is asked ‘What is the future of American democracy?’, the question must be made more precise. What, exactly, is ‘American democracy’? The word comes, as is well known, from the Greek; it is the rule – kratos – of the people – demos. But this general principle takes many forms, each containing mechanisms constraining the kratos of the demos: if American democracy is not majoritarianism the same goes for every other democracy. What we mean, then, by ‘American democracy’ is the form that democratic government takes in the United States. This gives us a more precise question: What is the future of the American system of government? To answer this question, we must identify some of the key features of the American system of government, their origins, and how they have evolved. The United States was founded in 1776 with a revolt by residents of 13 colonies against a government which was allegedly infringing what Thomas Jefferson called in their Declaration of Independence ‘certain unalienable Rights’, among which were ‘Life, Liberty and the pursuit of Happiness’. The young country immediately faced a fundamental question: how to build a government strong enough to safeguard these rights but not strong enough to threaten them? This question became more pressing in the turbulent years after peace with Britain in 1783, culminating in the outbreak of Shays's Rebellion in 1786.2 The following year, representatives of the states – as the colonies now were – met to draw up a constitution intended “to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity”. That Constitution – which is difficult to amend – is the basis of the American system of government. “When the Convention of the representatives of the states met in Philadelphia … to recommend a new form of government for the United States of America they had two main concerns”, wrote M. J. C. Vile. First, they wished to create a system of government that would be strong enough to defend their territory against attack, and which would have the basic unity through a common currency to provide the opportunity for economic development. But they did not wish to destroy the states, or to strip them of their role as the main sources of civil and criminal law for their citizens. They therefore invented a modern system of federalism, in which the functions of government were divided between the newly created government of the United States and the governments of the states. Their second concern was to create a government which was strong enough to provide stability for an emerging nation but which would not be dominated either by a single person or by the elected representatives of the people. They were equally afraid of autocracy and mob rule. They adopted a system of separation of powers, setting up barriers between the legislative, executive and judicial branches of government, giving them the ability to check each other's actions. It is this combination of federalism and the separation of powers which gives to the United States its particular characteristic as a system of limited government, in which no part of the system has the power to dictate to others. The executive was to be elected every four years, indirectly via the Electoral College, “in which each state was to have a number of votes equal to the number of senators and representatives to which each was entitled in Congress” (Vile, 1999, p. 77). There were two reasons for this. First, it would “isolate the election of the President from the turbulence of ‘mob politics’” (Vile, 1999, p. 76). Second, in a diverse country such as the United States was even then, it was deemed necessary to prevent more populous states dominating the less populous (Virginia counted a population of 691,937 in 1790 against just 59, 096 for Delaware), or the “large, commercially minded states” dominating the “smaller, agricultural states” or free states dominating slave states (Bodenhamer, 2018, p. 7). Political action would require the location or creation of common ground. The legislative branch, Congress, was split between a Senate with equal representation for each state – again, to prevent larger states dominating smaller ones – with Senators facing election every six years and a House of Representatives with seats distributed proportionate to the enfranchised population of each state with Representatives facing election every two years. At the head of the judicial branch was a Supreme Court. To buttress federalism, among ten amendments comprising a Bill of Rights which were added in 1791 was the tenth. This declared that “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people”. To head off the two threats of “autocracy and mob rule”, the American system of government rests on the two pillars of federalism and the separation of powers intended to safeguard ‘certain inalienable Rights’ from both ‘autocracy and mob rule’. Among the alleged infringements of the colonists' ‘certain unalienable Rights’ that inspired the revolution was the Currency Act of 1764, which prohibited the printing and issuance of paper money by the colonies. The revolutionary war had seen inflationary financing followed by deflationary bust, which was one of the causes of Shays's Rebellion. Against this background, the Constitution said that no state shall “coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts” and granted to Congress the power “to Coin money” and “regulate the Value thereof”. Stemming from this, Carola Binder, Associate Professor of Economics at the University of Texas at Austin, writes in Shock Values: Prices and Inflation in American Democracy, “[T]he struggle to find a legitimate role for the state in managing and stabilizing prices” is “one of the defining struggles of American democracy, and it is a continuing struggle” (p. 4). She offers an account of how American governments have approached the issue of prices over 250 years, not just through monetary policy, but via tariffs and price controls also. One aspect of the struggle, she notes, is how “wars – or emergencies more broadly defined – have a tendency to legitimize a more activist role of the state in the economic system” (p. 8). The Civil War, for example, saw the creation of the Bureau of Internal Revenue in 1862, which remained a permanent part of the federal government even though most of the taxes imposed to pay for the war – including the first federal income tax – expired after it ended. “The relationship of the American taxpayer to the government was never again the same”, writes James McPherson (1990, p. 448). When these emergencies came, they were seized upon in furtherance of ideological aims. The late nineteenth century saw the growth of ‘progressivism’ as an ideology, which argued that government action could improve society. So widespread was progressivism's appeal that both Democrats and Republicans sought to appropriate it. When the former Republican president, Theodore Roosevelt, bolted the party in 1912 to establish his Progressive Party, he split the Republican vote and facilitated the election of the Democratic progressive, Woodrow Wilson. “In his first years in office”, Binder writes: … Wilson began implementing his New Freedom agenda … All of these reforms, which aimed to mitigate inequality and unfair business conditions, came from Wilson's belief that a proactive government, with an efficient bureaucracy, could address social and political problems. Our peculiar American difficulty in organizing administration is not the danger of losing liberty, but the danger of not being able or willing to separate its essentials from its accidents. Our success is made doubtful by that besetting error of ours, the error of trying to do too much by vote. Self-government does not consist in having a hand in everything, any more than housekeeping consists necessarily in cooking dinner with one's own hands. The cook must be trusted with a large discretion as to the management of the fires and the ovens. Wilson's concern that the check and balance of the legislative branch prevented the executive branch from taking necessary actions was shared by Franklin Roosevelt. Coming to the presidency in the depths of the Great Depression in 1933, in his Inaugural Address Roosevelt (1933) argued: It is to be hoped that the normal balance of executive and legislative authority may be wholly adequate to meet the unprecedented task before us. But it may be that an unprecedented demand and need for undelayed action may call for temporary departure from that normal balance of public procedure. This Republic had its beginning, and grew to its present strength, under the protection of certain inalienable political rights. .. They were our rights to life and liberty. As our Nation has grown in size and stature, however – as our industrial economy has expanded – these political rights proved inadequate to assure us equality in the pursuit of happiness. We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence. This move to autocracy through growing executive power is exactly the situation the Founding Fathers separated powers to prevent. Binder notes that: Roosevelt's emergency declaration was not formally ended until 1977. Since 1978, presidential declarations of national emergencies have been governed by the National Emergencies Act. Presidents declare emergencies frequently, and the emergencies are long lasting. A 2019 report by the Brennan Center for Justice found that sixty-two national emergencies had been declared since the passage of the National Emergencies Act, with the average declared emergency lasting 9.6 years. The same report found that emergency authorities have accumulated over time, so that there are now 136 statutory powers available to the president during a national emergency, including substantial economic powers. In 1831, the Frenchman Alexis de Tocqueville arrived in the United States to see “what a great republic is” (Mansfield, 2010, p. 15). “Of all the novel things which attracted my attention during my stay in the United States”, he wrote, “none struck me more forcibly than the equality of social conditions”. “[A]s I studied American society”, Tocqueville went on, “I increasingly viewed this equality of social conditions as the factor which generated all the others and I discovered that it represented a central focus in which all my observations constantly ended” (de Tocqueville, 1831, p. 11). He produced Democracy in America based on his observations. Angus Deaton, a Nobel prize-winning Scotsman who arrived in the United States permanently in 1983, has produced Economics in America: An Immigrant Economist Explores the Land of Inequality based on his observations. This is quite an inversion: where Tocqueville saw “equality of social conditions” as “the factor which generated all the others”, for Deaton it is their inequality that fulfils this role. And, just as Tocqueville saw equality as the key to understanding the strength of democracy in America in the 1830s, Deaton sees inequality as vital to understanding the threat to it in the 2020s. Deaton's argument is twofold. First, he argues that poor economic outcomes for many Americans have left them ambivalent towards the system that produced them. “An epidemic of what Anne Case and I called ‘deaths of despair’ – deaths from suicide, drug overdose, and alcohol abuse – began before the Financial Crisis and continues to this day”, he writes. For Americans without a college degree, life expectancy at age twenty-five has been falling since 2010 … the background of despair … came from decades of an economy that was not delivering a good life for the two-thirds of the population without a four-year college degree. Second, Deaton argues that relative economic gains by the rich have enabled them to take control of the democratic process. “Democracy doesn't work if money captures the legislature”, he writes, “leaving those without wealth with no say …” (p. 110). “Wealthy minorities often block public provision of entitlement-like pensions or healthcare because they do not want to pay taxes for them”, he writes, “and do not need them for themselves or their families” (p. 105). These are heady arguments, particularly if they are leading “[m]any serious commentators … to worry that democracy is incompatible with capitalism, at least capitalism as currently practiced and regulated” (p. 211). But are they true? The epidemic of ‘deaths of despair’ which has propelled Deaton to the front rank of public intellectuals does not, in fact, exist. 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