Do the wealthy influence policy-making more across all forms of democracy?

Source- The post is based on the article “Do the wealthy influence policy-making more across all forms of democracy?” published in “The Hindu” on 11th April 2023.

Syllabus: GS2- polity

Relevance– Issues related to democracy

News– The article explains the study ‘Affluence and Influence in a Social Democracy’ published in American Political Science Review (2023).

What are the issues with democracies?

In the real world, no democracy is perfect. Affluent people enjoy a disproportionately greater influence over policy-making compared to the average citizen.

As per a study, public policy favors the affluent section at the expense of the poor and the middle classes. American democracy has certain unique features like heavy reliance of political parties on private donations. It makes policy-making unresponsive to the non-affluent.

Three different studies were conducted in Germany, the Netherlands and Sweden. In all these countries, policy was skewed in favour of the affluent.

How is Norway different from other democracies?

Public policy is skewed toward the preferences of the affluent. But the opinions of the poor and the middle classes also matter.

On economic issues, the preferences of both the poor and the rich seemed to matter almost equally. The link between money and politics was much weaker than in the U.S.

Why are the wealthy in Norway not able to influence policy-making?

Universal welfarism– The first factor is Norway’s universal welfare schemes and high levels of wealth redistribution. Universal welfare measures benefit every citizen. This contrasts with ‘targeted schemes’ which only benefit needy people.

It generates resentment among the non-needy people about how their tax money is being given away in ‘freebies’. It ensures their legitimacy and endorsement across classes.

Income equality– Norway has one of the lowest levels of income inequality in the world. So, the affluent section does not enjoy resource advantage to influence politics.

Resource rich people are not able to convert money power into political influence through political party funding. Here, the contrast between Norway and the U.S. is sharp.

Political candidates in the U.S. rely on large donations from individuals and organizations to run their campaigns. But parties in Norway get two-thirds of their financing from state subsidies.

Television advertising is a huge campaign expense in American elections. But political advertising on television is banned in Norway. This brings down the campaign costs. It also reduces the effect of disparities in spending power between candidates and makes the campaign process less vulnerable to private wealth.

In India, there is the opposite scenario. Electoral bonds empower wealthy private entities to make donations to political parties with zero transparency.

Strong trade unions– Norway has historically had strong trade unions. They have been able to influence economic and social policy through their close political links with the Norwegian Labor Party. It acts as a counter force to the influence of the wealthy.

Norway has vast reserves of oil and natural gas. It enables the government to maintain generous welfare schemes while imposing lower tax rates. It fulfils the needs of both the poor through subsidies and the wealthy through low taxes.

Less wealthy politicians– The country’s political class is not particularly wealthy. The median wealth among Norwegian MPs is zero.

Norwegian laws require proportionate representation of women in government institutions. Women on average have lower income than men. Their higher levels of representation results in greater political influence for women. It translates into greater political influence for lower-income citizens.