Grantham

https://www.gmo.com/docs/default-source/public-commentary/gmo-quarterly-letter.pdf

Trying to understand deficiencies in democracy and capitalism

Democracy

“The central point that emerges from our research

is 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

.”

[Emphasis added.] This is the killer conclusion of a paper last fall by Gilens and Page.

Based on the

study of almost 1,800 policy issues for which income breakdowns were available, and defining the

“Elite” generously as those above the 90th percentile, it finds that “majoritarian electoral democracy”

is largely a thing of the past.

To keep the review of this study short, it is probably only necessary to point out that the average bill in

the U.S. Congress has a 31% chance of passing; this chance falls to 30% when the proposed legislation

is hated by average citizens and rises to 32% when they love it! In contrast, love from the economic

elite, although not absolutely guaranteeing success, raises the chances of its passing to 60%.

But when

the elite truly detest an issue, it is like passing a death sentence: About 1% of these bills pass

!

It would be helpful to know one day whether it is the 1%, the .01%, or only the top 2,000 or so who

really drive this data, for it is surely not the top 10%. Other than that, the data speaks for itself: It would

seem that “government of the people, by the people, for the people” has indeed, for practical purposes,

“perish(ed) from the Earth.” Lincoln would no doubt urge us to try to resuscitate it.