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

Ruben B. Mathisen undertakes a study on Norway’s democracy, following the same methodology used by Gilens’ in the U.S., to assess the extent of policy unresponsiveness in a democracy that has ‘gone furthest in reducing economic inequality and restricting money in politics’

April 11, 2023 08:30 am | Updated 08:30 am IST

For representative purposes

For representative purposes | Photo Credit: Getty Images

Mathisen, Ruben B., ‘Affluence and Influence in a Social Democracy’, American Political Science Review (2023)

One of the reasons that a democracy is held to be superior to other forms of governance is the promise it holds out that every citizen will have equal say in policy-making. This would indeed be the case in a perfect democracy where every individual is politically equal. But in the real world, no democracy is perfect, and what has typically been observed is that the affluent enjoy a disproportionately greater say in policy-making compared to the average citizen.

The Gilens model

The most prominent studies on this phenomenon have been conducted by American political scientist Martin Gilens who, in a 2012 study, found that in the U.S., public policy decidedly favoured the preferences of the affluent, at the expense of the poor and the middle classes. American democracy, however, has certain unique features, such as the heavy reliance of political parties on private campaign donations, which might make it far more unresponsive to the non-affluent. Would other democracies, say, the social democratic ones of Western Europe, show a different pattern?

Three different studies inspired by Gilens tried to answer this question, with regard to Germany, the Netherlands and Sweden. In all these countries, policy was once again found to be skewed in favour of the preferences of the affluent. In this research paper, Ruben B Mathisen, a political scientist with the University of Bergen, seeks to test Gilens’ findings further by assessing the extent of policy unresponsiveness in a democracy that has “gone furthest in reducing economic inequality and restricting money in politics: Norway”.

Studying Norwegian democracy

For his study, Mathisen followed the same methodology as Gilens, constructing an original dataset on public opinion and public policy containing 603 specific issues over five decades (1966-2014). For each policy proposal, he “estimated the level of support among different percentiles and matched those data with information on which of the proposals were subsequently adopted by the government.” Mathisen’s findings were significant. Although in Norway, too, public policy skewed towards the preferences of the affluent, their influence was by no means exclusive, and the opinions of the poor and the middle classes also found expression in government decisions. Secondly, the study revealed that on economic issues, the preferences of both the poor and the rich seemed to matter almost equally; and most interestingly, the opinions of the highly educated were found to be strongly related to policy outcomes regardless of whether they were rich or poor. Clearly, in a social democracy like Norway, the link between money and politics was much weaker than in the U.S.

There are implications and lessons here for anyone interested in deepening democracy in their society. Mathisen advances several reasons why the wealthy in Norway haven’t managed to capture policy-making, the way they have in the U.S. The first factor seems to be Norway’s universal welfare schemes and high levels of wealth redistribution. ‘Universal’ welfare measures are ones that benefit every citizen (such as free education and free public healthcare). This is in contrast to ‘targeted schemes’ like the ones we have in India which only benefit the so-called ‘needy’ and tend to provoke resentment among the ‘non-needy’ about how their tax money is being frittered away in ‘freebies’. This universality of social benefits has the effect of ensuring their legitimacy and endorsement across classes, including the affluent. As a result, policies favoured by the poor have a “better chance at being maintained or even expanded by the government” and there is often a “self-reinforcing component by which new policy gains for the poor are more easily achieved over time.”

The second effect of redistributive welfarism is that Norway has one of the lowest levels of income inequality in the world, which essentially means “less of a resource advantage for the affluent to be used (in whichever way possible) to influence politics.” A key aspect related to this phenomenon of being able to convert money power into political influence is political party funding, and here, the contrast between Norway and the U.S. is sharp. While political candidates in the U.S. rely on large donations from individuals and organisations to run their campaigns, parties in Norway get two-thirds of their financing from state subsidies. This shuts down a major channel of influence-buying by the wealthy. Moreover, while television advertising is a huge campaign expense in American elections, political advertising on television is banned in Norway. This not only helps to bring down campaign costs, it also reduces the effect of disparities in spending power between candidates, making the entire campaign process less vulnerable to private wealth. In India, for instance, we have the exact opposite scenario, where electoral bonds empower wealthy private entities to make astronomical donations to political parties with zero transparency in terms of who gave how much money to which party or candidate. Understandably, inequality and policies known to worsen inequality have been gaining ground in India in recent years.

Thirdly, 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, serving “as a countervailing force to the influence of the wealthy”. And this is again a contrast to democracies such as the U.S. and India where trade unions are no longer politically powerful as they once were.

The effect of unlimited energy

There is another element that is perhaps unique to Norway and has enabled the state to cater to the concerns of the non-affluent without troubling the affluent — its vast reserves of oil and natural gas. They have made it possible for the government to “maintain generous welfare transfers while imposing lower tax rates than otherwise would be necessary, presumably catering to the preferences of both the poor [subsidies] and the wealthy [low taxes].” Mathisen cites the example of how, in the aftermath of the 2008 financial crisis, unlike other western democracies, the Norwegian government used oil money, rather than spending cuts or tax increases, to fund stimulus packages.

Lastly, the country’s political class is not particularly wealthy. The median wealth among Norwegian MPs is zero, according to tax records, which means that it is unlikely for policies to be biased in favour of the rich just because the politicians are themselves rich. There are also other, relatively minor factors that could explain the relatively greater influence of the non-affluent on policy-making: one of them is laws requiring proportionate representation of women in government institutions. Since women on average have lower income than men, their higher levels of representation resulted in greater political influence for women, which, in turn, got translated into greater political influence for lower-income citizens.

The study concludes by pointing out that although policy-making in democracies overall (including Norway), tended to skew in favour of the affluent, thereby violating the basic democratic principle of political equality, the Norway example demonstrated two things: one, in a welfarist social democracy with low inequality, education was a stronger predictor of responsiveness than income; and two, restricting how money can be used to influence elections, and strengthening countervailing forces (such as trade unions) might change the balance of power. Mathisen does add, however, that initiating such changes would be most difficult in precisely those democracies that need them the most, because it is in those countries that the affluent already wield the greatest influence on policy.

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