Thanks in large part to the Occupy Wall Street movement, the debilitating effects of income inequality have been hoisted into the national spotlight. But in addition to killing economic growth and economic mobility, income inequality also exacerbates political inequality.
Today, ThinkProgress spoke with MIT economist Daron Acemoglu, whose new book, Why Nations Fail (co-written by James Robinson), looks at the effect politics and policy have on economic growth and prosperity. Acemoglu said that he believes the most “pernicious” effect of income inequality is that it drains political power from lower- and middle-class Americans and allows the richest to then begin “changing the rules in their favor”:
I think there’s a lot of debate about the economic impact of income inequality. There’s literature on how greater inequality might slow economic growth because it creates a less conducive environment for consumer demand or credit. But at the end, my view, and that of our book with James Robinson, is that the more pernicious effect of economic inequality comes indirectly through its impact on political inequality. it’s a general pattern throughout history, and we see around today, that when economic inequality increases, the people who have become economically more powerful will often attempt to use that power in order to gain even more political power. And once they are able to monopolize political power, they will start using that for changing the rules in their favor. And that sort of political inequality is the real danger that’s facing the United States.
Acemoglu added that the Supreme Court’s decision in Citizens United and the growth in Super PAC spending are only going to make this problem worse by increasing the importance of money in politics. “We already had a very serious problem,” he said. “Instead of trying to stem that tide, we’ve done the opposite and we’ve now opened the sluice gate and said you can use that money with no restrictions whatsoever.” According to calculations by Council of Economic Advisers chairman Alan Kruegar, the shift in income inequality over the last three decades has been the equivalent of moving $1.1 trillion of income from the 99 percent to the top 1 percent every single year.