Money is about more than just survival Premium

There may be anger over capitalism in the context of income and wealth inequality, but money is about more than just survival

There is little surprise that Bernie Sanders in his book, It’s OK to Be Angry About Capitalism, has blamed unfettered capitalism for an unprecedented level of income and wealth inequality. The Vermont Senator recently came up with a radical idea: the U.S. government should confiscate 100% of any money that Americans make above $999 million. “I think people can make it on $999 m. I think that they can survive just fine,” he said.

But who says that having money is just for “survival”? Does not money buy many things? Take “happiness” for instance. Daniel Kahneman and Angus Deaton, Economics Nobel laureates in 2002 and 2015, respectively, hypothesised in 2010 that happiness increased steadily with income up to an annual income of $75,000, but that there was a monetary “happiness plateau” beyond that point.

Matt Killingsworth of the University of Pennsylvania, however, found no evidence of such a plateau. Well-being improves with money, according to his 2021 study. Recently, in an “adversarial collaboration,” Kahneman, Killingsworth, and Barbara Mellers reanalysed the experience sample data and discovered that the flattening pattern only affected 20% of the population, who were the least happy. One could certainly argue that by “happiness” they mean “well-being”.

Does money’s power end there? Rich people might have a lot of influence over policy changes in many places, as one may perceive. But where is the evidence?

In a recent work that was published in April in the British Journal of Political Science, Mikael Persson and Anders Sundell, two Swedish researchers from the University of Gothenburg, showed that having money increases your odds of achieving your goals. They examined survey data on the preferences for around 3,000 policy proposals from 30 European countries during a 38-year period, which included information on whether or not each policy proposal was implemented. The policy proposals covered topics such as welfare, immigration, foreign policy, and the environment. In all, but two European countries, they found that the rich consistently have a higher likelihood of getting what they want from policy and politics over the course of decades. Now, it is evidence-based conclusion, at least. The average proportion of rich households supporting policies was 57.1%, compared to 53.7% for low-income households. It is interesting that there was no proof that variations in unequal congruence were connected with economic inequality, campaign finance regulations, voter turnout, or union density.

This was already known in the American context. Political scientist Martin Gilens found in his ground-breaking study in 2012, that in the U.S., actual policy outcomes strongly reflect the preferences of the most affluent but exhibit little relationship to the preferences of Americans with poor or middle incomes. Many believe that significant economic transactions between wealthy individuals and the political elite in the U.S. may forge a link that influences politicians to act in accordance with the views of the wealthy. Nobel laureate economist Paul Krugman, for example, stated in an opinion piece in The New York Times, in 2020, that the wealthy have historically dominated campaign contributions in the U.S., which is related to their influence in policymaking.

Then, in a paper in 2014 published in the journal, Perspectives on Politics, Martin Gilens and Benjamin I. Page examined data sets that included measures of the key variables for 1,779 policy issues and discovered that while average citizens and mass-based interest groups have little or no independent influence, economic elites and organised groups representing business interests do. However, neither majoritarian electoral democracy nor majoritarian pluralism as a key fact was supported by the results; only theories of economic-elite domination and biased pluralism did.