Democracy in America: Effects of Wealth Inequality

Table of Contents

Democracy has always been associated with social inclusion and a closing gap between the rich and the poor. However, theory and reality change in the historical perspective – so does the situation with inequality. Undoubtedly, a deeper insight is needed to study the relations between democracy and inequality. The purpose of this study is to explore how wealth inequality affects democracy in America and what the perceptions of that influence are. The research aims to bring together different aspects of inequality including incomes, decision-making, Congress responsiveness, etc. The study analyzes different approaches towards democracy and decision-making to show the implications of high inequality. The goal is to analyze several books and works on democracy, politics, and political economy to find the clues of how the problems associated with inequality and lack of social inclusion influence democracy.

The introduction of democracy has contributed to some necessary improvements such as the participation of different social groups in political and economic life, the empowerment of women, and other key changes that help us believe in social inclusion and better world. Moreover, the economic progress contributed to a great wealth that was announced to be distributed among greater numbers. Now, the US is one of the leaders in the GDP per capita. It is a country that generates astounding ideas for the scientific and politico-economic breakthroughs enhancing production efficiency. Much has been done to improve the educational system and increase the inputs to a healthy life. However, wealth inequality remains a problem that disrupts our beliefs in the equal world. According to the estimates of the GINI coefficient, the US has rather high inequality rates. There are multiple reasons for this state of things. The US is a country where different social and ethnic groups have lived together for centuries. Various social entities had been facing significant barriers to economic participation. The modern America is to deal with the consequences of slavery, segregation, displacement of indigenous population. Further research is designed to determine how wealth inequality affects democracy in America.


The type of research that will be used in this study is qualitative research. The research aims to explore the influence of wealth inequality on American democracy through the analysis of the literature on democracy and policymaking. In the research, two books, two journal articles, and one research paper were observed to figure out what inequality implications are seen as the factors affecting the American democracy.

Review of Literature

The interrelations of inequality rates and democracy perceptions are widely discussed in modern literature. Particularly, attention is paid to the inability of particular classes and social groups to benefit from rising living standards. These assumptions are often associated with such issues as the economic participation of women and disability of service-sector jobs to provide enough remedies for a decent life. For instance, Miroff, Seidelman, Swanstorm, and De Luca (2012) suggest that “a single person—let alone an entire family cannot exist on the low-wage, service-sector jobs available today” (p. 34). Using the example of Wal-Mart, the largest American company of 2012, the researchers show that the biggest players in the American economy are not able to provide their employees with decent living standards. Being one of the most successful retailers in history, Wal-Mart has an average full-time wage of 10.11$ per hour which is almost half of what workers are paid in such chains as Costo (Miroff et al., 2012, p. 35). Miroff et al. (2012) note that “a remarkable 11 percent of all woman workers in the United States work for Wal-Mart” (p. 35). The low salaries of the workers and low democratic prices in the chain of Wal-Mart are the two sides of one coin as the cheap labor let the prices be so handsome. Moreover, service-sector jobs are often chosen by women that took care of their families and were not able to gain enough work experience.

Dye (2001) explores the conflict of two ideas – the idea of democracy as a regime reflecting the demands of all people and the idea that public policy is conducted by the privileged top. Dye (2011) states that there is no real democracy in the modern world, and governments’ measures don’t comply with the needs of population. Money is referred to as the main gear of the business-as-usual path. The author overviews campaign expenditures, interest group process, and the media elite’s advantages to investigate the symptoms of inequality – a remarkable contrast between the rich and the influential ones, and the rest of the population. Dye (2001) points out that “average House member… spend almost $1 million every two years. U.S. senators must be prepared to raise more than $5, $10, or $25 million every six years” (para. 18). Dye also reflects on the lobbying activities and public opinion in the US, underlying the fact that all these activities are designed to maintain favorable conditions for conducting the policy of elites. Dye (2001) admits that “power in American society is concentrated in the hands of the relatively few people who control its largest organizations and institutions. These are the people who make policy for the nation; they are the national elite” (para. 4). Moreover, public policy is not something with a definite and adequate purpose. It is the set of actions reflecting ambitions of the elite, and the pursued policy only seems to be rational and fair. (Dye, 2011, para. 6).

In his book “The political economy of the new gilded age,” Bartels (2014) focuses on unequal democracy and political obstacles to economic equality. Bartels (2014) notes that for the recent four decades “even for families near the top of the income distribution, the average rate of real income growth has been cut in half, from 2.4% per year to 1.2% per year for families at the 95th percentile” (p. 10). The shifts in public policy such as the welfare reform and the expansions of the Earned Income Tax Credit were most favorable only for the poor with jobs and families while ignoring the poorest of the poor. Bartels (2014) doubts about the fact that it is normal to call a democracy a system where nearly every adult has the right to vote, but wealth, knowledge, and real participation in the decision-making process are distributed unequally.

Hayes (2012) examines the unequal response by the Congress to the people in different social contexts. In his study, he measures the responsiveness of the Senators to the people with various income levels and finds out that the Senators tend to be positively responsive to upper-level constituents, being not attentive or even negatively responsive to the constituents with low and middle income. Heyes (2012) states that “analysis, which examines Senator behavior on a significant number of votes, shows evidence of responsiveness to only the wealthy, a distinct problem for any democracy” (para. 47). Hayes underlines the fact that income inequality inevitably has political consequences. According to Hayes (2012), “With the growth in income and wealth inequality in America since the late 1960s, scholars, policymakers … are increasingly concerned that inequality … often contribute to unequal political outcomes” (para. 1).

Other authors also underline the fact that different factors influence the inequality and distribution of wealth in the US. According to Acemoglu, Naidu, Restrepo, and Robinson (2013), “these include the distribution of innate abilities and property rights, the nature of technology, and the market structures that determine investment opportunities and the distribution of human and physical capital” (p. 1). In the research, Acemoglu et al. (2013) aim to illustrate the complexity of interrelations of inequality and democracy. Much attention is paid to the problem, and there are multiple opinions, though inequality is often perceived as a barrier to democracy. Acemoglu et al. (2013) oppose the claims that the society should doubt in the democracy if it faces challenges associated with inequality. As Acemoglu at al. (2013) suggest, “we find a robust and quantitatively large positive effect of democracy on tax revenues as a percentage of GDP (and also on total government revenues as a percentage of GDP)” (p. 3). In the research, both positive and adverse effects of democracy were examined. In the conclusion of their research, Acemoglu et al. (2013) state to have found the evidence that “democracy redistributes from the rich and the poor to the middle class, and therefore its effect on inequality may depend on the relative position of the middle class vis-a-vis the poor and the rich” (p. 42). The research also found out that the scientific literature is far from a consensus on the topic.


The data analyzed in the present study suggests that there is a connection between the inequality patterns and perceptions of democracy. By and large, people tend to doubt in the efficiency of the American political economy when there comes to investigations of high inequality rates and low live-standards in the particular social groups and classes. For instance, in the book by Miroff et al. (2012) the scales of the workers having underpaid jobs in Wal-Mart are described. Furthermore, Miroff et al. (2012) raise the question of women’s participation in the service-sector jobs and their inability to earn enough to provide themselves with decent living standards. Other studies illustrate the disparities of incomes between different classes. For example, Bartels (2014) points out to the uneven improvement of living standards while Heyes (2012) illustrates the difference of the Senators’ responsiveness to various classes and social groups. Dye (2001) pays attention to the amount of expenditures being made by the politicians during their campaigns. Finally, Acemoglu et al. state that the perceptions of both democracy and inequality should be more complicated as we tend to make accents on some factors and ignore others.

The authors reflect on different factors underlying inequality and poor participation including low salary, the gulf between the rich and the poor, high expenditures on political campaigns, and unequal responsiveness of the Congress members. The studies and books overviewed point out to the complexity of the problem. However, all of the authors focus on the fact that social inclusion, political and economic participation are still uneven and depend on social class or group. Although average incomes remain rather high, the contrast between the top one percent of the households and the rest of the population are still staggering. These disparities do not only result in unfair wealth distribution but influence the participation of the different social groups in a decision-making process as the authorities tend to pursue their interests rather than reflect the needs of the population. Importantly, political economy cannot be divided from the market demands and interests of politicians and monopolies, so it is unsurprising that democracy and inequality are seen as the two sides of the same coin.


Acemoglu, D., Naidu, S., Restrepo, P., & Robinson J. A. Web.

Bartels, L. (2014). The new gilded age. In K. Kollman, (Ed.), Unequal democracy: The political economy of the new gilded age. (pp. 1-29). New York, NY: Russel Sage Foundation.

Dye, T. (2001). Top down policymaking. New York, NY: Chatham House.

Hayes, T. (2012). Responsiveness in an era of inequality: The case of the U.S. Senate. Political Research Quarterly, 66(3), 589-599.

Miroff, B., Seidelman, R., Swanstorm, T., & De Luca, T. (2012). The democratic debate: American politics in an age of change. (6th ed.). Boston, MA: Cengage Learning.

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