DEMOCRACY AND ECONOMICS – A THOUGHT EXPERIMENT

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democracy:  government by and for the people
economics:   the systematic distribution of resources
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Imagine a big, gymnasium-size room with 100 people in it.

Imagine there is $1000 the 100 people can divide up among themselves
in any way that at least 51 of the people agree upon.

For instance, they might decide to give all 100 people $10 each,
or to give 50 people 15 and 50 people 5,
or any distribution at all that at least 51 of them approve.
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Suppose someone suggests the 100 people divide up the $1000
in the same proportions as wealth is distributed in the United States
(based on figures in the Federal Reserve Bank’s 2001 Survey of Consumer Finances).

That distribution would work approximately like this:

Get 10 of the 100 people and have them sit together in one part of the room.
These 10 people will get 700 of the $1000.
Before moving to the next group, get 1 of the first 10 people to stand apart of the other 9 –
out of their total of $700, this 1 person will get $330.

Now get another group of 10.
They will share $130.

Now, form a group of 20 – they’ll share $110.
Another group of 20 will share $40.

And finally, the remaining 40 people will get to share $3.
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So here’s how it ends up:
# of people           $ each gets
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1            $ 330.00
9            $  41.10
10            $  13.00
20            $   5.50
20            $   2.00
40            $   0.075 (seven and a half cents)
100            $1000.00
– – – – – – – – – – – – – – – – – – – – – – –  – – – – – – – – – –

THE KEY QUESTION:
Would 51 of the people in the room agree to this distribution?
It doesn’t seem likely, does it?  (Would even 25?)

HYPOTHESIS
for discussion and debate:
This distribution of wealth could not exist in a democracy.

Corollary:
The United States, where this distribution of wealth does in fact exist, is not a democracy.
The United States is at best some form of virtual democracy
(virtual meaning “existing in the abstract but not in fact”).

My unfortunate conclusion:
There is a name for our form of government, but it’s not democracy.
It’s PLUTOCRACY
government by and for the wealthy.

Is this the society we want?

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notes and caveats:
* Figures are approximations based on Table 2 in Edward N. Wolff, Changes in Household Wealth in the 1980s and 1990s in the U.S. (Levy Economics Institute Working Paper No. 407 (May 2004))
located at: http://www.levy.org/default.asp?view=publications_view&pubID=fca3a440ee

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