By To me, the root of America’s problems is that the United States is a failing democracy because it is, in fact, a plutocracy, not a real democracy.
The major corporate lobbies and military-industrial complex have captured the legislature ( most serious studies show that law-making benefits mainly the major corporations)
This is the key weakness in modern capitalism as it means that the majority becomes effectively disenfranchised and increasingly loses trust in the establishment and government. Ray Dalio has documented how the real incomes of the bottom 50% have declined substantially over the past 3 decades, poverty, financial insecurity and homelessness increased together with unprecedented income and wealth inequality.
This leads to political polarization, both far right and far left populism and a gradual breakdown in civic order ( “civil war “ in Ray Dalio’s terminology) with record levels of mistrust in government, the press and even the legal system.
To be fair, most modern liberal democracies have avoided this extreme capture of the state by corporations and rich individuals by institutions that prevent unregulated money politics and the breakdown of public trust in governing institutions.
Most of Northern Europe, including Germany, the Netherlands, Scandinavia, Austria, and Switzerland, as well as Canada, Australia, New Zealand, Japan, Taiwan, and Korea, has more healthy, functioning democracies and competitive and reasonably dynamic market economies.
The US is the democracy that proves the rule, not that democracy has failed, but that state capture by plutocracy is the real danger of democratic failure.
Yeoh Lam Keong is an esteemed economist and former Chief Economist at the Government of Singapore Investment Corporation (GIC).
