2016 Theme: The Hollow Shell of Democracy

A number of systemic, structural forces are intersecting in 2016. One is the hollowing out of democracy globally.

Democracy has three distinct states of being: formal, in actual practice and informal. Nations that claim the mantle of democracy typically mix features of all three varieties.

Formal democracy is the machinery of legislation and elections. Actual practice is how the machinery functions in the real world. Informal democracy is advocacy via direct action–protests, local movements and spontaneous mass expressions of outrage/disavowal of the status quo.

Formal democracies are being hollowed out. Within the hollow shell of formal democracy, wealthy elites purchase influence and lobbyists so regulation and legislation either actively advance their interests or imposes limits that are easily bypassed or negated in actual practice.

For example, the formal machinery of democracy generates tax statutes, but in actual practice, super-wealthy individuals and entities are laws unto themselves: The Oligarch Tax Bracket: How The Tax Rate For The Wealthiest 400 Americans Plunged From 27% To 17% (Zero Hedge)

For the Wealthiest, a Private Tax System That Saves Them Billions (New York Times)

With inequality at its highest levels in nearly a century and public debate rising over whether the government should respond to it through higher taxes on the wealthy, the very richest Americans have financed a sophisticated and astonishingly effective apparatus for shielding their fortunes. Some call it the “income defense industry,” consisting of a high-priced phalanx of lawyers, estate planners, lobbyists and anti-tax activists who exploit and defend a dizzying array of tax maneuvers, virtually none of them available to taxpayers of more modest means.

In recent years, this apparatus has become one of the most powerful avenues of influence for wealthy Americans of all political stripes

Each of the top 400 earners took home, on average, about $336 million in 2012, the latest year for which data is available. If the bulk of that money had been paid out as salary or wages, as it is for the typical American, the tax obligations of those wealthy taxpayers could have more than doubled.

Instead, much of their income came from convoluted partnerships and high-end investment funds. Other earnings accrued in opaque family trusts and foreign shell corporations, beyond the reach of the tax authorities.

The combination of cost and complexity has had a profound effect, tax experts said. Whatever tax rates Congress sets, the actual rates paid by the ultra-wealthy tend to fall over time as they exploit their numerous advantages.

Charting the American Oligarchy – How 0.01% of the Population Contributes 42% of All Campaign Cash (Mike Krieger)

The problem is not limited to the U.S.A.: concentrated wealth is buying political power in every formal democracy.

The hollow shell of formal democracy is being filled with an informal but very real authoritarianism. The citizenry of the hollowed-out democracies have not formally approved an authoritarian state, but the government on every level (national, regional and local) is imposing an unaccountable authoritarianism on the powerless citizenry.

This informal authoritarianism has many manifestations. First and foremost, no formal democratic approval of the authoritarian measures have been approved.

For example, the voters of California did not directly approve the state’s predatory, Orwellian policy of illegal seizure with a formal vote. The state of California simply adopted this authoritarian policy of first we seize your money and then you can beg us to give some of it back to you–maybe:

Welcome to the Predatory State of California–Even If You Don’t Live There

This is part and parcel of government’s authoritarian policy of civil seizure: Pay Our Pensions Or We’ll Throw You in Jail: the Legalization of Looting (March 19, 2014)

Another example is imposing high administrative fees for wrongdoing that is not adjucated in a court of law. The state bureaucracy decides the citizen didn’t meet some administrative standard and imposes a huge fee. In real practice, the appeal process is absurdly complex and slow, meaning most people have neither the time nor inclination to redress administrative wrongs.

The third form of democracy is informal gatherings of outraged/oppressed citizens: spontaneous demonstrations, workers protesting the plant closing without paying wages due, etc.

Governments quickly grasp the risk that such informal street democracy will reveal the truth–that the nation’s formal democracy is nothing but a hollow shell–and so the state either hurries to buy off the protesters with promises, or it sends in the storm-troopers (police, National Guard, civilian thugs hired by local government or its private-sector cronies) to bash heads and herd the protesters into gulags.

Democracy is now a travesty of a mockery of a sham, a hollow shell of PR and propaganda designed to confuse and distract the citizenry–the citizenry that is being crushed beneath the authoritarian rule that has expanded to fill the hollow shell of formal democracy.

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5 Responses to 2016 Theme: The Hollow Shell of Democracy

  1. Lynn Walker says:

    Mr. Smith, as you waste great amounts of our time discussing democracy and inequality, perhaps you can first explain to me why we intelligent humans would want a democratic form of government? Or how we can eradicate inequality?

    Democracy are the lowest form of civil governance, governance by those pandering to the lowest element. Democracies always degrade into authoritarian fascism. Why bother spending another minute analyzing something we should be rid of?

    Inequality is unavoidable. Fraud is the issue. The problem isn’t that the rich are richer than us, it is that they never earned their wealth, it was plundered with the aid of political, media, educational cohorts. I have no problem with honestly earned wealth, that recognizes the debt owed in it’s obtaining.

    Speak to the heart of our issues. You current discussions are irrelevant, foolish and waste our time. For the less intelligent they actually represent real harm as misinformation.

    This harassment of your messages will not stop until you re-educate yourself with actual knowledge.

    • tom says:

      There’s a lot to what you say, Lynn. But the problem of how human beings in the mass should govern themselves is extremely intractable. Aldous Huxley summed it up very accurately more than 50 years ago:

      “One of the many reasons for the bewildering and tragic character of human existence is the fact that social organization is at once necessary and fatal. Men are forever creating such organizations for their own convenience and forever finding themselves the victims of their home-made monsters”.

      In the case of government, the problem is fairly apparent. Any government must consist of ordinary human beings who are entrusted with huge power over their fellows. Moreover, such rulers are usually answerable to no one, and cannot be brought to book for their crimes. Inevitably, any government is gradually distorted by the immense pressures that come to bear on it. In modern “Western” (essentially American) society, money has come to be virtually the only value. Those who have lots of money are important, powerful, influential, and respected. Those who lack money are, by definition, lightweight, lazy, feckless, and negligible. Unfortunately money is as corrosive as hydrochloric acid. It destroys all other values, all duty, and all honour.

    • Brockland A.T. says:

      This is possibly the most relevant article Hugh Smith has ever written.

      The democracy gap is at the heart of every problem America/North America faces, as the driving force behind the lack of public accountability driving civil society and the economy into the ground. If earning honest living and honest accountability are no longer enforceable or profitable… well, what do you think is going to happen? Is happening?

      Proportional representation – an idea whose time has come. Get the government you want, today!


      Its a huge issue for the anglosphere. The Electoral Reform Society in Britain lost in 2011.


      But the problem persists. Many people probably don’t want the sense of responsibility. As if that means anything.


      When a ship goes down at sea, everybody without a lifejacket or place on a life boat goes down – and guess what, the “I’ve got mine” crown not only has yours, you’re being asked to trust in the system.


      In New Zealand, where pro-rep was introduced in 1992-3, a stealth attempt to reverse it was introduced and trounced.


      The question of proportional representation – democratic reform – has never came up in the United States.

  2. tom says:

    “For example, the formal machinery of democracy generates tax statutes…”

    You do not mention the well-known and uncontroversial fact that such statutes are usually written by the wealthy and their employees, before being rubber-stamped by complaisant legislators (who often have not even read the text).

  3. tom says:

    While I am at it, let me submit three further quotations from the work of Aldous Huxley. Notice how prescient he was: all of those remarks date back well over half a century.

    “A really efficient totalitarian state would be one in which the all-powerful executive of political bosses and their army of managers control a population of slaves who do not have to be coerced, because they love their servitude”.
    – Aldous Huxley (“Brave New World”, 1932)

    “Under the relentless thrust of accelerating over-population and increasing over-organization, and by means of ever more effective methods of mind-manipulation, the democracies will change their nature; the quaint old forms—elections, parliaments, Supreme Courts and all the rest—will remain. The underlying substance will be a new kind of non-violent totalitarianism. All the traditional names, all the hallowed slogans will remain exactly what they were in the good old days. Democracy and freedom will be the theme of every broadcast and editorial—but Democracy and freedom in a strictly Pickwickian sense. Meanwhile the ruling oligarchy and its highly trained elite of soldiers, policemen, thought-manufacturers and mind-manipulators will quietly run the show as they see fit”.
    – Aldous Huxley (“Brave New World Revisited”, 1958)

    “Armaments, universal debt, and planned obsolescence – those are the three pillars of Western prosperity. If war, waste, and moneylenders were abolished, you’d collapse. And while you people are over-consuming the rest of the world sinks more and more deeply into chronic disaster”.

    – Aldous Huxley (“Island”, 1962)

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