Liberty Square

What is the Liberty Square tartan?

Liberty Square symbolises the golden rule of contemporary capitalism: "Those with the Gold make the Rules." In a throwback to the Gilded Age, wealth is increasingly concentrated in the hands of a few—represented by the gold stripes—while the ordinary citizen, symbolised at the centre, finds themselves increasingly boxed in. In the US, according to the Tax Foundation, the share of Adjusted Gross Income (AGI) reported by the top 1% of earners rose from 22.2% in 2020 to 26.3% in 2021, while the share reported by the bottom 50% declined from 14.4% in 2001 to just 10.4% in 2021. Writing in the Financial Times, Jeremy Grantham, head of asset management firm GMO, acknowledged that the system is “designed to prolong, protect, and intensify the wealth and influence of those who already have the wealth and influence”. Disillusioned citizens elect populists to put things right, only to witness conditions deteriorate further.

A democracy built on equal citizenship fundamentally relies on mechanisms that ensure fairness and balance. Equal rights, political participation, and economic opportunities are central to this vision. Yet, as Yale professor Timothy Snyder highlights in his book, On Freedom, when "negative freedom"—freedom without accountability—is elevated above all else, it becomes a tool for entrenching inequality.

In the US, Snyder argues, negative freedom took root in the 1980s and shaped the political landscape in this century. The purpose of government changed from creating the conditions of freedom for all to removing barriers in order to help the wealthy consolidate their gains. The word freedom in American English has come to mean little more than the privilege of wealthy Americans not to pay taxes, the power of a few oligarchs to shape the discourse, and the unequal application of criminal law. The majority's needs (healthcare, education, infrastructure) are sidelined because the wealthy scupper policies that might limit their wealth or influence. People elect populists to put things right, only to watch conditions deteriorate further. 

Ann and Ian's Deep Dive into Crony Capitalism, Populism & Society

FAQ

What is the "veil of ignorance" and its use in evaluating global welfare?

The "veil of ignorance" is a thought experiment where individuals assess societal structures without knowing their position within that society. This encourages impartial judgment focused on fairness and justice. Applying this to global welfare, one might argue that being born into the present, despite its inequalities, is preferable to the past, given the substantial progress in overall well-being and poverty reduction in recent decades, particularly in India and China. What's concerning is rising within-country inequality, which raises important questions about the distribution of gains from economic growth and the need for fresh solutions that ensure equitable development, benefiting all segments of society.

What is crony capitalism? 

Crony capitalism is an economic system where success is driven more by political connections than merit. Businesses gain favor through political contributions, lobbying, and personal relationships with those in power. The system is not accidental, but the result of decisions made at the highest levels of government. For example, the 2010 "Citizens United" decision by the US Supreme Court significantly increased the ability of corporations to contribute to political campaigns. This has raised concerns about the influence of corporate money in politics and its potential to exacerbate crony capitalism.

"Kakistocracy" refers to government run by the worst, least qualified, or most unscrupulous citizens. This term has gained relevance in contemporary political discourse as some critics perceive certain governments as prioritizing loyalty over competence, potentially leading to ineffective governance and disregard for public interest. Kakistocracy was The Economist's Word of the Year for 2024—a direct reference to Donald Trump's second presidency and the perceived favoritism towards loyalty over competence in his appointments.

What are the potential consequences of crony capitalism?

Crony capitalism can lead to market inefficiencies and unfair competition. When political connections, rather than merit, determine economic outcomes, it undermines market forces and can stifle innovation and growth. Resources may be misallocated, and less-connected firms may face disadvantages, hindering overall economic development. This is most obvious in the case of tariff exemptions. 

The academic paper, The Political Economy of Tariff Exemption Grants, analysed tariff exemption applications during the Trump administration's trade war with China. The authors find that campaign contributions to Republican politicians significantly increased a firm's likelihood of receiving a tariff exemption, even when controlling for factors like lobbying expenditures and stated USTR exemption criteria.

The research highlights that firms contributing to Democratic politicians were less likely to be granted exemptions, suggesting a partisan bias in the process. Furthermore, the study shows that markets anticipate this bias, with firms receiving unexpectedly favorable decisions experiencing positive abnormal stock returns. This reinforces the notion that political connections, particularly with the ruling party, can create an uneven playing field in seemingly objective economic processes.

What is the relationship between crony capitalism and populism?

Populism often arises as a reaction against crony capitalism and the inequality it produces. Populist leaders or movements:

  • Target elites: They frame their message around fighting corrupt elites and restoring power to "the people."
  • Mobilize resentment: Economic hardship caused by crony capitalism fuels populist anger, making it easier to rally support among disillusioned citizens.
  • Promise change: Populists often claim they will dismantle crony capitalist systems, restore fairness, and redistribute power or resources.

Ironically, populism often reinforces crony capitalism rather than dismantles it:

  • Authoritarian tendencies: Some populist leaders centralize power under the guise of fighting corruption, creating opportunities for new forms of cronyism.
  • Economic mismanagement: Populist policies may focus on short-term gains (e.g., subsidies or handouts) rather than structural reforms, leaving crony capitalist systems intact.
  • Selective favoritism: Instead of dismantling cronyism, populist regimes may replace one elite class with another, rewarding loyalists or politically connected businesses.

Populism is a recurring phenomenon throughout history. Researchers identified 50 populist presidents and prime ministers in the period 1900-2018, with 2018 representing the high-water mark (16 countries ruled by populists. Unfortunately, countries that have experienced populist leadership once are more likely to see it again. Analysis of economic data reveals a consistent pattern of decline in GDP growth following the rise of populist leaders.

Sortition: A Path to Democratic Renewal

Sortition, or the random selection of citizens to hold public office or participate in decision-making, is an intriguing concept that could address many of the systemic issues discussed above, by breaking the link between wealth and political power. Rooted in ancient Athenian democracy, sortition ensures representation by drawing on the principle of randomness rather than wealth, connections, or popularity.

As noted by the forthcoming Journal of Sortition, an interesting line of inquiry—tracing back to Aristotle and recently revitalized by James Surowiecki’s work on the wisdom of crowds and further developed by Hélène Landemore—focuses on the concept of collective wisdom. This approach examines how large, randomly selected assemblies can harness diverse perspectives to arrive at informed and balanced decisions.

Theoretical, experimental, and empirical research has provided robust evidence supporting the potential of such assemblies to achieve "wise" outcomes. However, the same body of work has also illuminated the risks inherent in these processes, such as the dangers posed by information cascades—where the group converges prematurely on a suboptimal decision due to social dynamics or faulty information. This growing literature has spurred significant interest in how best to structure deliberative assemblies to maximize their effectiveness.

Key considerations include the design of briefing materials, the role of expert witnesses, and the function of moderators, all of which play critical roles in ensuring thoughtful and inclusive deliberation. Yet these interventions raise their own complex questions: Who guards the guardians? Who ensures that the selection of experts, the framing of information, and the moderation of discussions do not introduce bias or undermine the integrity of the process? Such challenges highlight the delicate balance required to cultivate collective wisdom, emphasizing the need for rigorous safeguards and transparent practices to maintain trust and legitimacy in deliberative systems.

The Liberty Square tartan

The Liberty Square tartan encapsulates the struggle against the concentration of power and wealth, pointing to the potential for collective wisdom to shape a fairer society. By donning the tartan, advocates not only honor the movement's roots in democratic reform but also embody its core principles: that power should flow not from privilege but from the collective wisdom and participation of the many.

Three tartan applications:

  • Advocacy: Worn by devotees to visibly signal their commitment to a fairer, more inclusive democratic system.
  • Identity: A unifying emblem for global movements advocating for sortition and democratic reform.
  • Recognition: Presented as a token of appreciation to participants in deliberative assemblies, fostering a sense of pride and connection to the movement.