3/7 A Civil Society - “CAPITOL, CAPITAL” THE GROWTH OF POWER AND MONEY TO THE CENTER

Americans of all ages, all conditions, all minds constantly unite... Everywhere that, at the head of a new undertaking, you see the government in France and a great lord in England, count on it that you perceive an association in the United States.
– Alexis de Tocqueville, Democracy in America

The growth of federal government overreach, and the increased concentration of wealth at the center, has a corrosive effect on social capital.

The growth of federal competencies undermines local, mediating, civil and civic institutions. There is diminished reason for involvement in local political or civic matters if policy decisions are made at the federal level.

Secondly, there is greater incentive for powerful actors, whether philanthropic or political, to direct their efforts to influence policy at a federal level. Further, with the increased wealth accrued to the already wealthy, this problem is amplified.

The amassing of power to federal government and the accrual of wealth to the rich— which together we describe as “the center”—creates a vicious cycle that perpetuates social capital decline.

1.1 CENTRALIZATION OF POWER

The government has grown in almost every measure: number of employees, share of the population in receipt of federal benefit, as a percentage of GDP, etc. Growth in federal per capita spending has, adjusting for inflation, increased from $3,782 in 1965 to $19,515, according to the Heritage Foundation.

As the Joint Economic Committee Social Capital Project has observed, “A portion of the decline in social capital is likely driven by the growth of government during the same time,” noting, “The explosive growth of the U.S. government through the 1960s and 1970s matches the contemporaneous inflection point and decline of social capital” where, for example, “States with a greater number of regulatory restrictions... tend to have lower levels of social capital.”

1.2 CONCENTRATION OF WEALTH

During this same period of social capital decline from the late 1960s onwards, the United States has seen an increased concentration of not just power, but money to the wealthiest.

Income inequality has been reported widely. Comparable to Russia, Brazil, Chile, Saudi Arabia, and Southern African countries, the United States’ top 0.1 percent of the population has more wealth than the bottom 80 percent. As American Compass have described,5 income inequality, as measured using the Gini coefficient, has been on the increase since the 1970s. The process of growth has not been a tale of all growing wealthy together. Rather, as some have accrued enormous wealth, many others have been left behind so that America’s experience with income inequality is closer to that of Latin America than, say, Canada or Europe.

Writing in Daedalus, Brady and Kent argue that economic inequality has played a role in the decline of social trust between people—the top 1 percent ’s wealth grew from 25 percent to almost 40 percent of all wealth. Crucially, this gap had followed a period of growing income for everyone—from 1946 to 1980 growth in income was evenly distributed across all income groups, but from “1980 to 2018, growth has been unevenly distributed with low growth for bottom income groups, mediocre growth for the middle class, and explosive growth at the top.”

Even those academics whose research leads them to conclude that the decline of social capital in the United States is not as feared, accept that there has been an overall decline in society-wide trust, and note that income inequality is detrimental to social capital creation. They observe “since young Americans today are coming of age during a time when their fellow citizens are less likely to associate with or trust others, then cohort replacement may soon lead to a decline in social capital.”

1.3 SUPER-CHARGING THE CENTER: Political funding and philanthropy

The centralization of power and money has had something of a run-away effect. If decisions are made at the center, then actors will want to invest in influencing the center. If the wealthy have more wealth than they had before, they have both more money to use to influence the center, and greater vested-interests to protect. This in turn sets off something of an arms race in political and philanthropic funding—as one faction ups the ante for one campaign or set of policy priorities, so another faction has to counter, even if begrudgingly.

Political funding8 and philanthropy are both core assets to social capital creation, and the health of these two major facets is of concern to all those who wish to see a growth in the health of social capital.

Yet, the reinforcing of the center—and the energy, attention, and cash that it invites— diminishes the capacity for activity at the periphery, which further withers. This is the picture that we have seen in the United States since the 1970s, especially in the nature of political funding and philanthropy.

1.3.1 Political funding

U.S. election expenditure is in a considerable rate of increase. Federal election spending in 2020 was, adjusting for inflation, 50 percent higher than 2016 and double 2018,9 making it the most expensive election in American history with nearly $3.3bn from outside spending.

While costs associated with political campaigns have increased substantially, it is notable that small donor numbers have plateaued, so that the increase in political funding has come from an increase in large donations from wealthy individuals or interests.

As Richard Briffault points out, almost 20 percent of 2020 funding came from just 2,635 people or couples, which is to say less than one thousandth of the population, and this for funds that we know about. Super PACs do not need to declare their donation sources—with the lack of transparency earning the moniker “dark money”.

Yet their influence is enormous. According to Open Secrets, in the decade since Citizens United—the Supreme Court ruling to protect unlimited campaign financing from government limits as a free speech issue—“The balance of political power shifted from political parties to outside groups,” where election-related spending from non- party independent groups totaled $4.5 billion, compared to $750 million in the twenty years prior. Candidates found themselves outspent by outside groups in 126 races since the court decision, previously a relatively rare occurrence.

This shift toward powerful outside groups also has the effect of making it more expensive to run for political office. This elevates the donor to primary importance to the success of the candidate, perhaps more so than the political party. This shift corrodes the patronage and discipline within a political party, and can hyper-charge more extreme, or more expendable, candidates, especially for Congress.

These big funds depreciate the value of a small donation to a political cause, whether cash or volunteering: when millions are available to be spent on advertising, social media, and television commercials that have more impact than going door-to-door wearing a button.

Such attrition in the value of small-participants in the political process in light of the mega donor further dissolves trust in the political process, and diminishes the purpose and value of civic society, especially at the local and state level: whose institutions are further bypassed by such activity focused at the federal level. By degrading the Party system too, access to political participation is also reduced for voters and the general public, who are not able to interact with anonymous outside funders that seek to sway electoral opinion.

1.3.2 Philanthropy super-charging the center

A similar picture can be seen in American philanthropy: donations made with tax- deductible status. The nature of philanthropy has also changed in recent decades. Cash amounts have increased, yet the rates of giving have declined. As with political donations, we have seen within philanthropy a plateau of smaller donations, with a rise in gifts from larger donors.

The number of households giving to a charitable organization has seen a sizeable drop: from about two-thirds of American households in 2000 to just under half in 2018. The biggest declines were in donations to religious causes, accounting for only 32 percent of gifts in 2016. Yet the amount of money being given to charity keeps growing, in 2021 in excess of $480 billion. As Putnam states in Upswing, “philanthropy among most Americans has fallen steadily since the mid-1960s, only partially and temporarily offset by megagifts from the newly mega-rich.”

This is potentially damaging to social capital as well as demonstrative of that decline. The overall rise of funds given to tax-exempt organizations in the United States perhaps masks a picture of social capital decline.