*2450. Еconomist.com

[Константин Сонин]

http://www.economist.com/economics/b...t_their_status

A response to:
How does inequality matter?

The "haves" have a strong incentive to protect their status
Jan 22nd 2011, 20:15 GMT

INEQUALITY matters. In unequal societies—even those that have mature democratic institutions—the rich spend a lot of money trying to shape “rules of the game” in their favour. In countries with immature or non-existent institutions of democracy the problem is much worse: the rich elite pursue anti-competitive policies both in the marketplace, and in politics.

Contrary to Adam Smith’s intuition, “haves” are not necessarily a source of political demand for non-corrupt bureaucracy and efficient courts. High barriers to entry and red tape protect rents of those firms that are already in the market, while election restrictions, vote manipulation, and outright fraud keep potential reformers at bay. This problem has been present in Latin America for decades, is profound in Russia, Ukraine and other countries of the former Soviet Union today, and may be a serious impediment to China’s growth down the road.