The Right’s Inequality Challenge
In politics, there are lots of ways to win an election. The best thing is to just be lucky. If your opponent screws up enough, you’ll win. But it’s one thing to win an election and another thing to implement a successful governing agenda. To succeed at governance, you need, I think, some policy ideas that both strongly appeal to your political base and also appeal to something like the “center” of the electorate. But for different coalitions at different times, this can simply be too tall an order for objective reasons.
Consider Jimmy Carter presiding over stagflation:
In the late 1970s, it just so happened to be the case that the structure of Great Society programs and of then-widespread union contracts meant that the objective interests of union members with automatic Cost of Living Adjustment (COLA) provisions, African-Americans, and public assistance recipients were quite a bit different from the objective interests of other Americans. By contrast, it was relatively easy for Ronald Reagan to assemble a coalition built around lower taxes and inflation that started with the well-off but expanded deep into the middle class. It was actually Carter who began the effort to fight inflation and deregulate certain key sectors of the economy, but that wasn’t a politically sustainable agenda for a Democrat (as witnessed by Ted Kennedy’s very strong primary challenge).
Since then, things have changed. I heard Ross Douthat on NPR this morning talking about how the conservative movement needs to return not to the policies of Ronald Reagan but to the spirit of Reaganism defined, as any successful American politics would have to be, as an effort to serious think about ways of improving middle class living standards. But one of the things that’s changed since the 1980s is a substantial growth in inequality.
Here’s a CAPAF chart showing the ratio of the top 10 percent’s income to the bottom 90 percent returning to the pre-FDR historical peak:
Normally talk about the growth in inequality begins and ends with a discussion of whether or not it’s a problem and should we try to “spread the wealth around” or just not worry. But completely aside from whether or not it’s substantively a problem, it’s a political problem for conservatives. That top ten percent is, in an important way, the base of the conservative coalition — providing loyal votes, campaign and institutional funding, etc. And as the economic circumstances of the top ten percent become more and more different from the economic circumstances of the rest of the country, it becomes harder and harder to articulate a policy agenda that speaks to the concerns of both the top ten and also the broad middle. Or, rather, it becomes harder and harder to articulate an economic policy agenda that does that. You can still put a winning coalition together under the right circumstances because people care about other things (abortion, national security, White House sex scandals, etc.) but it’s difficult to govern in a way that keeps the coalition together. Thus, you get a movement that spends an extraordinary amount of time and energy on trying to dream up problems to which capital gains tax cuts — essentially a parochial concern of the well-to-do — are the solution.
By contrast, these same historical trends combined with things like welfare reform have all combined to make it much easier than it once was for a progressive coalition to come up with ideas that unite the interests of the economically struggling with those of the middle class.
42 Responses to “The Right’s Inequality Challenge”
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November 6th, 2008 at 10:39 am
This implies a very interesting cycle then,
As Democrats gain power and bring down inequality, the moderately well-off become a larger electoral constituency, bringing Republicans to power. Then when Republicans get into power, inequality increases and their electoral coalition becomes untenable.
It’s most likely not true, but the idea might be interesting applied to other issues.
November 6th, 2008 at 10:44 am
What is the basis of your statement that the top 10% are the loyal base of a conservative coalition. The top 10% voted for Obama far more than McCain.
November 6th, 2008 at 10:52 am
The thing is there is so little data in Presidential elections, that it is impossible to say Reagan was a good campaigner or George Bush was a good campaigner, controlling for other national events. There are not enough elections to do anything like statistically isolate the effect of the economy, or peacetime/wartime or anything else.
So did Obama win because of structural reasons or because he was an unusually good campaigner? There is just not an answer to that. But it is easy to come up with a list of structural reasons that plausibly made his victory easier. Given the motivation, a list could have been made of structural reasons for Kerry’s victory if Kerry had won.
How good a campaigner is Obama compared to Clinton I, or Gore, or Reagan or Carter? This just has to go into the file of interesting questions that simply cannot be answered because there is not enough data to come up with an “expected” amount of votes Obama should have gotten given national conditions to determine if he over or underperformed – and if there was, how much did Obama overperform and how much did McCain underperform? Interesting important question for which there is no answer.
Was Obama a better campaigner than Clinton II or did he get lucky? I’d guess if we could run simulated campaigns, Clinton II would have won the primaries more often than Obama, she came from a stronger position, but that’s a guess. There is no answer.
Obama did run essentially a flawless campaign though, that elected a Black man to be President of the United States. That seemed last year at this time as impossible to me as breaking the 4 minute mile must have seemed the year before it was broken.
Reagan strikes me as enough better a politician than GWBush that if this had been eight years under Reagan, with the same inequality statistics, the Republican party would not be as discredited as it is now.
But if the Republicans win in 2010 or 2012 then I guess there had never been a structural disconnect between the Republicans and the American center. If not, we can say maybe there was, but not with any confidence.
November 6th, 2008 at 11:01 am
Yeah, you knew the goose was really cooked when McCain was actually making the focus of his campaign his ideological opposition to the idea of increasing taxes on the wealthiest 5% to give tax breaks to everyone else. Call that plan “socialism” all you want, it still sound like the kind of “socialism” the middle class likes.
That said, I think this is a bit of an oversimplification. Many wealthier people supported Obama, and they did so in part because they also believe that rising income equality is ultimately bad for them too. And that is because economies aren’t zero-sum games, and there is a growing recognition our economy is in trouble in part because of stagnant real incomes in most brackets.
In that sense, at the top level I still maintain the fundamental split here isn’t something like rich versus not-rich. It is people who are serious about things like economics versus those who are not (AKA, the reality-based community versus the faith-based culture warriors), and I personally don’t think the Republican Party has a chance until it becomes a reality-based party once again.
November 6th, 2008 at 11:09 am
What the fuck happened on that first chart during and after WWI?
November 6th, 2008 at 11:15 am
Arnold Evans,
So a bunch of political scientists got together and presented the results of different models forecasting the two-party share this year. See here:
http://www.apsanet.org/imgtest/PSOct08Campbell.pdf
The bottomline is that Obama’s victory is within the range defined by all the models collectively, but also a bit toward the higher side: with McCain’s share appearing to be around 46-47% (with counting still ongoing) Obama appears to have beaten 7-8 out of the 12 discrete predictions. See Table 2.
So that’s probably as good an answer as you will get–he didn’t do anything completely outside of what you would expect, but nonetheless seemed to do pretty well.
November 6th, 2008 at 11:29 am
After reading more and more of his stuff, I’m pretty much convinced that Ross Douthat & his wing of the conservative movement should realize that it’s impossible for a “compassionate conservative” – whether it’s Bush 2000 or Huckabee 201? to win and govern as a Republican without the Forbes wing of the party overwhelming their ideas and creating the bizarre contradictions we saw over the past 8 years.
There is a much *better* chance, in my opinion, of Douthat et al. aligning themselves with, say, Bob Casey, and instead pushing for Casey 2016. They would have to concede overturning Roe vs. Wade, but could still push for a more socially conservative agenda (in the context of a Democratic party that will be much more rooted within socially conservative AA and Hispanic voters) in the context of his economic views.
November 6th, 2008 at 11:56 am
If the Democrats really cared about wealth inequalities they would not be supporting a policy of open borders and unlimited immigration. Importing millions of poor people from Mexico is not the best way to equalize wealth. Also, as the U.S. imports millions of poor people, it makes it much harder for schools to help blue collar families move up the economic ladder.
November 6th, 2008 at 11:57 am
The argument is silly. You could argue that less economic inequality makes it harder to form a coalition because it requires the government to do a lot more meddling in the economy. High economic inequality is the “natural” outcome of market forces. Government efforts should be focused on minimizing poverty, not minimizing inequality.
November 6th, 2008 at 12:06 pm
I’m not sure that capital gains tax decreases are a “parochial concern” of the rich in the sense that lowering CG taxes makes it easier for the wealthy to pull their money out of businesses and hunt for the elusive higher-than-market return on investment. This creates a large quantity of hot money which is the stuff that bubbles are made on. Forcing the rich to lock up their money in long term investments is probably a much better idea and avoids making America look like a devloping third world nation.
November 6th, 2008 at 12:39 pm
Great post, would read again.
November 6th, 2008 at 1:20 pm
That top ten percent is, in an important way, the base of the conservative coalition — providing loyal votes, campaign and institutional funding, etc.
Matthew’s post is refuted by the exit poll data. The exit poll data provide as follows:
Vote by Income – $200,000 or more (6%): Obama 52%, McCain 46%
In fact, the rich ($200,000+) or more gave a higher percentage to Obama than did the middle class (between $50,000 and $200,000).
Obama dominated among the poor and the rich. McCain won the $50,000 and $200,000 crowd.
November 6th, 2008 at 1:21 pm
Al, quit fooling around.
November 6th, 2008 at 1:32 pm
Sorry, washerdreyer. The exit poll data is here. Check it out for yourself.
Obama won the lower middle class and poor (people with incomes $200k). McCain won the middle class and upper middle class ($50k – $200k).
November 6th, 2008 at 1:34 pm
Ack, html ate my comment. Guess you can’t use the greater than/lesser than signs!
Anyway, what the above was supposed to say is that, according to the exit poll data, Obama won the lower middle class and poor (people with incomes of less than $50k) as well as the rich (people with incomes over $200k). McCain won the middle class and upper middle class (people with incomes of between $50k and $200k).
November 6th, 2008 at 3:57 pm
But the bigger question (for me anyway) is: at what price did that middle class egalitarianism come about? Sure, wealth was distributed more fairly from a statistical standpoint after world war II, but just consider all the trappings of that same time period that still inhibit progress today: urban renewal, sprawl, white flight, the explosion of the car culture, the rise of the millionaire farmer, frivolous construction of infrastructure that can’t be maintained, etc. Sure, it’s an admirable goal to get back to that egalitarian past, but we have to be especially vigilant not to do it via the myriad of unsustainable means that we did it with 50 years ago.
November 6th, 2008 at 8:39 pm
“In the late 1970s, it just so happened to be the case that the structure of Great Society programs — African-Americans, and public assistance recipients were quite a bit different from the objective interests of other Americans.”
YOu seem to be under the impression that AFDC benefits were indexed to inflation. They weren’t. The real value of AFDC benefits declined sharply under Ford and Carter. The idea that “public assistance recipients” had less of an interest in fighting inflation than your average non-union worker is simply false. AFDC benefit levels were set by state legislatures and not indexed to inflation. National average real AFDC benefit levels declined sharply during the Carter and early Reagan years, then the decline ended (for a while) around 1984. AFDC plus food stamps declined less sharply (but declined a lot) plus there was a sharp drop 81 to 82 (food stamps are federal). Overall, the recipients of AFDC+food stamps appear to have suffered much more during the Carter years than your average non-union worker.
http://www.irp.wisc.edu/publications/dps/pdfs/dp121901.pdf
page 12.
From 1977 to 1981 the union non union wage differential in the USA decreased from 19% to 16% (17% in 1980) (all very roughly) It is true that inflation crept up during the Carter years. It is not true that this helped Unionized workers relative to non-unionized workers. http://www.dartmouth.edu/~blnchflr/papers/irra%20long.pdf
page 40.
The Kennedy challenge to Carter had a lot to do with the fact that Carter was generally immensely unpopular (Iran and a recession). Carter’s deregulatory efforts were generally not controversial, mildly popular and barely noticed (I remember I was there). I don’t recall any criticism from Kennedy.
November 6th, 2008 at 8:43 pm
Reagan’s policies never really were for the middle class as the middle class declined in the 80’s. He made the republicans the party that white people voted for. Since white people are declining as a percentage of the population it isn’t working as well.
November 6th, 2008 at 11:41 pm
Like so many things in politics — right and left — the left is fundamentally at odds with itself here. The biggest cause of increasing inequality is globalism. When the USA was the world’s manufacturing king and “outsourcing” was unheard of, unions could demand whatever wages they wanted, which led to a lot of well-off factory workers (as Matt’s chart reflects). Once companies could move work to China and Mexico, there went the high-paying factory jobs. Furthermore, the consolidation of medium-sized companies into global giants means that a handful of CEOs now make massive fortunes, rather than a larger pool of CEOs merely becoming rich.
Yet even liberal economists admit that shutting the borders to trade or adopting high tariffs would be economically disastrous for our import- & export-dependent economy.
Then there is illegal immigration. Much has been made of the increase in the rate of poverty, but what rarely gets mentioned is that this is driven largely by the influx of dirt poor, unskilled laborers from Mexico and Latin America. Stemming this flow would increase wages for lower-income Americans, but the left can not bear to do it because it offends their sensibilities.
Further exacerbating the situation, the left despises many of the things which allow the working and middle classes to improve their standards of living, if not their incomes. Things like Wal-Mart and suburban sprawl make many liberals’ skin crawl, yet without them, many Americans would not live as well. It is simply a fact that in places where “big box” stores are largely banned and sprawl is strictly controlled, the working and middle classes have an almost impossible time hanging on. The wealthy will always have their country manners and townhomes — telling working people that they must live in apartments and shop at expensive stores for aesthetic reasons and to “save the planet” ain’t gonna cut it with “Joe the Plumber” types. And I can’t say that I blame them one bit.
November 7th, 2008 at 12:24 am
Oops — I meant “country manors,” not “manners.” Obviously, I need some sleep.
November 7th, 2008 at 7:44 am
hope that you keep reporting and following up on this issue. I signed the petition because I can’t think of anything that is more important to the long-term health of our country, our environment, and our economy than a smart transportation policy, and especially
November 7th, 2008 at 9:54 pm
Inequality is more than a political problem. It produces financial crises like the one we are seeing now. The reason why is simple. The *value* of the economy’s assets is proportional to the economy’s output. Since this output has to be bought (otherwise it would not be produced) it is directly related to the income of the broad middle class consumer. Rising inequality means the rich (those who spend a small fraction of their income on consumption) have more money to invest relative to the value of things in which to invest.
This must mean that the market valuation of assets must rise as inequality rises. Such a process *must* eventually lead to a financial bubble, which when it collapsed produces a financial crisis. The spacing of major panics in the pre-New Deal era (1819, 1837, 1857, 1873, 1893, 1907, 1932-3) suggests it takes a couple of decades to build up enough of a bubble to get a full-scale crisis. The first big bubble in the post-New Deal era was the stock market bubble of 2000, which happened 19 years after the start of Reaganomics, right on schedule.
Anyways, as long as high levels of inequality remains, we will get bubbles and crises. And since the authorities are doing everything possible to prevent the depression that normally follows a crisis, it is likely that the “recharge rate” will be a lot less than 20 years. That is, if the authorities are successful in staving off disaster (as I think they will be) we will be right back in this situation within a decade.
Since the rich are an important constituency, somebody is going to represent them and call for continuation of the low-tax, bubble-promoting policy in effect since 1981.
But as the 2008 election shows, this sort of economy is a bitch politically, causing problems for the party of the rich.
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Obama won the lower middle class and poor (people with incomes $200k). McCain won the middle class and upper middle class ($50k – $200k).
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