Larry Bartels, Unequal Democracy, 2008
• This book provides a multifaceted examination of the political causes and consequences of economic inequality in contemporary America.
•Economically, America has become vastly richer and vastly more unequal
• The share going to the top 1% of income-earners—a much broader but still very affluent group—more than doubled over the same period, from 10.2% to 21.8%.3 It seems natural to wonder whether the pluralistic democracy Dahl found in the 1950s has survived
• Meanwhile, the political process has evolved in ways that seem likely to reinforce the advantages of wealth. Political campaigns have become dramatically more expensive since the 1950s, increasing the reliance of elected officials on people who can afford to help finance their bids for reelection.
•Membership in labor unions has declined substantially, eroding the primary mechanism for organized representation of working people in the governmental process.
• I find that elected officials are utterly unresponsive to the policy preferences of millions of low-income citizens, leaving their political interests to be served or ignored as the ideological whims of incumbent elites may dictate.
•I trace the impact of public policies on changes in the U.S. income distribution over the past half-century, from the tripled income share of Dahl’s “economic notables” at the top to the plight of minimum wage workers at the bottom. I find that partisan politics and the ideological convictions of political elites have had a substantial impact on the American economy, especially on the economic fortunes of middle-class and poor people. Economic inequality is, in substantial part, a political phenomenon.
•In theory, public opinion constrains the ideological convictions of political elites in democratic political systems. In practice, however, elected officials have a great deal of political leeway. This fact is strikingly illustrated by the behavior of Democratic and Republican senators from the same state, who routinely pursue vastly different policies while “representing” precisely the same constituents.
• On average, the real incomes of middle-class families have grown twice as fast under Democrats as they have under Republicans, while the real incomes of working poor families have grown six times as fast under Democrats as they have under Republicans.
• Escalating inequality is not simply an inevitable economic trend— a great deal of economic inequality in the contemporary United States is specifically attributable to the policies and priorities of Republican presidents.
• If Republicans have a negative economic outcome for working class families, why do working class whites vote for them? Chapter 3 examines contemporary class politics and partisan change, testing the popular belief that the white working class has been lured into the Republican ranks by hot-button social issues such as abortion and gay marriage. Acutally finds that they have become more Democratic over past half century (since 1950s).
• The familiar image of a party system transformed by Republican gains among working-class cultural conservatives turns out to be largely mythical.
• Why have Republican candidates fared so well over the past 50 years? Three reasons: 1) myopic focus of voters on very recent economic performance - rewards Republicans’ surprising success in concentrating income growth in election years 2) sensitivity of voters at all income levels to high-income growth rates - rewards Republicans’ success in generating election-year income growth among affluent families specifically 3) responsiveness of voters to campaign spending rewards Republicans’ consistent advantage in fundraising.
Chapter 5 -
• Reveals a good deal of ignorance and misconnection between values, beliefs, and policy preferences among people who pay relatively little attention to politics and public affairs, and a good deal of politically motivated misperception among better-informed people. As a result, political elites retain considerable latitude to pursue their own policy ends.
• Focuses on the Bush tax cuts of 2001 and 2003, which dramatically reduced the federal tax burdens of wealthy Americans. Public opinion regarding the Bush tax cuts was remarkably shallow and confused, considering the multitrillion-dollar stakes. More than three years after the 2001 tax cut took effect, 40% of the public said they had not thought about whether they favored or opposed it, and those who did take a position did so largely on the basis of how they felt about their own tax burden. Views about the tax burden of the rich had no apparent impact on public opinion, despite the fact that most of the benefits went to the top 5% of taxpayers; egalitarian values reduced support for the tax cut, but only among strong egalitarians who were also politically well informed.
• Chapter 7 focuses on the campaign to repeal the federal estate tax. As with the Bush tax cuts more generally, I find that repeal of the estate tax is re- markably popular among ordinary Americans, regardless of their political views and economic circumstances, and despite the fact that the vast majority of them never have been or would be subject to estate taxation
• The real “political mystery” is not why the estate tax was phased out in 2001, but why it lasted as long as it did. The majority of even poor Americans feel uncomfortable taxing children after parents die (inheritance tax). The answer to that question has little to do with conservative elites’ grasp of public opinion, but much to do with the political leverage of liberal Democratic elites whose own ideological values made them eager to retain “a steeply progressive tax.”
• Liberal elites determined to prevent repeal have been more consequential than the views of ordinary citizens.
• The real value of the minimum wage has declined by more than 40% since the late 1960s, despite remarkably strong and consistent public support for minimum wage increases. Why? Declining political clout of labor unions and to shifts in partisan control of Congress and the White House...conservative Re- publicans intent on protecting the free market (and low-wage employers) from the predations of people earning $5.15 per hour.
• In chapter 9, I attempt to provide a more general answer to Dahl’s fundamental question: Who governs? Results: 1) Roll call votes cast by U.S. senators are much better accounted for by their own partisanship than by the preferences of their constituents. 2) Insofar as constituents’ views do matter, political influence seems to be limited entirely to affluent and middle-class people. The opinions of millions of ordinary citizens in the bottom third of the income distribution have no discernible impact on the behavior of their elected representatives. These disparities in representation persist even after allowing for differences between high- and low-income citizens in turnout, political knowledge, and contact with public officials.
• Verba and Orren 1985 (Equality in America) - back and forth between political equality and economic inequality - Political equality . . . poses a constant challenge to economic inequality as disadvantaged groups petition the state for redress. Egalitarian demands lead to equalizing legislation, such as the progressive income tax. But the continuing disparities in the economic sphere work to limit the effectiveness of such laws, as the economically advantaged groups unleash their greater resources in the political sphere. These groups lobby for tax loopholes, hire lawyers and accountants to maximize their benefit from tax laws, and then deduct the costs.”
• This book provides strong evidence that economic inequality impinges powerfully on the political process, frustrating the egalitarian ideals of American democracy. The countervailing impact of egalitarian ideals in constraining dis- parities in the economic sphere seems considerably more tenuous.
• The period since World War II has seen substantial gains in real income for families throughout the income distribution, but especially for those who were already well off. The average rate of real income growth over the entire period covered by the figure in- creased uniformly with each step up the income distribution, from about 1.4% per year for families at the 20th percentile to 2% per year for families at the 95th percentile.
•Measured in 2006 dollars, the real incomes of families at the 20th percentile increased by less than $15,000 over this period, while the real incomes of families at the 95th percentile increased by almost $130,000. (What's crazy is that 130K is only 2% for high income families.)
• Poor families have also been subject to larger fluctuations in growth rates. Families at the 20th percentile experienced declining real incomes in 20 of the 58 years studied including seven declines of 3% or more; by comparison, families at the 95th percentile have experienced only one decline of 3% or more in their real incomes since 1951.
• What is most striking in figure 1.3 is that, even at this elevated income level, income growth over the past 25 years has accelerated with every additional step up the economic ladder. For example, while the real income of taxpayers at the 99th percentile doubled between 1981 and 2005, the real in- come of taxpayers at the 99.9th percentile nearly tripled, and the real income of taxpayers at the 99.99th percentile—a hyper-rich stratum comprising about 13,000 taxpayers—increased fivefold.
•The real income cutoff for this hyper-rich stratum (not the average income but the lowest income of taxpayers in this group) was virtually constant for three decades following the end of World War II; but around 1980 it began to escalate rapidly, from about $1.2 million to $6.2 million by 2000.
• The really dramatic economic gains over the past 30 years have been concentrated among the extremely rich, largely bypassing even the vast majority of ordinary rich people in the top 5% of the income distribution.
• One crucial—and highly contentious—question is whether dramatic in- come gains among the hyper-rich “trickle down” to middle-class and poor people, increasing the size of everyone’s piece of the pie.
•However, economists who have studied the relationship between inequality and economic growth have found little evidence that large disparities in income and wealth promote growth.
• Much of the economic argument for inequality hinges on the assumption that large fortunes will be invested in productive economic activities. In fact, however, there is some reason to worry that the new hyper-rich are less likely to invest their wealth than to fritter it away on jewelry, yachts, and caviar.
• The benefits of economic growth may or may not “trickle down” to the poor. Although it is common for Americans to suppose that the nation’s collective wealth makes even poor people better off than they otherwise would be, the reality is that poor people in America seem to be distinctly less well off than poor people in countries that are less wealthy but less unequal.
• Recent evidence suggests that the United States already has “significantly less economic mobility than Canada, Finland, Sweden, Norway, and possibly Germany; and the United States may be a less economically mobile society than Britain.”27 These comparisons suggest—contrary to the fervent beliefs of many Americans— that the contemporary United States outclasses Europe in the rigidity of its hidebound European-style class structure.
• The notion that the income distribution is shifting due to rewards to those with desirable skills may not be true - one study found that the earnings of mathematicians and computer scientists in- creased by only 4.8% between 1989 and 1997, while the earnings of engineers actually declined by 1.4%. In contrast, the earnings of CEOs increased by 100%.
•Dew-Becker and Gordon found that economic productivity had increased substantially over the period covered by their analysis, but that “the broad middle of working America has reaped little of the gains in productivity over the past 35 years. . . . The micro data tell a shocking story of gains accruing disproportionately to the top one percent and 0.1 percent of the income distribution.”
• Interpretations of economic inequality are politically consequential because they shape responses to inequality. If the differences between rich and poor in contemporary America “do not add up to class barriers,” if “the market isn’t broken” and “meritocracy is working,” or if “efforts to make more than superficial dents in inequality” are doomed to failure, then inequality is un- likely to rise to the top of the political agenda.
• It is a striking fact that the presence of vast disparities in wealth and income, and so in political re- sources, has never become a highly salient issue in American politics or, certainly, a persistent one
• Whereas Europeans fret about the way the economic pie is divided, Americans want to join the rich, not soak them. Eight out of ten, more than anywhere else, believe that though you may start out poor, if you work hard, you can make pots of money. It is a central part of the American Dream.
• The lifestyles of New York Times Magazine readers are emblematic of a striking social gulf between the people who are most likely to read lengthy articles (or books!) on the subject of inequality and the people who have themselves been on the losing end of escalating inequality in the past 30 years. That social gulf has been exacerbated by the economic trends of the New Gilded Age; and it constitutes a significant obstacle to political progress in responding to those trends. One can only wonder how many affluent readers will get around to pondering “The Inequality Conundrum” as soon as they return from the Cayman Islands.
• One of the most important questions explored in this book is whether political equality can be achieved, or even approximated, in a society marked by glaring economic inequalities. When push comes to shove, how impermeable are the boundaries separating the economic and political spheres of American life?
•There have been times in history when corruption ruled.Gilded Age (late 1800s) was a time when the boundaries between econ and political power were highly permeable...intense corruption, Social Darwinism, greedy and cynical preyed on the greedy and gullible.
• Economists have tried to explain escalation of economic inequality in the US over the past 30 years using "shifts in demand, supply and changes in wage setting institution" but they have mostly ignored political factors.
• The gap between the predictions of conventional political-economic mod- els and the actual workings of American democracy also reflects the pro- found difficulties faced by ordinary citizens in connecting specific policy proposals to their own values and interests. Economic analyses often take such connections for granted; but for many people on many issues they are misconstrued or simply missing.
• For example, in chapter 7, I show that almost two- thirds of the people who say the rich pay less than they should in taxes nevertheless favor repealing the federal estate tax—a tax that only affects the richest 1–2% of taxpayers.
• Data used is from ANES, Census Bureau, Federal Election Commission, etc...