The Political Economy of the New Gilded Age: An Introduction
In a previous post, I mentioned Larry Bartels' important new book, Unequal Democracy: The Political Economy of the New Gilded Age. Bartels is blogging about the book this week on TPMCafe. In his lead-off post, he reviews some of his key findings:
1. Ordinary citizens' policy preferences are often only loosely connected to their beliefs and values. For example, upward of 85% of Americans agree that "our society should do whatever is necessary to make sure that everyone has an equal opportunity to succeed," but support for specific policies that would promote equal opportunity is much more modest. One problem is that many people are too inattentive to grasp connections between values and policies. Among people with strongly egalitarian values, those who were highly informed about politics opposed the highly inegalitarian Bush tax cuts by a four- to-one margin, but those who were least informed were more likely to support the tax cuts than to oppose them.
2. Even when public preferences are clear and firmly held, policies contrary to those preferences can persist for a very long time if powerful political elites want them to persist. For example, 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. (This outcome has been facilitated by the fact that the nominal minimum wage is not adjusted for inflation, but that is itself a political decision; even when Democrats have controlled the White House and Congress, they have preferred symbolic nominal increases to permanent indexing of the sort that has long been accepted for social security.)
3. There are big differences in policies between Democratic and Republican elected officials, even when they represent exactly the same constituents. Political scientists have an elegant theory explaining why this shouldn't happen: if voters choose the candidate closest to their own policy positions, Democrats and Republicans alike must move to the center in order to get elected. The only problem is, they don't. A figure in the book compares the behavior of Democratic and Republican senators representing liberal and conservative states. The difference in behavior between a Democrat and a Republican representing the same constituents turns out to be much greater than the difference in behavior between a Democrat representing the most liberal state in the country and a Democrat representing the most conservative state in the country. Party and ideology dominate constituents' preferences in shaping legislators' roll call votes.
4. Insofar as elected officials are responsive to the policy views of their constituents, only the views of affluent and middle-class people really matter. The preferences of millions of low-income citizens (in the bottom third of the income distribution) have no discernible effect on senators' roll call votes, whether we consider the whole range of issues that come before Congress or specific salient roll call votes focusing on the federal budget, the minimum wage, civil rights, and abortion. Aristotle wrote that "where the possession of political power is due to the possession of economic power or wealth ... that is oligarchy, and when the unpropertied class have power, that is democracy." By that standard, America is, at best, a very unequal democracy.
Shawn,
I'm a student of American politics and economics (but not a real student, since those days are behind me) and I have to say that I'm perplexed at the resistance to Bush's tax cuts. In my opinion, he's holding exactly the right course...almost. But before you write me off as some Neoliberal (which I'm not), please let me explain.
Firstly:
By making tax rates less progressive, he's taking steps toward a flat tax. In Europe, we see that as positive--not Bush's plan specifically, since most people don't know much about Bush's economics aside from his inflating the dollar to pay for the war, but the flat tax in general. Some rapidly developing eastern European countries have implemented flat tax schemes rather successfully. Now some western ones are moving in that direction. Once implemented, the goal is to lower the flat income tax as much as possible, while simultaneously replacing it with higher consumption taxes (in our case, VAT). We feel that's good because it rewards those who choose to live in an ecologically responsible way, but it also provides the best matching of expenses to revenues since each product contains a cost component that's traceable to some usage of the infrastructure. As an added advantage, it can be applied most consistently without finagling by politicians.
Secondly:
Bush's $500 "stimulus" payment is brilliant! However, it needs to be expanded so that every man, woman and child (yes, every child too!) should get a (much higher) payment each year. Hence, he has already taken the first steps toward a Basic Income / Negative Income Tax plan. For working families, it would be a tax credit rather than a payment. This would be the best way to ensure prosperity among the widest swath of low- and middle-income groups, because it makes those aforementioned flat income and consumption taxes inherently progressive even though their nominal rates remain flat. That would enable purchasing power at the lower strata, which businesses will naturally support; after all, they need customers. Incidentally, even Germany is experimenting with BI/NIT, via it's Hartz 4 reforms.
By implementing the above concepts, you can move away from traditional welfare structures which have proven to be both contentious and counterproductive. Yet you still provide welfare and an income smoothing effect to people at the bottom. Issues such as minimum wage, child care and education expenses become mute, because they are contained within the system rather fairly and evenly.
What's nicest about this plan is that you can most easily build consensus among Progressives and Conservatives. IMO, that's better than battling over ideas that didn't work so well decades ago. Don't you agree?
I'm all for the European approach of combining a relatively regressive tax structure with generous and relatively progressive universal benefits. The United States, by contrast, combines a relatively flat tax system—one with progressive income taxes and various regressive taxes—with a "divided welfare state" that provides subsistence-level benefits targeted to certain segments of the population with low incomes, with regressive tax subsidies for health insurance, retirement, and homeownership.
We've ended up with this strange brew largely because American conservatives have fiercely and consistently opposed universal social policies. So, while I don't necessarily have any theoretical objections to a national VAT, I want universal health care first.
The same goes for Basic Income: I want universal health care (and child care) first.
Well, it should probably be said that "conservatives have fiercely and consistently opposed universal social policies" because there is no universal agreement on what such social policies should entail. The United States is simply too diverse to accept a uniform standard on something like, as you mentioned, child care.
Even here in the formerly homogeneous and undeniably socialistic Nordics, day care policies are being reexamined and partly dismantled due to the influx of immigrants and new ideas. Yes, we are starting to look more like the US in terms of ethnic and cultural diversity--but, in all fairness, you have far more experience with it than we do.
The racism here can really turn one's stomach, but that's another topic.
In any case, there's even much disagreement among the native population. After years of living by Marxist ideology, many natives are re-exploring the notion of 'traditional family.' And in my view, there's no reason why a family should be denied that choice; even the family of the lowliest construction laborer should be afforded that opportunity without suffering the penalty of living in squaller, financial insecurity or putting his children at an insurmountable disadvantage educationally.
However, child care policies, as such, tend to discriminate against those who wish to make the 'traditional' choice; to state it plainly, traditionalists are asked to subsidize those who want day care. So there should be no surprise that people reject such 'universal' policies--they simply aren't universal. Rather, they only benefit certain groups.
Therefore, in my view, the most politically unifying solution is to give everyone an exemption based on their child (or direct payment if necessary) to live according to their own wishes. It would help traditionalists, but also make life easier for struggling single moms. The nice thing about it is that most people have children at some point, so they'll all be lobbying for the same thing (a higher exemption/payment) irrespective of their chosen lifestyle. Cheers!