Inequality

When analyzing the UK's child poverty target it is critically important to remember that it uses a relative measure. Poverty is set at 60 percent of median income. For the past decade, median incomes in the UK have risen above inflation. Reducing child poverty by 17 percent over 6 years, relative to a rising median is no small feat, and makes the UK’s efforts so very commendable. That the job is getting tricky in this economic and political climate is not surprising. With a reduction as dramatic as 17 percent, the message must have resounded with some segment of the electorate. But for a host of nuanced reasons, even jobless Brits are now more likely to give their vote to the Tories rather than to Labour. In most circles, this is viewed as “people just being tired of Labour,” a phenomenon we Americans tend to answer with the help of term limits and set election days, neither of which exist in the UK.

It’s undeniable though: since the Labour Government took power in 1997, the tide has raised all ships, and smaller boats have been towed closer to the fleet.

Having studied first hand the successes and challenges of British policies on social inclusion, I’ve been asked recently why my friends at inclusionist.org and I advocate so strongly for a relative poverty measure when “it’s not likely to happen”?

Here's my case:

1. We believe in a more inclusive society. We believe in a more inclusive society where our government, our public services, and our community-based organizations have the power to bring those who have been excluded back into the mainstream of society. The only way to know if this is happening is to take a social-inclusion approach that measures against what’s happening in the middle, and whether the gaps between excluded groups and the whole of society are narrowing.

2. We’ve got the political capital, and we can build the political will. We’re enthusiastic, hopeful and ready to demand a little extra from the Democratic majority in both houses of Congress, and, c’mon – let’s start to believe it – a progressive president. To poverty and social inclusion analysts across the nation, we ask: “When is a relative measure of poverty more likely to happen?”

3. We don’t have to wait for the government to do it. There are some very encouraging poverty and child poverty campaigns that are building momentum in New Mexico, Wisconsin, Massachusetts, Vermont, and Connecticut, to name a few. To achieve at least a smidgen of the success that the UK has achieved, they’ll need to start by re-conceptualizing their state’s notion of poverty by identifying the state’s median income and measuring from there.

Conventional measurements of 100 percent or 200 percent of the official poverty line are more easily calculated and sold, but it’s not really the smart policy we’re capable of developing. Without a true relative measure, we’re stuck in the same old school ideas that haven’t taken us as far as we might go. Generating ideas independent of government—isn’t that what America is bloody about?

(This guest post by Natalie Branosky of the Centre for Economic and Social Inclusion (CESI is a UK think tank, but Natalie is from the U.S.) was originally written as a comment on Shawn Fremstad's post about Kate Stanley's recent Guardian op-ed on the UK's poverty reduction goal. The Editors.)

This week's issue of The Nation has a special on inequality. From the promising introduction:

Over the past three decades, market-worshiping politicians and their corporate backers have engineered the most colossal redistribution of wealth in modern world history, a redistribution from the bottom up, from working people to a tiny global elite.

This special issue of The Nation exposes the widespread costs of this rising inequality and offers a blueprint on how to reverse course. We will never achieve social and economic justice for those at the bottom of our economic pyramid until we tackle wealth concentration at the top.

Doug Henwood begins the issue by placing our current extreme inequality in historical context. We now live, he writes, in a second Gilded Age. Today, as in the robber baron era a century ago, the gap between those at the top and the rest of us is simply staggering. The richest 1 percent of Americans currently hold wealth worth $16.8 trillion, nearly $2 trillion more than the bottom 90 percent. A worker making $10 an hour would have to labor for more than 10,000 years to earn what one of the 400 richest Americans pocketed in 2005.

This story, from yesterday's USA Today, is one of the better recent pieces of reporting on the economy and inequality that I've seen. Here's the opening framing paragraphs and an excerpt from later on in the piece:

Work hard, play by the rules and tomorrow will be better than today. That implicit promise has been at the core of the American Experience through good times and bad.

But now, whipsawed by plummeting home values, $4-a-gallon gas, rising food prices and gyrating financial markets, Americans increasingly fear that the national bargain has unraveled, that their once-steady march toward affluence has derailed. In a new USA TODAY poll, 54% of those surveyed say their standard of living is no better today than five years ago.

....

Writer James Truslow Adams was the first to coin the term "American Dream," writing in 1931 that it was "that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement."

Amid the darkest days of the Depression, with the unemployment rate then heading toward 20%, Adams' ideal seemed more illusion than aspiration.

However, once the nation had escaped the clutches of economic collapse and world war, his vision was realized.

In a period that economists now refer to as the golden age, rich and poor alike prospered. From the end of World War II in 1945 to 1973, those at the bottom of the income charts actually advanced a bit faster than those at the top, in what Harvard University economists Claudia Goldin and Lawrence Katz labeled "growing together."

In recent years, however, most of the economic gains have gone to those at the top.

....

I especially like this point from Todd's post:

... for my money, the brouhaha is not over the white working class but over the working class. Parts of the Democratic Party have been searching for ways for decades to not have to deal with class, and have typically combined some outreach to the wealthy on the basis of their wealth, and other groups on the basis of their identity. Subtract these groups, and you're left with the WWC, which, yes, happens to be white, but its exclusion from the foregoing electoral schema is primarily on the basis of its class. So appealing to working class folks of any race on the basis of their class gets lost.

I'd add that when the media portrays blacks in class terms, they're generally portrayed as poor rather than working class. Similarly, when most liberal advocacy groups (other than unions) think of blacks and Latinos (or women, particularly lone mothers, for that matter) in class terms, they tend to think of them as "poor people" or as "recipients" of various public programs. For the media and many liberal groups, it seems like the working class is the white (and male) working class.

As an example, take a look at the website of the well-intended domestic anti-poverty campaign Half in Ten. Of the various images used on the site, there is only one of a white man and only one of someone in obvious work clothes. And guess what, they're the same image—a white guy in a hard hat, the archetypical image of the working class. By contrast, the one image of a black man shows him protesting (both images are reproduced side-by-side below). Where did they get these images? A Nixon '68 campaign ad? (Similarly and surprisingly, given the source, stereotypical, there are two images of white women, one holding a child (mommy!), the other, an elderly woman in a wheelchair (the really old mommy who you never call, you never write!)).

One of the reasons I find the popular conflation of the working class and white working class very odd is that blacks and Latinos are more likely than whites to identify as working class. As the chart at the top of this post shows, a majority of blacks and Mexican-Americans identify themselves as working class when asked to select among four classes. While whites are more likely to identify themselves as middle class than working class, blacks are almost twice as likely to id as working class than as middle class, and Mexican-Americans are more than twice as likely to do so.

Any successful bottom-up campaign for economic justice will need to resonate with, and bring together, working class Americans of all races. One of the few national figures I can think of who has called explicitly for such a coalition is Senator Jim Webb. As Elizabeth Drew notes in the current issue of NYRB:

in his writings, as well as in his new book, Webb has argued that a combination of blacks and the Scots-Irish working class could form an electoral majority. He argues that they have similar grievances: lack of adequate education and health care, job training and job opportunities; and that both have been put upon or neglected by the elites. To him, the basic issue is more one of class than of race.

Todd's insightful post made me recall some things I've read about public opinion, politics and inequality. Like they do about conflict and resentment-based messages, the "experts" say that inequality has no affect on politics, because Americans don't care about it. This is no coincidence, because conflict and resentment goes hand in hand with relative inequality. Yet, as one might suspect in a highly unequal nation, political polarization- a measure of conflict- has grown in step with the rise in inequality. Resentment over inequality exists in high proportions, too. Substantial evidence shows that Americans disapprove of growing inequality, and that opposition tends to grow as different types of inequality expand. Lane Kenworthy has also written up an international public opinion study that shows that our preference for low levels of inequality is right up there with a lot of highly egalitarian European countries. Apparently, we have more in common with those latte-sipping socialists in France than mainstream media and political elites want us to think.

A message that incorporates both "aspirational" and "downtrodden" politics could be very potent, I think. But according to an unpublished paper I recently read, we all really need to do a better job articulating just how to address inequality- the public thinks that education is the solution, but as many a progressive policy wonk will tell you, it'll only get us part of the way there. And it strikes me as unfair that these two messages are framed as mutually exclusive. They're both needed because they target different audiences. It would serve the progressive cause well to take inequality as seriously as we do "aspirational" politics and test the best way to message it.

That said, I have deep misgivings about a populism that damages our sense of national solidarity, the feeling that presidents from Roosevelt to Kennedy have invoked to unite the country around common aspirations and grievances (Todd doesn't say this. I'm generalizing.). It's easy to get carried away driving people apart and not do enough bringing people together- too much condemnation, not enough compassion. This is just a challenge to overcome, though.

A couple of months ago, my hometown pride swelled as the extra long primary season took candidates into parts of the country like my home Kentucky that rarely figure into national politics. But after Hillary Clinton trounced Barack Obama in Kentucky and West Virgina and some 20 percent of white WV voters said race was a factor in their vote, I heard quips about from East Coast & "liberal" friends, acquaintances and "fr-enemies" that ranged from ridicule to vitriol about the "backwater's" 15 minutes of fame. There has been a "discovery of the other among us"—the white working class (WWC)—as I get to hear any number of jokes about incest and hicks. Some politicos are choosing to pathologize the WWC, while some suggest than even the whiteys know not the full depth of backwardness that is within them. (And, btw, all the candidates need to leave the amateur sociology to the pros.)

Some of the more sophisticated analysts have taken to asking whether the WWC is even needed for electoral purposes anymore. Alan Abramowitz and Ruy Teixeira have written a paper entitled The Decline of the White Working Class and the Rise of a Mass Upper Middle Class. This is a useful companion piece to America's Forgotten Majority: Why the White Working Class Still Matters, Ruy's 2000 book with Joel Rogers. They look at the work of Larry Bartels and Thomas Frank, and offer some commentary on an emerging GOP strategy to attract WWC voters authored by Ross Douthat and Reihan Salam. Among the main findings of the more recent paper:

• There are many different ways to define working class. By a high school educational standard, the white working class" (WWC) has declined from 86% of the population in 1940 to 48% of the population in 2007. By a higher education standard, the WWC has declined from 82% to 29%.
• By a broad occupational index, the WWC has declined from 74 to 43%; by a narrower occupational index, the change has been 58 to 25%.
• By an income standard, the change has been 86% to 33%.

In short, by the absolute benchmarks used in the paper, white people have been on the move. The implication is that candidates, while they cannot ignore the WWC, do not need them as much as they used to. Messages and policies should be crafted to target some coalition of the poor, minorities, and richer whites, including, in Alan and Ruy's terms, more "aspirational" rather than "downtrodden" whites.

But the analysis ain't perfect. One problem is that Alan and Ruy do not take into account relative benchmarks, particularly skyrocketing income inequality. According to the leading analysis by Piketty and Saez, the richest 10 percent of Americans are taking nearly half of the economic pie, while the top 1 percent is taking over a sixth. Wealthy individuals' share of national income was stable for the first several decades after World War II, but shot up 50 percent for the richest 10 percent and 150 percent for the richest 1 percent between 1973 and 2006. These trends are bound to affect workers' attitudes, whether they work for a steel mill or an Internet startup.

Another problem has to do with causality. That the WWC didn't vote for Democrats from Hubert Humphrey to John Kerry may say more about candidates like Kerry than about the WWC's inherent political orientation. Without a control group of populist candidates, it is impossible to know how people might have voted.

Finally, Americans have likely always been both aspirational and downtrodden. But since pollsters did not employ these survey frames from the 1940s onward, it is impossible to know if Americans of any race or class are becoming less responsive to political messages that are more invested with conflict and resentment.

And for my money, the brouhaha is not over the white working class but over the working class. Parts of the Democratic Party have been searching for ways for decades to not have to deal with class, and have typically combined some outreach to the wealthy on the basis of their wealth, and other groups on the basis of their identity. Subtract these groups, and you're left with the WWC, which, yes, happens to be white, but its exclusion from the foregoing electoral schema is primarily on the basis of its class. So appealing to working class folks of any race on the basis of their class gets lost.

As we've shown elsewhere, there is more than an ample basis to construct a national project on the basis of our shared interests as consumers and workers. Not only might that be the right thing to do, but it can also be the electorally smart thing to do.

(This guest post by Todd Tucker was originally posted at Eyes on Trade, the blog of Global Trade Watch. The Editors.)

Via Economist's View, an excerpt from L. Randall Wray's review of James Galbraith's forthcoming (in August) book, The Predator State:

....

The general theses can be simply stated. First, while conservatives toyed with laissez-faire, they quickly abandoned it in all important areas of policy-making. For them, it now serves as nothing more than an enabling myth, used to hide the true nature of our world. Ironically, only the progressive still takes the call for “market solutions” seriously, and this is the major barrier to formulating sensible policy. Second, the “industrial state” has been replaced by a predator state, a coalition of relentless opponents of the very idea of a “public interest”, whose purpose is to master the state structure in order to empower a high plutocracy with nothing more than vile and rapacious goals. Finally, the “corporate republic” created by the likes of Dick Cheney is highly unstable, a formula for national failure. Progressives must wrest control from the reactionaries before it is too late for restoration of America as the world’s financial anchor, technological leader, and promoter of collective security.

....

The free market reactionaries promised that some combination of monetarism, supply side economics, balanced budgets, and free trade was the solution to America’s woes. The mantra “free markets” provided an easy antidote to “planning” that was said to constrain recovery and growth. As each conservative policy was tried, however, it resulted in obvious and even spectacular failure. In truth, all economies are always and everywhere planned—for the simple reason that planning is the use of today’s resources to meet tomorrow’s needs, something that all societies must do if they are going to survive—so the only question is who is going to do the planning, and to whom are the benefits going to flow? There are still a few true believers (principled conservatives that Jamie compares to noble savages in the political wilderness), but most conservatives realized that there is no conflict between “big government” and “the market” as they abandoned the myth but usurped the “free market” label. All we are left with is the liberal who embraces the myth out of fear of being exposed as a heretic, a socialist, or a fool. Thus, the liberal pines to “make the market work better”, never challenging the view (abandoned by all but the most foolish conservatives) that government is the problem.

Economic freedom is reduced to the freedom to shop, including the freedom to buy elections, and anything that interferes is a threat. “Market” means nothing more than “nonstate”, a negation of use of policy in the public interest. ....

There is a way out, but it is not easy. Historically, regulation and standards have required acceptance by progressive business—those firms that recognized they would lose in races to the bottom. Today, corporate and public policy alike are run by the most reactionary elements, well-paid rogues that suck capacity. Wherever one finds a sector that still operates reasonably well, one finds remnants of New Deal institutions that support, guarantee, regulate, and leverage private activities, in spheres as diverse as higher education, housing, pensions, healthcare, the military-industrial complex (and the prison-industrial complex). Naturally, even these sectors are endangered as they represent potential riches (witness subprimes, a privatization mess that Wall Street would love to repeat with Social Security). Still, Jamie is hopeful. The ideology of free markets is bankrupt, but the US is not. The path is clear: re-regulation, planning, standards (including wage controls), and coming to grips with the nation’s global responsibilities.

Some interesting points by Robert Schiller (even if one doesn't agree with him on Frank-Dodd):

... we have to consider that we cannot squarely place the blame for the current mortgage mess on the homeowner. It seems to be shared among mortgage brokers, mortgage originators, appraisers, regulatory agencies, securities ratings agencies, the chairman of the Federal Reserve and the president of the United States (who did not issue any warnings, but instead has consistently extolled the virtues of homeownership).

Because homeowners facing foreclosure must bear the brunt of the pain, they naturally feel indignation when all of these other parties continue to lead comfortable, even affluent lives. Trying to enforce mortgage contracts may thus have a perverse effect: instead of teaching homeowners that they should respect the contracts they sign, it may incline them to take a cynical view of the whole mess.

But instead of having sympathy for these homeowners, many people blame them for their predicaments. That isn’t surprising. It’s an example of a general tendency that was documented by social psychologists decades ago.

In his 1980 book, “The Belief in a Just World: A Fundamental Delusion,” Melvin Lerner, a social psychologist, argued that people want to believe in the inherent justice of the economic system in which they live, and want to believe that people who appear to be suffering are in fact responsible for their own situations. He provided empirical evidence, derived from experiments, that after an initial pang of sympathy, people tend to develop negative views toward others who are suffering. That negative tendency seems to be at work today.

Second, it is important to consider the psychological trauma of foreclosure. No one is likely to starve or sleep on the streets as an immediate result of a foreclosure, and the authorities no longer dump a family’s furniture on the sidewalk when it happens. Nonetheless, there is deep trauma.

Earlier this week, the Center for American Progress Action Fund, ACORN, the Coalition on Human Needs, and the Leadership Conference on Civil Rights kicked off the political arm of a campaign to expand the middle class by nearly 20 million people over the next decade. Well, they don't actually it that, but that's the basic idea.

The campaign's new website notes that the campaign "will focus on the issues facing the poor and middle class in America, building an effective constituency to advocate for specific policy changes." The part about focusing on issues facing the middle class is a notable addition and something that was lacking from CAP's earlier report on poverty.

It's a good sign that John Edwards is chairing the campaign. Edwards could bring the kind of partisan and populist voice to this work that has been lacking on the national level. As Larry Bartels' new book suggests, advancing the cause of economic justice in the next decade will require a Democrat in the White House and more partisanship rather than less.

Edwards should help ensure that the campaign doesn't become a kind of mushy attempt to find "common ground" between Republicans and Democrats on economic justice. The reality is that there really isn't any common ground on economic justice right now or in the near future at the national level given the conservative extremism of the national Republican party and their allies. (I say this as a matter of fact rather than advocacy—there are thoughtful efforts by progressive R's to change this, but it's a decades-long project, not a short-term one). The biggest challenge for the CAP campaign isn't finding common ground between Republicans and Democrats, it's making sure that conservative Democrats don't obstruct efforts to expand the middle class (which is one of the reasons, by the way, that this campaign needs to be framed as a campaign to expand the middle class).

While I'm fan of the policy ideas put forward by the campaign, I'm less enthusiastic about much of the communcations aspect of the campaign. The name of the campaign "Half in Ten: From Poverty to Prosperity" worries me. Half in Ten sounds more like a technocratic goal than a statement that combines vision and values. This can be demonstrated by comparing it with ONE: The Campaign to Make [Global] Poverty History and Green for All's goal to "build an inclusive green economy strong enough to lift people out of poverty.

ONE is both a values statement (we're in this together, "united as ONE") and a true vision statement ("make poverty history"). Similarly, Green for All's goal combines vision and values—a strong and inclusive economy—in a slogan that clearly positions poverty as an economic issue. By contrast, "Half in Ten" has no obvious values content and will sound to some like "give us half a loaf in 10 years." This may be fine as a compromise governmental goal adopted by political leaders, but may be less effective as an advocacy slogan. I wish the wealthy backers of estate tax repeal had rallied under the banner of reducing the estate tax by 50 percent in 10 years, but unfortunately they went for the whole loaf and were much more successful as a result. Of course, a 50 percent reduction in poverty in ten years would be a fantastic accomplishment, but the slogan the campaign, like all good advertising, doesn't need to be so literal.

A related communications issue. Most of the images used on the campaign's website seem likely to reinforce popular stereotypes and misconceptions about people living below the poverty line. The banner of the site rotates a set of photographs that appear to be: a black child, a white mother hugging a child, an elderly white woman in a wheelchair, a black man, and a black woman (the classroom setting suggests that she may be an immigrant). None of the pictures portray people who are clearly at work or in work clothes.

A final point that involves framing in a deeper sense: while it's positive that the campaign "will focus on the issues facing the poor and middle class in America, building an effective constituency to advocate for specific policy changes", they need to go one step further and describe the cross-class constituency they're trying to build as "the working class and middle class." Where I grew up in the tundra of rural Minnesota, there were plenty of people living below the poverty line, but if you called one of them a "poor person" you would probably get either a punch in the face or an insulted glare. The same goes for the hundreds of clients I represented as a legal services attorney in west central Minnesota. Most people with incomes under even the miserly federal poverty line describe themselves as working class or middle class rather than "poor." The descriptions used to describe people—and how they describe themselves—change considerably over time. Negroes, paupers, and, increasingly, homosexual, are examples of terms that have been replaced in general public conversation or are in the process of being replaced. Poor people is another term in need of such evolution.

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.

Robert Kuttner argues that publicly subsidized human-services jobs should be good-paying jobs with benefits:

....

Here is a very straightforward proposal. Let's have a national policy to make every human-service job a good job -- one that pays a living wage with good benefits, and includes adequate training, professional status, and the prospect of advancement -- a career rather than casual labor.

These, after all, are jobs caring for our parents, our children, and ourselves. Transforming all human-service work into good jobs would not merely replenish the supply of decent work. It would vastly improve the quality of care delivered to the elderly at home or in institutions; to young children in pre-kindergartens or day-care facilities; and to sick people whether in hospitals, hospices, outpatient settings, or their homes.

These are also the jobs that cannot be outsourced. Even if we succeed in reviving American manufacturing, the process of automation means that America is almost certain to become even more of a service economy over time. Good service-sector jobs can help replace for good factory jobs.

....

This effort would be part of two broader labor-policy shifts that America sorely needs. First, we need to reverse the trend toward casualization of labor that has been occurring for three decades. One of the great advances of the 20th century was regularization of the employment relationship. Through successful social struggle, growth of unions, and enactment of legislation, most jobs came to provide decent wages and fringe benefits. Workers could not be fired without cause. Loyalty to the firm was reciprocated. Grievance systems were created and respected. Economists termed these jobs primary labor-market jobs. Casual, secondary labor-market jobs, which paid less and offered no such guarantees, continued to exist, but they were the exception. In recent years, however, the shift to casual jobs has become the norm, and in low-paid human-service work, casual, high-turnover jobs are the industry standard.

Second, the upgrading of human-service work would reverse another insidious trend -- the employer's habit of trying to increase the efficiency of labor by fragmenting jobs into separate tasks and paying the lowest possible wage for each task -- a strategy known as Taylorism, after the early 20th-century "efficiency expert," Fredrick Winslow Taylor, who first recommended it.

....

Larry Bartels' new book, Unequal Democracy: The Political Economy of the New Gilded Age, is full of fascinating insights into the politics of inequality. I hope to do a longer post on the book at some point, but until then, wanted to share one of Bartels' conclusions:

Scholars of political participation and liberal activists often seem to suppose that the cure for political inequality is to educate and mobilize the disadvantaged in support of specific progressive policies. However, the evidence of unresponsiveness to the views of low-income citizens presented in chapter 9 [of Bartel's book] and in [Martin] Gilen's work suggests that that strategy is very unlikely to be politically effective. ....

If "voice" is "likely to be futile" for people on the losing end of economic inequality, is there any hope for progress? My analysis points to two related bright spots in an otherwise gloomy picture. First, the correlation between class positions and political views is not so substantial that support for egalitarian policies is limited to "those mired in poverty." ....

[Second], my analyses suggest that the specific policy views of citizens, whether rich or poor, have less impact in the policy-making process than the ideological convictions of elected officials. .... policy choices seem to depend more on the partisan ideologies of key policy makers than on the details of public opinion. Thus, even if poor people have negligible direct influence on the day-to-day decisions of elected officials, they--and their ideological allies--may have substantial indirect influence by altering the balance of power between Democrats and Republicans in the making of public policy.

In essence, reducing poverty and inequality will require more progressives in positions of power. Yet, modern-day anti-poverty advocacy is largely legislative advocacy, advocacy conducted by groups funded by non-partisan and mostly non-ideological foundations. As political scientist Andrew Rich has noted:

... the leaders of liberal think tanks are often preoccupied by deeply held commitments to producing objective research, on the one hand, and to connecting their work to issue-based grassroots activism, on the other hand. These commitments are compatible with the tenets of liberal ideology, but they are far less helpful to fighting a war of ideas.

This dominant liberal approach has met with limited success over the last few decades. Bartels' research helps to explain why.

I really like Matt's "transcendent enemy" formula. Some nominations for that role: 1) "Wall Street predators", from last night's Obama speech; and 2) the "superclass", from David Rothkopf's new book, or some variation on it. The extremely wealthy or corporate CEO or similar categories by themselves aren't sufficient as transcendent enemies—it's the nexus of wealth, power, and actions driven by conservative ideology that needs to be the target.

The mortgage interest tax deduction is one of our largest government programs—it will cost almost $100 billion in 2009—contributes significantly to income and wealth inequality, and helped make the housing bubble happen. The time has come to reform it. Via Economist's View, this is a good post by Thomas Palley that includes recommendations on reform:

....

First, the capital gains exemption should be abolished for all new home purchases. Instead, the base cost of houses should be indexed to inflation so that homeowners are not taxed on inflation gains. Existing homeowners should be grand-fathered under current law to discourage selling to protect unrealized gains, which would destabilize the housing market.

Second, the ceiling (currently $500,000 per taxpayer) on mortgages qualifying for interest deductibility should be gradually lowered to zero over a ten-year period. Such a gradual phase-out can actually help existing middle-class homeowners because it will make top-end homes relatively less affordable compared to mid-market homes that retain the tax subsidy. That will shift demand toward the mid-market segment, helping maintain mid-market prices and thereby mitigating the housing slump.

Third, since everyone needs housing, the Federal government should phase in a refundable housing cost tax credit available to all, regardless of whether they own or rent. That credit can be financed with revenues generated by phasing out the mortgage interest deduction. During the transition every taxpayer should have the choice between taking either the available mortgage interest deduction or receiving the housing tax credit.

Current tax treatment of housing is intended to benefit working families, but it actually creates bad outcomes. The reality is current tax law distorts the economy, promotes house price speculation, renders households over-indebted and financially vulnerable, and undermines wages and family structure. There is a better way to help working families afford decent housing, and now is a good time for policy to transition in that direction.

....

Jared Bernstein is discussing his new book at TPM Cafe this week, and he's been getting into it with a conservative economist over the concept of merit and how much people are paid.

Alan found principle #1 ambiguous, and since it’s central to a) the book, and b) my understanding of the economy, let me repeat the principle and try to clarify.

#1: Economic outcomes are generally thought to be fair, in the sense that market forces dole out rewards to those who merit them. But that’s not always the case. Power, whether it’s based on political clout, wealth, class, race, or gender, is also a key determinant of who gets what.

This seems crystal clear to me, but maybe that’s because I view many of the economy’s outcomes through this lens. Simply put, I see evidence of large and growing gap between overall economic growth and the living standards of working families. And I see disproportionate power—not merit, not marginal product, not efficient resource allocation—as one driving force behind it.

Probably the best indirect evidence that pay doesn't reward productivity is this chart showing income growth under Republican and Democratic presidents. The party of the president has a profound influence on who gets what, and unless higher wage earners become more productive than anyone else under Republican presidents, or unless everyone gets more productive under Democrats, politics and power has a lot to do with how much you're paid.

That said, is this a good argument for progressives to get into? If I had to answer, without much direct evidence, I'd say no, just because you're swimming against such a strong current. People, especially Americans, tend to believe in a just world, that people generally get what they deserve. Maybe with elites who buy conservative economics it's a good idea to have at it, but I doubt it'd play in Peoria. Conservatives will probably win, and it's better to talk about job quality and inequality on more favorable grounds.