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Monday, July 17, 2006


It's probably time to move on to something else for awhile since there have been quite a few posts on income inequality recently and I don't want to overdo the topic. But it's an important topic and underdoing it would be an even bigger mistake, so here's one more. This describes how inequality drives political polarization and shuts down the legislative process:

Why We Fight, by Brendan Mackie, American Prospect: ...In their new book, Polarized America: The Dance of Ideology and Unequal Riches, political scientists Nolan McCarty, Keith T. Poole, and Howard Rosenthal identify a chief culprit behind the decades-long increase in political polarization: rising economic inequality. TAP spoke with McCarty from his office ... at Princeton University.

You argue that economic inequality and illegal immigration feed America’s increased political polarization. How does this “dance,” as you call it, work?

What’s happened in the past 25 to 40 years or so is that as economic inequality has increased, there’s been a polarization of the parties on economic issues... T]here’s a direct relationship between the polarization of the parties on economic issues and the increased economic inequality that took place, primarily because these new, wealthier voters gave an impetus to a set of policy priorities -- lower taxes, a more libertarian set of economic prescriptions -- that reinforced inequality.

The question is, why hasn’t this increased economic inequality produced more redistribution?

Typically economists, political economists, and political scientists think that economic inequality is self-correcting: If inequality increases there will be a mobilization of lower-income voters in a push toward greater redistribution of wealth to offset that inequality. Here’s where immigration is a big part of the story, ... at the same time as economic inequality in America was increasing, immigration was increasing, too. There were increasing numbers of low-wage workers, but an increasing proportion of those were immigrants who were not yet naturalized and therefore not able to vote for redistributionist policies. ...

Do you think American politics would become more or less polarized if more illegal immigrants were given citizenship?

It’s really not so much a question of legal vs. illegal immigration  ... it’s simply a question of the levels of immigration and the class or skill composition of immigrants. We argue ... that if, in fact, immigrants could vote, or if there hadn’t been this sort of compositional change in lower-income voters so that increasing numbers of them can’t vote, then there might have been more support for redistributionist policy (like an increase in the minimum wage, or an extension of the earned-income tax credit, or improvements to education)... Giving immigrants citizenship might not end polarization -- there would still presumably be big differences in the economic interests of high-income voters and low-income voters -- but it might lead to a stronger policy response toward economic inequality.

The current administration puts a lot of polarizing cultural issues out into the national debate. Are these just red herrings that distract from more salient economic issues?

I don’t buy into the Thomas Frank view that these cultural issues are red herrings, fake populism by economic royalists of the Republican Party. Lower-income religious Americans are only slightly more Republican than lower-income Americans in general. What’s very dramatic is that we find a coalitional structure that’s emerged in which the base of the Republican Party isn’t religious conservatives or economic conservatives, but religious high-income voters who have no conflict between voting their values and voting their pocketbook. ...[I]f you look at what Republicans have done in office, they really have pushed on the economic issues -- the tax cuts, the privatization of social security, the deregulatory agenda and so on -- more than the cultural issues. And while some have interpreted this to mean that the Republicans aren’t serious about conservative religious issues, I just think it’s more that they have this coalition of high-income Americans. The religious issues are important to certain parts of this coalition, but it’s not the dominant part...

What’s the big problem with political polarization? It’s just people disagreeing, right?

Some level of polarization and disagreement is undoubtedly good. Good policy-making has to be some combination of debate and resolution. In the ideal political system, people ... iron out their differences in principled ways. We’ve gone past that point. Polarization has become debilitating. Congress has been unable to fulfill its legislative functions in an effective way. By way of an anecdote, Congress is on pace to set the modern record for the fewest days in session. Why be in session if nothing’s going to be accomplished? ...

It won’t surprise anyone who’s thought about the nature of American political institutions to note that in America it’s very easy to block things from getting done. We have a federal system that requires some degree of coordination between the federal government and state governments; we have a bicameral system that requires coordination across the branches; in each of these systems we have committee systems which require the coordination of committee chairs; and we obviously require cooperation between the President and the Congress. Because of this, without exception every single major piece of legislation in the post-war period has had to have some sort of bipartisan consensus in order to get passed. Our institutions are pretty prone to gridlock ... because we have all these hurdles. ...

Talk a bit more about when and how political polarization began increasing.

Polarization started to increase right after the Great Society. There had been a real consensus on economic and social policy: that Keynesian macroeconomics and the welfare state social policies were the way to go. The breakdown of this consensus caused by the economic changes in the 1970s created today’s increased political polarization. Keynesian economics unraveled, and so the consensus about the government’s role in the macro-economy changed; the urban crisis of the 1970s undermined faith in New Deal/Great Society-type liberalism.

At the same time there was a real skills premium in the economy so the value of education started to rise relative to unskilled labor, and thus you had an increase in economic inequality. The beneficiaries of this change, ... because they were doing quite well under the new consensus, began to support Reaganomics and other conservative economic policies.

The polarization we see today is the Democratic Party supporting the remnants of the old consensus and the Republicans representing this alternative libertarian, small-government consensus. Other issues started getting drawn into this split, creating the polarization we see on non-economic issues. Although we argue that for the most part the polarization on social issues has been overstated, you can’t deny that there are other religious and cultural issues coming out of the 1970s -- Roe v. Wade and so forth -- that have reinforced these divisions. ...

If America continues to become less equal, do you see American politics becoming more and more polarized?

We talk about some of the proposals people have made to try to ameliorate polarization. A lot of them are small, like reforming reapportionment and gerrymandering or changing the ways electoral primaries are conducted. But since we think polarization is more a fundamental reflection of a divergence of interests across different economic groups, those sorts of things aren’t going to be solutions.

This leads us to something of a pessimistic conclusion: if we can’t change the system by reforming the way politics works, then you’re left with two options. First, voters simply have to change their mind about what their interests are or you have to have political leaders stand up and convince them that their interests are different than what they think they are -- both of which seem like unlikely scenarios. Or, alternatively, you have to have something really bad happen. Nobody wants anything really bad to happen, but the Great Depression and the Second World War had huge effects on political polarization and economic inequality. They gave people a sense of shared fate. It’s hard to see a way out of polarization, without some big event that either changes people’s perceptions of how the world works or what the role of government should be, or increases people’s sense of shared fate.

A lot of people argued in 2001 that 9-11 was potentially such an event. If you looked right after 9-11 you saw increases in people’s trust in governmental institutions, ..., and you saw a short-term increase in bipartisanship in congress, but both of those were very, very short lived. Within six months the level of congressional bipartisanship and people’s trust in government were back to where they were before 9-11. So even very significant events like 9-11 may not be big enough to change people’s perspectives...

    Posted by on Monday, July 17, 2006 at 10:35 AM in Economics, Income Distribution, Politics | Permalink  TrackBack (0)  Comments (27)


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