The belief that there is an irreconcilable conflict between government benefits and the freedom to pursue dreams can only arise among those who have never had to worry about the reality of equality of opportunity in America. For most Americans, public schools are a critical piece of the machinery of economic mobility. Things like unemployment insurance and social security, meagre though they are, sometimes mean the difference between destitution and the possibility of a second chance or a non-wretched standard of living. For many Americans, the ability to even contemplate dreams for a better life is down to the small cushion and basic investments provided by governments, provided for precisely that reason, because an economy in which only those born with a comfortable financial position can invest in human capital and take entrepreneurial risks is doomed to class-based calcification.
America’s welfare state is far from perfect. But it is necessary; indeed, it’s hard to imagine a just and sustainable system of free enterprise without a robust social safety net. Republicans need to recognise this and acknowledge that the past three decades have meant rising income inequality and falling economic mobility alongside top marginal tax rates that are among the lowest of the postwar period. A party that can’t come up with a better answer to this dynamic than to conclude that half of America simply isn’t trying hard enough probably isn’t a party destined or deserving of electoral success.
Archive for the 'Politics' Category
Here’s what we know from the experiences of the world’s rich democracies: Relative to other nations, those in which labor is highly organized are more likely to have an influential social democratic and/or Catholic center-right (emphasis on center) political party, a proportional representation electoral system, well-organized employers, formal or informal-but-institutionalized participation by labor and business associations in the policy-making process, generous social insurance programs and complementary programs to help households that fall between the social insurance cracks, expansive public services, similar long-run economic growth, a fairly egalitarian distribution of individual wages and household incomes, reliable economic security, extensive economic mobility, and generous holiday and vacation time.
Sorting out the causality is a bit tricky, but it seems probable that labor organization has contributed to most, if not all, of these outcomes. If you want progressive policies, the comparative historical evidence suggests it’s very helpful to have a strong labor movement. Indeed, after democracy, it might well be the single most valuable thing to have.
But what if you live in a country with labor unions that are weak, and getting weaker? What if your country is the United States?
You might choose to focus on strengthening the union movement. Or you might seek an alternative view (“theory of politics”) about conditions for feasible and sustainable progressive policy change. Is there any such view? I think so.
Forge whatever electoral coalition you can, including but not necessarily centered on unions. Organize sympathetic interest groups into single- or multi-issue movements and coalitions. Build up a network of think tanks, journalists, bloggers, and other organizations and individuals to identify and expose the strategies and plans of opposing forces. Offer worthy, workable policy ideas and try to get them (or some acceptable version of them) passed when possible. Aim for big policy advances in rare favorable moments and small ones the rest of the time. (Examples of big ones in American social policy: universal public K-12 schooling, Social Security, unemployment insurance, AFDC, minimum wage, Medicare, Medicaid, Food Stamps, Affordable Care Act. Examples of smaller ones: Head Start, indexing of Social Security benefits to inflation, EITC (it later got big), expansion of EITC and indexing it to inflation, child tax credit, S-CHIP, periodic minimum wage increases.) If your favored programs work well, people will like them. They’ll therefore be difficult — not impossible, but difficult — for the other side to weaken or remove when it’s in power. This last element of the strategy, avoiding policy reversals, is critical, and it’s aided by the array of veto points in the American policy-making process (though there’s also this).
This is a second-best strategy, to be sure. But in the American context it may be the only practicable one.
Nor is its relevance confined to the United States. Workers are relatively unorganized in some other affluent nations, such as Japan and New Zealand. Even in western Europe, the bastion of encompassing labor movements, its relevance is likely to grow. One reason is the American problem: unionization is declining in much of Europe too, though from a higher level and at a slower pace than here. A second reason is the “postmaterialism” problem: union members may grow less and less wedded to left parties and progressive policies.
Henry Farrell suggests that we “not only need to think about the abstract desirability of a policy, but whether it supports or undermines the coalition that makes this and other desirable policies possible.” I agree. But I’d discourage any sort of rigidity on this. Sometimes good policy might usefully be subordinated to long-run politics, and sometimes not.
On policy grounds, I’m not happy about President Obama’s decision to go along with a two-year extension of the Bush tax cuts for those making over a million dollars and with a scaled-back estate tax. But there’s an economic and political logic to it.
Economic: The most important thing our federal government can do at the moment is to help the economy. Fiscal policy options are limited; there’s no chance of a second stimulus package. Extending the tax breaks for the richest will help — not a lot, since much of the money the rich get to keep will be saved rather than spent, but a little. More important, in exchange the administration got an extension of unemployment benefits for several million people and additional tax reductions for low- and middle-income Americans.
Political: The general line of commentary on the left suggests that compromising with Republicans on this issue hurts Obama politically. Comparisons to Jimmy Carter are becoming commonplace. But Bill Clinton got the same kind of flak. In the end, the key difference between the Carter and Clinton presidencies wasn’t clarity of vision, a big idea, decisiveness, toughness, progressiveness, or partisanship. It was how the economy performed as each approached reelection. If our economy gets back on its feet, President Obama and his party are likely to fare well in the 2012 elections, and images of Obama as Carter redux will be a distant memory.
More from Dean Baker, Jonathan Chait, Clive Crook, Kevin Drum, Howard Gleckman, Robert Greenstein, Greg Ip, Simon Johnson, Ezra Klein, Paul Krugman, Greg Mankiw, Robert Reich, Felix Salmon, John Sides, Mark Thoma, Matt Yglesias, and others.
At The Monkey Cage over the next few days. It includes comments on the book by Paul Pierson and Jacob Hacker, by Will Wilkinson, and by me, with responses from Bartels.
My two favorite dailies, the New York Times and the Financial Times, offer divergent takes today on prospects for the Obama administration’s proposed economic stimulus package.
To a degree that would have been unimaginable two years ago, economists and politicians from across the political spectrum have put aside calls for fiscal restraint and decided that Congress should spend whatever it takes to rescue the economy.
But with the Congressional Budget Office projecting a federal budget deficit of 8% of GDP in 2009, the FT suggests
The president-elect … will now find it harder to achieve broad bipartisan support for the package. In addition to rising Republican concerns about the size of the stimulus, which has not been factored into the CBO’s 2009 fiscal deficit projection, fiscally conservative “blue dog Democrats” are now more likely to drag their feet on the measure.
“I acknowledge the electoral commissioner’s declaration and congratulate Professor Mills.” These words are from Nana Akufo-Addo, who, according to the New York Times, has lost a run-off election for the presidency of Ghana by a very narrow margin. His acceptance of defeat may help Ghana avoid the type of violence produced by disputed election results in Zimbabwe, Kenya, and a variety of other countries in recent years.
There are, of course, circumstances in which the declared result is not fair and protest is justified. But nothing is more important to democracy than the normalization of peaceful transfer of power (Akufo-Addo’s party has held the presidency the past eight years). Here’s hoping this type of statement will be uttered many more times this year and into the future.
With an incoming Democratic president, should we expect some reversal of the rise in income inequality that has characterized much of the past generation? The following chart, from Larry Bartels’ book Unequal Democracy, suggests reason for optimism. Using Census Bureau data covering the period from 1948 to 2005, Bartels finds a much more egalitarian pattern of income growth under Democratic presidents than under Republican ones.
Bartels’ book is social science at its best: careful empirical research on questions at the forefront of current political and policy debate. His finding of a strong association between president’s party and income inequality is just one of the many interesting and important ones in Unequal Democracy.
That finding seems to have become accepted as an empirical fact by economic and political commentators. A sampling: Dan Balz, Alan Blinder, Tyler Cowen, Kevin Drum, Andrew Gelman, Ezra Klein, Paul Krugman, Andrew Leigh, Brendan Nyhan, Dani Rodrik, Theda Skocpol, Michael Tomasky, Will Wilkinson, Matthew Yglesias, Julian Zelizer.
Is it correct? The story struck me as convincing for the period through the end of the 1970s, but less so for the years since then. So I went to the data. Here’s a summary of my conclusions:
Bartels’ account of the first portion of the post-World War II era seems to me compelling. From the late 1940s through the 1970s, Democratic and Republican presidents tended to have sharply contrasting fiscal and monetary policy orientations. This difference in policies appears to have contributed to sizable differences in income growth for families at various points in the income distribution. Families near the top tended to do equally well irrespective of the president’s party, but families in the bottom 80% fared better under Democrats. Income inequality in the United States changed little over the period as a whole, as increases under Republican presidents were balanced by declines under Democratic presidents.
Since the 1970s the story has been very different. Income inequality has risen sharply, and the correlation between president’s party and movement in inequality has been much weaker.
If we focus on the bottom 95% of the income distribution, as Bartels does, we observe a notable partisan difference in inequality trends and in patterns of income growth in the lower half of the distribution during this period. Contrary to Bartels’ conclusion, this partisan difference exists mainly for pretransfer-pretax income, suggesting that transfer and/or tax policy differences have not been a key driver. To the extent presidents have mattered, the effect seems more likely to have operated via union strength and/or the minimum wage.
To fully understand post-1970s trends in income inequality in the United States, it is critical to include developments at the top of the distribution, which Bartels does not do. If we turn to data that include the top 1%, we find only a weak association between president’s party and changes in inequality since the 1970s. Republican and Democratic presidents have pursued contrasting tax policies, and those policies appear to have made a difference for inequality. But their impact has been swamped by trends in pretax income. At the moment we know relatively little about the factors driving the dramatic increase in the share of economic growth going to those at the top of the distribution, and even less about what role presidents have played.
The following chart is, I think, the best representation of what’s happened since the late 1970s:
The full paper is here.
Following up a previous post on political opportunity in the United States and Europe, this graph shows the share of seats held by women in the main legislative body (parliament’s “lower” house) in the U.S. and nineteen other rich democracies. The data are from the Inter-Parliamentary Union. Though not far behind France, the United Kingdom, and Italy, America’s share is one of the lowest. When the new Congress convenes in January, women will hold just 17% of the seats in the House of Representatives (and 17% in the Senate). The figure for Germany is 32%. In Sweden, at the high end, it’s 47%.
A report on how women fared in the 2008 U.S. elections is here. A good introduction to cross-country differences and over-time developments is Women, Politics, and Power, by Pam Paxton and Melanie Hughes.
Has the 2008 election ushered in a new era of Democratic hegemony, akin to those enjoyed by the Democrats beginning in 1932 and the Republicans beginning in 1980? Two considerations suggest yes.
First, a Republican president is presiding over a deep economic crisis. The early-1930s and late-1970s crises scarred the party in power for a generation, and this one has the potential to do the same (John Judis makes a similar point).
Second, Barack Obama won big among young voters; according to exit polls, he got 66% of the votes of those age 18 to 29. This is important because while our party preference can in principle change at any time, we tend to stick with the party we identified with when we first became politically aware.
The following two charts show the role this played in the partisan shift that occurred around 1980. Both use data on party identification from the National Election Study (NES) and the General Social Survey (GSS). In the first chart, we see that among all American adults Democrats held a large advantage until the late 1970s, after which their edge diminished sharply. The second chart shows the trend for people who turned age 20 between 1978 and 1990. The formative political years for this cohort were ones of economic crisis under Democrats in the late 1970s followed by improvement (after 1982) under a Republican president and Senate in the 1980s. Among this group the party identification gap started small and had virtually disappeared by the mid-1980s. Through the 1980s, 1990s, and 2000s this cohort has slowly replaced an older generation of Americans who continued to identify with the Democrats. This process of cohort replacement is a key driver of the shrinking partisan gap among all adults that we see in the first chart.
Are we in the midst of an enduring shift in favor of the Democrats? We’ll only be able to tell in retrospect, of course, and I suspect much hinges on what the Obama administration can accomplish. But the groundwork appears to have been laid.
Lagging in one respect, but in another perhaps not so much.
Earlier this week the New York Times ran a piece highlighting skepticism about whether a black or other racial minority politician could replicate Barack Obama’s feat in the not-too-distant future in France or Germany or the U.K. There’s a good bit of truth in this.
But then in today’s NYT I notice photos of Germany’s Chancellor Angela Merkel and France’s finance minister Christine Lagarde, and this reminds me that the U.K. elected a female prime minister nearly thirty years ago.
Vote choice in presidential elections is strongly influenced by voters’ perceptions of their financial situation, according to exit poll data available since 1992. More than 65% of those who feel their situation has gotten better typically vote for the incumbent party’s candidate, versus fewer than 35% of those who say their finances are worse.
A key factor in election outcomes, then, is how many voters feel their financial situation has gotten worse. As the following chart suggests, when that share reaches about a third of voters, as it did in 1992 and 2008, it spells trouble for the incumbent-party candidate.