Politics, Public Opinion, and Inequality

Politics, Public Opinion, and Inequality Larry M. Bartels Princeton University

In the past three decades America has experienced a New Gilded Age, with the income shares of the top 1% of income earners reaching levels unseen since the Roaring 20s. Income share (%) 50 45 40 35 30 25 20 15 10 5 0 Figure 1.4 Income Shares of Top 5% and Top 1%, 1917-2005 T op 5% T op 1% 1915 1925 1935 1945 1955 1965 1975 1985 1995 2005

Meanwhile, the real incomes of middle-class and working poor families have grown much more slowly, and much more unequally, than they did in the decades following World War II. Cumulative income growth (%) 120 100 80 60 40 20 0 97.5 100 Figure 1.2 Cumulative Income Growth by Income Percentile, 1947-1974 and 1974-2005 102.9 97.6 89.1 10.3 18.6 1974-2005 20th 40th 60th 80th 95th 20th 40th 60th 80th 95th 30.8 42.9 62.9

Economists attribute these changes in the income distribution to technological change, globalization, and demographic shifts.

Economists attribute these changes in the income distribution to technological change, globalization, and demographic shifts. While those factors are clearly important, politics and public policy also have profound effects. One bit of evidence: other wealthy democracies have experienced similar economic trends, but much more modest increases in inequality due to more aggressive redistribution.

Another: simply tabulating patterns of income growth in the U.S. over the past half-century reveals striking differences in how middle-class and working poor families have fared under Democratic and Republican presidents. Average annual growth in real income (%) 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Figure 2.1 Income Growth by Income Level under Democratic and Republican Presidents, 1948-2005 Democrats Republicans 0 10 20 30 40 50 60 70 80 90 100 Income percentile

If the Democratic pattern of income growth had somehow been maintained consistently through this period, inequality would now be lower than it was in the 1940s, despite unfavorable technological and demographic trends. Inequality (80/20 income ratio) 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 Figure 2.5 Projected Income Inequality under Republican and Democratic Presidents, 1947-2005 Republicans Democrats 1945 1955 1965 1975 1985 1995 2005

If voters are so much better off under Democrats, why do Republicans win so many elections?

1. Social issues outweigh economic issues. According to Thomas Frank in What s the Matter with Kansas?, Republicans have captured working-class whites through the hallucinatory appeal of cultural wedge issues like guns and abortion. Not really. In fact, low-income white voters are more reliably Democratic than they used to be; and they attach less weight to social issues than more affluent white voters (who tend to be socially liberal) do.

2. Partisan bias in economic accountability due to myopia : voters reward or punish incumbents for income growth, but only income growth in the year of the election.

2. Partisan bias in economic accountability due to myopia : voters reward or punish incumbents for income growth, but only income growth in the year of the election. This turns out to account for much of the Republicans electoral success over the past half-century. Middle-class and working-poor incomes have generally grown much faster under Democratic presidents than under Republicans; but everyone does better under Republicans in presidential election years.

Figure 2.1 Income Growth by Income Level under Democratic and Republican Presidents, 1948-2005 Figure 4.4 Income Growth in Presidential Election Years, by Party, 1948-2004 3.0 3.5 Average annual growth in real income (%) 2.5 2.0 1.5 1.0 0.5 0.0 Democrats Republicans Average annual growth in real income (%) 3.0 2.5 2.0 1.5 1.0 0.5 0.0-0.5-1.0 Democrats Republicans 0 10 20 30 40 50 60 70 80 90 100 0 10 20 30 40 50 60 70 80 90 100 Income percentile Income percentile

Of all the races in an advanced stage of civilization, the American is the least accessible to long views. Always and everywhere in a hurry to get rich, he does not give a thought to remote consequences; he sees only present advantages. He does not remember, he does not feel, he lives in a materialist dream. Moiseide Ostrogorski (1902)

Do Americans care about inequality?

Yes. 85% say that Our society should do whatever is necessary to make sure that everyone has an equal opportunity to succeed.

Yes. 85% say that Our society should do whatever is necessary to make sure that everyone has an equal opportunity to succeed. Most prefer working class people to middle class people, poor people to rich people, and labor unions to big business.

Then why do egalitarian attitudes not lead to egalitarian policies?

1. People often fail to connect general values and specific policy preferences especially if they are not well-informed about politics and public affairs. Probability of supporting tax cut 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.0 Figure 6.4 Support for the 2001 Tax Cut by Egalitarian Values and Information Level, 2004 Non-egalitarian Moderately egalitarian Strongly egalitarian 0 10 20 30 40 50 60 70 80 90 100 Information percentile

Table 7.1 Obtuse Support for Repealing the Estate Tax Favor repeal Oppose repeal N Total sample 67.6% 27.2% 1,346 Among those who... have family incomes of less than $50,000 62.9% 29.9% 620 (46%) want more spending on most government programs 66.3% 28.3% 1,232 (92%) say income gap has increased and that is a bad thing 64.9% 31.9% 596 (40%) say government policy contributes to differences in income 64.6% 30.1% 813 (63%) say rich people pay less than they should in federal income taxes 65.2% 31.4% 674 (50%) All of the above 63.4% 32.8% 134 (10%)

Policy preferences are also strongly shaped by unenlightened self-interest. For example, people s attitudes about their own tax burdens were a primary determinant of support for the Bush tax cuts (which went mostly to taxpayers in the top 5% of the income distribution), and even for estate tax repeal (which only affected multi-millionaires). In neither case did attitudes about the tax burden of the rich have any discernible effect on people s policy views.

2. People who are sufficiently attentive to construct reliable links between values and policy preferences are also likely to perceive the world in ways that bolster their ideological preconceptions.

2. People who are sufficiently attentive to construct reliable links between values and policy preferences are also likely to perceive the world in ways that bolster their ideological preconceptions. For example, political information produces ideological polarization in views about whether poor people can get a fair trial, about the importance of hard work in explaining income differences, and even about whether economic inequality has, in fact, increased.

The bestinformed conservatives are twice as likely as the least-informed conservatives to deny that income inequality has increased over the past twenty years. Probability of agreement 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.0 Figure 5.2 Perceptions of Increasing Income Differences by Ideology and Information Level Liberals Conservatives 0 10 20 30 40 50 60 70 80 90 100 Information percentile

3. When the public does have clear preferences regarding relatively straightforward policy issues, those preferences are often ignored by policymakers catering to special interests or pursuing their own ideological convictions. For example, the estate tax survived for most of the 20th century, despite strong and consistent public antipathy, because Democratic majorities in Congress supported it.

Conversely, the real value of the minimum wage has fallen by more than 40% over the past forty years (while average hourly pay has increased significantly)... Hourly Wage (2006 dollars) $25 $20 $15 $10 $5 Figure 8.1 The Real Value of the Minimum Wage, 1948-2006 Average Hourly Pay Minimum Wage $0 1948 1956 1964 1972 1980 1988 1996 2004

... despite strong and consistent public support for minimum wage increases. Support (%) Figure 8.2 Public Support for Minimum Wage Increases, 1945-2006 100 90 80 70 60 50 40 30 20 10 0 1945 1955 1965 1975 1985 1995 2005

Much of the decline in the real value of the minimum wage is attributable to the declining membership and political clout of labor unions.

Much of the decline in the real value of the minimum wage is attributable to the declining membership and political clout of labor unions. However, policy-making in this domain, too, has a significant partisan dimension: since 1949, the real value of the minimum wage has increased by a total of $4 under Democratic presidents, but declined by a total of $2 while Republicans controlled the White House.

4. When policy-makers do respond to public opinion, they respond mostly to the opinions of affluent people. The poor seem to receive little or no representation.

4. When policy-makers do respond to public opinion, they respond mostly to the opinions of affluent people. The poor seem to receive little or no representation. For example, Gilens s (2005) study relating policy preferences in hundreds of national opinion surveys to subsequent policy shifts found that influence over actual policy outcomes appears to be reserved almost exclusively for those at the top of the income distribution.

Another example, with very similar implications: Individual U.S. senators seem to be much more responsive to the views of affluent constituents than to the views of middleclass constituents, while the opinions of people in the bottom third of the income distribution have no apparent impact on their senators votes.

Responsiveness (regression estimate) 7 6 5 4 3 2 1 0-1 Senators' Responsiveness to Income Groups (W-NOMINATE Scores) 101st Congress 102nd Congress 103rd Congress Low income Middle income High income

Republican senators are especially sensitive to the views of affluent constituents but even Democrats are unresponsive to people in the bottom third of the income distribution.

Responsiveness (regression estimate) 7 6 5 4 3 2 1 0-1 Democrats Republicans Democratic and Republican Senators' Responsiveness to Income Groups Low income Middle income High income

Under what circumstances (if any) will the interests of the poor be served by our Unequal Democracy?

While Senators roll call votes are related to their constituents views, they are much more strongly related to the senators own partisanship. Senators' conservatism (W-N OMINATE ) 1.0 0.8 0.6 0.4 0.2 0.0-0.2-0.4-0.6-0.8 Constituency Opinion and Senators' Roll Call Votes, by Party Republicans Democrats -1.0 0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 Constituency opinion (NES conservatism scale)

This brings us back to partisan politics. People of modest means are likely to fare (relatively) well under Democrats, but much less well under Republicans, regardless of their own specific policy views or specific patterns of responsiveness on the part of elected officials. Thus, insofar as poor people s votes are decisive in the electoral arena, they will be politically influential. More often, however, their political fate will depend on the ideological sympathy of the non-poor.

Unfortunately, the increasing social isolation of rich and poor people in contemporary America and the extent to which economic inequality is exacerbated by racial and ethnic divisions makes ideological sympathy for the poor less powerful than it might otherwise be. Only remarkable emergencies are likely to remind us that we re tied together in this life, in this nation and that the despair of any touches us all.