Tag Archives: leighley

How Progressive Policies Boost Economic Growth

At the core of the debate between liberals and conservatives is a dispute over whose policies are better for economic growth, and particularly for the middle class. A new studyby Bryan Dettrey and Harvey D. Palmer suggests one way to test this question — by examining how economic growth differs under Republican and Democratic presidencies. Their finding might not be too surprising: Under Republicans, growth boosts the stock market, while under Democrats, it reduces unemployment.

The two academics examine how economic growth is distributed over time. Their data are expansive, covering the 60-year period from January 1951 to December 2010. They find that once economic growth increases above 1 percent a year — and it does so over most of the period they studied — “the average level of unemployment is significantly higher under Republican administrations.”

As the above charts (from their paper) show, with either a one- or two-year lag, Democrats reduce unemployment dramatically during periods of GDP growth compared to Republicans. Some of this effect has to do with inflation rates (as a I note below), but the authors note another key difference: They argue that Republican policies (for instance, massive tax cuts for the rich and cuts to capital gains) incentivize corporations to use money to compensate CEOs or distribute to shareholders, rather than invest in workers and jobs.

Dettrey and Palmer are not the first academics to raise these points. In a 2004 paper, Larry Bartels showed that “Democratic presidents have produced slightly more income growth for poor families than for rich families.” He updated that analysis earlier this year and found the same result. One reason he cites is the minimum wage: Its real value increased 16 cents a year under Democrats, but decreased by 6 cents a year under Republicans. Aseminal study by Douglas Hibbs found that “the unemployment rate was driven downward by Democratic and Labor administrations and upward by Republican and Conservative governments.” In another study, Alan Blinder and Mark Watson found that the economy grows faster under Democrats, but couldn’t determine why. It could be that the safety net boosts entrepreneurship by making Americans feel more economically secure (and willing to take risks).

There is also an increasingly large body of research on differing government policies at the state level. Christopher Witko and Nathan Kelly note that “since the Republican takeover of Congress in 1995, the states have played a more important role in shaping the income distribution,” and, consequently, in driving income inequality. In another paper, Elizabeth Rigby and Megan Hatch identify three major policies that states can pursue to slow the income growth of the 1 percent. In particular, they find that “policies played a significant role in shaping income inequality in the states.” If states had adopted more liberal policies, Rigby and Hatch suggest, the increase in inequality (as measured by the Gini Coefficient) would have been 60 percent smaller — and the share going to the top 1 percent would have been halved.

(Story continues below the chart.)

Overall, Hatch and Rigby find that conservative policies tend to exacerbate inequality, while liberal policies tend to reduce it. Rigby tells me that the “more redistribution” scenario can be considered the “liberal” scenario, and “less redistribution” the “conservative” scenario, although Democrats don’t always line up perfectly behind liberal policies. Kelly and Witko concur: “We observe that when unions are stronger and left party governments are in power at either the federal or state level we see lower levels of inequality.” Numerous other studies surveyed by Anne Case and Timothy Besley suggestthat Democrats boost government spending, particularly on workers’ compensation and Medicaid (see pages 44 and 45).

Finally, it’s worth noting the racial impacts of these policies. I recently highlighted research by Zoltan Hajnal and Jeremy Horowitz showing that people fare far better under Democrats than Republicans. Given that black and Latino Americans are more likely to end up unemployed — research suggests this is part of the reason for the racial wealth gap — Republicans’ preference for tightening monetary policy is most likely to fall on people of color. Conservatives may not be intending to harm black people, but their policies can end up having a disproportionate impact on them nonetheless.

Inequality did not arise in a vacuum. Government policy plays a significant role in determining the distribution of income. To take one policy, Anthony Atkinson and Andrew Leigh find that reductions in tax rates explain between one half and one third of the rising share of income going to the 1 percent in Australia, Canada, New Zealand, the U.K. and the U.S. (As I’ve noted elsewhere, there is strong evidence that unions and Democrats can reduce inequality, although unions are more effective.) Meanwhile, Olivier Bargain and others find that tax policy accounted for at least 29 percent of the increase in inequality between 1979 and 2007, and likely more. Further, they find, “Republican policymakers increased inequality especially at the top whereas Democrats increased the income share of the bottom 80 percent of the distribution.”

These findings decimate the idea that there isn’t “a dime’s worth of difference” between America’s two major parties. Many commentators in particular focus too much on marquee policies and miss the “market conditioning” and other minor policies that Republicans and Democrats pursue in office, which can have an outsized impact on economic outcomes. (The fact that these same commentators often worry about “rising polarization” is telling.)

In fact, there are differences in the way Republicans and Democrats govern. Pretending there aren’t doesn’t just sow confusion, it may hurt the left as well. A recent study findsthat when people don’t perceive large differences between the parties, they are less likely to vote; and when people become alienated from the political process, they are less likely to vote. By contrast, as David Brockington argues, “choice-rich environments” increase the probability that people will turn out to vote.

It is clear that the parties offer distinct options to voters. While it is certainly true that liberal parties sometimes do less to fight inequality in the era of globalized finance, they still have an important influence over outcomes. The Republican party has indeed become the party of the rich.

Worryingly, however, Jan Leighley and Jonathan Nagler find that “respondents who perceive a greater difference between the candidates… are more likely to vote.” And “those in the top income quintile see a larger difference between the candidates on ideology than do those in the bottom quintile.” Research suggests that when voters gain more information, they shift to support more liberal policies and parties. In the current system, much of the problem rests in the fact that low-income and middle-income voters don’t realize that conservatives are fleecing them. The rich do realize they benefit fromRepublicans, and therefore have an incentive to turn out. Commentators who suggest that the two parties are the same, rather than galvanizing Democrats toward more progressive policies, may be simply keeping conservatives in power.

This piece originally appeared on Salon

Russell Brand is wrong: Voting really can change America for the better

Last year, Russell Brand declared in a New Statesman article that he had never voted because he “regard[s] politicians as frauds and liars and the current political system as nothing more than a bureaucratic means for furthering the augmentation and advantages of economic elites.” And Brand, in many ways, is right — just not about voting. A growing body of political science literature actually finds that voting is an incredibly important lever of policy change. To understand why, though, we need to start with the matter of class.

The class bias in voter turnout in America is strong. A recent study estimates that in 2008, voter turnout among the wealthiest 1 percent of the population was an astronomical 99 percent. It’s not surprising that this level of participation doesn’t hold for all tax brackets; yet the chart below still shows a startling trend. There is only a single instance over the past three election cycles of a lower income bracket having higher turnout than a higher bracket.

For a long time, political scientists weren’t worried about turnout disparities. In their seminal 1980 study on the question (using data from 1972), Raymond Wolfinger and Steven Rosenstone argued that, “voters are virtually a carbon copy of the citizen population.” Later, in a 1999 study, Wolfinger and Benjamin Highton find a slightly larger gap between voters and non-voters, but still conclude that “non-voters appear well represented by those who vote.”

However, in a more recent review of the data, Jan Leighley and Jonathan Nagler find “enduring and increasing” differences between voters and non-voters on issues relating to class-based issues.  They find that non-voters are far more likely to support union organizing, a job guarantee and universal health insurance.

Why the differences in the studies? It turns out, the reason is historical. Difference between voters and non-voters with regards to the size of government and redistributionweren’t as strong in the 1970s and 1980s, when the earlier studies were conducted; since then, according to Larry Bartels, the U.S. has become a world leader in class conflict over government spending. These biases began accelerating at the end of the 1980s.

Since then, the Leighley and Nagler thesis has enjoyed increasing support. A 2012 Pewsurvey revealed similar differences, with non-voters far more supportive of government intervention in the economy and far more supportive of the Affordable Care Act. A Public Policy Institute of California (PPIC) study of Californians from 2006 finds that non-voters are also more likely to support higher taxes and more services. They were more likely to oppose Proposition 13 — a constitutional amendment that limits property taxes — and to support affordable housing.

Given all of this, it’s unsurprising that the current Republican electoral strategy is based around disenfranchisement through means like voter ID laws. Consider a Pew poll taken from before the 2012 election: Among “likely voters,” Obama and Romney were split, with 47 percent of voters each. Among non-voters, however, Obama had 59 percent support, compared with Romney’s 24 percent support.

 

One problem with this is that turnout inequality affects both parties — pulling the Democrats and Republicans to the right. The corollary is that voter suppression efforts pursued by Republican partisans also affect the behavior of Democrats. And there is strong evidence that voter suppression efforts increase turnout inequality.

For instance, one study finds that “state voter registration laws pose a substantial barrier” to the mobilization of low-income voters.  While 63.2 percent of citizens in the lowest income bracket (less than $10,000) are registered, a full 87.1 percent of those in the top bracket ($150,000 or more) are. Research shows that same-day registration decreases the class bias of the electorate, so rollbacks of same day registration will also harm low-income voters.

It’s important to note that the gap between registration and turnout is higher for low-income citizens. A bit more than 16 percent of registered low-income citizens don’t vote, while only 6.9 percent of registered citizens in the top income bracket don’t vote. (See chart) Much of the problem, then, is getting low-income voters  – who are hampered by voter ID laws and reduction in early voting — the the ballot box. It’s unsurprising that an investigation of Republican voter suppression efforts finds that “larger increases in class-biased turnout, indicating higher turnout among lower income voters relative to wealthy voters, is significantly associated with a larger volume of proposed legislative changes.” This finding was confirmed by a study of Indiana’s voting law by Matt A. Barreto, Stephen A. Nuño and Gabriel R. Sanchez.

Where class bias is lower, the poor benefit. Christopher Witko, Nathan Kelly and William Franko studied 30 years of data on turnout inequality and find, “where the poor exercise their voice more in the voting booth relative to higher income groups, inequality is lower.” Their results show that lower turnout inequality leads to significantly more leftist governments and significantly more liberal economic policies. In currently unpublished research, James Avery studied the period between 1980 and 2010 and finds  “unambiguous” evidence that increased turnout bias leads to “greater income inequality several years later.”

This means that the impact of voting goes beyond simply elections.

In the wake of the 1965 Voting Rights Act, long-term Democratic incumbents shifted their voting behavior to respond to the newly mobilized Southern black electorate.Thomas Hansford and Brad Gomez studied more than 50 years of data and find that the “effect of variation in turnout on electoral outcomes appears quite meaningful.” One recent studyfinds that where there is less class bias in turnout, party policy platforms are more favorable to the poor. James Avery and Mark Peffley find that states with low-income voters turned out to vote, politicians were less inclined to pass restrictive eligibility rules for welfare.  Political scientists Kim Hill and Jan Leighley find in two studies that states with a more pronounced class bias, social welfare spending is lower. David Broockman and Christopher Skovron find that legislators tend to overstate the conservative attitudes of their constituents. This could be because their constituents tend to be wealthier. One study of wealthy citizens finds that, “on economic issues wealthy Democratic respondents tended to be more conservative than Democrats in the general population.”

Voting should only be the beginning of political change; it should not be the end. It is, however, necessary. In their study, Hill and Leighley find, “it is the underrepresentation of the poor, rather than the overrepresentation of the wealthy” that explains why states with high turnout inequality have low social welfare spending. The fight to reduce the influence of the wealthy will be a long one, but it begins at the ballot box.

So don’t listen to Russell Brand. Vote.

This article originally appeared on Salon