Tag Archives: rich

Why Washington’s gridlock won’t go away

Pundits have suggested that the Republican control of U.S. Senate will lead to a new era of bipartisanship, which will offer new solutions on immigration, the environment and tax reform. These arguments are extremely myopic. A critical look at the recent structural shifts in the American political system shows that the gridlock in Washington is caused by increasing inequality and benefits the rich.

To be sure, Congress is facing an almost unparalleled level of gridlock. Since President Barack Obama took office in 2009, we have seen an unprecedented use of the filibustervery little major legislationlong delays in mundane appointments, government shutdowns and highly partisan attacks on a progressive legislative agenda.

To understand the current congressional gridlock, it’s important to look at who is benefiting from the stalemate. A recent report published by the University of Tennessee at Knoxville found (PDF) that gridlock in the U.S. political system benefits the rich and has significantly contributed to rising inequality. The findings have been confirmed by Alfred Stepan and Juan Linz, who conclude that the structure of the Senate, the majority-constraining capacity of veto players and the filibuster all contribute to rising inequality.

The question then becomes, Why have we not seen the same level of gridlock in our lifetimes?

The growing economic power of U.S. elites coincides with increasing political dominance. Numerous studies have shown that the U.S. political system is no longer responsive to the electorate. In part this is because the United States’ political system is designed to be slow moving, with multiple checks and balances. In addition, as with other developed countries, the United States has incredibly low voter turnout. The 2014 midterm elections saw the worst voter turnout in 72 years (a dismal 36.3 percent of eligible voters). Higher voter turnout is positively correlated internationally with higher income redistribution (PDF, see chart on page 27). A vast body of literature shows that low-income voter turnout leads to more-left-leaning governments. The U.S. political system has had persistent class bias, but in the past these factors did not prevent stymie important legislation that benefits the poor.

AJAM Figure1

The dramatic reduction in top tax rates and the deregulation of finance in the 1980s opened the door for mass inequality. Rising inequality had three important effects on U.S. politics. First, it allowed the rich to take over the political system. Research shows (PDF) that the richest 0.01 percent of Americans now provide 40 percent of political contributions — up from 10 percent in 1982.

AJAM Figure2

By nearly every measure, the rich are far more likely to participate in the political process, and the superrich make up most of the donors. A 2013 study in The Journal of Economic Perspectives found (PDF):

In 1980, the top contributor … gave $1.72 million (in 2012) dollars, nearly six times the amount given by the next largest contributor. In 2012, the two largest donors were Sheldon and Miriam Adelson, who gave $56.8 million and $46.6 million, respectively. Other members of the Forbes 400 accompany the Adelsons; 388 current members are on record as having made political contributions. They account for 40 of the 155 individuals who contributed $1 million or more to state and federal elections during the 2012 election cycle.

At a time when Congress increasingly dominated by superrich (and white) politicians, these contributions buy enormous political influence. A similar study by Jesse H. Rhodes and Brian F. Schaffner found (PDF) that “millionaires receive about twice as much representation when they comprise just 5 percent of the district’s population than the poorest wealth group does when it makes up 50 percent of the district.” As Duke University professor Nicholas Carnes has demonstrated (PDF), “representatives from working-class occupations exhibit more liberal economic preferences than other legislators, especially those from profit-oriented industries.” But those measures often die or are shelved in deeply gridlocked Congress.

Second, rising inequality has created ideological structures. As the rich grow richer, they justify their wealth by inflating their sense of intelligence and superiority. The poor and middle class begin to accept this narrative,forgoing their desire for redistribution. Since individuals understand inequity by relating it to their circumstances, higher inequality leads to its growing acceptance. Given the United States’ racist history, whites try to avoid feeling being in the last place by punitively harming blacks. In turn, the rising inequality erodes the social trust necessary to reduce inequality.

“The best policy response to growing inequality is to enact universalistic social welfare programs,” Bo Rothstein and Eric Uslaner, wrote in a 2005 study (PDF) published by World Politics. “However, the social strains stemming from increased inequality make it almost impossible to enact such policies.” Because the rich views the poor as personally responsible for their failings, they see no reason to help them up the ladder. A recent Gallup poll found that fewer Americans than ever believe that hard work can help one get ahead in life. Data from the American National Election Survey shows the percentage of people who say the government is run “by a few big interests looking out for themselves” has grown dramatically. (See chart below.)

 TheWeekFig3

Finally, amid rising inequality, both Republicans and Democrats have moved to the right, rejecting liberal economic policies to woo wealthy donors. Democrats have struggled to maintain their coalition of single women, people of color and educated progressives. In fact, as Benjamin Page, Larry Bartels and Jason Seawright noted in the journal Perspectives on Politics last year (PDF), “on economic issues wealthy Democratic respondents tended to be more conservative than Democrats in the general population.”

Studies show that the strength of unions is a far more important bulwark against inequality than the number of Democrats in Congress. “The effect of the Democratic Party [on the rate of financial deregulation] is not very large, but rather varies along with the strength of unions,” writes Christopher Witko in an upcoming paper on the rise of finance. He argues the Democratic Party has been attempting to win the votes of professionals (that is, rich people), pulling them to the right. Other studies confirm that the decline of unions has led to steep rise in inequality.

Meanwhile, the wealthiest Americans have increasingly favored one party. In a 2003 paper, Nolan McCarty, Keith T. Poole and Howard Rosenthal examined 40 years of data and found that “partisanship has become more stratified by income.” In a later study, the researchers show how tight polarization tracks with inequality (PDF, see chart on page 108) and wages in the financial sector. American National Election data also confirm the rising class polarization of the electorate, particularly at the 68th to 95th income percentile range, which went from a nearly 40 point margin preference for Democrats in 1952 (58 percent Democratic, 20 percent of Republican) to a 5 point margin for Republicans (43 percent Democrat, 48 percent Republican) in 2008. In the 2008 elections, the poorest Americans (below the 16th income percentile) preferred Democrats by 42 points, while the richest (above the 96th income percentile) preferred Republicans by 40 points.

AJAM Figure4

Widening class divide

The increasing class divide within the two parties has made gridlock inevitable. But Republicans automatically win from gridlock. The asymmetric partisanship of the last six years is driven by a simple dynamic: Government inaction benefits the wealthy and harms the working class. When Republicans are in the majority, they hollow the government out from the inside with tax cuts, deregulation and austerity. When they are not in power, the easiest way to benefit the rich is to dither. In essence, the GOP serves a 1 percent agenda, based entirely on making government fail. “We should not be judged on how many new laws we create. We ought to be judged on how many laws we repeal,” House Speaker John Boehner said in a moment of honesty earlier this summer.

Rising economic and political inequality have coincided over the past three decades. As the rich have grown richer, they have been able to exercise more political power. Their aim is to allow laissez-faire to do its dirty deeds by preventing the government from working for the poor and middle class. As a result, conservative-leaning rich Americans oppose reducing economic inequality. (See chart below.) Politics is nothing more than a class war by other means. The problem is that the poor are losing. Nothing that happened in this year’s midterm elections will change that.

AJAM Figure5

This article originally appeared on Al Jazeera

Congress Is Rich: Here’s Why It Matters

Congress is rich. The average net worth in Congress is a bit more than $6 million, while the median net worth is $1 million. To put that in context, $4 million in net worth is enough to put someone in the top 1 percent, and $660,000 is enough to put an individual in the top 10 percent. Meanwhile, the median family wealth for whites is $134,000 and for blacks is $11,000. Emerging political science research suggests that the implications of this class bias are profound and important.

Political scientists have long debated the importance of “descriptive representation” or “reflective democracy.” Reflective democracy means that representatives share salient characteristics with their constituents. Most political scientists now agree that reflective representation leads to better substantive representation: that the interests of constituents are being reflected by legislator choice.

It’s increasingly clear that descriptive representation matters, particularly as related to race and gender. Political Scientists Robert R. Preuhs and Eric Gonzalez Juenke findthat black and Hispanic legislators are more responsive to the interests of black and Hispanic constituents than white legislators, after controlling for party. Legislators of color also serve an important veto function — preventing laws from passing that would disproportionately harm communities of color. Daniel Butler and David Broockman findthat politicians are more responsive to letters from constituents of the same race. This is confirmed by a study that finds legislators that support voter ID laws are less likely to respond to inquiries from Latino constituents. Further, black legislators are also more likely to hire black staffers. In addition, Economist Ebonya Washington finds that having a daughter makes a congressperson more liberal, particularly on reproductive rights. Some studies suggest that female representatives are more likely to set an agenda around women’s issues.

Given this, should we worry that more than half of all members of the House of Representatives are millionaires? Further, while two-thirds of the population don’t have a college degree, only two House members (Robert Brady of Pennsylvania and Stephen Fincher of Tennessee) and one senator (outgoing Mark Begich of Alaska) lack one.

Nicholas Carnes of Duke University has recently taken up the question of how class affects votes. In a 2012 paper, he finds that “representative from working-class occupations exhibit more liberal economic preferences than other legislators, especially those from profit-oriented professions.” Other research has confirmed this. Christopher Witko and Sally Friedman find that “House members with business backgrounds have closer relationships with business interests… and demonstrate more probusiness roll call voting.”

While descriptive representation of women and people of color has increased dramatically, the descriptive representation of working-class people has remained stubbornly flat (see chart).

As Carnes writes,

If millionaires were a political party, that party would make up roughly 3 percent of American families, but it would have a super-majority in the Senate, a majority in the House, a majority on the Supreme Court and a man in the White House. If working-class Americans were a political party, that party would have made up more than half the country since the start of the 20th century. But legislators from that party (those who last worked in blue-collar jobs before entering politics) would never have held more than 2 percent of the seats in Congress.

Those data end in 1998, but Carnes maintains his own database using similar metrics that picks up again in the mid-2000s. He finds that the line has remained flat, or if anything declined. At the state and local level, the picture isn’t much better. According to theNational Council of State Legislators, the share of legislators who worked in business in a non-managerial position (i.e., workers) has declined from 4.4 percent in 1976 to 2.8 percent in 2007.

Carnes defines class by occupation, and although his main regression finds that high-income congresspeople are more economically conservative than other members, the results are not statistically significant and not as strong as the correlation with occupation. However, other studies suggest that certain votes certainly contain an income component. Michael Kraus and Bennett Callaghan find that rich members of the House are more likely to accept high levels of inequality than less rich members. The effect is particularly strong on Democrats (see chart).

In a recent study, political scientist Christian Grose finds that “members of Congress with more money invested in the stock market were more likely to vote to increase the debt limit, presumably in order to avoid a market crash.” John Griffin finds that wealthier legislators were more likely to cosponsor and vote for bills to repeal the estate tax. This held even after controlling for party affiliation, their views on other taxes and their constituent opinions. A Mother Jones investigation finds that the 10 richest members of Congress (a bipartisan group) all voted to extend the Bush tax cuts.

It is therefore clear that we need more workers in office, but what will the impact be for the gains of women and people of color? Carnes finds that we can have our cake and eat it too. Using the Local Elections in America Project (LEAP) database of 18,000 local and county elections in California, he finds that working-class candidates are less likelyto be white men that white-collar candidates (see chart).

At the federal level, Carnes finds that between 1999 and 2008,

the average male member of Congress spent about 1 percent of his labor precongressional career in working-class jobs, while the average female member spent about 3. The average white member spent an average of 1 percent of his career in working-class jobs, compared to 3 percent among the average black or Hispanic member and 5 percent among the average Asian member.

It is clear, then, that policies to increase working-class representation in Congress might also increase the representation of women and people of color. But what policies could do so? Carnes tells Salon that in yet unreleased research he finds that publicly financing elections can increase working-class representation.

This isn’t surprising. A study of New York City’s public financing scheme finds that it increased the class and racial diversity of political donors. Carnes also argues that recruiters need to do more to encourage working-class voters to run. In a recent paper with David Broockman, Melody Crowder-Meyer and Christopher Skovron, he finds that “party leaders exhibit some biases against blue-collar workers” which likely prevent many from running. Research on the lack of candidates of color has also found such biases.

Carnes tells Salon that another solution is programs like the AFL-CIO “Labor Candidate School,” which began in New Jersey but now exists in North Carolina, Oregon, Nevada, Maine, New Haven and New York City. The programs, which train politically savvy members to run for office, have a good success rate; 75 percent of those who run after going through the New Jersey program win their races. Carnes tells Salon he’ll be working on an effort in Durham next year. “I believe in the potential of this model so much, I’m going to try it out myself,” he says.

As the Democratic Party increasingly moves to the center to please an elite donor base, the last hope for action on economic inequality might be more blue-collar politicians.

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

This is your brain on money: Why America’s rich think differently than the rest of us

Consider the following recent headlines:

The Internet is replete with apologias for the rich. They are thinly sourced and even less well thought. The goal is simple: to justify the unjustifiable chasm between the rich and poor, globally and within our nation. But the irony is that, rather than being better than the rest of us, in many ways the rich are worse.

Paul Piff and his co-authors, who have done extended research on the behaviors of the wealthy, find that lower class individuals are more generous, charitable, trusting and helpful than upper class individuals. In another study, they find individuals with expensive cars were more likely to cut off other drivers and pedestrians. Further, in laboratory experiments, wealthy participants were more likely to take valued goods, cheat, lie and endorse such behavior. These studies have support from other sources. For instance, the wealthy actually donate less to charity as a share of their income than the middle class. Their giving is more dependent on the economic climate than the middle class. It is unsurprising that Christ warned, “it is easier for a camel to go through the eye of a needle than for a rich person to enter the kingdom of God.”

The rich tend to behave badly, but their bad behaviors are often socially accepted; a behavior that would be seen as inappropriate by a poor person is seen as a minor offense by the rich. (See: casual drug use.) The reason is simple: in a society that worships wealth, those with wealth are worshipped as well. A young economist wrote in 1844,

“The extent of the power of money is the extent of my power. Money’s properties are my – the possessor’s – properties and essential powers… I am bad, dishonest, unscrupulous, stupid; but money is honoured, and hence its possessor. Money is the supreme good, therefore its possessor is good. Money, besides, saves me the trouble of being dishonest: I am therefore presumed honest. I am brainless, but money is the realbrain of all things and how then should its possessor be brainless?”

Economist Chris Dillow cites research by Cameron Anderson and Sebastien Brion, showing that overconfident individuals are seen by others as more competent. He argues that, “overconfident people are more likely to be promoted. And this could have positive feedback effects. Higher status will itself breed even more overconfidence. (E.g. “I got the job so I must be good.”) And if bosses employ like-minded subordinates, the result could be entire layers of management which are both over-confident and engaged in groupthink.”

This effect is reinforced further by the “just-world” bias, which leads us to believe that the rich and powerful deserve their positions. In a famous study, Melvin Lerner found that when students were informed that another student had randomly won a prize, they attributed positive characteristics to the student who had won. Studies have also shownthat people attribute negative characteristics to victims — from Kent State students shot by the National Guard, to young black men shot by police, to low-wage workers.

A more recent study by Justus Heuer, Christoph Merkle and Martin Weber finds rather the same thing: Investors are fooled into believing risk-taking is based in skill, rather than chance. Like the students in the experiment, investors believe managers who are simply reaping returns from risky bets are, in fact, oracles. Another study by Arvid Hoffmann and Thomas Post finds that “the higher the returns in a previous period are, the more investors agree with a statement claiming that their recent performance accurately reflects their investment skills (and vice versa).” Research by Charles O’Reilly and others finds that narcissistic CEOs are better paid than other CEOs. Another study finds that employees that spend more time grooming make more than workers who do not. (The effect is particularly strong for men of color.) All of this should leave us skeptical of the idea, promoted by many free-market fundamentalists, that compensation is set by objective market factors. As Christopher Lasch notes, “Nothing succeeds like the appearance of success.”

Many defenders of the rich argue that the rich are special and therefore merit special treatment. (Charles Murray has gone as far as to argue that the rich should preach their virtues to the poor.) Americans overwhelmingly believe that the wealthy have individually earned their place in society. But this is unlikely. Numerous studies find that financiers are vastly overpaid, and hedge fund managers, even the best, rarely beat the market. CEOs are also vastly overpaid, and largely benefit from a shift in tax policy that allows rent-seeking to flourish.

A famous economist once wrote,

“This disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition, though necessary both to establish and to maintain the distinction of ranks and the order of society, is, at the same time, the great and most universal cause of the corruption of our moral sentiments.”

The economist was not Marx, but Adam Smith.

In “The Son Also Rises,” Gregory Clark finds that wealth can persist for 10 or more generations. But biases, like the self-serving bias and optimism bias, lead the wealthy to attribute to themselves what is actually caused by factors beyond their control. Lucky people are seen as skillful, and are constantly worshiped for their success. Eventually they begin to believe what others say, leading to a narcissistic personality — or as Paul Piff says, “characteristics we would stereotypically associate with, say, assholes.”

There’s an apocryphal story in which F. Scott Fitzgerald says, “The rich are different from you and me,” and Ernest Hemingway retorts,“Yes, they have more money.” In his story, “Rich Boy,” Fitzgerald writes of the wealthy: “They think, deep in their hearts, that they are better than we are because we had to discover the compensations and refuges of life for ourselves. Even when they enter deep into our world or sink below us, they still think that they are better than we are. They are different.”

All humans all delusional. It is only the rich who have that delusion fostered. All humans are, to some extent, assholes. But only rich people can get away with it.

This piece originally appeared on Salon.