Monday, May 26, 2014

Political polarization correlates with rising inequality

Thomas E. Mann, arguing that U.S. political dysfunction is more extreme than political scientists are willing to acknowledge, asserts (and demonstrates) that paralyzing party polarization is asymmetric:
That mismatch between parties and governing institutions is exacerbated by the fact that the polarization is asymmetric. Republicans have become a radical insurgency—ideologically extreme, contemptuous of the inherited policy regime, scornful of compromise, unpersuaded by conventional understanding of facts, evidence, and science; and dismissive of the legitimacy of its political opposition. The evidence of this asymmetry is overwhelming.
The time frame for this accelerating dysfunction is approxmately 1980 - present:

And Norm Ornstein and I in It’s Even Worse Than It Looks document how the asymmetry developed from Newt Gingrich in the 1980s to the present. Asymmetric polarization has found its way to the public: Republican Party voters are more skewed to their ideological pole than Democratic Party voters are to theirs.
Serendipity: continuing my slow plow through Thomas Piketty's Capital in the Twenty-First Century this morning,  I came across the foundational fact base:

Since 1980, however, income inequality has exploded in the United States. The upper decile’s share increased from 30– 35 percent of national income in the 1970s to 45– 50 percent in the 2000s— an increase of 15 points of national income (p. 294)... of the 15 additional points of national income going to the top decile, around 11 points, or nearly three-quarters of the total, went to “the 1 percent” (those making more than $352,000 a year in 2010), of which roughly half went to “the 0.1 percent ” (those making more than $ 1.5 million a year) (p.296). ...if we consider the total growth of the US economy in the thirty years prior to the crisis, that is, from 1977 to 2007, we find that the richest 10 percent appropriated three-quarters of the growth. The richest 1 percent alone absorbed nearly 60 percent of the total increase of US national income in this period (p. 297).

Who are the .1%? No mystery:
Recent research , based on matching declared income on tax returns with corporate compensation records, allows me to state that the vast majority (60 to 70 percent, depending on what definitions one chooses) of the top 0.1 percent of the income hierarchy in 2000– 2010 consists of top managers...the financial professions (including both managers of banks and other financial institutions and traders operating on the financial markets) are about twice as common in the very high income groups as in the economy overall (roughly 20 percent of top 0.1 percent, whereas finance accounts for less than 10 percent of GDP ) (pp 302-302).
Warren Buffett watched this appropriation up close and didn't need painstaking economic analysis to tell us what was happening back in 2006:  “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning."  They've won, in large part, ideologically, by capturing the Republican party in toto and Democrats in part.

How, exactly, did we allow ourselves to be collectively (or at least effectively) convinced that it's appropriate for CEOs to earn 300 times what their average workers earn, that debt-funded private equity takeovers foster economic efficiency, that capital gains tax cuts are vital to investment, that a bloated financial sector allocates capital with unparalleled efficiency, that lean social spending helps keep unemployment at bay, that taxing greenhouse gas emission and energy consumption would impose unacceptable economic costs, and that eviscerating unions increased worker freedom?

Political polarization does not explain all. Democrats in power have acceded to much of this agenda -- e.g., financial deregulation, low taxes on capital gains, tax loopholes for equity-based incentive pay. One way or another, we've collectively fallen victim to ideological capture. And with our multiple-veto-point system of government -- not to say our nonrepresentational system of government -- rolling back the effects is going to be a very heavy lift.

No comments:

Post a Comment

Share