Unequal Democracy: The Political Economy of the New Gilded Age

In this study Princeton professor Larry Bartels makes the argument that lower- and middle-income groups consistently do better under Democratic administrations than under Republican. During the last sixty years (1948-present) the average annual growth of real GNP was 1.64 percent per capita under Republican presidents and 2.78 percent under Democratic presidents. He shows further that income inequality has gone sharply upward during Republican administrations and slightly downward during Democratic. Inequality has gone up significantly since 1980, years in which Republicans have won all but two presidential elections. He calls this the "new gilded age" because the top 1 percent now controls 20 percent of the wealth, a percentage not seen since the 1920's. Perhaps another sign that the economy is out of balance and heading for greater turbulence. Republican economists will argue that this is merely a statistical aberration. They claim that presidents have little influence over the economy, and other forces such as monetary policy, oil prices, and technology are more determinative. Republicans view the market as a force of nature, whereas Democrats see it as a political construct. Bartels, being a Democrat, makes a strong case for government intervention to achieve greater balance and greater income equality. Bartels shows that Democratic presidents have consistently produced their best results during their second year in office. This is because the spending programs put in place the first year usually produce their benfits the second. Not suprisingly income growth was virtually the same for both parties the first, third, and fourth years. The second year surge seems to have given Democrats the edge. The question that comes to mind is that if Democrats are producing higher income growth and greater equality why did Republicans win 5 of the last 7 presidential elections? Bartels' answer is that the benefits of the second year are no longer part of the voter's consideration by the time elections roll around. Also by the fourth year Republican presidential candidates are making populist election year promises that make them indistinguishable for Democratic candidates. (Which party now is not in favor of bailouts and stimulus packages?) Bartles makes an interseting argument. He argues that for those looking out for their economic interests it is not only important for Democrats to vote Democratic but Republicans - other than the top 1 percent - should also be voting Democratic. (Joe the Plumber included.) The upcoming presidential elections will probably prove Bartels theory correct.

"Unequal Democracy" presents the results of a six-year exploration of the political causes and consequences of economic inequality in America. It was inspired by the substantial escalation of this inequality in recent years. Total income going to the top 0.1% of income earners has more than tripled, from 3.2% in the late 1950s to 10.9% in 2005; that going to the top 1% rose from 10.2% to 21.8%. Further, this widening is accelerating. Despite this trend, 80% believe that though you may start out poor, if you work hard you can make lots of money - more than any other developed nation. This belief undermines motivation for change. Bartels believes that the most significant domestic policy initiative of the past decade has been a massive government-engineered transfer of additional wealth from the lower and middle classes to the rich via substantial reduction in federal income taxes for the rich. Economists have found little evidence that large disparities promote growth, or that progressive tax rates retard growth by discouraging economic effort. Meanwhile, political campaigns have become dramatically more expensive, increasing the reliance of elected officials on those who can afford to help finance their re-election bids. At the same time, membership in labor groups, a previously countervailing force, has substantially declined. On average over the past half century, real incomes of middle-class families grew 2X under Democrats vs. Republicans, and working poor families grew 6X faster under Democrats - even after allowing for differences in economic circumstances. So why do those with lower incomes vote for Republicans? Bartels tells us that contrary to the theme of "What Happened to Kansas," moral values do not trump economics as a basis for lower-income voting behavior. Bartels offers evidence that the contradiction is explained by confusion generated by mixing "working class" (defined often as those w/o a college education) with lower-income. The working class has a lot of relatively high earners that are influenced by the moral values issues. Bartels then contends that Republican success in presidential races is due to voters' overemphasis on election-year economic growth, vs. the superior longer-term performance of Democratic presidents, but lesser achievement during the last year of their terms. Finally, its on to the estate ("death") tax. Actions to reduce and eliminate it during the early Bush II years represent about 15% of the impact of the overall tax reduction package. Bartels asserts that there is enormous misunderstanding about this tax regarding the wideness of its applicability. As a result, it is a wonder that it still exists. Bottom Line: "Unequal Democracy" presents a carefully documented set of conclusions about an important and timely topic; its only drawback is that sometimes the statistics get too deep.

I've been searching for some data on how well off people are during the different rules and along came unequal democracy. If you now people that keep trying to convince you that if you vote for the Dems, you will be over taxed to the gates of hell, this is a must read. It's a text book but very readable.

Larry Bartels's book is one of the most important written works on economic inequality issues over the last 25 years. Anyone discussing economic inequality in the U.S. will have to deal with Bartels's arguments and evidence, even if you disagree with his findings and how he interprets those findings. Among the evidence and arguments of Bartels's books are the following: *** Since World War II, Democratic Presidents have been associated with modestly progressive patterns of real per family income growth, that is the income growth during Democratic Presidents' terms has been somewhat higher for lower income families than for upper income families. Republican Presidents have been associated with highly regressive patterns of real per family income growth, that is income growth has been much higher for upper income families than for other families. However, all income groups have on average gained more under Democratic Presidents. *** The Democratic Presidents' better performance has been concentrated during the second year of Presidential terms. Republican Presidents have done better during the 4th year of Presidential terms, that is the election year. This may help explain Presidential election results, as voters appear to respond more to election year economic performance than the economic performance of prior years. *** Economic issues still are key for working class voters in the U.S. *** Political leaders appear to be much more responsive to upper class and middle class voters in their state than to lower class voters. However, even more of voting behavior is explained by the ideology of a politician's political party. This is true both for the Democrats, who have ignored most voters' opposition to estate taxes, and for Republicans, who have ignored most voters' support for higher minimum wages. Bartels's work is only a start. He really does not have even close to a complete theory about WHY economic growth for different income families has the correlations he finds with Presidential political party. We would need to know more about this to more completely judge the relative economic performance under different political parties. In addition, his book raises the issue of how we can improve the quality of the political debate in the U.S. over issues of economic inequality. There is considerable resistance in the U.S. to openly discussing these issues. Politicians who discuss these issues risk being accused of promoting "class warfare". As Bartels points out, there is some tendency to want to assume that somehow the income distribution is determined by unchanging economic laws that are impervious to political influence. Bartels presents new evidence that in fact the income distribution can be influenced by public policy to a very large extent. But the question is, how do we make this understanding part of the mainstream political debate?

This is a quite amazing book for its wealth of fascinating and often counter intuitive information, particularly income distribution stats and political survey information. There is definitely a form of political delusion at work in the USA, based on voters so consistently voting against their own interests. For example voters favoring abolition of the estate tax when it only affects the top 2% of tax payers or favoring the Bush 2001 tax cuts without knowing anything much about them. More interestingly he shows how, while increasing political knowledge (measured by simple questions on who is what position in US politics) increases Democrats awareness of economic inequality; the same increasing political knowledge makes Republicans LESS knowledgeable or more in denial that inequality has increased, let alone whether it is a problem. He also nails the idea that the blue collar have shifted against their interests. Republican voting is still largely a matter of the better off supporting them, especially the less well educated and religious better off The Democrats lost power because of the defection of the South that now merely reflects the national picture (rather than hugely Democratic as before Civil Rights circa 1964) and the growth of reasonably well off, non college educated, religious voters who vote on economic AND values grounds, though still against their economic interests. Since 1948 economic growth has been on average significantly higher and unemployment lower for all social groups under Democrat presidents; inflation has been only slightly higher. And income equality much better under Democrats. Ultimately I suppose a worrying and somewhat pessimistic book, but a necessary tough tonic before thinking of solutions. Voters tend to vote on the economy in election year and the Republicans have done better in election years and voters don't seem to remember the other years when things were much worse. I hope both Presidential Candidates read it but doubt it will have the necessary impact. That will take a gutsy new FDR to put the country back together again after a collapse like the 1930s. Interestingly my conservative friends go into huge denial about this book: they can't even consider it; it is so threatening to their world view. I am open to doubt about its data and arguments, but the author provides plentiful source and precise survey question detail so intelligent engagement with the book is really easy, whether you agree or not with his fundamental premises. The author hasn't voted since 1984 he says and then voted Reagan, so this is not another move on.org book for the choir. The evidence drove him to his conclusions rather than the other way round. I wish there were more books this insightful.