How inequality can spiral out of control
“Let me tell you about the very rich,” F. Scott Fitzgerald once wrote. “They are very different from you and me.” To this, Ernest Hemingway famously replied: “Yes, they have more money.”
This exchange occurred in 1926, a time in America that was very good for the very rich, paralleled by today’s socioeconomic climate. Hemingway’s rebuke is comforting. If it is true that being rich simply means having more money, a bigger house and a fancier car, then those may simply be the inevitable rewards for success — or not. Larry Bartels’ book Unequal Democracy is a sophisticated, data-driven study of the ways the very rich have more than just more money. His book, a collection of previously published papers, traces the processes that transform economic disparities into political inequality. His argument for tracing democracy’s flaws to economics is urgently relevant.
The Political Economy
From the mid-1970s until today, Bartels writes, economic inequality has risen precipitously in America — the average income of the richest Americans has grown six times faster than that of the poorest and the share of gross income going to the rich has more than doubled.
The key, provocative insight of Bartels’ book is that this is not, as sometimes thought, the inevitable result of “market forces,” impersonal economic trends that hum along absent of any governmental policies. By contrast is Bartel’s central claim that rising inequality is an artifact of partisan political choice. “The most important single influence on the changing U.S. income distribution,” he writes, “[is] the contrasting policy choices of Democratic and Republican presidents.” Put more provocatively, Republican administrations cause rising inequality. And his data here are very compelling. Controlling for macroeconomic factors, Bartels finds that on average, since World War II, under Republicans income has grown much faster for the rich than for the middle- and lower-classes, while under Democrats it has grown more equally between percentiles and faster than under Republicans for nearly everyone.
Unresponsive Democracy
While remarkable, Bartels gives no clues as to exactly how such a substantial change in income distribution can occur. While he briefly suggests Republican principles of inflationary control over expansion and their vocal support for regressive taxation and spending, he admits that it would take a “small army of economists” to fully account for the connection. However, even without a causal mechanism, the implication is clear. The tides of inequality are reversed simply enough.
An obvious problem emerges here. If these data are true, and income growth is indeed faster and more equal under Democrats, then why do Republicans keep getting voted into office? Bartels dismisses the notion that low-income voters have been “seduced” into voting for cultural issues against their economic interests. Instead, he suggests that voter “myopia” — such as the peculiar sensitivities of the poor to the income growth of the rich and the tendency of the electorate to judge an incumbent on election-year economic growth — has greatly advantaged Republicans. He also points to widespread misinformation and a general unresponsiveness of political representatives to their poorer constituents. Taken together, these effects create a feedback loop unfavorable to egalitarian policies.
Breaking the cycle
Some of this might seem commonsensical or simplistic. But Bartels’ book, despite its gaps and cursory explanation for its key argument, puts forward a provocative and compelling model of democratic change, according to which income inequality makes short work of democratic equality. Bartels is almost too cautious to state forcefully the nature of this relationship: the very rich are “very different from you and me.” They, whose political representation is greatest, have the power to affect the very policy changes necessary to perpetuate their own advantages.
Nonetheless, political choices matter, because the loop of inequality has been broken by partisan decisions time and again. If it is elites that run our country, there is still a difference in the two sets of elites available, with strong reason to believe that partisan markers translate well into reduction of overall inequality. Partisan change may be the simplest way to see a reduction in inequality, and the 2008 election provided one such change; Bartels ought to pay close attention to its aftermath.