September 10, 2006

Yes, Inequality Threatens Democracy

In a long and thoughtful post on income inequality in the United States, Reihan Salam had this to say:
My sense is that many on the left are bothered by the massive increase in income and wealth among the top 1 percent because they believe this threatens the democracy by giving a small handful of households outsized influence. This could be true.
Well, yes, that's certainly one of a couple reasons why inequality bothers me, but why stop at saying it could be true? I think it's certainly true. Political scientists have done a lot of work on how income inequality leads to political inequality (which in turn can lead to further income inequality) and their findings are very much worth reviewing.

First, some statistics. Between 1979 and 2003, the income of the richest one percent of Americans more than doubled, the income of the middle 15 percent grew by only 15 percent, and the income of the poorest 20 percent barely budged, according to the CBO. By the late 1990s, the richest one percent of Americans households had a third of all wealth in the economy, and took in 14 percent of the country's income—a greater share than at any point since the Great Depression. These days you can't swing a dead gerbil without hitting some leftist faithfully reciting these figures, but I thought I'd repeat them anyway.

In politics, this all matters very much. Larry Bartels of Princeton has studied the voting record of the Senate between 1989 and 1994—a time, note, when Democrats controlled Congress. He found that Senators were very responsive to the preferences of the upper third of the income spectrum, somewhat less attentive to the middle third, and completely ignored the policy preferences of the poorest third of Americans. In one striking example, Bartels discovered that Senators were only likely to vote for a minimum wage increase if and when their wealthier constituents favored it—the views of those directly affected by the hike had "no discernible impact."

Nor is this pattern limited to domestic policy. Lawrence Jacobs of the University of Minnesota and Benjamin Page of Northwestern have found that the foreign policy views of the executive and legislative branches are primarily influenced by business leaders, policy experts—whose think tanks are often funded by businesses—and, to a lesser extent, organized labor. Jacobs and Page found that the views of the broader public have essentially zero impact on the government when it comes to tariffs, treaties, diplomacy, or military action. Walter Russell Mead once argued that "Jacksonian" nationalism in the heartland drove American foreign policy, but the data doesn't back him up. Business still calls the shots.

To some extent, these findings are likely a result of the fact that elected officials tend to hail from the upper classes, and so tend to be the sort of people who worry more about the burden the estate tax imposes than, say, food insecurity or too-high heating bills. In 2003, financial records revealed that 40 senators and 123 representatives were millionaires. This shouldn't be surprising. Without publicly-financed elections, it takes a good deal of personal wealth to run for office—the average Senate campaign in 2006 will cost about $10 million, minimum, according to a University of Washington study.

But that's only the most obvious way economic power begets political power. Consider the fact that wealthy Americans are far more likely to vote: 86 percent of those in families with incomes over $75,000 reported voting in 1990, compared to only 52 percent of those in families with incomes under $15,000. Whether that's because the well-off are more likely to believe that government will work for them—evidently a sound assumption—or because they have more time and opportunity to inform themselves and do their civic duty is unknown.

But it's not just voting. People in the $75,000 bracket are much more likely to join a political advocacy group like the NRA or the NAACP (73 percent vs. 29 percent), and much more likely to make campaign contributions (56 percent vs. 6 percent). Indeed, in the 2000 election, 95 percent of those donors making substantial campaign contributions came from households making over $100,000. While high-income donors don't usually bribe politicians to do their bidding, they do get more face time with their representatives, during which they can frame issues and concerns in ways amenable to their interests.

This counts for a lot. For one, as Dean Baker has argued, conservatives have actively used the nanny state to redistribute wealth upwards over the years—these are the policies we get when the wealthy control Congress. Second, politicians tend to think more about their better-off constituents in everything they do, which inevitably biases policy. George W. Bush once reportedly told Jim Wallis, "I don't understand how poor people think." I can find no better example of how massive income disparities undermine democracy.
-- Brad Plumer 7:06 PM || ||