Government Policy Led to Inequality

Colin GordonColin Gordon over at the Center for Economic and Policy Research annotated this great graph of the income share of the top one percent (from data by Emmanuel Saez). He says that the events are meant to be “representative rather than exhaustive.” Of course, the pattern is clear, “The share of the top one percent rose during eras of tax cutting, light financial regulation (or deregulation), and labor weakness. And inequality narrowed when policy pushed in the opposite direction.”

This pushes back against one of the most annoying aspects of economic reporting in this country. We are constantly told that there is nothing the government can do about inequality and associated problems. Supposedly, the current system is just the outcome of a globalized economy and the only way we could fix it would be to have a command economy that would hurt everyone. But of course this isn’t the case at all. Inequality went down during much of the last century because of government policy—especially policies that allowed workers to organize. And the huge increase in inequality over the last 35 years has been the outcome of government policies that have harmed worker organizing ability and lowered taxes on the rich.

The greatest victory of the rich over the past 30 years has been to get the public intellectual class to believe that the smartest thing is to solemnly shake their heads and claim that there just aren’t any easy answers. We’ve seen that throughout this economic crisis where the important pundits (e.g. Thomas Friedman) have claimed that there is nothing we can do but grind our way back. The fact that World War II showed the way out of the Great Depression seems to have been erased from memory. And we are left with the low inflation and high unemployment answer to the economic downturn that just so happens to be exactly what is best for the rich.

Income Share of the Top 1%
(Click image to enlarge.)

Upton Sinclair Tried to Save Us from the Jungle

Upton SinclairOn this day in 1902, the great poet Stevie Smith was born. She was also a novelist, but I haven’t read anything but her poetry. In fact, I most know of her from a really great film Stevie—which you should watch if you get the opportunity (it isn’t available on DVD). Her work is simultaneously playful and dark. Take, for example:

   Drugs made Pauline vague.
   She sat one day at the breakfast table
   Fingering in a baffled way
   The fronds of the maidenhair plant.

Was it the salt you were looking for dear?
said Dulcie, exchanging a glance with the Brigadier.

   Chuff chuff Pauline what’s the matter?
   Said the Brigadier to his wife
   Who did not even notice
   What a handsome couple they made.

The great television producer Jay Ward was born in 1920. He created shows such as Crusader Rabbit, Hoppity Hooper, and George of the Jungle. But I love him most for Rocky & Bullwinkle. I discussed the show only last month (it includes a documentary about the show). But rather than embed yet another clip of that show, here is Super Chicken:

Other birthdays: songwriter (co-writer of “Are You Lonesome Tonight?”) Roy Turk; actor Anne Meara (84); actor Sophia Loren (79); and activist Van Jones (45).

The day, however (and easily), belongs to the great writer Upton Sinclair who was born on this day in 1878. He is best known for the novel The Jungle. It is an amazing book. It is dystopian yet true. With 1984, there is always the sense that no government could be that perfectly authoritarian. But in the case of The Jungle, that is really the way life was. It is also the way life is in many parts of the world. And perhaps most interesting of all, it is the way that modern day conservatives wish society to be. This brings to mind the work of John Rawls who said that a just society would be the one that you would choose if you couldn’t predict where you would be born. Conservatives always look to a society in which they would be at the top. And indeed, the Gilded Age was a great society to be in if you were rich.

In addition to his large body of work, Sinclair also tried his hand at politics. He ran for governor of California in 1934. He was hugely popular. But then the newspaper owners turned against him and effectively cut off any good or even objective coverage of him, and he ended up losing. It’s a good thing to remember. There is no such thing as democracy if there is not a free press. And the lack of a free press does not have to be the result of government interference. Around here, Sinclair is most often mentioned for one of his many great quotes, “It is difficult to get a man to understand something, when his salary depends upon his not understanding it.” We see this again and again, but most profoundly, we see it with supposedly objective journalists.

Happy birthday Upton Sinclair.

GOP Votes to Starve the Poor

SNAPYesterday, the House Republicans finally got around to dealing with the Supplemental Nutritional Assistance Program (SNAP), generally known as “food stamps.” Traditionally, food assistance to the poor was linked to farm subsidies in the Farm Bill. But this year, the Republicans just couldn’t do it, because the leadership was only able to offer a $20 billion cut to SNAP—the nihilistic wing of the party refused to vote for the bill without a $40 billion cut. So back in July, they cut the Farm Bill into two pieces: one for support of farmers and one for support of the poor.

Very quickly they passed the “farmers” bill. This part of the Farm Bill has long been attacked by liberals and conservatives alike as crony capitalism. As it is, it gives billions of dollars away to very wealthy and profitable farmers. But the House Republicans not only funded it. They funded it for more than Obama had requested. Apparently, there is no limit to Republican largesse when it comes to the rich.

It took the House Republicans over two months, but they finally passed the “poor people” bill. And of course, the nihilists got their $40 billion cut. In addition to this, states will have strong incentives to cut the program even more. Estimates indicate that as many as 6 million people will lose access to SNAP benefits. There was this stunning bit of hypocrisy:

One lawmaker from Tennessee who voted for SNAP cuts even referenced the Bible to justify his vote and lectured the poor about handouts—while taking more than $3 million in farm subsidies from the government over the past decade.

All of this is not to say that the Republicans do not have their stated reasons for being for these cuts. Initially they stated that it was all about stopping fraud. But there is basically no fraud in the system. Now, they claim that they are just trying to get those lazy bums to get jobs. They point to the economic recovery as a reason that there should be less people receiving SNAP benefits. But Paul Krugman demolished this argument earlier today. Although there has been an improvement at the top, the poor have seen no economic improvement at all. He provided the following graph to show that SNAP enrollment and the plight of the poor work in lockstep:

Income and SNAP enrollment correlation

There really is no point in countering the Republican arguments here. This is as clear an example of what the Republicans are as you will ever seen. They want to spend money on the rich. They do not want to spend money on the poor. It isn’t that they are hypocrites so much as that their constituency is simply the rich. Earlier today, Jonathan Chait responded to Henry Olsen at the National Review who found this behavior “baffling” and referred to the image of Republicans as “Scrooge McDucks” as a stereotype:

It’s not baffling, nor is the notion that the Republican Party protects the class interests of the rich a “stereotype.” It’s an analysis that persuasively explains the facts.

Indeed, it’s the only analysis that persuasively explains the facts. I’d prefer to abolish agriculture subsidies completely while keeping in place (or boosting) food rations for the poor. A libertarian might want to abolish both programs, a socialist might want to keep both. I’d disagree but attribute the disagreement to philosophical differences. What possible basis can be found to justify preserving subsidies for affluent farmers while cutting them for the poor? What explanation offers itself other than the party’s commitment to waging class war?

The problem for the Republicans is that there are very few rich people. So they need to maintain the pretense that they really care about the non-rich. But they are indeed lucky that they have a mainstream press that is willing to pretend that they mean what they say. It isn’t just the National Review that won’t admit that Republicans simply hate those who make less than a quarter million dollars a year. It’s all about “plausible deniability” except that rather than bombing the poor in Cambodia, the Republicans are starving the poor in this country. They claim to be helping the poor. But it takes a lot of effort and apologetics to believe that.

Presidential Ideology

On the IssuesEarlier this week, I discovered a great website, On the Issues. It provides quite detailed information about the positions of politians at various times in their careers. I’ve found it really useful. One thing that isn’t so useful—But very interesting!—is their use of the political philosophy chart. These charts place a person’s ideology on two scales: economic and social. Thus, if you are economically conservative and socially liberal, you are a libertarian. (In my experience, libertarians are not this, but that’s another matter; it is what they claim to be.) If you are economically liberal and socially conservative, then you are a populist. You get the idea.

The reason such charts aren’t that useful for politicians is because it is highly subjective how you would rate different votes. In particular, I think the scale as used by On the Issues makes the range of disagreement on economic issues look much wider than it is. Nonetheless, it provides a decent idea of where politicians are. The website provides ratings for all the presidents since Kennedy. So I went ahead and plotted all of the presidents on one graph, with the Republicans in red and the Democrats in blue:

Presidents' Ideology

What immediately stands out is that the Democratic presidents have been much more moderate than the Republicans. The only president who doesn’t qualify as moderate is Obama, and this I find hard to believe. I accept his 80% on social issues, but if he is a 20% of economic issues, it is only because of the extremism of the Republican Party. You may wonder who that most moderate of presidents is—there just on tic from the very center of the graph. That is none other than Richard Nixon! And that is more or less correct.

What you see with the Republicans is a steady march toward extremism. But surprisingly, the most extreme Republican president wasn’t Reagan or Bush Jr. It was Bush Sr. That shows how the ranking are not that accurate. I don’t think that anyone thinks that Bush’s father was more extreme on social issues than his son. But the chart is clearly correct in that the two Bushes and Reagan were roughly equivalent in their ideologies.

Similarly, on the Democratic side, the numbers don’t seem quite right. The first three Democratic presidents—Kennedy, Johnson, and Carter—are all ranked at 40% on economic issues. Carter was distinctly more conservative than his predecessors. And the idea that Clinton is even more liberal is just ridiculous. Again, I think these ranking are just relative. Since both Clinton and Obama received nonstop opposition from the Republicans, they are ranked as more liberal than they should be.

What is most interesting in all this is how there have been no populist presidents. I understand there being no libertarian presidents; libertarianism is an extremely unpopular ideology. But the vast majority of the Republican base is actually populist, not “right conservative.” These people are mostly Republicans for social reasons. Yet the party does not offer them a populist choice. The reason for this is that the Republican elites really are libertarian. But since no one likes libertarians, they have a choice: they could compromise on economic issues and become Democrats or compromise on social issues and become Republicans. Their answer should be obvious: they care about money far more than they care about freedom.

But if the political philosophy chart was really accurate, the Democrats would be clustered around 60% on economic issues and the Republicans would be clustered around 90%. Bearing that in mind, the chart is very interesting. And if you want to drill down into policy, On the Issues provides a great deal of useful information.

GOP Loses on Government Shutdown

Marco Rubio - Ted CruzThe Republicans really are divided. But it isn’t between the crazy and non-crazy. It is between the nihilists and the extremists. What are normally referred to as the Tea Party are just conservatives who aren’t interested in the political process and so want to send “messages.” As a result, those who want to, you know, win elections, are pretty upset at what is going on in Washington right now. Bear in mind, these people are not any more interested in what is best for the country than the Tea Party is; they just recognize that explicitly trying to destroy the nation is a really bad marketing campaign for the GOP.

Byron York is a man who I almost never agree with, but he was making a lot of sense yesterday. Over at the Washington Times he wrote, Actually, Senate GOP Can’t Filibuster to Defund Obamacare. It’s a really good article because it explains some of the ins and outs of congressional process that I have to admit to finding mysterious. He points out that the Republicans do not have the 41 votes they need for a filibuster in the Senate. But it’s worse than that. “Cruz & Co” can’t even stage an old fashioned talking filibuster.

This morning, the House passed their bill of a continuing resolution (CR) along with defunding Obamacare. But as York points out, Harry Reid can just strip this out of the bill with a simple majority vote:

Then, when the defunding continuing resolution is being considered, Senate Majority Leader Harry Reid will propose a motion to strike the defunding provision from the continuing resolution. Senate rules allow that to be decided on a simple majority vote. Democrats will vote to strike the defunding portion and set up a final up-or-down vote on the continuing resolution, which at that point will be just a measure to fund the government, including Obamacare. There will be a simple majority vote. The measure will pass.

All this information came from a Senate Republican aide. It is very clear that a lot of Republicans are just sick of all this bullshit. The aide said, “This is not a gimmick or a scheme. It is Rule 22 of the U.S. Senate. Everybody knew this. This is an existing rule. It is taught in Senate class when you do your orientation. It is not a surprise. Nobody sprung it on [Ted Cruz].”

By Democratic standards, I’m an extremist (that is, I’m a liberal). And from time to time, I am certainly in favor of hardball tactics. For example, in the end, I think the immigration bill that Congress came up with was most likely not worth supporting. But there is a very big difference between the good extremist fight and political self-immolation. This is the major rift in the Republican Party today.

Where this goes from here, I’m not sure. But one thing is for clear: the House Republicans will not be able to claim that they passed a CR and the Senate killed it. That means that public opinion on a government shutdown is going to come down hard on the House Republicans. If the Senate had voted the House bill down, the Republicans could have framed the issue as, “The Democrats are forcing a government shutdown just for the sake of funding Obamacare.” But as it is, they won’t be able to say that. Instead, the Democrats will correctly claim, “The Republicans are forcing a government shutdown just for the sake of defunding Obamacare.” The optics of that are really bad—so bad that Boehner may be forced to allow a clean CR vote and move onto the next (and far more dangerous) Debt Ceiling hostage crisis.