Class warfare is back in vogue. Just ask Jim Webb, the freshman senator from Virginia who, in his State of the Union rebuttal last week, thundered: "When I graduated from college, the average corporate CEO made 20 times what the average worker did; today, it's nearly 400 times." And it's not just Webb. The yawning gulf separating the rich from, well, everybody else has emerged as a major theme among a new generation of populist Democrats. Even Massachusetts Representative Barney Frank, no great enemy of capitalism he, has wondered lately whether the United States is suffering from more inequality in wealth and income "than is either socially healthy or economically necessary."
And so, predictably, the backlash from conservative economists has begun. Alan Reynolds, a senior fellow at the libertarian Cato Institute, recently published a book arguing that reported increases in inequality have been overblown. Most professional economists dispute Reynolds's claims (see Jonathan Chait, "Equality Bites," January 29), but, for right-leaning commentators, this is all beside the point: Rising inequality, real or not, just doesn't matter. In The New York Times on Thursday, Tyler Cowen wondered "why we should worry about inequality — of any kind — much at all." What matters, he argued, "is how well people are doing in absolute terms" — and not whether Smith makes ten times more than Jones. Bruce Bartlett, a conservative columnist, agreed: "If my real income does not fall, how am I hurt when Bill Gates makes another billion dollars?"
On their face, these arguments sound reasonable enough, although one could interject with all sorts of complaints (among other things, median incomes in the United States have largely stagnated in the past few years, so Bartlett's hypothetical doesn't quite apply). But there's another inequality-related concern that rarely gets much attention. Over the last few years, political scientists have been converging on the view that massive disparities in wealth and income really do distort the democratic process — by allowing a tiny segment of the population to wield outsized influence in the political realm. The idea isn't terribly groundbreaking — even casual observers of American politics know that money can buy power — but recent research is slowly nailing down exactly how this process works.
The statistics on inequality are well known and — setting aside Reynolds's dissent — present a clear picture. Between 1979 and 2004, the richest 1 percent of Americans saw their after-tax incomes triple, while those of the middle fifth grew by only 21 percent and those of the poorest fifth barely budged, according to Congressional Budget Office data. By the late '90s, the richest 1 percent of American households held one-third of all wealth in the U.S. economy, and took in 14 percent of the national income — a greater share than at just about any point since the Great Depression.
In politics, this all matters a great deal. Larry Bartels of Princeton has recently 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 dismissive of the policy preferences of the poorest third. In one striking example, Bartels discovered that senators were likely to vote for a minimum wage increase only 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.
To some extent, these findings stem from the fact that elected officials tend to hail from the upper classes, and so they 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. At least 35 percent of members of Congress were millionaires in 2005, according to the Center for Responsive Politics — compared with 1 percent for the population at large — and senators had a median net worth of $1.1 million. This should hardly come as a shock. Without publicly financed elections, it often takes a good deal of personal wealth and connections to run for office — the average Senate campaign in 2006 cost about $5.8 million.
That's only the most obvious way economic power begets political power. Consider the fact that wealthy Americans are far more likely to vote: 80 percent of families with incomes over $75,000 voted in 2004, compared with just 48 percent of families with incomes under $20,000, according to the Census Bureau. 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 opportunities to inform themselves and do their civic duty is unclear.
But it's not just voting. People in the $75,000 bracket are much more likely than those in the $15,000 bracket to join a political advocacy group like the National Rifle Association or the NAACP (73 percent versus 29 percent) and much more likely to make campaign contributions (56 percent versus 6 percent). Indeed, in the 2000 election, 95 percent of those donors making substantial campaign contributions came from households earning 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. (Over half of donors in a 2000 poll reported speaking directly with a major elected official, as opposed to 9 percent of regular voters.)
This counts for a lot. For one, as Dean Baker has argued in his book The Conservative Nanny State, the political right has long employed big government to redistribute wealth upwards — from promoting high CEO pay to putting loopholes in bankruptcy law that benefit wealthy homeowners. 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." One assumes he doesn't hear much on the subject during chats with key donors.
Back in the postwar era, the working classes at least had unions to fight for their concerns some of the time. But, thanks to the decline of manufacturing and the assault on organized labor over the past three decades, union density has shriveled — from 24 percent in 1973 to 12 percent today. Meanwhile, in the late '70s, in response to inflation that was eating away at the wealth of the top 1 percent, "business refined its ability to act as a class, submerging competitive instincts in favor of joint, cooperative action in the legislative arena," as TNR's Thomas B. Edsall wrote in his 1986 book, The New Politics of Inequality. It worked. The leveling forces of the '60s and '70s were overturned by the Reagan revolution, and the upper classes have made out quite nicely ever since.
That dynamic seems likely to accelerate. The political scientist Theda Skocpol has noted that there are more well-educated Americans in rapidly growing professional societies than there are lesser-educated workers in trade unions. Absent a countervailing force, the political influence of the wealthiest Americans will continue to expand. On the other side of the Atlantic, European nations have managed to reduce inequality, partly by redistributing wealth through the welfare state. Unless the United States figures out how to do something analogous — or, failing that, find some way to bolster civic participation — the very idea of "equal citizenship" will continue its long erosion.
By Bradford Plumer
If you like this article, go to www.tnr.com, which breaks down today's top stories and offers nearly 100 years of news, opinion, and analysis