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For Richer or for Poorer

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Income Growth by Income Level
Reviewed by Dan Balz
Sunday, June 15, 2008

UNEQUAL DEMOCRACY

The Political Economy of the New Gilded Age

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By Larry M. Bartels

Princeton Univ. 325 pp. $29.95

The most important issue rarely mentioned on the campaign trail this year is the gap between rich and poor in America. It is important for two reasons: The gap has been growing, and the choice between John McCain and Barack Obama likely will affect whether it narrows or expands.

That is the conclusion of Unequal Democracy, a provocative new book by Princeton professor Larry M. Bartels, one of the country's leading political scientists. His most significant finding is that there is a partisan pattern to the size of the gap between the rich and the poor. Over the past half-century, he concludes, Republican presidents have allowed income inequality to expand, while Democratic presidents generally have not.

Lest anyone think this book is a partisan hit job by a left-wing academic, Bartels goes to great pains in his introduction to preempt the counterattack he expects from critics on the right. "I began the project as an unusually apolitical political scientist," he writes, noting that the last time he voted was in 1984, "and that was for Ronald Reagan." He adds that in doing this work, "I was quite surprised to discover how often and how profoundly partisan differences in ideologies and values have shaped key policy decisions and economic outcomes. I have done my best to follow my evidence where it led me."

In Bartels's analysis, the period from the late 1940s to the early '70s was one of "rapid and remarkably egalitarian" growth in real incomes: Every group, from the richest to the poorest, experienced growth of between 2.4 percent and 2.7 percent per year. Since 1974, the pattern has skewed significantly toward the rich. Overall income growth has slowed, and it has slowed far more for those at the bottom than at the top.

Bartels acknowledges that there can be many explanations for growing income inequality, from globalization and structural changes in the U.S. economy to technological and demographic shifts. But he argues that it is wrong to assume there is no cause-and-effect relationship between government policies and income distribution. In fact, he asserts, "economic inequality is, in substantial part, a political phenomenon."

Bartels comes to this conclusion by examining what happened to income inequality from President Truman to President George W. Bush. "Under Democratic presidents," he writes, "poor families did slightly better than richer families (at least in proportional terms), producing a modest net decrease in income inequality; under Republican presidents, rich families did vastly better than poorer families, producing a considerable net increase in income inequality."

He concludes that the income gap increased under Presidents Eisenhower, Nixon, Ford, Reagan and both Bushes, while it declined under four of the five Democratic presidents who have served during this period -- all except Jimmy Carter. That pattern, he asserts, "seems hard to attribute to a mere coincidence in the timing of Democratic and Republican administrations." Rather, Democratic and Republican presidents have pursued different economic policies, with Democrats generally focused more on raising employment and output growth, which disproportionately benefit poor and middle-class families. Republicans have worried more about containing inflation, which has "negligible" effects on real income growth near the bottom of the income distribution but "substantial effects at the top," Bartels says. On tax policy, Republican presidents, especially since Reagan, have pushed tax cuts that have disproportionately helped the wealthiest Americans.

Bartels uses the election of 2000 to illustrate, with a hypothetical example, how much difference presidential leadership realistically may make in the distribution of income in America. In Bush's first four years, families in the top 95th percentile of income received a 2-percent cumulative increase in real income. Middle-income families saw a decline of 1 percent, while poorer families saw a decline of 3 percent. Based on historical data for Democratic presidents, Bartels estimates that if Al Gore had been elected instead of Bush, the working poor would have seen an increase of about 6 percent, while the wealthy would have seen essentially no gain.

Why don't voters hold Republican presidential candidates accountable for what appears to be such a clear pattern? Bartels doesn't buy the hypothesis that lower-income Americans vote against their own economic interests because they put more stock in social and cultural issues when they pick a president. He was one of the first to challenge that idea when it was advanced in Thomas Frank's book What's the Matter with Kansas four years ago. Bartels argues that, nationally, the white working class has become more loyal to Democratic presidential candidates, not less. He contends that Republican gains have come mainly among middle- and upper-income voters, and that the overall shift away from the Democrats is almost entirely attributable to the partisan transformation of the South over the past 40 years or so.

One of Bartels's most intriguing conclusions is that the political timing of economic growth has influenced voters, and that this has helped Republicans, despite their overall pattern of increasing the gap between rich and poor. Republicans presidents, he concludes, have often generated significant economic growth rates in presidential election years, while Democratic presidents have not. If only election years are counted, families at every income level "turn out to have fared much better under Republican presidents than under Democrats," he writes. "Whether through political skill or pure good luck, Republican presidents have been remarkably successful in targeting income growth to coincide with presidential elections."

No political party or administration can be held responsible for the global economic changes that affect income inequality, Bartels acknowledges. But, he goes on to say, "It certainly seems fair -- and perhaps even useful -- to hold political parties accountable for the profound impact of their policies on the way those structural changes shape the economic fortunes of wealthy, middle-class and poor American families." ยท

Dan Balz is national political correspondent for The Post. A version of this review appeared first on The Post's blog "The Trail."


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