Why Is It So Hard for Democracy to Deal With Inequality? Note for a discussion, "E Pluribus Unum? What Keeps the United Statees United."

Thomas B. Edsall, Feb. 15, 2018, New York Times;
original article contains links and charts.

Image from article, with caption: a fundraiser for

Hillary Clinton in New York in Sept. 2016.

In theory, in a democracy, the majority should influence — some would even say
determine — the distribution of income. In practice, this is not the case.

Over the past few decades, political scientists have advanced a broad range of
arguments to explain why democracy has failed to stem the growth of inequality.

Most recently, Thomas Piketty, a French economist who is the author of “Capital
in the Twenty-First Century,” has come up with a straightforward answer:
Traditional parties of the left no longer represent the working and lower middle
classes.

In a recent Power Point presentation, “Brahmin Left vs Merchant Right,” Piketty
documents how the domination of the Democratic Party here (and of socialist parties
in France) by voters without college or university degrees came to an end over the
period from 1948 to 2017. Both parties are now led by highly educated voters whose
interests are markedly different from those in the working class.

The result, Piketty argues, is a political system that pits two top-down coalitions
against each other:

In the 1950s-60s, the vote for left-wing (socialist) parties in France and the
Democratic Party in the US used to be associated with lower education & lower
income voters. It (the left) has gradually become associated since 1970s-80s
with higher education voters, giving rise to a multiple-elite party system: high-education
elites vote for the left, while high-income/high-wealth elites for the
right, i.e., intellectual elite (Brahmin left) vs business elite (merchant right).

Changes in the structure of the electorate emerged in force during a period of
unprecedented upheaval in the 1960s, when a combination of liberation movements
— committed to civil rights, women’s rights, sexual freedom, the student left,
decolonization and opposition to the Vietnam War — swept across Europe and the
United States.

In this country, Democratic reforms adopted after the 1968 convention — an event
marked by police violence against antiwar demonstrators — produced a radical shift
in power within the Democratic Party.

Before reform, Byron Shafer, a political scientist at the University of Wisconsin,
writes in “Quiet Revolution: The Struggle for the Democratic Party and the Shaping
of Post-Reform Politics,”

there was an American party system in which one party, the Republicans, was
primarily responsive to white collar constituencies, and in which the other, the
Democrats, was primarily responsive to blue collar constituencies.

After reform, Shafer contends,

there were two parties each responsive to quite different white collar
constituencies, while the old blue collar majority within the Democratic Party
was forced to try to squeeze back into the party once identified predominately
with its needs.

Shafer’s white collar constituency is, in fact, what Piketty describes as “a higher
education” or “intellectual” elite — his “Brahmin left.”

In support of Piketty’s argument: In 1996, according to exit polls, the majority of
voters who cast ballots for Bill Clinton were what demographers call non-college.
That year, his voters were split 59 percent non-college to 41 percent college
graduates. Twenty years later, the majority of voters for Hillary Clinton were college
graduates, at 54.3 percent, compared with 45.7 percent non-college.

Exit polls show substantially larger numbers of college-educated voters than the
surveys conducted by American National Election Studies. But the ANES data also
shows a sharp increase in the percentage of voters with college and advanced degrees
supporting Democratic presidential candidates. In 1952 and 1956, for example, the
Democratic nominee, Adlai Stevenson, got 29 and 31 percent of the college-educated
vote. In 2012, the most recent year for which ANES data is available, 53 percent of
those with at least a college degree voted for Barack Obama.

One of the most important of Piketty’s conclusions is that constituencies that
feel unrepresented by the new partisan configuration will be drawn to populism.

The Piketty report is a significant contribution to the growing collection of
studies analyzing the inability of democratic forces to adequately counter inequality.

Five years ago, for example, Adam Bonica, a political scientist at Stanford,
published “Why Hasn’t Democracy Slowed Rising Inequality?” Economic theory, he
wrote, holds that “inequality should be at least partially self-correcting in a
democracy” as “increased inequality leads the median voter to demand more
redistribution.”

Starting in the 1970s, this rebalancing mechanism failed to work, and the divide
between the rich and the rest of us began to grow, [JB emphasis]
Bonica, Nolan McCarty of Princeton, Keith T. Poole of the University of Georgia,
 and Howard Rosenthal of N.Y.U. wrote.

They cite five possible explanations.

First, growing bipartisan acceptance of the tenets of free market capitalism.
Second, immigration and low turnout among the poor resulting in an increasingly
affluent median voter. Third, “rising real income and wealth has made a larger
fraction of the population less attracted to turning to government for social
insurance.” Fourth, the rich escalated their use of money to influence policy through
campaign contributions, lobbying and other mechanisms. And finally, the political
process has been distorted by polarization and gerrymandering in ways that “reduce
the accountability of elected officials to the majority.”

In the five years since their essay was published, we’ve seen all of this play out;
in the case of campaign contributions in particular, the authors provide strong
evidence of the expanding clout of the very rich.

In recent decades, there has been a large increase in the number of people who
contribute to political campaigns: In 1980, there were 224,322 individual
contributions, the four authors write, and by 2012, that number grew to 3,138,564.

On the surface, those numbers would seem to suggest a democratization of
campaign financing. In fact, as the courts have steadily raised the amount an
individual can contribute, megadonors have become all the more influential, a
process my colleagues Nicholas Confessore, Sarah Cohen and Karen Yourish have
documented in detail.

... [T]he share of contributions donated by the top 0.01 percent of the voting age
 population grew from 16 percent in the 1980s to 40 percent in 2016.

In other words, if money buys influence over policy, the top 0.01 percent bought
nearly triple the influence in 2016 that it purchased in the early 1980s.

Daron Acemoglu, an economist at M.I.T. who has stressed the power of
economic elites to set the policy agenda, voiced some skepticism of Piketty’s analysis.
In an email, he wrote that what Piketty found can be explained in large part by racial
hostility, the adverse effects of globalization on white manufacturing workers, and
the decline in social mobility:

It’s not a new thing. This is what George Wallace and Ronald Reagan were
about also. Its current reincarnation is almost surely due to the fact that both
globalization and technological changes have left behind vast swathes of the
country. But why have these people found a home in the Republican Party, not
in the Democratic Party? That’s less clear, but if I were to make a guess, I would
say that this is related to the fact that economic hardship does not work by
itself. It needs to tap into other grievances, and in the US context these have
been related to pent-up hostility towards blacks and immigrants (and perhaps
their own albeit slow upward mobility). If so, it is natural that it is the
Republican Party, with its southern strategy and more welcoming attitude
towards soft racism, that has come to house this discontent.

Jacob Hacker, a political scientist at Yale who writes extensively about
inequality, praised Piketty’s work but noted that he and others

have argued that the Democrats were cross-pressured by rising inequality
because they wanted to maximize campaign cash as well as votes and because
they got most of their institutional support from a coalition of single-issue
groups. This cross-pressure, in turn, contributed to their weak attempt to
maintain the allegiance of the white working class.

Like Acemoglu, Hacker argues that the Piketty analysis does not place enough
emphasis on race:

It doesn’t seem very fundamental to Piketty’s story. Yet it’s impossible to deny
that the realignment of the parties around race created the opening for the GOP
to gain the support of white voters — especially downscale white voters — by
exploiting resentment of racial and ethnic minorities.

Dean Baker, a co-founder of the liberal Center for Economic and Policy
Research, was the sharpest critic of Piketty among those I contacted.

“I’m not sure this analysis is all that useful,” Baker wrote me.

I see Piketty is missing the way in which markets have been restructured to
redistribute income upward and to take away options for reversing inequality
and promoting growth in ways that benefit low and middle income workers.

Piketty, in Baker’s view, “sees the market outcomes as largely given and
redistribution just means tax and transfer policy.”

Baker argues that correcting inequality requires adoption of a much broader
policy agenda. Citing the argument in his book “Rigged,” Baker calls for radical
reform of exchange rates, of monetary policy, of intellectual property rights and of
the financial sector as well as reform of the institutional protection of doctors,
dentists, and lawyers and of corporate governance rules that now allow “C.E.O.s to
rip off shareholders.”

Baker is not optimistic about full-throated economic liberalism in the
Democratic Party.

“Because the party has largely supported an agenda that redistributes upward,
they have lost much of their working class base,” he wrote in his email to me:

The friends you keep matter. The speeches that folks like Hillary Clinton and
Barack Obama give at Wall Street firms are not a good look. The banks don’t
hand you huge honorariums if they think you are going to take their money and
put them in prison.

There is “an ongoing battle,” Baker continued,

in the Democratic Party as well as in most of the left parties across Europe.
There are those who would like to accept inequality and focus exclusively on
issues like gender equality and anti-racism. I would never minimize the
importance of combating gender inequality or racism/nativism, but if that
means ignoring the policies that have led to the enormous inequality we now
see, that is not a serious progressive agenda.

If Democrats must adopt a broader agenda to counter inequality, Piketty’s study
is indispensable. He demonstrates that the highly educated constituency currently
controlling the party has been ineffective in protecting the material interests of the
less well off.

For one thing, the well-educated leadership of the left is thriving under the
status quo. ... From 1988 to 2012, the inflation-adjusted income of college graduates
increased by 16 percent and for those with advanced degrees by 42 percent.

In contrast, those with some college but no degree saw a 1 percent increase;
those with a high school degree saw a 0.3 percent income growth; and those without
a high school degree saw their income decline by 13 percent.

There is no question that the Democrats’ loss of non-college white support has
deep roots in the civil rights revolution of the 1960s. The fight for equal rights for
African-Americans resulted in the full-scale regional realignment of the South
toward the Republican Party and turned once solidly Democratic precincts in
working class sections of Chicago, Boston, Milwaukee and other major cities into
partisan battlegrounds.

These upheavals have left the party of the left ill-equipped to tackle not only
inequality but economic mobility more broadly and with it the pervasive decline of
much of what has become red America.

This in turn raises the question: Can a party split between an upscale wing that
is majority white and a heavily minority working class wing effectively advocate on
behalf of a liberal-left economic agenda? The jury is out on this question, but the
verdict could very well be no.