The Rising Tide: Will All Boats Be Lifted?
We have lived for decades, even centuries, with the economic faith that a rising tide lifts all boats. But what if it doesn’t? What happens then, economically and politically?
Debate and commentary about the rising tide of income inequality in the United States is remindful of Jesse Jackson’s presidential campaigns in the 1980s when he kept preaching about boats stuck on the bottom. In the mud, as it were.
That seems like irrelevant ancient history to some, but it is beginning to be talked about again by serious folk like Eduardo Porter, the economic columnist of The New York Times.
Last Wednesday, Porter began a column with the line: “Is it time to stop obsessing about inequality?”
His principal witness was Tyler Cowen of George Mason University, who testified:
“The returns to growth are going to people in other countries, most notably China, and generally to people with high I.Q., no matter where they live. I don’t really know how you could undermine this dynamic, short of wrecking the world. Trying to deny that logic is going to fail, or worse, backfire.”
Cowen makes an interesting — and ridiculous — personal argument about the political implications of equality and inequality. He remembers that there was more equality but more social unrest in New York City in the 1970s. Now there is more inequality but more harmony.
Nice, but that was accomplished by driving poor and lower-middle-class people out of the city’s “better” parts. I was there in the 1970s, too, living on West 11th Street in Greenwich Village, where my mother was born, in a church-owned building with 10 apartments on five floors. Today, that building is a single-family home, and I doubt the family living there is into social unrest. The rich ye shall always have with you, but they push their agendas in peace and quiet.
Porter and Cowen make one other interesting point. That is that while college education produces more income over a lifetime, that now means advanced degrees produce more income. The money earned by those with bachelor’s degrees — the new high school — is essentially stagnant. Translation: The rich get richer.
So, says Porter: “Whatever the reason, suddenly inequality seems to be not only at the top of the liberal agenda, but in the thoughts of concerned American voters.”
One hopes. In the current Atlantic magazine, the formidable Molly Ball quotes some interesting research by Mike Podhorzer, the political director of the AFL-CIO — you remember the AFL-CIO don’t you? — that shows an absolute consistency in recent national elections. The crucial factor, Podhorzer found, is Democrats’ vote share among voters making less than $50,000:
“Republicans consistently win voters making $50,000 or more, approximately the U.S. median income. The margin doesn’t vary too much: In 2012, Mitt Romney got 53 percent of this group’s vote; in 2010, Republican House candidates got 55 percent. And Democrats consistently win voters making less than the median — but the margin varies widely. In fact, whether Democrats win these voters by a 10-point or a 20-point margin tells you who won every national election for the last decade.
“In 2004, Democrats won the working-class vote by 11 points; George W. Bush was re-elected. In 2006, Democrats won the working-class vote by 22 points and took the House and Senate. In 2008, Democrats won by 22 points again, and President Obama was elected. In 2010, the margin narrowed to 11 points, and Republicans took the House back. In 2012, Obama was re-elected — on the strength of another 22-point margin among voters making under $50,000.
“‘It doesn’t often get reported, but the key indicator that has been decisive for the last several elections is how people making below the median income vote,’ Podhorzer said this week. Black or white, Asian or Hispanic, male or female, young or old, it’s that simple. To reach these voters, Podhorzer believes, candidates need to focus on the economic issues of the working class. ‘Economic populism decides who wins elections in America,’ he said.
“In addition to working-class voters’ Democratic margin, their turnout rate is also an important variable. Though they make up half of all earners, they consistently comprise less than half of the electorate, because the richer people are, the more likely they are to vote.”
So, Podhorzer believes Republicans will prevail in this year’s congressional election. But if, in this brave new world, the boats at the bottom stay stuck, sooner or later, the folks on the bottom will have their chance to rise.
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