THE POLITICAL ECONOtvlY OF THE NE\V GILDED AGE
Larry Al. Bartels
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o 1c state Tax? Elite Idmlogy r111d Ifie l'The Erodmg ~finimum W1af' The Eco11~111iic Effects if'~ ,1. . P I 1. .I.I' . As a studl'nt of democracy, it also SC'emed important to me to explore the ramifications of f'Scalating f'conomic i1lf'quality for the American political system. Probably most sentif'nt obsPrvers of AmC'rican politics suspect that the concentration of vast additional wealth in the hands of alTiuent people has augmented their influence in the political arf'H
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which will only be intelligible or interesting to people with some background in social science or statistics or hoth. I recognize that any compromise of this sort is bound to leave readers in both camps less than fully satisfied; how-ever, I view it as a necessary accommodation to the prevalence of social-scientific illiteracy among Americans who read (and write) about politics and public affairs.
I suspect that the prevalence of social-scientific illiteracy in American public discourse is both a cause and an effect of the fact that social-scientific research is woefully undersupported in American society. 1 lowever, I have been unusually fortunate in finding generous financial, institutional, and personal support for my work, and it is a great pleasure to acknowledge that support lwre.
Princeton University and its \Voodrow \Vilson School have provided time and facilities for research, as well as regular access to stimulating students and colleagues. I am grateful to the past and present deans of the \Voodrow Wilson School, Michael Rothschild and Anne-Marie Slaughter, for building and maintaining a vibrant intellectual community in which to pursue serious analysis of significant public issues. I am also grateful to students in my \Vilson School seminar on Inequality and American Democracy for se1ving as an invaluable test-audience for the first complete draft of the book, and to my colleagues Roland Benabou, Angus Deaton, Alan Krueger, Jonathan Parker, and Mark \Vatson for providing generous advice about economic issues and literature.
Within the Woodrow Wilson School, my primary home for the past eight years has been the Center for the Study of Democratic Politics. The faculty, visitors, students, and staff there have provided abundant intellectual and moral support, including appropriate mixtures of criticism and encouragement in response to half-baked arguments presented in lunch seminars, conferences, and common room chats. I am especially grateful to Doug Arnold, Brandice Canes-Wrone, Michele Epstein, Marty Gilens, Dave Lewis, Nolan McCarty, and Markus Prior for helpful reactions and suggestions. As I have come to expect over the years, Chris Achen provided especially cogent advice and especially generous encouragement. He also graciously tolerated the constraints imposed by this project on the progress of our long-running collaborative work on democratic accountability. Next!
I have also benefited greatly, and repeatedly, from the generous support of the Russell Sage Foundation and its president, Eric Wanner. The first stages of my research were conducted as part of the Princeton \Vorking Group on Inequality, one of several interdisciplinary research teams sup-ported by the Russell Sage Foundation through its Social Dimensions of In-equality project. I thank Bruce Western, the ringleader of the Princeton Working Group, for involving me in the project, and Bruce, Paul DiMaggio,
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Political Science Association (200.5), the European Consortium for Political Hesearch (20o.5), and the National 'fax Association (2006). Each of these pre-sentations generate
_________ CHAPTER 1---------
The New Gilded Age
IN THE FIRST sentence of one of the greatest works of modern political sci-ence, Hobert Dahl posed a question of profound importance for dlmocratic theory and practice: "In a political system where nearly ewry adult may vote but where knowledge, wealth, social position, access to officials, and other resources are unequally distributed, who actually governs?"'
Dahl's answer to this question, for one American city in the late 1950s, was that political power was surprisingly widely dispersed. Examining politics and policy making in New Haven, Connecticut, he concluded that shifting, largely distinct coalitions of elected and unelected leaders influ-enced key decisions in different issue areas. This pluralistic pattern was facilitated by the fact that many individuals and groups with substantial resources at their disposal chose not to devote those resources to political activity. Even "economic notables"-the wealthy property owners, busi-nessmen, and bank directors constituting the top tier of New Haven's economic elite-were "simply one of the many groups out of which indi-viduals sporadically emerge to influence the policies and acts of city offi-cials."2
The significance of Dahl's question has been magnified, m1d the pertinence of his answer has been cast in doubt, by dramatic economic mid political clumges in the United States over the past half-century. Economically, Amer-ica has become vastly richer and vastly more unequal. Perhaps most strikingly, the share of total income going to people at the level of Dahl's "economic notables"-the top 0.1% of income-earners-has more than tripled, from 3.2% in the late 1950s to 10.9% in 2005. The share going to the top 1 % of income-earners-a much broader but still very affluent group--more than doubled over the same period, from 10.2% to 21.8%.:3 It seems natural to won-der whether the pluralistic democracy Dahl found in the 19.50s has survived
1 Dahl (1961). 1. 2 Of the 238 people in this group, only three were among the 23 most influential participants
in the city's politics and policy making. Nine more were "minor leaders" -all in the field of ur-ban redevelopment, a policy area of distinctive relevance for their economic interests (Dahl 1961, 72 and chapter 6).
~These figures are from tabulations by Piketty and Saez (2003), updated at http://elsa .berkeley.edu/-saez/, table A3.
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this ra1)id co11co11tr1t1'c) f ' ' no vist l IT I Wl'altliicst citizcns ' ' . .ic
4 CHAPTER I
Moreover, low-income white voters continue to attach less weight to social is-sues than to economic issues-and they attach less weight to social issues than more affluent white voters do. The familiar image of a party system transformed by Republican gains among working-class cultural consel\latives turns out to be largely mythical.
Then why haw Republican pnsidential candidates fared so well over the PL~t half-century? J'vfy analysis in chapter 4 identifies three distinct biasE'S in po-litical accountability that explain 111uch of their success. One is a myopic focus of voters on very recent economic perfonnance, which rewards Republicans' smprising success in concentrating income growth in election years. Another is the peculiar sensitivity of voters at all income levels to high-income growth rates, which rewards Republicans' success in generating election-year income growth among afTiuent families specifically. Finally, the responsiveness of vot-ers to campaign spending rewards Republic
CHAPTER I and political ec1ua)ih1: ".R l"t .. I .
. ') 0 I IC.l equ1)1h' nom1c inequality as dis1clv111t1 I ' 'J ... poses a constant challe11ge t . ' ' ' aec group t" o eco-1 tanan demands lead to eq111J-~ 1' . I s_pe it1on the state for redress E I t B I ' 1zmg eg1s itm I l g.1 -';;. . _ut t ie co1~tinuing disparities in th~ '.1, sue~ as t ie progressive income
el ectiveness ol such laws is tlie . eco11om1c sph
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---99.99th percentile - - - 99.9th percentile - - - 99.5th percentile - - 99th percentile 95th ercentile
1955 1965 1975 1985 1995 Figure 1.3 Top Incomes by Income Percentile, 1947-200.5
Ev~n the di~~arities in income growth for affluent, middle-class, and poor Ame~ica'.1 fanuhes charted in figures 1.1 and 1.2 understate the extent of es-calatmg mequality over the past 30 years, since much of the real action has been concen~rated at the very top of the income distribution. While the Cen-sus Bureau figures document the experience of families affluent enough to have reac:hed the 9.5th percentile of the national income distribution, they ~heel no light .on what has happened to people with much higher incomes. As it turns out, mcome gains among the ultra-rich have vastly outpaced those among the merely affluent.
iTconomists Thomas Piketty and Emmanuel Saez have used information co ected by the ~ntemal Revenue Seivice to trac.:k the economic fortunes of1
P_eople much lugher up the economic ladder than the Census Bureau tab-u atJons reach Figure 1 3 prese t ti t b I
n s ieJr a u ahons of the rea