Why We Latte Drinking Liberal Elitists Can Vote Democratic

There has been considerable discussion about voters who appear to vote against their economic interests. This peaked with the publication of What’s The Matter With Kansas in which Thomas Frank questioned why lower income voters would vote against their economic interests by voting Republican. Similarly, if we accept this simplistic interpretation of economic interest and the political parties, there are many of us liberals who might be thought to be voting against our economic interests by voting Democratic. A recent article on economics from a historical perspective in The New York Times sheds some more light on this.

Alan Blinder summarizes the differences under Democratic and Republican administrations:

The stark contrast between the whiz-bang Clinton years and the dreary Bush years is familiar because it is so recent. But while it is extreme, it is not atypical. Data for the whole period from 1948 to 2007, during which Republicans occupied the White House for 34 years and Democrats for 26, show average annual growth of real gross national product of 1.64 percent per capita under Republican presidents versus 2.78 percent under Democrats.

That 1.14-point difference, if maintained for eight years, would yield 9.33 percent more income per person, which is a lot more than almost anyone can expect from a tax cut.

Such a large historical gap in economic performance between the two parties is rather surprising, because presidents have limited leverage over the nation’s economy. Most economists will tell you that Federal Reserve policy and oil prices, to name just two influences, are far more powerful than fiscal policy. Furthermore, as those mutual fund prospectuses constantly warn us, past results are no guarantee of future performance. But statistical regularities, like facts, are stubborn things. You bet against them at your peril.

The second big historical fact, which might be called the Great Partisan Inequality Divide, is the focus of Professor Bartels’s work.

It is well known that income inequality in the United States has been on the rise for about 30 years now — an unsettling development that has finally touched the public consciousness. But Professor Bartels unearths a stunning statistical regularity: Over the entire 60-year period, income inequality trended substantially upward under Republican presidents but slightly downward under Democrats, thus accounting for the widening income gaps over all. And the bad news for America’s poor is that Republicans have won five of the seven elections going back to 1980.

The Great Partisan Inequality Divide is not limited to the poor. To get a more granular look, Professor Bartels studied the postwar history of income gains at five different places in the income distribution.

The 20th percentile is the income level at which 20 percent of all families have less income and 80 percent have more. It is thus a plausible dividing line between the poor and the nonpoor. Similarly, the 40th percentile is the income level at which 40 percent of the families are poorer and 60 percent are richer. And similarly for the 60th, 80th, and 95th percentiles. The 95th percentile is the best dividing line between the rich and the nonrich that the data permitted Professor Bartels to study. (That dividing line, by the way, is well below the $5 million threshold John McCain has jokingly used for defining the rich. It’s closer to $180,000.)

The accompanying table, which is adapted from the book, tells a remarkably consistent story. It shows that when Democrats were in the White House, lower-income families experienced slightly faster income growth than higher-income families — which means that incomes were equalizing. In stark contrast, it also shows much faster income growth for the better-off when Republicans were in the White House — thus widening the gap in income.

The table also shows that families at the 95th percentile fared almost as well under Republican presidents as under Democrats (1.90 percent growth per year, versus 2.12 percent), giving them little stake, economically, in election outcomes. But the stakes were enormous for the less well-to-do. Families at the 20th percentile fared much worse under Republicans than under Democrats (0.43 percent versus 2.64 percent). Eight years of growth at an annual rate of 0.43 percent increases a family’s income by just 3.5 percent, while eight years of growth at 2.64 percent raises it by 23.2 percent.

That paragraph begins with a key point. While the rich do better under Republicans and the poor do significantly better under Democrats, “families at the 95th percentile fared almost as well under Republican presidents as under Democrats (1.90 percent growth per year, versus 2.12 percent), giving them little stake, economically, in election outcomes.”

Since affluent liberals have “little stake” economically in the outcome, we are free to vote Democratic based upon matters such as social issues, civil liberties, and foreign policy. The propensity for many “latte drinking elitists” to vote Democratic is increased as Democrats have begun to realize where much of their support is coming from. It is no coincidence that John Kerry promised not to raise taxes on those making under $200,000 per year in 2004, and this year Barack Obama has increased this figure to $250,000. As the figures show, we even benefit economically more from the Democrats than the Republicans.

Even without the data in this article I had realized this was the case. I figure that under Democrats taxes might be a little higher, but this is more than offset by both increased business income and increased returns from the stock market under a the Democrats as compared to the economy under Republicans. It is worth paying a little more taxes if in the end I wind up with more money in my pocket (and if Obama can keep this campaign promise, there won’t even be higher taxes this time).

While it certainly makes sense for affluent liberals to vote Democratic, this still does not explain why so many others vote against their economic interests by voting Republican.

Update: The election results verified this view as affluent voters did wind up voting for Obama over McCain, with this post revisited here: The Affluent Voting Democratic Based Upon Values and Economic Self-Interest

Update II: Affluent Voters Key to Obama Victory

Be Sociable, Share!

11 Comments

  1. 1
    John says:

    Ron:

    A minor comment on grammar: I think that should be “Why WE latte drinking elitist liberals can vote Democratic.”

    Otherwise, good job.

  2. 2
    Mark says:

    One thing – a lot of this is well-understood in economics circles, and has been for a long time (I remember reading about it back in my econ classes at least a decade ago).  The long-accepted explanation in economics circles, as I understand it (since I’m not an economist myself), is that a lot of it boils down to expectations with respect to the Fed.  Specifically, the market expects Democrats to put a lot of pressure on the Fed and for Republicans to be relatively hands-off.  When those expectations turn out to be wrong, especially with regards to Dem Presidents (which has pretty regularly been the case – both Clinton and Carter were extremely hands-off when it came to the Fed), the uncertainty built in to the economy disappears, and the economy does its magic.   The full explanation is much more detailed than that, of course, and I’m far from qualified to give it.  But the bottom line isn’t so much that Dem policies are inherently better than Republican policies as it is that a President’s policy positions are largely irrelevant.  This, of course, largely comports with reality, I think, in that we tend to impute to the Presidency far more power and control than the office actually possesses.

    FWIW- there is an alternate explanation, which I find significantly less credible, which is just that it takes several years for policy changes to take effect and that, as a result, GOP Presidents inherit an economy that has been weakened by the Dem President whereas Dems inherit an economy where the GOP President has already made the political sacrifices necessary to create long-term strength in the economy.  The problem with this theory is that, although policy changes almost certainly take several years to really affect the economy, it assumes that (1) Republicans and Democrats actually implement the policies most associated with their parties; and (2) that the President actually has the power to have a direct, significant effect on the economy.

    One more thing, about taxes.  Something I’ve been thinking about, and which I believe a lot of economists agree with (most notably, IIRC, Milton Friedman) is that overall tax rates are relatively unimportant (although how those rates are structured may be important).  What is important, however, is spending, since spending represents actual tax rates; when deficits are incurred, those taxes will have to be paid eventually, plus interest.  Of course, despite popular perceptions, Republicans are no better on spending than Democrats – the only real difference is in where the parties prefer to place their spending*….in fact, if recent history is our guide, then Clinton was far and away better than any modern Republican (and IIRC, Carter wasn’t too bad either). 

    I guess what I’m ultimately saying is that one should be very careful about reading too much into this data. 

    *Dems obviously prefer spending on social programs while (modern) Republicans prefer spending on the military.  Given Washington and Eisenhower’s prescience about standing armies and the military-industrial complex, it’s clear which type of spending, driven to excess, is worse.  Of course, I would prefer all spending be massively slashed; but if the tradeoff is military v. social spending, I’ll take social spending 8 days a week, since it has far more benign unintended consequences.

  3. 3
    Brian says:

    Charters of Dreams must be totally off his meds today. He’s also linking here, distorting what you say along with relying on his usual insults without any coherent argument.

    He totally misses the point of your excellent post! He argues that we do a couple of points better under divided government and therefore that the argument here means we should vote for McCain.

  4. 4
    Ron Chusid says:

    Why do you even bother to read what he writes? If he said that he sure did miss the point of this. If we only do a couple of points better under divided government this would be consistent with my argument.

    As long as there is not a huge financial hit by voting Democratic, as right wingers like Charters of Dreams would claim, then we can afford to vote based upon principles as opposed to economics.

    If Charters of Dreams wants to stay in Iraq for 100 years, if he wants to further decrease civil liberties,  and if he wants to give more power to the religious right, then he can vote for McCain. I’ll vote for Obama to achieve the opposite of this–and it is even easier to do if the economic impact is essentially a wash.

    Actually under many circumstances I would prefer a divided government, but not when the Republican Party is so far to the right.

  5. 5
    Brian says:

    I read Charters of Dreams because it is hard to find such poor logic elsewhere. He goes to the trouble of spending his time attacking you and winds up proving your argument.

    Alas it looks like I’m about the only person left reading his blog. He has ten subscribers and virtually zero traffic.

  6. 6
    Ron Chusid says:

    Ten subscribers? That means himself, his work computer (if he works), his mother, perhaps his cat, and a few people who hit subscribe to RSS feed by accident.

  7. 7
    Brian says:

    Obama-Hater and Liberty-Hater Charters of Dreams is linking here yet again, once again showing that he is so warped by supporting McCain/Palin that he doesn’t have a clue about either economics or why people vote. He thinks that the market has crashed because of fear of Obama coming into power and repeats the McCain line that Obama supported higher taxes.

    He even outright lies about what is said in this post, claiming that you, along with Obama, are supporting higher taxes.

  8. 8
    Ron Chusid says:

    Brian,

    Some are poor losers and want to hang on to the debunked arguments of the last campaign. He cannot accept that Obama beat  his candidate. He is just bitter that we cannot stay in Iraq for another 100 years, bitter that his opposition to science didn’t prevail, bitter that he cannot have a global warming denier and creationist like himself in office, and most importantly bitter that everything he argues for has been thoroughly debunked.

    Some on the far right are totally out of touch with reality. He likes to pretend he is right by lying about what those who disagree with have written. It is also possible that he doesn’t even understand the counter arguments. His world view is so limited to black or white arguments that I bet the meaning of this post is totally beyond what he can understand, and he might actually see this post as support for higher taxes. Therefore he fails to understand why educated affluent voters backed Obama despite the risk of slightly higher taxes, not because of supporting higher taxes.

  9. 9
    ObamaLibertarian says:

    Being limited to black vs. white view of the world is an  understatement. Charters of Dreams is a typical right winger in falling for conservative talk about the free market and liberty and ignoring the reality.

    I wish I had seen this post before the election. It helps show that neither party supports complete capitalism. Each side intervenes to help the poor (Democrats) or the rich( Republicans) but both parties use government to help their supporters.
    You make a good point, which is lost to many wing nuts in backing Obama despite tax increases, not because of them. Many libertarians back Obama to get out of Iraq and in opposition to the anti-freedom policies of the Bushies. Obama supports lower tax rates than Ronald Reagan, so he is nuts in claiming that the changes backed by Obama will do serious harm.
    How can he say that the market crashed because of fear that Obama would get elected.  If that is the case, why did so many people vote for Obama because they though he could best improve the economy? Sure the market can respond to popular mood, but in that case the market would do better if people beleived Obama would get elected.  There are many factors beyond public mood which account for how the market did and brought about the crash but if we look at public mood if anything this would explain the gains on election day itself. If we followed COD’s arguments then the market would be crashing even more than it has because people have less confidence in McCain than Obama on the economy.

    He’s also being dishonest in using this as a counter argument to the economy and market doing better under the Democrats. These are simply matters of historical fact. It doesn’t prove that the market will do better under Obama than McCain but if historical trends hold up this is more probable.

  10. 10
    CJ says:

    He is just another ditto head repeating what he picks up from Rush Limbaugh and Sean Hannity. None o them think–they just repeat what they heard.

  11. 11
    Ron Chusid says:

    Well, at least I now know where Charter of Dreams gets his ideas on economics from!

1 Trackbacks

Leave a comment