A Different Perspective on The Journal of Economic Perspectives

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Graduate course work in economics is such great fuel for a public discussion of the weak, inconsistent, and often hypocritical nature of both modern writing and modern economic analysis. The following will be my submission for an assignment in my Public Sector Economics course, which requires students to read Why Hasn’t Democracy Slowed Rising Inequality (linked here), an article by Bonica et al. in the The Journal of Economic Perspectives and respond with two paragraphs of summary and one paragraph of opinion. Keep in mind this is for an actual assignment. Per usual, the juicy stuff is emphasized.

Summary

Bonica et al. examine the relationship between political contributions from the super-rich (Forbes 400/Fortune 500), the top 0.01 percent of income-earners, and the general public with respect to income inequality as defined by the distance from median to mean income in Why Hasn’t Democracy Slowed Rising Inequality. The discussion revolves around five claims; first, politicians have shifted ideologically towards “a form of free market capitalism;” second, immigration and low voter turnout among the poor has afforded greater voting power to higher earners; third, high real wealth has caused people to turn away from government, as opposed to private, insurance; fourth, the wealthy have undue influence in politics; and fifth, “gerrymandering” and other phenomena distort political outcomes (103-104).

Bonia et al. employ a methodology from Poole and Rosenthal (1997) to argue that “Republicans have become sharply more conservative,” while “the slight liberal drift of the Democrats is compositional in nature,” with the interesting caveat that “what makes a legislator liberal or conservative evolves over time” (106). After reviewing the composition of the voting population, Bonica et al. conclude that “[v]oting tilts the policy scales in favor of top incomes” as opposed to those of the general public (111). This is supported by the claim that although the share of total income to the top 0.01 percent is only five percent, “campaign contributions made by the top 0.01 percent of the voting age population is now over 40 percent” (111). However, Bonica et al. agree that these top earners “give pretty evenly to Democrats and Republicans,” and that “[b]ipartisan boardrooms are the norm,” rather than the exception (116). Rounding out their discussion, Bonica et al. point to the role of “pivots,” “legislative gridlock” and “drift,” “gerrymandering,” and other proposals from other authors in their conclusion as possible contributing factors to income inequality in the United States (119-121).

Opinion (Remember, I was only supposed to give a single paragraph)

This article is plagued by the same false political dichotomy of liberal-conservative that likewise haunts the media and institutions of higher education. That Bonica et al. can suggest in the same paper that Republicans and Democrats are experiencing this miraculous divergence of ideology while simultaneously acknowledging that “[b]ipartisan boardrooms are the norm,” that the top earners as a class give relatively evenly to politicians of both stripes, that the “revolving door” swings open for Republicans and Democrats alike, and that “policy outputs of the US national government are far more responsive to preferences of high-income voters, especially in policy domains where the opinions of the rich and poor diverge” illustrates a breath-taking naivete (116-118). Clearly the phrase “he who pays the piper calls the tune” has fallen on the deaf ears of Bonica et al.. Couple this with the strange blanket assertion–sans evidence–that the public has accepted “free market capitalism” and one is left wondering whether Bonica et al. understand the state as it really is, or simply as they wish or perceive it to be (104). Republicans and Democrats are birds of the same feather, and despite their flashy rhetoric, effectively agree on all major institutions and policies in the American political lexicon, including but not limited to: the legitimacy and constitutionality of the Federal Reserve, undeclared wars overseas, the power of the executive branch to create law via executive orders, the existence of an alphabet soup of allegedly “demanded” agencies, e.g. the FDA, EPA, DHS, FBI, CIA, FDIC, FHA, SEC, CDC, DOC, IRS, DEA, etc., the moral righteousness of taxation, minimum wage, and on and on. Individuals interested in a more comprehensive and consistent appraisal of the condition of the United States political system might turn to the many writings and speeches of former Congressman Ron Paul (R-TX) for a more enlightened perspective. Only then might we arrive at a more sober diagnosis of the cause of income inequality.