May 2, 2017

Economists are puzzled. Why don’t those who are being hurt by the rise of inequality vote to change it? Imagine those being hurt by inequality rising up and voting for higher taxes on corporations.  Isn’t that what a democracy is for? In a democracy, the people have the opportunity to vote for what is in their personal best interest.

But this is not happening in America. Voters are not coming out to vote for the return of benefits which have been eroded across the last 30 years. They don’t vote for redistribution. On the surface, it appears they do not care about rising inequality.

One possibility comes from studies showing the public often fails to see the impact of proposed legislation on their personal interests, and when they see it, they vote differently. For example, a tax cut seems appealing to everyone at first–until they are informed that the tax cut will result in a reduction in funding for the school their children attend. If they know that, they often make a different choice. They may prefer the school funding over the additional disposable income from the tax cut. It follows that better communication of the impact of legislation might draw those of lower incomes to vote in a way that more logically follows the expectation of democracy. And, we all know how campaign strategists cleverly pair tax cuts with sometimes false issues such as gun rights. No wonder voters can’t see the the clear impact on their lives.

There are also hourly jobs, child care, logistics, and other things that are greater obstacles to voting for the working class than for salaried of higher income. Another reason is that many people just don’t vote. Maybe they don’t think their vote will matter. One clear obstacle is the feeling that big money controls politics, so my vote is unimportant. Economists debate whether the big money is greater from the Right or the Left. But regardless of the answer to that question, 84% of Americans say money has too much influence in politics.

A third argument is that Americans remain fiercely independent in nature. Americans still believe the Horatio Alger fable. The truth is that Horatio Alger didn’t really pull himself up by his bootstraps as alleged–look it up. The idea is that I don’t want to vote to increase taxes on the wealthy because I expect to be among the wealthy in the near future. Maybe even if my income as a blue collar worker is only $30,000, I hold to this belief. But the reality is that the chances of “making it” have been dramatically eroded over the last 80 years. A 2016 study by Raj Chetty of Stanford University and colleagues showed that the chances for a child to earn more than his father were 80% for children born in 1940, but only 50% for children born in the 1980s. Yet, the belief is very slow to die. And this study is just about exceeding your father, so “making it” to the top is far, far less likely.

Chetty and colleagues went even further with the study. Through analysis keeping certain variables constant, they found that a more equal income distribution like the 1940s for the 1980s kids would reverse more than 71% of the decline in mobility, while assuming the higher GDP of 1940s for the 1980 cohort would only close 29% of the gap. This provides further robust evidence that an economic proposal based solely on GDP growth is weak in restoring mobility, while a proposal focused on equalizing can be highly restorative. As one would expect, Chetty’s studies showed wide variations from the average reported here. Wealthier communities with stable parents have much higher mobility, so it’s even worse for the poor communities with unstable parental situations.

How could this anomaly be improved? How could we enable our underprivileged to come out and vote for what is best for them? Some have proposed that we should have automatic registration for voting at age 16, and/or mandatory voting, as some nations do. Another suggestion is that the budget office of the city, state, or federal government could be required to provide a study of all major legislation or finalist electoral proposals, detailing impact on schools, on infrastructure, on jobs and inequality. Then, networks could be required to provide free prime time before elections to air these findings. Would a better communication of the predicted outcomes of Trump’s proposals have changed the vote? I’m just not sure.

Of course, if the underprivileged really don’t care that they are underprivileged, and don’t want laws and economic programs to better benefit them, that’s OK. But it’s certainly counterintuitive.