Political Science 322
Parties, Campaigns,
and Elections
POSC 322 – Course Outline - 1
I.Order of Topics
A. Importance of Political Parties
B. Founder’s View of Parties
C. Origins of Parties
D. Party Systems
POSC 322 – Course Outline - 2
E. Public Opinion
F. Political Participation
G. Voting Behavior
H. What Difference it Makes Which Party Wins
(Hacker and Pierson – 2nd half of the
course)
POSC 322 – Course Outline - 3
Two Important Themes of this Course:
(1) How representative is public policy of
public opinion?
(2) How fair are the policies and actions of
government?
Grading System - 1
I. Grading System
A. Unannounced Quizzes – one-third of
your grade
B. Term Paper – one-third of your grade
1. Divided into three parts
Grading System - 2
2. Examples of all three parts
– including a sample outline
and sample term paper – are
in the coursepack
C. Cumulative Final Exam – one-third of
your grade
Preparing for Quizzes - 1
1. Be able to answer the study guide
questions.
2. Be able to explain any concept or term
on the slides and why that concept or
term was important enough to be
discussed.
3. What was the impact of a law, policy or
event?
Preparing for Quizzes - 2
3. Be able to “compare and contrast”
concepts or ideas. For example, how
are Republican economic priorities
different from Democratic economic
priorities?
4. What’s related to what? For example,
as a person’s income increases does
their probability of voting increase or
decrease?
Materials
I.Materials
A. The coursepack (which contains the
syllabus) is available at my website:
http://web.csulb.edu/~cdennis/
(under “Courses”)
B. Textbooks: Marjorie Hershey, Party Politics
in America, 16th edition and Jacob Hacker
and Paul Pierson, Winner-Take-All
Politics. Both are available in the CSULB
bookstore.
Materials
By the beginning of next week you will also
need to read the first of a series of
weekly newspaper columns. Questions
from each column will only appear on
quizzes during the time period
mentioned at the beginning of the
column. The columns are in a file at my
website. Look under POSC 322 for a file
entitled, “Newspaper Columns”.
Newspaper Columns
The Newspaper Columns file is password
protected. The password is not available
in any of the material you can download.
However, it is contained in the email I
previously sent you.
Materials
For each newspaper column be able to do
the following: (1) summarize the column
in two sentences; and (2) explain why
the column was important enough that I
assigned it. If you can do these two
things you should be able to answer any
question I’ll ask from the newspaper
columns.
Make Use of Me!
I. Office Hours: M, W 9:00-9:30, 10:4511:00, 1:50-2:20 in SPA-241
II. Write this Down! – Phone - 3:00-4:00
Tuesday, Thursday, Friday, Saturday
and Sunday (No Messages - I Don’t
Return Phone Calls) Call – Email Isn’t
Good for Question
My phone number is included in the
email I previously sent you.
Make Use of Me!
You can download ALL of the PowerPoint
slides for this course at my website (look
under the appropriate course). However,
knowing these slides is NOT NEARLY
sufficient. The slides are outlines and
DO NOT contain much of the lecture
material that is on the quizzes and tests.
I’m glad to help you but for that to
happen you’ll need to take notes in
class.
Political Parties - 1
I.Why Political Parties are Important
A. Provide Candidates for Office
1. Importance of opposing candidates
– even in lopsided elections
Political Parties - 2
B. Provide Policy Alternatives
1. Election should provide a
Referendum on Policy
2. Information Reduction
Device for Voters
Political Parties - 3
2008 Presidential Candidates
L= AFL-CIO (Labor)
E = League of Conservation Voters
(Environment)
Political Parties - 4
Democratic - 2008
Edwards
L
E
Clinton
L
E
Obama
L
E
97% 88%
94% 87%
98% 86%
2004 Democratic Ave. LCV – 85%
Political Parties – 5A
Republican - 2008
McCain
Thompson
L
E
L
E
17%
24%
8%
6%
2004 Republican Ave. LCV – 10%
Note: McCain Changed Virtually Every
Moderate Position to Appease the Republican
base: Bush Tax Cuts, Off Shore Drilling, etc.
Political Parties – 5B
Republican - 2012
Gingrich Santorum Paul
Ryan
L
E
L
10%
29%
L
13%
E
L
E
E
0% 18% 30% 14% 24%
NOTE: Gingrich’s record became consistently
less environmental over time. In 1995 the
LCV called the Gingrich-led legislative agenda
“an environment train wreck.”
Political Parties – 5C
Republican - 2016
Paul
Rubio
Graham
L E
L
E
L
E
4% 9%
6% 9%
16% 11%
Cruz
L
E
0% 11%
Kasich
L
E
0% 13%
Jindal
L
E
21% 6%
Political Parties – 5D
Democratic - 2016
Clinton
Sanders
Warren
L
E
L
E
L
E
94% 87% 98% 95% 100% 94%
Biden
L
E
85% 83%
Warner
L
E
86% 89%
Webb
L
E
95% 81%
Political Parties - 6
C. Accountability
1. G. H. W. Bush–No New Taxes
Pledge
2. Republicans in California after
Republican defections
in the state legislature
over 2009 budget
Political Parties - 7
3. Most Party Platform Pledges are
Honored
II. The Founder’s View of Political Parties
A. Political Parties are not Mentioned in
the U.S. Constitution
Political Parties - 8
B. Why?
C. Founder’s wanted to Maximize the
“Freedom To” – not the “Freedom
From”
Political Parties - 9
1. Method – Limit Government
a. Governmental decisions seen
as reducing individual
freedom of choice
b. Private Property seen as an
extension of the individual
Political Parties - 10
2. Bill of Rights – “Congress shall make
no law…”
3. Government Can Extend Rights (e.g.,
Voting Rights Act of 1965)
a. How much freedom to use the
beach would we have if the
beaches were not
governmentally owned?
Political Parties - 11
D. The Founders feared that if Political
Parties were to develop they would
almost inevitably divide over property
rights with one party representing the
less affluent and wanting to curtail
the property rights of the rich
1. Property ownership as a
requirement to vote
Political Parties - 12
2. The Founders thought that voters
would view the voting decision
through economic self-interest
rather than a view of what
was good for society as a
whole
a. The Founders (e.g., James
Madison in Federalist 10)
wanted to avoid “Factions”
Political Parties - 13
E. Since Political Parties would likely
encourage one to think in terms of a
self-interest calculus for voting the
founders thought they should be
discouraged
1. Thus, political parties are not
mentioned in the U.S.
Constitution
Political Parties - 14
III. It is Worth Mentioning that Studies
Indicate Voters are More Concerned
with Sociotropic Questions (e.g., How
is the economy doing?) than more
selfish questions (e.g., How am I
doing?)
Political Parties - 15
A. As we will see later, this doesn’t mean
that the founders’ concerns were not
justified – selfishness does play a role
– but it is not as important as the
founders feared.
Political Parties - 16
B. Additionally, as Robert Lane’s research
indicates, the poor tend to see the
middle and upper classes as
deserving their higher incomes
1. The poor aren’t that interested in
taking away the property rights
of the rich
Political Parties - 17
IV. If the Founders Did Not Want
Political Parties to Form, Why did
They?
A. The “Short Answer” is that
officeholders needed them
Political Parties - 18
B. The Problem of Collective
Policymaking
1. Assume a unicameral (i.e., one
house) legislature in which
every bill that passes
becomes law (e.g., no
executive)
Political Parties - 19
2. Let us examine what might happen when
this legislature tries to pass “pork barrel”
legislation (i.e., where the benefits are
concentrated in one, or a few, districts but
the costs are widely – perhaps equally distributed)
3. Assume we have three legislators (A, B and
C) and three bills (X, Y and Z).
Political Parties - 20
Payoff to Legislator if Bill Passes
Bill
Legislator
X
Y
Z
A
4
3
-9
B
3
-9
4
C
-9
4
3
Political Parties - 21
C. Assuming that any bill that fails gives a
benefit of “0” to each legislator, what will
happen?
1. Since two out of the three legislators
receive a “positive” benefit from each
bill all three bills pass by a 2-1
margin and each legislator’s “net
total” is –2 (4 +3 – 9 = -2)
Political Parties - 22
2. Thus, each legislator would be better
off if all three bills were defeated
D. If each legislator acts independently,
even if they know that all legislators
will be worse off if each bill passes,
does not ensure that no bills will pass
Political Parties - 23
1. For example, suppose bills are taken
up in alphabetical order
2. No matter what happens with bills X
and Y by the time bill Z is brought up
legislators B and C have a
clear incentive to vote for
it (Z)
Political Parties - 24
E. Not acting independently (i.e., one
legislator trying to alter the behavior
of another legislator) legislator A
could try to “buy off” either B or C
(by giving them the same, or more,
benefit than they would’ve gotten if
bill Z passes)
Political Parties - 25
1. “Buying Off” is the first step in forming
a political party
2. For example, legislators A and B could
form a political party and pass only
bill X (i.e., keep bills Y and Z “off the
table”)
3. Agenda control is a major function of
political parties (e.g., House Speaker)
Political Parties - 26
V. Collective Action Problems – as
illustrated in the preceding example
of negative legislative benefits
A. Definition of a Collection Action
Problem: when rational
behavior leads to results that
could be improved upon for at
least one of those involved
Political Parties - 27
B. In the previous example of legislation
each bill passes and each legislator
was worse off as a result
C. Collective Action Problems frequently
occur when the government provides
“Public Goods”
Political Parties - 28
D. Characteristics of Public Goods:
no one is excluded and one person’s
consumption of the good does not
reduce the amount available for
someone else
1.Example: Clean Air
Political Parties - 29
2. Unless you benefit more than the
entire cost of the public good, there is
no reason for you to contribute to it.
Hope others provide and “free ride”
off them.
Political Parties - 30
E. Applicability of Public Goods to
Political Parties
1. For the vast bulk of citizens,
governmentally provided public goods
are essential (e.g., national defense,
police protection, a clean
environment, reducing poverty, etc.)
Political Parties - 31
a. In the previous example of three
legislators, agree that legislation
could only be adopted if each
legislator benefited
Political Parties - 32
b. Realistically, since most any major policy
involves making someone worse off, a
unanimous (or nearly unanimous)
approach would result in little
legislation and few problems solved.
Political Parties - 33
c. In the previous example, A and B
might form a political party and bill X
would be passed (because they
would gain 4 and 3 from it) while Y
and Z either wouldn’t be voted
on or would be defeated
Political Parties - 34
d. While A and B would be better off,
society as a whole would NOT
because Cs loss (9) would be greater
than the gains to A and B
combined (7)
Political Parties - 35
F. Political Party Affiliation for the
Legislator is a Method of Reducing
Uncertainty
1. Thus, if legislator “A” tried to form a
coalition on every vote there would
be some uncertainty
2. Political parties reduce uncertainty by
telling which coalition, or “team,” you
belong to
Political Parties - 36
H. The Federalist and Jefferson
Republican Parties began as
legislative parties for the previous
reasons.
1. The minority, or “losing,” party
turned to the public to elect more
of their members.
Political Parties - 37
VI. As the Political Parties will Need the
Support of Voters, Let’s Look at the
Benefit of Party Identification for
Voters
A. Rationality of Voting:
Political Parties - 38
R = reward (expected utility) for
casting a vote
P = probability that the voter’s vote
will affect the outcome
B = the differential benefit the voter receives if
their preferred candidate wins
Political Parties - 39
D = any positive rewards received from
voting itself (i.e., fulfilling a citizen’s
“duty”)
C = cost of voting (e.g., information costs,
time and effort to register, etc.)
R = PB + D-C
Political Parties - 40
ANALYSIS: (1) “P” and “D” are likely
unaffected by political parties; (2) parties
reduce “C” (by reducing information
costs) and increase “B”
Political Parties - 41
I.Political Party Systems
Cadre
Mass
Membership
Where
Found:
U.S.
All other Wealthy
Democracies
Political Parties - 42
Goal:
Winning
Greater Emphasis on
Standing for
Something Different
than the Opposition
Traits: Few Dues
Many Dues
Paying Members Paying Members
Political Parties - 43
Little Public
Education
Policy
Flexibility High
Much Public
Education
Low
Political Parties - 44
II. Why the U.S. Developed a Cadre
rather than a Mass Membership
Party System
A. "Absolutist Individualism" – to make the
individual as self-reliant as is
practically possible
B. Little for the Political System to do
Political Parties - 45
III. Why the U. S. Has Such a Strong
Commitment to Absolutist Individualism
A. Great Wealth
Political Parties - 46
B. Frontier Experience
1. Self-Sufficiency
2. Ease of Owning Property
Political Parties - 47
3. Basic rule: government actions to help
the poor often involve some
reduction in property rights
4. Zoning
Political Parties - 48
C. Agrarian Experience
1. Difficult to Organize Farmers
Political Parties - 49
D. Ethnic Diversity
1. Basic Rule: A society strongly divided
on racial, ethnic or religious lines is
more difficult to divide on social class
lines
Political Parties - 50
E. Lateness of the Industrial Revolution
1. Strong Commitment to Absolutist
Individualism Prior to
Industrialization
2. Reliance on “Craft” Unions
Research Methodology - 1
I. Approaches to Study Mass Political
Behavior
A. Economists typically use a deductive
model based on maximizing personal
self-interest (defined chiefly in
economic terms).
Research Methodology - 2
1. Economists typically assume “selfinterested rationality” (i.e.,
aren’t interested in studying
“how you made up your mind” or
assume they already know the
process).
Research Methodology - 3
2. Median Voter Theorem
3. Explaining the change in the votes for a
political party based on change in real
disposable income
a. Skeptical of survey research – all
questions about economic issues
illicit stupid answers
Research Methodology - 4
4. Congress – all regulations are passed
at the behest of interest groups
a. Thus, “ideas” (i.e., ideology of the
congressman) would not effect
their voting in Congress.
Research Methodology – 5
C. Sociology
1. A person behaves politically as
they are socially.
2. Thus, the “group” you are a
member of largely determines
your vote in an election.
Research Methodology - 6
3. If so, what explains the movement
of all groups in a particular
direction (e.g., in a proRepublican direction)?
D. The question immediately above
prompted many political scientists to
study voting behavior from a
psychological perspective.
Research Methodology - 7
1. Political Scientists, using
psychological approaches,
studied voting from the
perspective of decision-making
(i.e., value of a “standing
decision” such as party
identification and feelings toward
a candidate and then vote
choice).
Research Methodology - 8
2. The Funnel of Causality
War
Party Issue
Vote
Depression > I.D. > Positions > Choice
Research Methodology - 9
3. Findings include the impact of the
following on voters’ decisions: party
identification, issue positions and the
basis of economic influences (e.g.,
How important is your perception of
your own financial situation as
opposed to your perception of the
financial situation of others?)
Research Methodology - 10
3. Early survey research findings were
discouraging: (1) voters had little
knowledge; (2) few voters could
either think in ideological terms or
apply such terms; (3) consequently,
little relationship between issue
positions (e.g., between various
domestic policies and/or foreign
policies).
Political Opinion - 1
I. Public Opinion
A. Economic and Noneconomic
B. Abstract and Specific
Public Opinion - 2
1. Basic rule: People give more tolerant
or “democratic" responses in the
abstract than they do in the specific.
C. Liberal and Conservative
1.Relative not Absolute Definitions
Public Opinion - 3
2. Liberal - greater commitment to
reducing economic inequality
and maintaining economic
security/greater support for the
noneconomic freedom to differ
Public Opinion - 4
3. Conservative – greater individual
free choice-less commitment to
equality in economics/less
commitment to the freedom to
differ in noneconomics
Public Opinion - 5
D. If Asked Their Political Orientation
Conservatives Outnumber Liberals
Two to One.
1. Symbolic Conservatism (they say
they’re “conservative”) but
Operational Liberalism (support
greater government spending on
education, health care, etc.)
Public Opinion - 6
2. Conservatives have, with much
success, attempted to switch the
notion of an “elite” from an economic
elite (which politically hurts
conservatives) to a cultural elite
(which politically helps
conservatives).
a. Sarah Palin/Rick Santorum – the
well-educated are “against us”
Public Opinion - 7
E. Public support for greater government
spending on social welfare programs
moves opposite the partisanship of the
president (e.g., public support for more
government spending on environmental
protection increases under Republican
presidents because the public feels the
Republicans aren’t very environmentally
oriented).
Public Opinion - 8
F. Citizens Often Hold Competing
Values Such as Freedom and
Equality (e.g., desiring both tax cuts
and increased government services)
1. Public opinion can often be easily
manipulated.
Public Opinion - 9
G. Public Opinion is Individually
Irrational but Collectively Rational
1. Most people don’t follow politics
closely and aren’t well-informed.
However, a small group of voters are
well-informed and this means that
overall opinion moves in a rational
manner.
Public Opinion - 10
H. Political Parties and Voters - Specific
Issue Positions – “Four-Celled
Diagram”
The Voters:
Economic - Liberal/
Noneconomic -Conservative
Public Opinion - 11
Democratic Party:
Economic – Liberal/
Noneconomic – Liberal
Public Opinion - 12
Republican Party:
Economic – Conservative/
Noneconomic – Conservative
Public Opinion - 13
Libertarians –
Economic – Conservative/
Noneconomic – Liberal
Since political support is often based
upon intolerance, libertarianism will
have difficulty building much mass
support.
Public Opinion - 14
H. Relationship Between Socioeconomic
Status (SES) and Political Opinions
1. Socioeconomic Status - income,
education and occupational
status
Public Opinion - 15
2. Economic Issues – Negative
Association - As SES increases
support for liberal positions
decreases
Public Opinion - 16
3. Noneconomic Issues - Positive
Association – As SES increases
support for liberal positions increases
Public Opinion - 17
4. Typically, a party will “frame” an issue
as an issue they “own.” Democrats
would frame universal health care as
either security for workers losing
insurance and/or fairness, while the
Republicans would frame universal
health care as either a tax increase
and/or the size and scope of
government (i.e., “big government”).
Public Opinion - 18
a. Republicans are perceived as better
able to handle foreign policy and
defense issues, reducing taxes,
controlling inflation, reducing
government spending, reducing crime
and promoting moral values than
Democrats.
Public Opinion - 19
b. Conversely, Democrats are perceived
as better able to handle social welfare
policies and/or “fairness” issues such
as protecting Social Security,
improving health care, helping the
poor, supporting public schools,
reducing unemployment, solving farm
problems, and protecting the
environment than Republicans.
Public Opinion - 20
J. Public Support for the Bush Tax Cuts
A. 40% of the benefits go to the
wealthiest 1% of households
(annual income above
$370,000) – this is equal to the
amount received by the poorest
70% of households COMBINED!
Public Opinion - 21
1. 75% of households LOSE under the
Bush Tax Cuts
a. Mean Cut - $1,199
Median Cut - $217
2. People Overly Upwardly Identify (19%
thought they were in the top 1%)
Public Opinion - 22
B. Those FAVORING greater government
spending more FAVORED the Bush
Tax Cuts - SEE THE
CONTRADICTION?
1.Similarily half of California voters
think the state’s budget could be
reduced 20% WITHOUT
reducing services.
Public Opinion - 23
C. The MORE One Thinks Their OWN
Tax Burden is Too High the MORE they
SUPPORT the Bush Tax Cuts - SEE THE
CONTRADICTION?
D. The Public Simply Doesn’t Connect
the Bush Tax Cuts to Either Other
Public Policies (services cutbacks,
higher interest rates) or Inequality.
Public Opinion on Income
Inequality - 1
The next several slides show what groups
in the United States, Japan and Sweden
think is the actual and fair degree of
income inequality between an executive
and an auto worker.
Public Opinion on Income
Inequality – 2 – United States
Perceived
Income
Republicans 13.2/1
Democrats
15.4/1
Fair
Income
11.3/1
8.2/1
Public Opinion on Income
Inequality – 3 - Japan
Conservative
Party
Left Parties
Perceived
Income
7.1/1
Fair
Income
5.4/1
10.3/1
3.7/1
Public Opinion on Income
Inequality – 4 - Sweden
Conservative/
Center Party
Left Party
Perceived
Income
Fair
Income
2.2/1
2.1/1
3.2/1
1.9/1
Political Participation - 1
I. Political Participation
A. Types of Political Participation
Political Participation - 2
B. Who Participates?
1. Basic rule: while voting is positively
related to socioeconomic status
(SES) non-voting forms of political
participation are even more strongly
positively related to socioeconomic
status.
Political Participation - 3
C. “60-30-10” Diagram
1. SES Composition of the Highest
Participating One-Fifth of Adult
Americans
Political Participation - 4
Highest 1/3 SES - 60%
Middle 1/3 SES - 30%
Lowest 1/3 SES - 10%
Political Participation - 5
D. Consequences
1.Message Received: Too
Economically Conservative and
Socially Liberal
Political Participation - 6
E. Comparison
1. Only In India was the Relationship
between SES and Participation
As Strong as in the U.S.
Political Participation - 7
F. Why?
1. Relative Absence of Class-Related
Politics in the U.S.
2. Relative Lack of Work
Organizations/Unions in the U.S.
Voting Behavior - 1
I. Voting Behavior
A. Realigning Election
B. Current Division between the Parties
is Quite Close
Voting Behavior - 2
II. The Republican Coalition
A. White Evangelicals – Moral Decline
B. Deep South – Civil Rights
Voting Behavior - 3
C. Country Folk – Culture
D. Exurbia – White Flight
Voting Behavior - 4
E. Young Blue Collars Boys – White
Men Without College Degrees
F. Blue Collar Old Men – Social Security
can cause defections
Voting Behavior - 5
G. Privileged Men – Noneconomic
liberalism of this group can cause
defections
Voting Behavior - 6
III. The Democratic Coalition
A. African-Americans – Civil Rights plus
Economic Need
1. Republican support eroded once
Civil Rights involved government
regulation of business
Voting Behavior - 7
B. Hispanics – Similar Calculus to
African-Americans
C. Well-Educated Women – Relatively
Liberal both Economically and
Socially (support Affirmative Action –
Abortion Rights and Gun Control)
Voting Behavior - 8
D. Secular Warriors – Don’t Go to
Church and Don’t Own Guns
E. Cosmopolitan States (large, diverse
populations on the sea coasts)
Voting Behavior - 9
F. Union Families
IV. Contested Groups – Typically
Economically Liberal and Socially
Conservative
A. Catholics
Voting Behavior - 10
B. Single Women – Economically
Vulnerable
C. Young Voters – Tend to be Relatively
Liberal but Don’t Vote as Much
Voting Behavior - 11
I. Question – If poor people disproportionately
vote Democratic and richer people
disproportionately vote Republican, why do
Democratic Presidential candidates win the
richer states and Republican Presidential
candidates win the poorer states?
Voting Behavior - 12
Voting Behavior - 13
Voting Behavior – 14 - Race is
Half the Story
Voting Behavior - 15
I. Voting and the Culture War
A. The culture war is fought by the
wealthy, in part, because their
economic needs are met.
B. The wealthy have sufficient money
to move to an area that is
culturally suitable for them.
Voting Behavior - 16
I. The Issue Positions/Ideology of Today’s
Voters More Accurately Reflect the
Views of Their Party than during the
1950-1980 period.
A. During the 1960-1980 period the
message from party elites
became more consistent within
each party.
Voting Behavior - 17
B. Two Fundamental Causes
1. Reaction to the Civil Rights
movement – the South becomes
much more Republican
2. Political losses by business cause
it to spend much more on
lobbying for a message of low
taxes and regulation
Voting Behavior - 18
C. As the cues from party officeholders
become more similar within each
party, there are fewer voters whose
issue positions/ideology don’t fit their
political party (i.e., liberal
Republicans and conservative
Democrats).
Voting Behavior - 19
1. Independent voters who “lean” toward a
party typically behave as partisans
(i.e., hold opinions similar to their
party and vote for that party).
2. If faced with a conflict between their
ideology and their party, most voters
change their ideology to fit their
party rather than vice versa.
Voting Behavior - 20
3. However, voters do process policy
information if available and this
information has 1.5 to 2.0 times the
impact on partisan’s opinions than
does the impact of party leaders’
opinions. Policy information has a
greater impact on Democrats than
Republicans.
Voting Behavior - 21
a. It is worth mentioning that
increased information
significantly increased
Republican support for
expanding health care coverage.
Many Republicans didn’t know
that the Obama Health Care
Plan contained such
expansions.
Voting Behavior - 22
D. All these factors, plus the greater
turnout rate among partisans, have
caused campaigns to increasing
focus on activating their “base” rather
than appealing to independent
voters.
Voting Behavior - 23
E. All of these factors greatly increase
the “cost” to politicians of
compromising with the opposition
party (e.g., you may get a primary
election challenge within your party).
Noneconomic Party Differences1
I. Left (Non-Communist)/Right (NonFascist) on Noneconomic Issues
A. Right
1. Maintain Traditional Social
Relationships/Regime
Maintenance
Noneconomic Party Differences2
2. Freedom of Expression
3. Increase Civil Rights and Liberties
Noneconomic Party Differences3
B. Left
1. Freedom of Expression
2. Increase Civil Rights and Liberties
Noneconomic Party Differences4
3. Maintain Traditional Social
Relationships/Regime Maintenance
Political Parties, Income
Inequality and Public Policy – 1A
DON’T WRITE DOWN ANY OF THE
MATERIAL OVER THE NEXT
220 SLIDES. ALL OF IT IS IN
THE COURSEPACK. JUST
LISTEN TO THE DISCUSSION!
Political Parties, Income
Inequality and Public Policy – 1B
I. Policy Orientation of This Discussion
A. Since the U.S. has the weakest
social safety net and highest level of
income inequality of any wealthy
democracy the obvious comparison is
to the other wealthy democracy that
have stronger social safety nets and
less income inequality than we do.
Political Parties, Income
Inequality and Public Policy – 1C
B. I know that isn’t “comforting.” We
naturally want to think of our nation
as “best” on all criteria. Realistically,
this is impossible. A nation that has
the lowest taxes won’t have the least
inequality. The United States ranks
high on some social programs (e.g.,
higher education) but not on income
security and reducing inequality.
Political Parties, Income
Inequality and Public Policy – 1D
C. If I were teaching this class in a nation
with a very strong social safety net
and much less income inequality
(e.g., Sweden), I would compare it to
nations that have less strong social
safety nets and greater income
inequality (e.g., Canada and Great
Britain with moderately strong social
safety nets and the U.S. with a very
social safety net).
Political Parties, Income
Inequality and Public Policy – 1E
D. Therefore, while I will touch on
proposals to weaken the U.S.
safety net, the vast bulk of the
discussion ahead will focus on what
other wealthy democracies do to
reduce income equality, how well
these policies work and what the U.S.
could do in this regard while still
preserving our freedoms and
improving our political system.
Political Parties, Income
Inequality and Public Policy – 2
I. Incentives of the Two Major Political
Parties
A. Unemployment has a large impact
which disproportionately falls on
low and middle-income voters.
1. Nonmonetary costs of
unemployment
Political Parties, Income
Inequality and Public Policy – 3
B. The poorest 80% of American
households are relatively unaffected
by inflation. However, inflation has a
greater adverse impact on the richest
20% of American households.
Inflation – Closer Look - 1
Inflation – Closer Look
Scenario #1
Year 1
Year 2
Chicken
$1 lb.
Gas
Chicken
$1 gal.
$.75 lb.
Gas
$1.25 gal.
Inflation – Closer Look - 2
Scenario #2
Year 1
Year 2
Chicken Gas
Chicken
Gas
$1 lb. $1 gal.
$1.05 lb. $1.75 gal.
Scenario #1 – 0% inflation
Scenario #2 – 40% inflation ($2.80 is 40%
greater than $2.00)
Inflation – Closer Look - 3
Inflation rate doesn’t matter, it is the ratio
of gas to chicken that matters (e.g., in
year #2, chicken is 60% of gas in both
scenarios)
Since the Great Depression, U.S. has
used Scenario #2
Inflation – Closer Look - 4
V. Possible Government Responses to
Increases in Either Unemployment
or Inflation
A. Concepts
1. “Core” Inflation Rate – the
regular inflation rate minus the
politically uncontrollable items:
food, shelter and energy
Inflation – Closer Look - 5
2. Natural Rate of Unemployment – whatever
level of unemployment is necessary to
keep inflation the same – i.e., not either
increasing or decreasing - today about 5%6.5%)
3. Blinder Rule – a 1 percentage point increase in
unemployment above the natural rate of
unemployment endured for a year lowers the core
or underlying inflation rate (excludes food, shelter
and energy) ½ of 1 percent (i.e., .5%).
a. Reagan Administration – Core Inflation
Rate reduced from 9.6% to 4.6%
Political Parties, Income
Inequality and Public Policy – 4
C. Marginal Substitution Rate
Democrats
.90
Independents Republicans
2.0
1.5
Macroeconomic Theory - 1
I. Macroeconomic Theory
A. Neoclassical
1. The free market was assumed to
yield full employment (i.e.,
no/low unemployment) and to
grow without limitation and
to correct any imbalances
that might develop
Macroeconomic Theory - 2
2. Since the higher one’s income the
greater the percentage of their
income they save/invest and the
smaller percentage of their income
they spend, the greater the share of
income the rich possessed the
greater the investment, and hence,
economic innovation/growth.
Macroeconomic Theory - 3
3. By this view, a major goal of
macroeconomic policy was to keep
the costs of production low (e.g., low
wages – through the absence of labor
unions, a low minimum wage, low
taxes, little government regulation of
business, etc.) in order to increase
profits and investment.
4. Couldn’t explain the Great Depression
Macroeconomic Theory - 4
B. Keynesianism
1. If the non-rich lacked sufficient
money to purchase goods, the
economy would not reach its’ full
potential because businessmen
would not open new business, or
expand current ones, if they felt
they could not sell the resulting
products or services.
Macroeconomic Theory - 5
2. This meant that middle and lowerincome groups, who spend a greater
share of their income than upper
income groups, need to have a
significant share of the national
income (through a minimum wage,
labor unions, etc.).
Macroeconomic Theory - 6
3. If economic demand was insufficient,
Keynes argued that the government
should increase its’ spending and be
willing to run large deficits (i.e., spend
more money than it receives in
taxes).
4. If both inflation and unemployment are
high (late 1970s & early 1980s) –
trouble.
Macroeconomic Theory – 7A
C. The aforementioned difficulties of
Keynesian economics, plus the
renewed political strength of a
Republican Party whose ideology
was similar to neoclassical
economics, resulted in a rebirth of
neoclassical economics under
several different names.
Macroeconomic Theory – 7B
D. Corporate profits were 25% to 30%
higher at the official end of the
Great Recession than they were
before it started (2007). Meanwhile,
wages as a share of national income
fell to 58%. That’s the lowest wage
share had been since it began to be
recorded after World War II.
Macroeconomic Theory – 7C
If wages were at their postwar
(World War II) average of 63%, U.S.
workers would earn an extra $740
(billion) this year (2012) or about
$5,000 per worker. That’s a lot of
consuming power.”
Macroeconomic Theory - 8
D. Supply-Side Economics - Ronald
Reagan 1981 & Newt Gingrich 2012
1. Like Neoclassical Economics –
much more concerned with
reducing impediments to supply
(high labor costs, taxes and
regulations) than in stimulating
demand.
Macroeconomic Theory - 9
2. Tax Cuts DON’T pay for
themselves.
3. Gregory Mankiw – supply-side
economics devised by
“charlatans and cranks”
E. Relationship between the
philosophy/self-interest of both major
political parties and the economic
theory they use.
Political Parties, Income
Inequality and Public Policy – 5
D. Recent research by political
scientists shows that all income
groups up through the 95th percentile
(i.e., all but the richest 5% of
households – today those earning
about $200,000, or less, per year)
gain under the Democrats relative to
the Republicans. However, the poor
gain at a greater rate under the
Democrats.
Political Parties, Income
Inequality and Public Policy – 6
E. Our Current Situation
1. Tremendous loss of consumer
demand due to the collapse of
real estate
2. Government needs to replace this
lost demand – i.e., NOT cutback
Political Parties, Income
Inequality and Public Policy – 7
3. 300 billion dollars of stimulus will reduce the
unemployment rate by 1%. The Obama
Stimulus Plan was approximately 775
billion dollars spread over two years.
Given the composition of the Obama
Stimulus Plan (e.g., tax cuts – which have
low stimulative value) it is equivalent to
about 510 billion dollars of stimulus rather
than 775 billion dollars.
Political Parties, Income
Inequality and Public Policy – 8
This means that, due to the Obama
Stimulus Plan, the unemployment rate,
while high, is about 1.7 percentage
points lower that it would have been
without the plan (510/300 = 1.7).
Political Parties, Income
Inequality and Public Policy – 9
4. Many economists think that the federal
government needs to do two things to improve
the economy: (1) provide a larger stimulus
than the Obama Stimulus Plan; and (2) more
strongly regulate the financial markets (to
avoid the bad loans that precipitated our
current problems). This is difficult for the
Republican Party: their ideology conceives of
government as “the problem,” not “the
solution.”
Political Parties, Income
Inequality and Public Policy – 10
Income Inequality in Wealthy Democracies
in the Mid-1980s – Percentage Distribution
Japan
Sweden
U.S.
Richest
20%
37.5%
41.7%
42.0%
Poorest
20%
8.7%
7.4%
5.0%
2009 >>> 3.9%
Political Parties, Income
Inequality and Public Policy: 11A
Year
1920
Richest Richest
10%
1%
39.0% 14.8%
1970
32.6%
9.0%
Richest
½ of 1%
11.1%
6.3%
2008
48.2% 21.0%
16.9%
SHARES FOR THE RICHEST 1% AND ½ OF
1% ARE ABOUT TWICE AS HIGH AS IN
EUROPE
Political Parties, Income
Inequality and Public Policy: 11B
U.C. Berkeley Economist Emmanuel
Saez’s comments on the reasons for
increase income inequality in the U.S.:
“…The changes in income concentration
are just too abrupt and too closely
correlated with policy developments for the
standard story about pay equaling
productivity to hold everywhere.
Political Parties, Income
Inequality and Public Policy: 11C
Between 1971 and 2007, U.S. hourly
wages, adjusted for inflation, rose by 4%.
(That’s not 4% a year; it’s 4% over 36
years!) during those same decades,
productivity increased by 99% - that is, it
nearly doubled. In other words, the
average worker’s productivity rose 25
times more than his pay. Los Angeles
Times, May 14, 2013, page A11).
Political Parties, Income
Inequality and Public Policy: 11D
That is, if pay is equal to productivity, you
would think that deep economic changes
in skills would evolve slowly and make a
gradual difference in the distribution—but
what we see in the data are very abrupt
changes. Basically all western countries
had very high levels of income
concentration up to the first decades of the
20th century
Political Parties, Income
Inequality and Public Policy: 11E
and then income concentration fell
dramatically in most western countries
following the historical narrative of each
country. For example, in the United States
the Great Depression followed by the New
Deal and then World War II. And I could go
on with other countries.
Political Parties, Income
Inequality and Public Policy: 11F
Symmetrically, the reversal—that is, the
surge in income concentration in some but
not all countries—follows political
developments closely. You see the highest
increases in income concentration in
countries such as the United States and
the United Kingdom (Great Britain),
Political Parties, Income
Inequality and Public Policy: 11G
following precisely what has been called
the Reagan (Republican President from
1981-1988) and Thatcher (Conservative
Party Prime Minister of Great Britain from
1979-1990) revolutions: deregulation, cuts
in top tax rates, and policy changes that
favored upper-income brackets.
Political Parties, Income
Inequality and Public Policy: 11H
You don’t see nearly as much of an
increase in income concentration in
countries such as Japan, Germany, or
France, which haven’t gone through such
sharp, drastic policy changes.
Political Parties, Income
Inequality and Public Policy: 11I
Apportioning the 12 percentage Increase
in the Share of Income Going to the Top
1% - 1976-2008 (8.9% to 20.9%)
Tax Reductions –
45%
Political Polarization – 28%
Unexplained 26%
Conservative tax changes and the
increased conservatism of the Republican
Party have had a large impact on
inequality.
Political Parties, Income
Inequality and Public Policy – 12
If you include government transfers and subtract
taxes from 1979 to 2006, the richest 1% of
households had a 256% increase income
while middle-income households (40th-60th
percentiles) had a 21% increase and lowincome households (1st-20th percentiles) only
an 11% increase. In the United States today,
the richest 1% of households have over 1.5
times as much income as the entire poorest
40% of households combined.
Changes in California - 1
In California, between 1987 and 2009,
more than 33% of the income gains went
to the richest 1% of Californians, and
almost 75% went to the richest 10%
while the bottom 90% received just over
25% of the growth in incomes. During
the last two decades, the average
income of the richest 1% of Californians
increased by more than 50%,
Changes in California - 2
after adjusting for inflation, while the
average income of the middle fifth (i.e.,
the 40th – 60th percentiles) decreased by
15%. In 2009, the average income of
the richest 1% of Californians was $1.2
million – more than 30 times that of
Californians in the middle fifth.
California’s income gap is wider than
most other states.
Political Parties, Income
Inequality and Public Policy – 13
Americans in the poorest 10% had a living
standard 22% below low-income Finns,
24% below low- income Dutch and 15%
below low-income Italians. However, the
wealthiest 10% of Americans had
incomes 50% higher than the wealthiest
10% in the other OECD nations (Great
Britain, France, Canada, Japan,
Australia and New Zealand).
Political Parties, Income
Inequality and Public Policy -14
One fundamental reason the poor in the
U.S. have a lower standard of living than
in several other nations is that, after
taxes, the U.S. transfers only about onethird the percentage of income to the
poorest 20% of households (1.5%) as
does the average (4.2%) of the world’s
wealthy democracies.
Analysis from the World Bank Publication, “Social Safety
Nets and Target Assistance: Lessons from the European
Experience,” Chris de Neubourg, et. al.
While the average American has a higher living
standard than the average resident in the
other countries, this does not hold for the
entire spectrum of the income distribution.
Despite the higher aggregate and average
standard of living in the United States, people
in the lower deciles of the income distribution
are far worse off in US than poorer persons or
households in Europe, if compared to the
median income of their own country. (p. 5)
Political Parties, Income
Inequality and Public Policy – 15
The median Swedish family has a living standard
roughly comparable with that of the median
U.S. family: wages are, if anything, higher in
Sweden, and a higher tax burden is offset by
public provision of health care and generally
better public services. As you move further
down the income distribution, Swedish living
standards are much higher than in the U.S.: at
the 10th percentile (poorer than 90% of the
population) the Swedish living standard is 60%
higher than in the U.S.
Political Parties, Income
Inequality and Public Policy – 16
In this light it is worth noting that approximately
38% of the benefits from the Bush Tax Cuts go
to the richest 1% of the households (i.e., the
same households who have been receiving a
much higher share of personal income over
the past 40 years). The richest 1% of U.S.
households receive more money from the
Bush Tax Cuts than the entire poorest 70% of
U.S. households combined (roughly
households with annual incomes of about
$90,000 or less).
Political Parties, Income
Inequality and Public Policy – 17
Wealth is a storehouse of assets: trusts, stocks,
bonds, etc. whereas income is what you live
on over a short period – say, a year. As the
following statistics will make clear: Wealth is
even more unequally distributed than income.
In the United States the wealthiest 1% of
households have over 33% of the national
wealth while the poorest 50% of households
have approximately 7% of the national wealth.
Political Parties, Income
Inequality and Public Policy – 18
A rather large amount of research tells us the
following: (1) Americans vastly overestimate
their chances of becoming rich; (2) vastly
underestimate the degree of income inequality
(i.e., do not think the wealthy are as wealthy
as the actually are); and (3) have a difficult
time connecting public policy to economic
outcomes (e.g., not that many see the Bush
Tax Cuts as a tremendous redistribution to the
wealthy).
Political Parties, Income
Inequality and Public Policy – 19
Currently, wealth in America is distributed as
follows: the richest 20% of households
(percentiles 81-100) have approximately 84%
of the wealth, the next richest 20% (i.e.,
percentiles 61-80) have approximately 11%,
the middle quintile (i.e., percentiles 41-60)
have approximately 4%, the next poorest 20%
(i.e., percentiles 21-40) have approximately
.2% (two tenths of 1%) and the poorest quintile
(i.e., percentiles 1-20) have approximately .1%
(one tenth of 1%).
Political Parties, Income
Inequality and Public Policy – 20
Americans do desire a less unequal
distribution of wealth. Recently, two
scholars tried an interesting experiment.
Not being told what nations had what
distribution of wealth, Americans were
offered three choices: (1) the current
American distribution of wealth;
Political Parties, Income
Inequality and Public Policy – 21
(2) perfect equality (i.e., each quintile getting an
equal – 20% - share of the wealth); or (3) the
current Swedish distribution of wealth (the
richest 20% of households approximately 36%
of the wealth, the next richest 20%
approximately 21% of the wealth, the middle
quintile approximately 18% of the wealth, the
next poorest 20% approximately 15% of the
wealth and the poorest quintile approximately
11% of the wealth).
Political Parties, Income
Inequality and Public Policy – 22
The results were as follows: 47% chose
Sweden’s distribution, 43% chose
perfect equality while only 10% chose
the current American distribution.
Additionally, American’s are less
satisfied with their lives than citizens in a
number of European countries that have
less per capita income, but much
stronger safety nets/less income
inequality than the U.S.
Political Parties, Income
Inequality and Public Policy–22A
I.How Should We Measure “Well-Being”?
A. If someone spends $1,000 on diabetes
medicine it counts as part of GDP.
However, wouldn’t the same person have
a better life if they didn’t have diabetes but
spent $750 on a computer? Since $1,000
is greater than $750, in this example GDP
would be higher for diabetes oriented
spending than for buying a computer.
Political Parties, Income
Inequality and Public Policy–22B
B. GDP (Gross Domestic Product) only
measures the monetary value of the
economy. It tells nothing about how
the money is used or any nonmonetary value (national health, the
functioning of the political system, job
security and measures of community
well-being).
Political Parties, Income
Inequality and Public Policy–22C
C. Typically, on such indicators, the
United States ranks lower than the
high tax and strong welfare state
countries of Northern Europe (e.g.,
Norway, Sweden, Denmark, Finland,
and the Netherlands).
Political Parties, Income
Inequality and Public Policy – 23
Mobility is NOT that high in the U.S.
If you compare the eventual income of two
children from different families, on
average, the child from the richer family
receives an annual income that is higher
than the child from the poorer family by
approximately 30%-40% of the
difference in the incomes of their
parents.
Political Parties, Income
Inequality and Public Policy – 24
A child from a family that made $100,000 per
year would, on average, out earn a child from
a family that made $25,000 by approximately
$25,000 per year (the difference in their
parents incomes was $75,000 – i.e., $100,000
- $25,000 = $75,000; 33% of $75,000 =
$25,000). Thus, if later in life the child of the
poorer family was earning $25,000 per year
and the child of the richer family was earning
$50,000 per year, you could say that the
difference was entirely due to background.
Political Parties, Income
Inequality and Public Policy – 25
Put another way: children born into the
poorest 20% of households have
approximately a 42% chance of ending
up in the poorest 20% themselves, a
24% chance of ending up in the next
poorest 20% and only a 6% chance of
ending up in the richest 20%.
Political Parties, Income
Inequality and Public Policy – 26
Father’s and Son’s incomes in the U.S.
correlate at about .43 (correlation ranges
from 0 to 1.0 so this is a moderate
correlation), and is higher in the U.S.
(i.e., less mobility) than in Sweden,
Norway, Finland, France, Spain,
Germany, and Canada.
Political Parties, Income
Inequality and Public Policy – 27
The Bush Tax Cuts reveal a very pertinent fact
about economic policy: there is often a great
difference between programs that help the
non-wealthy acquire wealth versus policies
that protect the wealth of those who already
have it. What is good for one group is not
necessarily good, and often harmful, for the
other group. Approximately 75% of American
household lose under the Bush Tax Cuts.
Political Parties, Income
Inequality and Public Policy – 28
Consider how the Bush Tax Cuts affect mobility
from low to high-income groups. First, by
repealing the estate tax and reducing other
taxes on high-income individuals, the Bush
Tax Cuts give the wealthy more wealth to
leave their heirs. Obviously, this makes it
more difficult for most of you to try to amass
more wealth than the heirs of the currently
very wealthy due to the fact these heirs will be
given such a tremendous head start on you.
Political Parties, Income
Inequality and Public Policy – 29
Second, by reducing the revenue of the
federal government, the Bush Tax Cuts
will all but require reductions in programs
that help low and middle-income people
ascend the economic ladder (e.g., the
Pell Grant Program for poor college
students, health care for the poor, job
training, public transportation, etc.).
Political Parties, Income
Inequality and Public Policy – 30
The Bush Tax Cuts are one of the very least
effective, and most costly, methods of
stimulating the economy and, ultimately,
reducing unemployment. As economic
research indicates: lower-income households
spend a higher percentage of each additional
dollar they receive than higher-income
households.
Political Parties, Income
Inequality and Public Policy – 31
For example, a household with a $40,000 annual
income will spend a higher percentage of each
additional dollar it receives than a household
with a $200,000 annual income. This is
because lower-income households have
greater unmet needs than higher-income
households (e.g., replacing a worn out car).
Political Parties, Income
Inequality and Public Policy – 32
By showering more money on the richest
1% of households (i.e., households with
incomes above $370,000) than on the
entire poorest 70% of households
combined, the Bush Tax Cuts place the
most money in the hands of those least
likely to spend it. Contrast this with the
items on the next slide – favored by
Democrats.
Political Parties, Income
Inequality and Public Policy – 33
The following indicates how much additional
economic activity occurs per dollar spent:
extending unemployment compensation $1.60; payroll tax reduction - $1.09; and
extending the Bush Tax Cuts - $.35 (i.e. for
each dollar given to tax payers through the
Bush Tax Cuts, we only receive 35 cents of
additional economic activity – only a fourth as
much per dollar spent as on unemployment
compensation – i.e., $.35 is about ¼ of $1.60).
Political Parties, Income
Inequality and Public Policy – 34
Since all income groups will save some
percentage of the money they receive
(i.e., lower-income households will save
some money, just not as a great
percentage as higher-income
households), having the government
directly spend money is more stimulative
than tax cuts.
Political Parties, Income
Inequality and Public Policy – 35
If the government both taxes and spends a
large share of the economy won’t we
end up with more equal slices of a
smaller pie (or a pie that isn’t growing as
fast as it otherwise would)? While this is
an important point, the evidence in favor
of it is NOT compelling.
Political Parties, Income
Inequality and Public Policy–36A
Tax rates as a percentage of the economy
are much lower in the U.S. than in most
wealthy democracies:
U.S. – 32.2%, Canada – 38.3%,
Great Britain – 41.2%, Germany – 44.6%,
Italy – 47.8%, Sweden – 50.9%,
France – 52.9% and Denmark – 57.4%.
Source: OECD as reported in NY Times
11/16/14
Political Parties, Income
Inequality and Public Policy–36B
Federal Taxes as a percentage of our
economy are lower today than they have
been in over 60 years.
1951- 16.1 % (before Medicare enacted)
1971 – 17.3%
2001 – 19.5%
2011 – 15.4%
Political Parties, Income
Inequality and Public Policy–36C
Effective Tax Rates on Income of
$100,000 in 2012
Nation
Income Tax Social Security
U.S. – 26.0% 18.7%
7.3%
G. Brit.- 31.4% 24.1%
7.3%
Sweden- 36.3% 36.3%
0%
France – 42.0% 20.0%
22.0%
Germany-43.8% 28.3%
15.5%
Political Parties, Income
Inequality and Public Policy–36D
Government Mandated Paid Annual Leave
and Paid Days of Vacation
U.S.
- 0
Great Britain - 20
Sweden
- 25
German
- 30
France
- 31
Political Parties, Income
Inequality and Public Policy – 37
From 1990-2005 per capita (i.e., per person - to
adjust for differences in population size
between nations) growth rates were as
follows: U.S. - 85%, Netherlands – 86%,
Norway – 134%, France – 60%, Australia –
91%, Canada – 69%, Denmark – 80%, United
Kingdom – 111%. Since 1980, per capita real
G.D.P. (Gross Domestic Product) – which is
what matters most for living standards - has
risen at about the same rate in America and in
the E.U.(U.S. - 1.95%, E.U. - 1.83%).
Political Parties, Income
Inequality and Public Policy – 38
As economist Peter Lindert of the University of California
at Davis put it, “No matter how you torture the data,
there is no negative relationship between a
commitment to the welfare state and the growth rate in
how well off we are.” While taxes may reduce the
willingness of some to work as hard, many of the
purposes for which tax dollars are spent (e.g.,
education, infrastructure, etc.) increase the growth
rate. One of the reasons the Nordic countries
(Norway, Sweden, Denmark and Finland) spend about
TWICE the percentage of GDP (3%-4%) on research
and development as the U.S.
Political Parties, Income
Inequality and Public Policy – 39
In light of the Obama Health Care Plan, let me
mention the following: EVERY nation in the
world rations health care. For example, would
you pay an additional $200 per month for
health care in order to prolong the life of
terminally ill patients an average of 3 months?
If “yes,” how about $400 per month? Once
you say “no” (i.e., refuse to pay), you are
rationing health care.
Political Parties, Income
Inequality and Public Policy – 40
Let me offer the following question: Would
you prefer to have a government panel –
typically headed by physicians – make
the necessary rationing decisions or
would you rather have a for-profit
insurance company make them? That’s
the choice we actually have.
Political Parties, Income
Inequality and Public Policy – 41
Government policies do have important affects
on the rationing decisions that all health care
systems must make. For example, cigarette
taxes reduce cigarette smoking. Economists
have found that a 10% increase in the cost of
cigarettes reduces smoking by about 3%-4%.
Thus, cigarette taxes reduce the amount of
smoking which, in turn, reduces the onset of a
large number of adverse health consequences
(e.g., cancer, heart attack, stroke, etc.).
Political Parties, Income
Inequality and Public Policy – 42
Many of those who claim the Obama Health
Care Plan will lead to government rationing of
health care to the elderly are the same
individuals/groups who oppose government
regulations (e.g., soda taxes, meat taxes,
restaurant menu labeling requiring disclosure
of calories, fat, sodium, etc.) which would
greatly reduce adverse health consequences
(e.g., obesity) which, in turn, would leave more
money for the health care needs of senior
citizens.
Political Parties, Income
Inequality and Public Policy – 43
Broad-based government programs, such as
Medicare (a government health care program
for senior citizens), have two big cost saving
advantages over a completely free market
social insurance system: (1) compulsion – i.e.,
requiring everyone to buy health insurance
lowers the cost because the cost of the
“expensive” individuals (e.g., those likely to be
ill) is spread over a large group (e.g., the
healthy) and;
Political Parties, Income
Inequality and Public Policy – 44
(2) administrative cost (e.g., the typical
private health insurer spends about 10%
of its outlays on administrative costs,
weeding out sick people, etc. whereas
the government run Medicare program
spends between 2%-3% of its budget on
administrative costs).
Political Parties, Income
Inequality and Public Policy – 45
The preceding are two of the major
reasons why the #1 ranked (by the World
Health Organization) French health care
system spends only a little more than
half as much money per person as the
37th ranked U.S. health care system
(France - $4,690, U.S. - $8,895).
Political Parties, Income
Inequality and Public Policy – 46
Government run programs such as
Medicare aren’t the same as government
ownership of productive assets.
Medicare doesn’t own hospitals or
employ doctors, it contracts with privately
owned hospitals and private physicians.
Political Parties, Income
Inequality and Public Policy – 47
I should also mention that government
programs such as Medicare and
Medicaid (a government run health care
program for the poor) currently pay
substantially more of our nation’s health
care costs (approximately 47%) than
private insurance (approximately 35%).
Thus, we can’t “get the government out
of health care.”
Political Parties, Income
Inequality and Public Policy – 48
It should also be mentioned that the
democracies of Western Europe are, in
the main, NOT socialist nations.
Socialism means that the government
owns the modes of production and
distribution. For example, socialism in
the U.S. would mean that the
government would own the major fast
food outlets (e.g., McDonalds, Wendy’s
etc.).
Political Parties, Income
Inequality and Public Policy – 49
Considerations about the size of
government on personal freedom are
complicated. Equating the size of
government with personal freedom often
involves equating private property with
personal freedom. This is difficult.
Political Parties, Income
Inequality and Public Policy – 50
For example, would most Californians
have more freedom if the beaches were
sold to private individuals or if the State
of California operates them? Additionally,
if state taxes were reduced taxpayers
would have a greater freedom of choice
in spending their money.
Political Parties, Income
Inequality and Public Policy – 51
However, if these state tax cuts resulted in
higher fees for U.C. and CSU students fewer
students would attend college. Not attending
college would reduce both the future incomes
and occupational choices of the individuals
who did not attend college due to the budget
reductions resulting from the state tax cuts. In
short, it would reduce their future freedom.
So, would such a state tax cut result in a “net”
gain or loss in freedom?
Political Parties, Income
Inequality and Public Policy – 52
A relatively small loss in freedom for a large
group of people (requiring each person to
purchase health insurance) will provide a
much larger amount of freedom (to make all
the decisions living people can make) for a
smaller group of people (the unhealthy). If so,
has the amount of freedom either increased or
decreased? It’s not so easy to answer! You
would have to balance the loss of many small
amounts of freedom against a fewer large
gains in freedom.
Political Parties, Income
Inequality and Public Policy – 53
People in the democracies of Western Europe
are typically as “free” as Americans. For
example, free speech in Great Britain is as
great as it is in the United States. Additionally,
some Western European nations actually have
higher scores on some measures of
democracy than the United States. Typically,
this occurs because of lower voter turnout and
fewer major political parties in the United
States.
Political Parties, Income
Inequality and Public Policy – 54
The “big picture” is that, if we wanted to,
our nation could reduce economic
inequality significantly and still have an
equally vibrant, growing economy with
the same level of freedom we currently
enjoy. This is really a question of values
(i.e., Do we want to?) rather than
possibilities (i.e., Could we?)
Political Parties, Income
Inequality and Public Policy–55A
Increased redistribution of income and wealth
might well improve the functioning of
democracy in the United States. What some
refer to as “the Debilitating Cycle” is a very
important problem: greater income inequality
leads to a greater reliance of politicians on
campaign contributions from the wealthy,
which, can easily cause these same politicians
to adopt policies that even more favor the
wealthy, which starts the same cycle again.
Political Parties, Income
Inequality and Public Policy–55B
Relative to the average American, the very
wealthy (net worth of $40 million or more) are:
(1) much more concerned about budget
deficits; (2) much more favorable to cutting
social welfare programs, especially Social
Security and health care; (3) are considerably
less supportive of an above-poverty-level
minimum wage, or having the federal
government “see to” or provide jobs for the
unemployed;
Political Parties, Income
Inequality and Public Policy–55C
(4) much less supportive of providing
broad educational opportunities; (5)
much less willing to redistributive income
to those poorer than themselves; (6) less
willing to raise taxes on high income
groups (e.g., less supportive of having
an estate tax); and (7) are less willing to
regulate either the stock market or
businesses.
Political Parties, Income
Inequality and Public Policy – 56
Proposals of the Political Parties
President George W. Bush proposed a series of
policies to deal with our nation’s economic
future that were collectively referred to as “The
Ownership Society.” The idea is that each
individual citizen would “own” items that had
previously been provided by the government.
For example, if each individual citizen can
choose how to invest their money in a
personal Social Security Account you could
say that person “owned” their retirement.
Political Parties, Income
Inequality and Public Policy – 57
Let’s see how “The Ownership Society” would
have changed American health care policy
and the degree of health care security
American’s have. Former President George
W. Bush did not favor requiring all Americans
to purchase health insurance. He did favor
(and at his urging Congress did pass)
legislation setting up Health Savings Accounts
in 2003.
Political Parties, Income
Inequality and Public Policy – 58
In 2008, an individual could contribute up to
$2,400 per year to such an account ($5,800
for a family). The gains from this investment
are not taxed and the money could be
withdrawn to pay the deductable under a
health insurance policy. This is a tax free
method of investing for those fortunate enough
to have the money to participate. Not
surprisingly, those most likely to contribute to
Health Savings Accounts are much richer than
average.
Political Parties, Income
Inequality and Public Policy – 59
Look at the relationships between
wealth/education and health: (1) more welleducated and higher-income individuals are
more likely to value delayed gratification – i.e.,
foregoing something today for a greater future
gain - in this case eating healthier food,
maintaining a healthier weight, not smoking,
etc. than less well-educated and lower-income
individuals; thus,
Political Parties, Income
Inequality and Public Policy – 60
(2) more well-educated and higher-income
individuals are less likely to need medical
attention than less well-educated and lowerincome individuals; and (3) more welleducated and higher-income individuals are
more likely to contribute to Health Savings
Accounts than less well-educated and lowerincome individuals.
Political Parties, Income
Inequality and Public Policy – 61
By not requiring people to buy insurance and by
allowing people to put money into Health
Savings Accounts, higher-income people, who
are typically more healthy, are able to remove
money that would’ve gone into an insurance
pool from which the unhealthy could benefit.
Thus, the practical effect of Health Savings
Accounts is to reduce the ability to spread
medical costs over a larger, healthier,
population.
Political Parties, Income
Inequality and Public Policy – 62
Withdrawing money that a healthier population
would have put into an insurance pool and,
instead, placing it in the hands of higherincome households means that the costs of
health insurance to the less healthy
population, disproportionately drawn from
middle and low-income households, will
increase. All of this works to the advantage of
higher- income individuals.
Political Parties, Income
Inequality and Public Policy – 63
The Ownership Society proposal for education
(another tax-free savings plan) has a similar
effect to the Health Savings Accounts. Here’s
why: (1) higher-income individuals are much
more likely to have the necessary money to
put into such an account; (2) citizens are more
likely to vote in favor of increased taxes for
education when they have children in the
public education system; and
Political Parties, Income
Inequality and Public Policy – 64
(3) the money from an Educational Savings
Account will either allow more students to
afford a private college and/or reduce their
need for more funding for state run colleges.
For example, the money from the account
means they are less likely to need financial aid
than other students. Points 1-3 mean that the
educational “gap” between students from
lower and higher-income households will
increase.
Political Parties, Income
Inequality and Public Policy – 65
Republican Congressman Paul Ryan calls his
plan, “The Roadmap for America’s Future.”
His plan would: (1) cut federal taxes of the
richest 1% of households by 50% (i.e., in half
– this is in addition to the tax cuts this group
would receive by making the Bush Tax Cuts
permanent);
Political Parties, Income
Inequality and Public Policy – 66
(2) replace some of the lost revenue from
the tax cuts for the richest 1% of
households with a much more regressive
consumption tax on most goods and
services (i.e., paid much more by middle
and low-income households – families
with incomes between $50,000 and
$75,000 would face a tax increase of
around $900 per year);
Political Parties, Income
Inequality and Public Policy – 67
(3) freeze discretionary domestic spending
(keep in mind that, that after adjusting for
inflation and population growth, this
would mean a 25% reduction over 10
years in such items as public
transportation, etc.); (4) privatize Social
Security (i.e., individual accounts) and;
Political Parties, Income
Inequality and Public Policy – 68
(5) replace Medicare for senior citizens with a
voucher (i.e., an amount of money to buy
health insurance). Since the Ryan plan
doesn’t require all citizens to buy health
insurance and includes Health Savings
Accounts, health care costs will increase (see
previous discussion). These increases would
occur at the same time that Ryan wants to
reduce Medicare spending. Thus, senior
citizens would have much poorer health care
under the Ryan plan than currently.
Political Parties, Income
Inequality and Public Policy – 69
The Ryan plan proposes large cuts in
Social Security benefits — roughly 16
percent for the average new retiree in
2050 and 28 percent in 2080 from price
indexing alone — and initially diverts
most of these savings to help fund
private accounts rather than to restore
Social Security solvency.”
Political Parties, Income
Inequality and Public Policy – 70
This is very similar to former President
George W. Bush’s proposal for Social
Security. Unlike Bush’s Social Security
Proposal, the Ryan Plan protects those
whose investments result in less income
than under the traditional Social Security
program. Ryan’s guarantee would
encourage seniors to make more risky
investments.
Political Parties, Income
Inequality and Public Policy – 71
Why not gamble on an investment with
large possible gain (but also large
possible loss) when the federal
government insures you against loss?
Political Parties, Income
Inequality and Public Policy – 72
While the Ryan Plan does include a protection
for senior citizen’s whose investments yielded
a return lower than what they would have
received under traditional Social Security, it is
extremely unlikely that this guarantee would
be paid in full. Here’s why: Ryan would use
government revenues to replace the lost
income to senior citizens whose investments
performed poorly.
Political Parties, Income
Inequality and Public Policy–73A
The cost of this guarantee would be very
high. Given the reductions in other
programs that would be required to fully
fund this guarantee (e.g., in defense,
education, environmental protection,
etc.) it would be extremely unlikely to be
fully realized. The “big picture” is that the
current Republican plans, including Mitt
Romney’s, are very similar to former
President Bush’s plans.
Political Parties, Income
Inequality and Public Policy–73B
Regardless of whether one agrees or disagrees
with the philosophy of the Republican party,
the following conclusion is inescapable: the
Republican proposals would make what is
already, by far, the weakest social safety net
of any wealthy democracy in the world much
weaker still while simultaneously increasing
the degree of after-tax income inequality in
what is already the most economically unequal
wealthy democracy in the world.
Political Parties, Income
Inequality and Public Policy – 74
Which of the following seems more
appropriate: (1) As personal economic
risk increases, you need the government
less? (2) As personal economic risk
increases, you need the government
more?
Political Parties, Income
Inequality and Public Policy – 75
The two parties differ widely. The Republican
Party approach (i.e., “The Ownership Society”
and “The Roadmap for America’s Future”) is to
load increased personal economic risk back
on the individual (i.e., less governmental
guarantees – privatization of Social Security
rather than guaranteed benefit levels, giving
senior citizens a voucher rather guaranteed
Medicare – same with health care for the poor;
Political Parties, Income
Inequality and Public Policy – 76
reducing taxes on high income earners that can
be applied to public services for middle and
low-income earners) while the Democratic
Party approach is more in favor of using the
government to offset increased personal
financial risk (e.g., the Obama Health Care
Plan – making health care more affordable for
middle and low-income earners, increasing the
Pell Grant program for low-income college
students,
Political Parties, Income
Inequality and Public Policy – 77
reducing the Bush Tax Cuts, increasing
government deficit spending and
increasing regulation of financial
markets).
Political Parties, Income
Inequality and Public Policy – 78
Tax rates are NOT highly progressive in the
United States. The rich pay a higher
percentage of their income in taxes than the
poor, but not greatly so. All federal taxes
together (i.e., income taxes, Social Security
taxes, etc.) take approximately 9.4% of the
income of households making $16,000 per
year, approximately 20.5% of the income of
households making $52,000,
Political Parties, Income
Inequality and Public Policy – 79
approximately 27.2% of the income of
households making $200,000 per year
and approximately 34% of households
making $18,000,000 per year.
Political Parties, Income
Inequality and Public Policy – 80
It is very important to mention that federal taxes
have been made much LESS progressive over
time. To demonstrate the impact of reduced
federal tax progressivity consider the following:
“In 2000, the richest 1 household in 1,000 (i.e.,
.1 of 1%) had about 7.3% of total national
after-tax income. If the effect of taxes on their
income had remained what it was in 1970,
they would have had about 4.5% of after-tax
national income.
Political Parties, Income
Inequality and Public Policy – 81
This would be a reduction of approximately
38% in their after-tax income (7.3% 4.5% = 2.8 and 2.8 is approximately 38%
of 7.3). This decrease in federal tax
progressivity was prior to the Bush Tax
Cuts (which, as previously discussed,
overwhelmingly benefit households with
very high incomes).
Tax Rates Over Time
Political Parties, Income
Inequality and Public Policy – 82
State and local taxes are even LESS progressive
than federal taxes. Thus, if you add state and
local taxes to federal taxes (i.e., to obtain “total
taxes”) the tax burden is less favorable to the
poor (i.e., less progressive) than for federal
taxes alone. State and Local Taxes are a
greater percentage of personal income for the
poorest 20% of a state’s households than for
the wealthiest 1% of a state’s households in
virtually every state (all but one).
Political Parties, Income
Inequality and Public Policy – 83
In California state and local taxes take
approximately 11.3% of the income of
the poorest 20% of households while
taking only 7.2% of the income of the
richest 1% of households.
Political Parties, Income
Inequality and Public Policy – 84
For example, in California, the wealthiest 10% of
the taxpayers pay approximately 75% of the
state income tax. While true, this argument is
misleading for two reasons: (1) the most
important consideration is taxes as a
percentage of income and not the percentage
of a tax borne by a particular income group –
thus, if California’s state income tax was only
to raise $1 and Steven Spielberg paid that $1
he would have borne 100% of the state
income tax burden –
Political Parties, Income
Inequality and Public Policy – 85
however, $1 would be virtually 0% of his income
– thus it’s the percentage of income paid in a
tax and not the percentage of a tax that a
particular income group pays that is the
important consideration; (2) this calculation
excludes all taxes except the income tax (e.g.,
state sales taxes, property taxes, etc.) – when
we include all state and local taxes and fees,
state and local taxes are a higher percentage
of income for the very poor than the very rich.
Political Parties, Income
Inequality and Public Policy – 86
As a share of personal income, California
typically ranks about 18th (out of 50
states) in state and local tax burden with
state and local revenues equal to
approximately 17% of personal income.
Political Parties, Income
Inequality and Public Policy – 87
One often hears candidates for state office
talking about “runaway” state spending.
Adjusting for population growth and inflation,
to maintain the same level of service in 2009
that the state of California provided in 1999
state spending would have had to increase by
53%. Over the 1999-2009 period spending by
the State of California only increased by 29%
(i.e., a 24% REDUCTION in real per capita
spending).
Political Parties, Income
Inequality and Public Policy – 88
Another way of looking at the question of
state spending is to take account of both
need (i.e., what type of population we
have) and state wealth (i.e., our “ability
to pay”). By such a measure, California
ranked 37th out of the 50 states.
Political Parties, Income
Inequality and Public Policy – 89
Some state tax increase would IMPROVE the
functioning of California’s economy:
(1) tax internet purchases – not taxing
them discriminates against bricks and
mortar stores;
(2) change business property taxes annually
(i.e., not only when the property is sold) current practice favors those who hold a
property longer – harms new
businesses;
Political Parties, Income
Inequality and Public Policy – 90
(3) tax carbon, pollution and oil - from an
economic standpoint, the cost of
pollution should be taxed to provide the
appropriate disincentives to reduce
pollution. Currently, California is the only
oil producing state that does not have a
severance tax on oil.
Political Parties, Income
Inequality and Public Policy – 91
One factor that would greatly help California’s
business climate is a more highly educated
workforce. To meet employment needs, the
percentage of California’s workforce with at
least a bachelor’s degree needs to roughly
double over the next 15 years (from
approximately 21% to approximately 41%).
Tax cuts that result in reduced funding for
higher education will not help us meet this
critical need.
Political Parties, Income
Inequality and Public Policy–92A
A final point, California does NOT have a
“big bureaucracy.” State and local
employees constitute a SMALLER share
of California’s population than in
approximately 45 of the 50 states.
Political Parties, Income
Inequality and Public Policy–92B
HOMELESSNESS:
In 2005, Utah calculated the annual cost of E.R.
visits and jail stays for an average homeless
person was $16,670, while the cost of
providing an apartment and social worker
would be $11,000. Each participant works with
a caseworker to become self-sufficient, but if
they fail, they still get to keep their apartment.”
Due to drug and alcohol use shelters are much
less beneficial than individual apartments.
Political Parties, Income
Inequality and Public Policy–92C
Will poor people make better decisions if
they have greater economic security
(e.g., guaranteed housing, food, medical
care, etc.) or less economic security?
The evidence we have is lopsidedly on
the side that says poor people will make
better decisions (e.g., decisions
concerning employment, health, etc. that
involve current sacrifice but have greater
Political Parties, Income
Inequality and Public Policy–92D
long-term benefits) under conditions of
greater rather than lesser security. In
reviewing a recent study by an
economist and psychologist, Tina
Rosenberg notes, “Worrying about
money when it is tight captures our
brains. It reduces our cognitive capacity
— especially our abstract intelligence,
Political Parties, Income
Inequality and Public Policy–92E
which we use for problem-solving. It also
reduces our executive control, which
governs planning, impulses and
willpower. The bad decisions of the poor,
say the authors, are not a product of bad
character or low native intelligence. They
are a product of poverty itself. Your
natural capability doesn’t decrease when
you experience scarcity.
Political Parties, Income
Inequality and Public Policy–92F
But less of that capacity is available for
use. If you put a middle-class person into
a situation of scarcity, she will behave
like a poor person.”
Political Parties, Income
Inequality and Public Policy – 93
Why Not Policies that Would More Help
Middle and Low-Income Households?
While both our strong commitment to absolutist
individualism and the framework of our political
system (e.g., the separation of powers), make
it difficult for the government to pass laws,
there are important changes in the balance of
domestic political power that have taken place
over the past 40 years that make it even more
difficult for the federal government to act on
Political Parties, Income
Inequality and Public Policy – 94
behalf of the interests of middle and lowincome citizens.
In a “nutshell,” here’s what happened: (1) after
suffering a large number of political defeats
through the 1960s under both political parties,
during the mid-1970s business groups (the
U.S. Chamber of Commerce, the National of
Manufacturers, the National Federation of
Independent Business, etc.)
Political Parties, Income
Inequality and Public Policy – 95
decided to invest tremendous amounts of money
both in lobbying members of Congress and
contributing to political campaigns; (2) the
relative strength of the counter-weight to
business, labor unions, declined precipitously
(in 1954 – 32% of the workforce was unionized
- today only 13%), and with it a tremendous
loss in both political information supplied to
middle and low- income households and
political participation by these citizens
Political Parties, Income
Inequality and Public Policy – 96
(i.e., unions contacting their membership with
information on political issues, the
membership then contacting elected officials);
(3) the interest groups that have formed on the
political left have dealt more with the
concerns/interests of well-educated higher
income voters rather than the working class
(i.e., environmentalism, women’s rights and
gay rights do not deal with the distribution of
the tax burden,
Political Parties, Income
Inequality and Public Policy – 97
subsidies for low-wage workers or extending
governmental provided health care); (4) due to
the increased share of income going to the
rich and greatly increased campaign costs –
Democrats have had to turn more to business
and upper-income groups for campaign
contributions; and (5) due to factors 1-4, the
political position of business has become
much more advantaged relative to labor.
Political Parties, Income
Inequality and Public Policy – 98
Think of the political consequences of policy
philosophies such as The Bush Tax Cuts, The
Ownership Society and The Roadmap for
America’s Future. All of these policies
accomplish three goals of many (but not all)
conservative leaders: (1) they shift the
distribution of the tax burden away from taxing
investments (i.e., money made with money –
income sources primarily of very high-income
households)
Political Parties, Income
Inequality and Public Policy – 99
toward higher taxes on labor (i.e., taxes more
paid by income from wages and salaries – the
principle sources of income for the poorest
90%, or more, of households - by relying on
consumption taxes); (2) reduce the amount of
money redistributed to middle and low-income
groups through public programs (e.g., mass
transit, job retraining, guarantees for Social
Security, Medicare, etc.); and
Political Parties, Income
Inequality and Public Policy –100
(3) increase the size of the federal deficit to the
point that future Democratic Administrations
will have difficulty in undertaking programs
primarily benefitting middle and low-income
households. For example, notice how difficult it
is for Obama to get the necessary funding to
implement his health care plan due to the size
of the federal deficit (greatly swelled by the
Bush Tax Cuts).
Political Parties, Income
Inequality and Public Policy –101
The political consequences of the above
mentioned policies significantly reduce the
incentive for low and middle-income people to
participate in the political process (e.g., vote)
because they will perceive that government is
not that helpful to them (i.e., their taxes will
increase and the value of their government
benefits will decrease). So, why invest time
and effort in politics?
Political Parties, Income
Inequality and Public Policy –102
This protects high-income households
from future adverse political events.
Thus, if increasing income inequality
might cause low and middle-income
people to desire income redistribution,
make it difficult for the government to
accomplish this and reduce the
incentives for low and middle-income
people to get involved in the political
process.
Political Parties, Income
Inequality and Public Policy –103
What could we do? The basic answer is to undo
the changes of the past 40 years. While any
proposed “reforms” would spark opposition
from those who do well under the current
system, I’ll mention two possible changes that
would greatly alter the political landscape in a
direction much more favorable to middle and
low-income groups. First, make it easier for
workers to unionize.
Political Parties, Income
Inequality and Public Policy –104
Canada offers a compelling lesson. According
to the survey evidence, American workers are
as favorable to unionization as Canadian
workers. However, over the past 40 years, the
gap between the percentage of the Canadian
workforce that is unionized and the percentage
of the U.S. workforce that is unionized has
steadily increased (Canada: 1960 - 32%, 2000
– 32%| U.S.: 1960 - 31%, 2000 – 13%).
Political Parties, Income
Inequality and Public Policy –105
Without a lengthy discussion, the
differences over time are mostly
attributable to differences in public
policies governing the unionization
process. Not surprisingly, this was one
of the earliest results of increased
business political strength: make it more
difficult for workers to unionize.
Political Parties, Income
Inequality and Public Policy –106
The second change would be to enact Yale Law
Professor Bruce Ackerman’s “Patriot Dollars”
proposal for campaign financing: have the
federal government give each voter an ATM
valued at $50 for each federal election cycle
(i.e., every two years). This money could only
be used for campaign contributions (i.e., all
unused money would be returned to the
federal government – “yes” it could be done –
i.e., the technology to ensure this does exist).
Political Parties, Income
Inequality and Public Policy –107
A voter could give their contribution to one, or a
series, of candidates. By not limiting how
much individuals, businesses or unions
contribute, this policy would not be invalidated
by the Supreme Court. The Supreme Court
has ruled that restricting how much an
individual, or group, can contribute violates
their free speech (i.e., money equals speech).
Since Professor Ackerman’s proposal does
not limit speech, it is constitutional.
Political Parties, Income
Inequality and Public Policy –108
By greatly increasing the amount of
campaign money available, Professor
Ackerman’s proposed policy would
reduce the tremendous monetary
advantage of both business and the
wealthy.
Lessons from Canada - 1
Currently, the federal deficit (i.e., the
difference between what the federal
government receives in taxes and what it
spends) is approximately 10% of GDP.
Rather than the painful cuts to the poor
(food programs, medical care, job
training, etc.) and education, we could
eliminate the ENTIRE deficit by
Lessons from Canada - 2
having U.S. taxes as a percentage of GDP equal
Canadian taxes as a percentage of GDP (U.S.
taxes would increase from 27% of GDP to
37%). Next to the United States, Canada has
one the VERY WEAKEST social safety nets of
the wealthy democracies. Thus, Canada is
NOT a “high tax, big welfare state” nation.
However, Canadian taxes represent 10%
more of GDP than in the United States. We
are a very LOW tax nation.
Rationale for Budget Austerity
In voting in favor the Ryan Budget,
Representative Tim Walberg (R-Michigan)
said, “They understand in my district: We’re
broke. If we don’t deal with this, we lose the
social safety net.” One could ask, “Why can’t
the wealthiest democracy in the world
guarantee to it’s citizens the same social
welfare protections (universal health care,
greater income support, etc.) that all other
wealthy democracies guarantee their
citizens”?
U.S. & Canada – Taxes and
Spending as a Percent of GDP
U.S.
Canada
Taxes
27%
37%
Health Care
16%
10%
W. Health Org. Rank 37th
30th
Defense
4.7%
1.1%
It’s not that we “can’t afford” to provide a better
social safety net but rather we tax much less
and spend much more on health care and
defense. Defense spending in Great Britain
and France is approx. 2.5% of GDP.
Areas to Reduce Spending
If you’re thinking of areas to reduce federal
spending consider defense. U.S. military
spending is about 4.7% of GDP. U.S. military
spending is approximately 46.5% of the
military expenditures of the ENTIRE WORLD.
To put this in perspective the second highest
spending nation, China, spends about 6.6% of
the military expenditures of the entire world.
The next largest spenders are France (4.2%),
Great Britain (3.8%) and Russia (3.5%).
The Social Safety Net - 1
Even the comparatively weak U.S. safety
net still helps. In the current recession,
the U.S. Census Bureau estimates that
the combination of unemployment
insurance, food stamps and tax credits
for the working poor lifted the incomes of
between 3 to 5 MILLION U.S.
households above the poverty line. Now
think of the human cost of reducing the
funding for these programs.
The Social Safety Net - 2
The most important fundamental change is
to realize that a more activist
government will be necessary. If
present economic trends continue (e.g.,
small increases in hourly wages for most
middle and low-income workers, reduced
employer provided health care and less
generous and secure private sector
retirement benefits),
The Social Safety Net - 3
the obvious “solution” is to have the federal
government provide the benefits that the
private sector use to provide. This means
having the federal government supplement
wages (i.e., to provide cash payments to those
who work but earn little), provide a health care
benefits package to all citizens similar to
Canada and Western Europe, provide child
care/day care to working mothers and
increase the amount of money Social Security
provides to retirees.
The Social Safety Net - 4
Concerning Social Security remember:
1.It Is LESS GENEROUS than similar
programs in other wealthy democracies;
2. For TWO-THIRDS of the retired
population it provides OVER HALF of
their income and for ONE-THIRD of the
retired population over 90% of their
income;
The Social Safety Net - 5
3. Is an “INSURANCE” against poverty for
the elderly and income loss due to
disability – to do this it MUST have
GUARANTEED benefits;
4. As “INSURANCE” against poverty and
disability it is NOT comparable to a
risk-laden 401k plan;
The Social Safety Net - 6
5. Future shortfalls in necessary
revenues can EASILY be
accomplished by having ALL income
subject to the Social Security tax;
6. Future support for Social Security
would be GREATLY weakened if ALL
elderly did NOT receive benefits.
The Social Safety Net - 7
One of the primary difficulties the United
States faces in confronting growing
inequality and poverty “head on” is the
following core set of beliefs about
poverty: (1) poverty is the fault of the
victim; (2) economic growth will greatly
reduce poverty; (3) government
intervention will increase poverty. Each
of these beliefs, at best, is “suspect. ”
The Social Safety Net - 8
Greater economic growth does reduce the
poverty rate in the U.S. However, what this
means is that the U.S. poverty rate (typically
around 17% of households - Great Britain and
Canada around 12%, and the Scandinavian
countries – Norway, Sweden and Denmark –
around 6.5%) fluctuates around a much higher
average than in other wealthy democracies
and even at it’s lowest level, is much higher
than most all other wealthy democracies.
The Social Safety Net - 9
The “big picture”: the main reason that the U.S.
has a much higher poverty rate than the vast
bulk of wealthy democracies is that we don’t
spend nearly as much of our economy in the
following programs as do other wealthy
democracies on income transfers (i.e., direct
cash payments to either the unemployed or
the working poor and the elderly) and do not
providing comprehensive health insurance and
childcare to all.
The Social Safety Net - 10
Wage Subsidy: Assuming a minimum wage of
$8 per hour, here’s how such a plan might
operate: a worker earning the minimum wage
of $8 per hour would receive a $4 per hour
subsidy from the federal government (i.e., their
“total wage” would be $12 per hour - $8 per
hour from their employer plus $4 per hour from
the federal government = $12 per hour) with
the subsidy decreasing by 10% for each
additional dollar per hour they earned.
The Social Safety Net - 11
This plan does NOT increase unemployment
because employers are NOT required to pay
their employees more. Far from discouraging
work and rewording laziness, the wage
subsidy plan encourages work by making work
pay more (i.e., the normal wage plus the value
of the wage subsidy). The more work “pays”,
the more leisure “costs” (i.e., each hour you
don’t work costs you more when income per
hour is higher than when it is lower). Since
you have to work, this isn’t “welfare.”
The Social Safety Net - 12
Furthermore, by making work pay more, and
increasing the cost of not working in a
legitimate occupation (e.g., selling drugs), the
wage subsidy plan will reduce government
expenditures by reducing the occurrence of
two circumstances which increase government
costs: (1) crime (by offering more money for
being employed in non-criminal employment)
and; (2) teen pregnancy (by increasing the
cost of not working – having children typically
reduces the hours a mother can or will work).
Reaction to the Wage Subsidy
Plan
When a senior economic advisor to former
President George W. Bush was asked
about the wage plan he replied, “that’s
the type of thing we’d do if we were
serious.”
Value of Education
It is very important to mention the tremendous
impact education has on earnings. In 1975
those with a bachelor’s degree out earned
those with a high school diploma by
approximately 60%. By 2008 this differential
rose to approximately 100%. Unfortunately,
the United States ranks 12th in the percentage
of 25 to 34 year olds with at least an
associate’s degree.
The Social Safety Net - 11
In addition to the wage subsidy, other
programs that would greatly benefit low
and middle-income earners are:
universal childcare, fully funding the
Obama Health Care plan and the “Patriot
Dollars” campaign finance plan.
The Social Safety Net - 12
In all high-income countries, the parents’
socioeconomic status shapes a child’s
educational and earnings prospects, but
much less so in Sweden than elsewhere
and much more so in the United States.
In Sweden, even a child growing up in
relative poverty has almost the same
education and earnings prospects as a
child growing up at the top on the income
curve.
The Social Safety Net - 13
Sweden’s distinction lies not in its support
for public education, which is roughly
matched by other countries, but in its
public support for families and their
children from the earliest age, even
before formal schooling. All of Sweden’s
families have access to affordable highquality day care, which is publicly
provided.
The Social Safety Net - 14
This enables mothers to work without leaving
their children behind in an unsafe
environment. Female heads of household, a
group marked by a high rate of poverty in the
United States, are not poor in Sweden.
Remarkable, their poverty in Sweden, is only 4
percent, compared with the United States,
where the Census Bureau recorded a 30
percent poverty rate in 2009. Similarly, all of
Sweden’s children are afforded high-quality
preschooling.
The Social Safety Net - 15
The annual costs of these programs are:
1. wage subsidy ($150 billion)
2. universal childcare ($150 billion)
3. Obama Health Care Plan ($96 billion)
4. Patriot Dollars ($4 billion)_______
Total Annual Cost: $400 billion
Note: wage subsidy costs over time are
likely to be much lower than listed above
The Social Safety Net - 16
Paying for the these programs:
1. Allowing the Bush Tax Cuts to expire
will bring in approximately $363 billion
per year.
2. Ackerman and Alstott’s Wealth Tax - a 2%
annual wealth tax on households owning
more than $7.2 million in assets (the
richest ½ of 1% of households) would bring
in at least $70 billion dollars per year –
France, Norway and Switzerland have this
The Social Safety Net - 17
If repealing the Bush Tax Cuts and instituting
Ackerman and Alstott’s wealth tax seems “too
hard” on the wealthy, consider the following:
(1) the wealthy did very well, as did the
economy as a whole, under the tax rates that
would be in effect if the Bush Tax Cuts were
allowed to expire (i.e., economic growth was
greater under the higher tax rates of the
Clinton Administration than during the Bush
Administration);
The Social Safety Net - 18
(2) over the 1980-2008 period 98% of the
income gains went to the richest 10% of
American households (i.e., exactly those
that gained, by far, the most under the
Bush Tax Cuts); (3) the share of income
going to the richest 1% of American
income earners more than doubled
between 1970 and 2010 (from about 7%
to over 18% of personal income);
The Social Safety Net - 19
(4) reducing the concentration of income and
wealth at the top of the income distribution
would likely improve the performance of our
democracy by reducing the previously
discussed “debilitating cycle” (i.e., where the
increasingly concentration of income and
wealth among the very rich increases the
reliance of politicians on campaign
contributions from the very rich which, in turn,
leads politicians to enact policies which further
advantage the very rich);
The Social Safety Net - 20
(5) many of the very rich inherited their wealth
which rewards “luck” (you can’t pick your
parents/grandparents) not “merit”; and
The Social Safety Net - 21
(6) much of the income of very wealthy citizens
was made possible by taxpayers. For
example, while Henry Ford made a fortune
from developing the Ford automobile, he
wouldn’t have been successful unless
taxpayers and/or government provided
roads/highways, street lights, a public
education system to provide an educated
workforce to design, build and sell Ford cars,
and a highway patrol to keep the highways
safe.
The Social Safety Net - 22
Similarly, would Bill Gates and Steve Jobs have
been able to amass vast fortunes without the
research and development provided by the
National Science Foundation (an agency of
the federal government which provided many
of the protocols used for the internet) and the
public school system to train the designers
and builders of computers?
The Social Safety Net - 23
In all of these cases, it is misleading to say
that these individuals achieved their
success “alone”, or without government
help. Since taxpayers provided much of
the requirements for their success,
doesn’t it seem reasonable to suggest
that taxpayers were investors in these
projects and, as such, should reap the
rewards of their investment (through tax
payments)?
The Social Safety Net - 24
Even if all of the preceding policy and tax
changes were adopted, by comparison
to the other wealthy democracies of the
world the U.S. Social Safety net would
still be “weak” and taxes would still be
“very low.” It’s not “big government.”
The Social Safety Net - 25
We could more than save the annual $400
billion cost of these programs by
switching to a Canadian or European
style health care system.
The Social Safety Net – 26
If we adopted a European Health Care system
taxes would increase, but this would be more
than offset by the savings. For example, if
your taxes increase by $100 per month, but
your take-home pay increases by $200 per
month (due to either less money deducted by
your employer for health insurance) or your
medical expenses decrease by $200 per
month (by reducing the amount you have to
pay out of your own pocket for health
expenses), your standard of living would
increase by $100 per month.
Size of Government - 1
There are good reasons to think that the
government budget is too small in a
democracy. First, consider the power of
advertising. Isn’t the purpose of the
tremendous amount of advertising
private companies buy to get you to
spend money on their product rather on
an alternative use of the same money
(e.g., higher taxes to provide government
benefits)?
Size of Government - 2
Second, there is ample evidence that the
public does not have a good sense of not
only the benefits other citizens derive
from government programs, but of the
value they themselves derive from
government programs. The percentage
of people who (a) benefit from various
government programs, and
Size of Government - 3
(b) claim in response to a government
survey that they 'have not used a
government social program’ are as
follows: Home Mortgage Interest
Deduction (a huge benefit for home
owners) – 60%, Student Loans – 53.3%,
Child and Dependent Tax Credit –
51.7%, Earned Income Tax Credit –
47.1%, Pell Grants – 43.1%, Medicare –
39.8% and Food Stamps – 25.4%.
Size of Government - 4
Third, many of those who most benefit
from government programs vote the
least frequently. As discussed in both
class and the readings, lower income
citizens disproportionately benefit from
government social welfare programs.
Additionally, lower income citizens vote
less frequently than middle and upper
income citizens.
Size of Government - 5
Fourth, many upper income individuals might
prefer a greater government effort to help the
poor if they thought they might be poor in the
future. It doesn’t take much “courage” to favor
low taxes and oppose government spending to
help the poor when the person in question,
either by their current economic position
(upper income) or a realistic assessment of
their future economic position (e.g., being born
into a wealthy family, being close to
completing medical school, etc.)
Size of Government - 6
strongly suggests that they aren’t likely to
become poor. Would this same
individual be as likely to oppose
government programs for the poor if they
did NOT know (or have a pretty good
idea) of their future economic position?
Size of Government - 7
So, wouldn’t the obvious political incentive
be for politicians to provide lower
government benefits to the poor than
would be provided if the poor voted in
proportion to their strength in the
population?
Size of Government - 8
A person’s political philosophy is likely to
their willingness to spend money to
reduce income inequality. If you are
political liberal, you probably viewed the
programs I mentioned previously (the
wage subsidy, universal child care, the
Obama Health Care Plan and the Patriot
Dollars campaign finance reform)
favorably.
Size of Government - 9
However, if you are liberal you have to
face the question of how far you would
go (i.e., how much of your money would
you spend) to reduce income inequality?
Size of Government - 10
If you are politically conservative, a reasonable
question to ask is: What are you trying to
“conserve”? On the one hand you could
answer that you were trying to conserve
freedom and since taxes reduce a person’s
freedom to spend their money as they please,
then the government should be very small and
taxes very low and, hence, you would probably
not support the programs I mentioned
previously.
Size of Government - 11
That’s certainly a philosophically
defensible position. It could be useful,
however, to consider the following two
questions: (1) Is freedom the only value
that matters? (i.e., inequality, poverty,
the performance of democracy – think
back to the discussion of the “debilitating
cycle” - don’t matter much);
Size of Government - 12
(2) Does a small government actually
deliver the most freedom? For example,
would increase if: (1) the State of
California sold off public beaches to
private citizens and; (2) if taxes were
reduced but fewer students could go to
college and hence suffer a reduction in
career choices later in life?
Size of Government - 13
A second answer to the question of what you are
trying to conserve might be as follows: an
America where the benefits of economic
growth and technological change are widely
shared, such as occurred between the end of
World War II (1945) and the early 1970s (i.e.,
where economic growth was high and the
share of income going to very high income
groups decreased substantially). If this is
what you are trying to conserve, then the
programs previously mentioned could be quite
beneficial to your goal.
Thiessen’s Comments - 1
Mitt Romney, the 2012 Republican
Presidential nominee, said the following:
“We have a very ample safety net, and
we can talk about whether it needs to be
strengthened or whether there are holes
in it. But we have food stamps, we have
Medicaid, we have housing vouchers, we
have programs to help the poor.”
Thiessen’s Comments - 2
Now the reaction to Romney’s comments from
Washington Post editorial writer Marc
Thiessen. “So Romney is fine with an entire
class of Americans being permanently on food
stamps, Medicaid, housing vouchers and other
government welfare programs? His solution
for our fellow citizens trapped in poverty and
dependency is to find holes in the safety net
and repair them? That is not conservatism.
Thiessen’s Comments - 3
That is liberalism. The left judges
compassion by how much money we
spend, which is why the liberal project is
to strengthen the safety net and grow the
nanny state. The conservative project is
to help people escape the safety net.
Conservatives seek to create an
opportunity society where we can lift
people out of lives of dependency.
Thiessen’s Comments - 4
That is liberalism. The left judges
compassion by how much money we
spend, which is why the liberal project is
to strengthen the safety net and grow the
nanny state. The conservative project is
to help people escape the safety net.
Conservatives seek to create an
opportunity society where we can lift
people out of lives of dependency.
Thiessen’s Comments - 5
We are not okay with having millions of
Americans trapped in poverty and living
on the dole. We are not okay with
multiple generations trapped in
government welfare. We believe in a
society where the poor have
opportunities for advancement.
Thiessen’s Comments - 6
We want them to have the education and
skills they need to find good jobs, get off
public assistance and to move up to the
middle class and beyond-as far as their
ambition and ability will take them.”
Thiessen’s Comments - 7
First, our economy does not, and will not,
generate sufficient jobs to employ all of
the poor who want to work. The Great
Recession, which began in late 2007,
caused the economy to lose 8 million
jobs. According to the nonpartisan
Congressional Budget Office, the
unemployment rate is NOT expected to
get as low as even 5% by 2016.
Thiessen’s Comments - 8
Put another way, for the nine year period
from 2007 through 2016, the
unemployment rate would be high
enough to leave several million job
seekers without employment. How could
these people be expected to work over
this period when the jobs simply aren’t
available?
Thiessen’s Comments - 9
Furthermore, as explained very early in
this writing, Republican/Conservative
Administrations and politics weight
reducing inflation more highly than
Democratic/Liberal Administrations.
Think back to the Obama Stimulus plan’s
effect: unemployment was 1.7% lower
than it otherwise would have been.
Thiessen’s Comments - 10
As much research by political scientists and
economists has found, more liberal
administrations typically produce lower
unemployment and higher inflation than
conservative administrations (see earlier
discussion and sources cited therein). So, the
policies of the very philosophy Thiessen favors
actually produces less employment, and
hence, less opportunity for the poor than more
liberal administrations/politicians.
Thiessen’s Comments - 11
If the growth rate in the economy appeared to be
high enough to actually employ all those who
wanted to work, the inflation rate would move
into, as policymakers see it, a danger zone.
What would happen is that as economic
growth exceed about 4% per year the federal
reserve would raise interest rates, making
borrowing more costly and, thus, ultimately
reducing the economic growth rate and
employment.
Thiessen’s Comments - 12
Since the Great Recession started,
millions of Americans cannot find work
and the economy will not likely grow
sufficiently to employ them for many
years, if ever.
Thiessen’s Comments - 13
Second, many jobs simply do not provide
the level of compensation necessary to
provide workers with a standard of living
that Americans would consider “decent.”
Working 40 hours per week, 50 weeks
per year, at $9 per hour translates into
an income of $18,000 per year. Most
such jobs do not come with either health
care or retirement benefits.
Thiessen’s Comments - 14
Think of your family living on such an
income. Is this how you want low wage
workers to live? The very government
programs Thiessen refers to are the only
bulwark such low workers have against
living on an income that does not
adequately provide even the “essentials”
of life. Think back to the discussion of
the wage subsidy program.
Thiessen’s Comments - 15
Take the food stamp program. Food
stamps only provide approximately 70%
of the money necessary to provide what
the U.S. Department of Agriculture says
is a nutritionally adequate diet Over three
times as many households that receive
food stamps had at least one worker
than relied solely on government
assistance.
Thiessen’s Comments - 16
Finally, each $1 spent on the food stamp
program generates $1.72 in economic
activity. Think back to the previous
discussion of how much economic
activity per dollar spent was generated
by other programs that benefit the poor
(e.g., extending unemployment
compensation - $1.60; payroll tax
reduction - $1.09 or the wage subsidy
program) versus
Thiessen’s Comments - 17
the economic stimulation per dollar of the
Bush Tax Cuts ($.35). Thus, the food
stamp program helps generate the very
economic activity that helps reduce the
unemployment rate.
Thiessen’s Comments - 18
Generations of the same family could not
be on cash welfare for entire lifetimes
because each person is restricted to 5
years. Second, Mitt Romney supports
the previously discussed Ryan Budget,
which will require large reductions in
what is, by far, the weakest social safety
net of any wealthy democracy in the
world.
Thiessen’s Comments - 19
No other wealthy democracy has pursued
the type of system Thiessen desires.
Third, the Ryan Budget, will require large
spending reductions in exactly the types
of programs (e.g., education) that would
make the poor/unemployed more
competitive in today’s labor market.
Thiessen’s Comments - 20
Fourth, the previously discussed wage
subsidy plan increases the incentive for
people to work because it “makes work
pay more” for low-income workers than it
current does. Thus, if we adopted such
a plan, it would use government
programs to increase, not decrease,
work effort.
Thiessen’s Comments - 21
Wage Subsidy: Assuming a minimum wage of
$8 per hour, here’s how such a plan might
operate: a worker earning the minimum wage
of $8 per hour would receive a $4 per hour
subsidy from the federal government (i.e., their
“total wage” would be $12 per hour - $8 per
hour from their employer plus $4 per hour from
the federal government = $12 per hour) with
the subsidy decreasing by 10% for each
additional dollar per hour they earned.
Conclusions - 1
Budget Waste/Fraud: One of the most important
findings from the study of citizen attitudes
toward government programs is this: people
typically think that unpopular spending
programs (e.g., welfare and foreign aid)
makeup a much larger share of the budget
than they actually do. In studies I read many
Americans think that welfare and foreign aid
each account for 10%, or more, of federal
spending. Actually, welfare and foreign aid
each account for less than 1% of federal
spending.
Conclusions - 2
The error rate in the food stamp program is
2% (92% of the money goes to the
beneficiaries). Since one-third of those
eligible for food stamps do not receive
them, we spend much less on food
stamps than we would if fraud were
completely eliminated and everyone who
was eligible for foods stamps
participated.
Conclusions - 3
Eliminating politicians “pet projects” (e.g.,
“earmarks” – the famous “bridge to
nowhere”) are .1% of GDP (i.e., one
tenth of one percent). The “big picture”
is that we will not meaningfully reduce
the budget deficit by eliminating “waste,
fraud and abuse.” Waste, fraud and
abuse simply aren’t large enough to
have a discernible impact on budgets.
Conclusions - 4
The ingenuity of capitalism’s “creative
destruction” means that business
CANNOT pursue social goals/values
over profitability. Thus, the very strength
of capitalism is a prime reason why it can
be argued that a strong social safety net
is absolutely necessary.
Conclusions - 5
None of this is to say that our current policies are
“wrong” or that the conservative vision of low
taxes, high levels of inequality and a low
degree of economic security are “wrong.”
However, if we want to provide greater
economic security and reduce income
inequality in America, there are very viable
options to both our current policies and
conservative proposals.
Party Differences – Economic - 1
I. Political Party Differences on
Redistributive Economic Issues
A. Economic Redistribution Changes
the Distribution of Economic
Benefits and Burdens
Party Differences – Economic - 2
B. Why Study Economic Redistribution?
1. Voters Value these Issues
Party Differences – Economic - 3
2. Parties take Very Different
Positions
C. Issues We Will Examine
1. Unemployment/Inflation
Party Differences – Economic - 4
2. Taxation
3. Health Care
Party Differences – Economic - 5
II. Unemployment and Inflation
A. Economists and Political Scientists
1. Outlook: economists tend to regard
economic policy as if it were
neutral with respect to effects on
individuals
Party Differences – Economic - 6
2. Argue for “One Best Policy”
3. Liberal Economists – More
Concerned with Inequality so
Greater Emphasis on Reducing
Unemployment
Party Differences – Economic - 7
4. Conservatives – More Worried
about Inflation
Party Differences – Economic - 8
B. Political science has a different
orientation about policy choices
1. We tend not to believe in the
possibility of a best policy in
a neutral whole-economy, but
rather see it as a struggle for
whose interests are served
Party Differences – Economic - 9
III. Who Wins and Loses from
Various Economic Outcomes?
A. Unemployment: reduces the share
of income going to the poor.
1. Unemployment compensation
replaces about 1/3 of
income loss
Party Differences–Economic - 10
2. Approximately 30,000 additional
deaths per year per point
B. Inflation
1. Poorest 80% relatively unaffected
2. Wealthy lose the most
Party Differences–Economic - 11
IV. Inflation – Closer Look
Scenario #1
Year 1
Year 2
Chicken
$1 lb.
Gas
Chicken
$1 gal.
$.75 lb.
Gas
$1.25 gal.
Party Differences–Economic - 12
Scenario #2
Year 1
Year 2
Chicken Gas
Chicken
Gas
$1 lb. $1 gal.
$1.05 lb. $1.75 gal.
Scenario #1 – 0% inflation
Scenario #2 – 40% inflation ($2.80 is 40%
greater than $2.00)
Party Differences–Economic - 13
Inflation rate doesn’t matter, it is the ratio
of gas to chicken that matters (e.g., in
year #2, chicken is 60% of gas in both
scenarios)
Since the Great Depression, U.S. has
used Scenario #2
Party Differences–Economic - 14
V. Possible Government Responses to
Increases in Either Unemployment
or Inflation
A. Concepts
1. “Core” Inflation Rate - defined in
the coursepack – term won’t
appear until the final
examination
Party Differences–Economic - 15
2. Natural Rate of Unemployment – defined in
the coursepack – term won’t appear until
the final examination
3. Blinder Rule – defined in readings – term
won’t appear until the final examination
a. Reagan Administration – Core Inflation
Rate reduced from 9.6% to 4.6%
Party Differences–Economic - 16
4. Marginal Substitution Rate – defined
in the coursepack – term won’t
appear until the final examination
VI. The Evidence: Do Democratic and
Republican Administrations Behave
as We Should Expect?
Party Differences–Economic - 17
A. YES!
1. After 4 years – unemployment
roughly 2% lower under the
Democrats (Obama Stimulus
reduced unemployment about
1.7%)
2. Income Inequality Lower Under
the Democrats
Party Differences–Economic - 18
3. Inflation Higher Under the Democrats
4. Income Growth Greater Under the
Democrats through the 95th percentile
(Bartels)
5. Obama = Stimulus + Longer Unemployment
Benefits vs. Republican Opposition
Party Differences–Economic - 19
VII. Macroeconomic Priorities of Political
Parties
Left
Center
Right
Full
Employment
Equalization of
Income
Distribution
Price Stability
Balance of
Payments
Price
Stability
Party Differences–Economic - 20
Economic
Expanison
Price
Stability
Balance of
Payments
Economic
Expansion
Full
Employment
Equalization
of Income
Economic
Expansion
Full
Employment
Equalization
of Income
Distribution
Party Differences–Economic - 21
1. How does the difference between the
right and center priorities compare to
the difference between the center and
left priorities?
2. What are the priorities of the poor?
3. Popularity Deficit Model
Party Differences–Economic - 22
I. Partisan Differences of Taxation
A. The Economic Recovery Tax Act of
1981
1. Reduced federal income tax rates
23% over three years
Party Differences–Economic - 23
Income (approx. current dollar)
Congressional
Reagan
Democrats
Administration
$25,000 $1,000
$150
$120,000 $3,600
$3,900
$250,000 $3,700
$7,500
Party Differences–Economic - 24
B. Clinton – 1993
1. Increased rate for those earning
what today is $250,000 from
31% to 36% + surtax
2. Large reduction for the poor
Party Differences–Economic - 25
C. Dole – 1996
1. Across the board 15% federal
income tax reduction
2. $1,000 (today) per child, nonrefundable tax cut.
Party Differences–Economic - 26
3. The richest 1% would have received
as large a percentage of the total
benefit (27%) as the entire poorest
80% of households
D. George W. Bush 2001 & 2003
Party Differences–Economic - 27
1. Highlights – reduce the rate on those
who today make $250,000, or more
from 39.6% to 33% (Republicans
now want to reduce this to 25%) and
eliminate the estate tax
2. The wealthiest 1% receive as much
money from the cuts as the entire
poorest 70% added together
Party Differences–Economic - 28
3. While the mean tax cut is $1,200 per
household the median household
receives a cut of only $217
4. Approximately 75% of households
lose under the Bush Tax Cuts.
Party Differences–Economic - 29
E. Obama – 2008
1. Increase the top rate from
approximately 31% to 36%
(i.e., back to the level under
Clinton)
2. Federal income tax reduction for
poorest 97% of households
Party Differences–Economic - 30
I. Partisan Differences on Health Care
A. Medicare – 1965
1. Presidential History
a. Truman
Party Differences–Economic - 31
1. Due to absolutist
individualism, Truman
shifts from universal plan to
Medicare
b. Eisenhower
c. Kennedy
Party Differences–Economic - 32
d. Johnson
1. 1964 election aids passage
2. Fewer than 30% of
congressional Repubicans
vote for Medicare
Party Differences–Economic - 33
2. Interest Groups – Medicare
For
Against
AFL-CIO
AMA
NFU
AFBF
(small farmers) (large farmers)
Party Differences–Economic - 34
For
Against
CCUS
(business)
NAM
(business)
Blue Cross
Party Differences–Economic - 35
Note: (1) the relative wealth
difference between the “for” and
“against” groups; (2) “for” groups
support Democrats while
“against” groups support
Republicans
Party Differences–Economic - 36
3. Ramifications
a. Virtually impossible to repeal
b. America lags well behind other
wealthy democracies in both the
time of adoption and the scope
of coverage
Party Differences–Economic - 37
c. Incremental attempts to increase
coverage can make it difficult to
eventually cover everyone
B. Clinton – 1994
1. Expansion of coverage again
attempted by Democrats
opposed by Republicans
Party Differences–Economic - 38
2. Almost identical interest group
alignment as on Medicare
C. Obama – 2009
1. Democrats try to expand coverage
while Republicans oppose
Party Differences–Economic - 39
2. If fully implemented, would reduce
uninsured rate from about 17%
to about 7%.
Party Differences–Economic - 40
Rudy Giuliani: “The American way is not
single-payer, government controlled
anything. That’s a European way of
doing something; that’s frankly a socialist
way of doing something.” “That’s why
when you hear Democrats in particular
talk about single-mandated health care,
universal health care, what they’re
talking about is socialized medicine.”
Party Differences–Economic - 41
“That is where Hillary Clinton, Barack
Obama and John Edwards are taking
you,” he said, “You have got to see the
trap. Otherwise we are in for a disaster.
We are in for Canadian health care,
French health care, British health care.”
(“Giuliani Seeks to Transform U.S.
Health Care Coverage,” Marc Santora,
New York Times, August 1, 2007)
Party Differences–Economic - 42
II. Comparison of U.S. and Foreign
Health Care Systems
Per Capita
WHO
Spending
Ranking
U.S.
$8,895
37th
France
$4,690
1st
Canada $5,741
30th
U.K.
$3,647
18th
Party Differences–Economic - 43
A. Why do the others do better at lower
cost?
1.Require Everyone to Buy Insurance
a. adverse selection if people
aren’t required to buy
insurance
Party Differences–Economic - 44
b. Need a strong minimum
benefits package-must
shift costs to the healthy
2. Single-Payer Plans have much Lower
Administrative Costs
3. Government Bulk Buying of Medicine
Party Differences–Economic - 45
4. Pay Doctors Less
Question: If we are measuring “wait times” for
a procedure should we start when your
physician recommends the procedure or
when it is medically advisable? Remember
18% of Americans don’t have a physician
and Americans see doctors less frequently
than in Europe/Canada. U.S. “wait times”
are longer than frequently stated.
Party Differences–Economic - 46
One last thought: Isn’t there a tension between
opposing government regulation of behavior
with health consequences (e.g., cigarette
taxes, soda taxes, meat taxes, etc.) and
believing in personal responsibility? The least
regulatory, or “smallest government,” may not
be the government that most fosters personal
responsibility. Especially when personal
irresponsibility imposes costs on others (i.e.,
people whom my costly actions shouldn’t
harm).
Party Differences–Economic - 47
I. Partisan Differences in the U.S.
Congress
A. 95% Direction Rule
B. 40% Difference Rule
Party Differences–Economic - 48
C. Policy Areas – least to greatest
partisan difference
1. Civil Liberties
2. International Involvement
Party Differences–Economic - 49
3. Agricultural Assistance
4. Social Welfare
5. Government Management of the
Economy
Party Differences–Economic - 50
D. Partisan Differences in Congress are
Much Greater Today than 40 Years
Ago Because:
1. The Constituencies of Each Party
have Become more Dissimilar
a. Increasing Income Inequality
Party Differences–Economic - 51
b. Share of Income Going to the
Richest 1%:
1970 – 9.0%
1990 -14.3%
2008- 21.0%
Party Differences–Economic - 52
On a Concluding Note: There is Virtually
No Relationship between the Economic
Growth Rate and the Size of
Government/Tax Rates
We don’t have to have a “small”
government with low taxes in order to
have a high growth rate
Public Opinion and Public Policy
-1
I. Theories of Political Responsiveness
A. Median Voter Model – The electoral
incentive is to follow the policy
preferences of the median voter
Public Opinion and Public Policy
-2
1. Drawbacks in the Median Voter
Model
a. Voters at all points on the
ideological continuum are
not equally likely to vote
Public Opinion and Public Policy
-3
1. Extremists makeup too large
a share of the electorate
b. Voters may not vote on the basis
of issues
1. Example: constituency service
based vote for Congress
Public Opinion and Public Policy
-4
c. Voters may either be misinformed
about a candidate’s position on
an issue and/or hold
contradictory views on the issue.
1. Few voters know the
RELATIVE positions of
the candidates on the
issues.
Public Opinion and Public Policy
-5
2. Example: the vast mis-information
concerning the Obama health
care plan caused many voters
to mis-perceive the plan’s
impact.
d. Voters may hold contradictory
opinions which candidates can
then exploit.
Public Opinion and Public Policy
-6
1. Example: voters desiring both
universal coverage and
fearing government control
of health care.
e. Thus, politicians/interest groups
craft a message that suggests
that their position is what the
median voter desires.
Public Opinion and Public Policy
-7
f. Rather than maximize the vote,
candidates who are in close races
opt for a certain “narrow” win rather
than a possible broader victory by
catering to a sub-set of their
constituency (a re-election
constituency).
Public Opinion and Public Policy
-8
1. For example, if you compare
“marginal-switch” congressional
districts (i.e., go from Dem. to
Rep.) there is a very great
difference in the voting behavior
of the congressman. Thus,
greater electoral competition
does not necessarily bring about
greater responsiveness to the
median voter.
Public Opinion and Public Policy
-9
B. The Retrospective Model
1. The voter looks back over the past
electoral period and, if satisfied,
votes for the incumbent.
2. Median voter model was
prospective, not retrospective.
Public Opinion and Public Policy
- 10
3. One large problem is the voter’s
lack of knowledge of how
programs connect to outcomes
(e.g., wanting economic stimulus
and, therefore, desiring the Bush
Tax Cuts when government
spending offers much greater
stimulus per dollar spent).
Public Opinion and Public Policy
- 11
4. The retrospective model is easier for
the voter to apply than the median
voter model.
a. Median voter model forces the
voter to know the positions on a
left/right scale of all parties on all
important issues.
Public Opinion and Public Policy
- 12
C. Weaknesses of the both the Median
Voter Model and the Retrospective
Model
1. Neither model accounts for change
in the degree of policy
congruence between voters and
government over time.
Public Opinion and Public Policy
- 13
2. Both models falsely assume that
politicians accept public opinion as a
given and operate under conditions of
certainty regarding the future
contours of public preferences.
Public Opinion and Public Policy
- 14
a. Thus, conservative or liberal
legislators would wait until public
opinion changed in their
direction before pursuing their
policy preferences.
Public Opinion and Public Policy
- 15
b. The uncertainty of public opinion is
important to politicians. Thus
politicians have strong
incentives to change the public’s
policy preferences.
Public Opinion and Public Policy
- 16
D. The Party Vote Model
1. Candidates and Officeholders
follow the Policy Preferences of
their Partisans (activists as well
as less involved partisans)
Public Opinion and Public Policy
- 17
2. Reasons this model should reflect
reality:
a. Candidates are screened by party
activists and elites.
b. The views of party activists are
important because they provide core
voters, money and campaign
workers.
Public Opinion and Public Policy
- 18
c. Since activists communicate more
with the candidate/officeholder they
are easier to represent. The
candidate/officeholder knows the
activists opinions.
d. The activists views are likely to be
similar to the candidate/officeholder’s
own view of “good public policy.”
Public Opinion and Public Policy
- 19
e. Interest groups who are part of the
candidates/officeholders electoral
coalition can organize citizens and
turnout voters. Hence, it is costly to
alienate them.
Public Opinion and Public Policy
- 20
3. Since the candidate/officeholder needs
the support of voters at, or close to,
the median, politicians will either:
a. craft a message so that the median
voter thinks that the
candidate/officeholder is
supporting their position;
Public Opinion and Public Policy
- 21
b. use devices that make it difficult for
median voters to monitor the
candidate/officeholder’s position;
c. build trust with the constituency
so that voters will give the
candidate/officeholder leeway;
Public Opinion and Public Policy
- 22
d. or, use non-policy devises such as valence
issues (emotional, non-conflictual issues
such as opposing drunk driving) and
constituency service.
4. All of the above, while interesting, do not
explain why responsiveness has probably
declined over the past four decades.
Public Opinion and Public Policy
- 23
II. Declining Responsiveness
A. Five Systemic Conditions Changed or
Interacted in ways that Changed the
Incentives for Politicians to Respond
to Centrist Public Opinion
Public Opinion and Public Policy
- 24
1. Partisan Polarization
a. The influence of strong partisans,
who are typically policy
extremists, has increased since
the 1970s.
Public Opinion and Public Policy
- 25
1. The South has realigned, based
largely on race, into the
cornerstone of the Republican
party.
2. Catering to southern conservatives
has had two large effects:
Public Opinion and Public Policy
- 26
a. It has reduced the number of
conservative southern
Democrats in Congress;
b. It has increased Democratic
strength outside the South
at the expense of moderate
Republicans.
Public Opinion and Public Policy
- 27
3. These two effects have left the
two parties more internally
similar and externally dis-similar.
b. This polarization is much more
pronounced at the elite, as opposed
to the mass level (i.e., little change in
the electorate).
Public Opinion and Public Policy
- 28
1. Congressional districts, due to
(a) redistricting; (b) voters more
accurately sorting themselves into
parties based on elite cues; and (c)
greater socioeconomic differences
between congressional districts has
resulted in ideologically cohesive
districts (thus, reducing the value of
compromise to a representative).
Public Opinion and Public Policy
- 29
2. The direct primary, coupled with the
increased costs of campaigns, has
resulted in candidates more needing
funds from interest groups and
political activists. This reduces the
reliance of candidates on party
leaders.
Public Opinion and Public Policy
- 30
3. Institutional Individualization
a. Congressional Reforms in the
1970s (e.g., increased staff and
election of committee chairs)
empowered individual legislators
to take policy initiatives on their
own and to resist Congressional
leaders.
Public Opinion and Public Policy
- 31
b. The incentives for individualism
increased while the cohesion of
each party in Congress also
increased (you’d expect the
opposite).
Public Opinion and Public Policy
- 32
4.Greater Incumbent Security
a. Constituency service (aided by
larger staffs per member) and
money raising advantages of
incumbency has boosted the
incumbency advantage from
the 1%-3% range of the 19401950s up to 7%-10%.
Public Opinion and Public Policy
- 33
5. The increased number of interest
groups, and their diversity, has made
it much more difficult to achieve a
policy consensus.
Public Opinion and Public Policy
- 34
c. Technological change has allowed
politicians and interest groups a
greater opportunity to find what
message will resonate with the
electorate and craft their appeal so
that the median voter thinks they are
getting what they want.
Public Opinion and Public Policy
- 35
1. Since voters hold conflicting views
(e.g., wanting both more
government services and tax
cuts) superficially (i.e., not
“deeply held opinions”) there is
ample opportunity for politicians
and interest groups to “change”
public opinion.
Public Opinion and Public Policy
- 36
2. Since “conflict” often drives media
ratings, there is an incentive to report
differing political views, but little
incentive for “fact checking.” Thus,
an interest group or politician can
keep repeating a false or misleading
message with beneficial political
affect.
Public Opinion and Public Policy
- 37
d. The tremendous increased costs of
campaigning, coupled with the
absence of public funding and the
decline of organized labor, has meant
that Democratic candidates have had
to rely more on wealthy individuals
and business for contributions. This
reduces the ability of the Democratic
party to respond to middle-income
voters.
Public Opinion and Public Policy
- 38
III. Policy Change
A. Given that current policies produce a
large group of interests that are
satisfied with the status quo, policy
change can be very difficult to
achieve.
Public Opinion and Public Policy
- 39
B. However, when policy change comes
it means that there has been such a
large threat to the status quo that the
policy change is more likely to be
large than small.
Public Opinion and Public Policy
- 40
C. While non-business groups often work
together with business interests, the
necessity of working with business
interests can easily shift the range of
“policy possibilities” in a much less
redistributive direction.
1. This puts economic policy often to the
“right” of centrist/majority public
opinion.
Public Opinion and Public Policy
- 41
2. For example, despite solid majority
support, the “public option” for
health care was dropped
because of the intense
opposition of the health
insurance industry.
Assignment 6 - 1
DON’T TAKE NOTES!! – IT’S ALL IN THE
COURSEPACK
Assignment 6 is to pick two political issues (ONE
ECONOMIC and ONE NONECONOMIC) that
have been in the news over the past decade
and find political information about them (from
the sources mentioned in the coursepack –
e.g., stories and columnists from the New York
Times, Washington Post and L.A. Times, NOT
other sources – see pages 9-13 of the
coursepack).
Assignment 6 - 2
You MUST be able to defend WHY EACH
of your issues should be classified as
either economic or noneconomic.
People frequently have difficulty doing
this. I’m likely to ask for such a defense
on the date this assignment is due.
Assignment 6 - 3
Do NOT select ANY of the following
issues: the estate tax, free trade (e.g.,
NAFTA or CAFTA), gay issues (e.g., the
Defense of Marriage Act, the Federal
Marriage Amendment, gays in the
military, AIDS funding, domestic partners
legislation, etc.) or immigration (e.g.,
immigration reform, guest worker
programs, bilingual education, etc).
Assignment 6 - 4
One of your issues must have a corresponding
vote in Congress. Since conflict makes
politics more interesting, pick a vote where at
least 20% of those voting voted on the losing
side (i.e., 20% of the total votes cast – you can
use a voter where all Democrats opposed all
Republicans). Use the Congressional Record.
START EARLY!
Assignment 6 - 5
At the beginning of class one the date this
assignment is due (after the beginning of class
counts as one day late) you need to show me
or have emailed each of the following: (1)
which issues you will use and a written
defense of their classification (i.e., what makes
one issue economic and the other issue
noneconomic);
Assignment 6 - 6
(2) the vote by party from the
Congressional Record on a vote take on
one of your two issues (at least 20%
must vote on the losing side and we
must know which Democrats voted “yes”,
which Democrats voted “no” – same for
Republicans – not a “link” – download
the material into a Word or Pdf. file);
Assignment 6 - 7
and (3) the various newspapers (those
newspapers mentioned on page 9),
columnists (see page 9), political party
websites, and the Center for Budget and
Policy Priorities, Citizens for Tax Justice,
etc. (see page 10 - download the
material into a Word or Pdf. file).
Assignment 6 - 8
One the date this assignment is due, I need to
see that you have ALL the materials
necessary to write the paper. That’s the point
of this assignment. This eliminates the need
to do this later in the semester. You’ll
appreciate this (as well the assignment to
outline the paper) at the end of the semester.
You’ll have much less to do at the end of the
semester!
Assignment 11 - 1
DON’T TAKE NOTES! ALL THAT FOLLOWS IS
IN THE COURSEPACK (pp. 65-76)!
The purpose of Assignment 11 is to produce an
outline that contains ALL the ideas and
organization you need to write a terrific term
paper. This will save you much time and
consternation at the end of the semester. The
MOST likely way to lose points is by not using
the concepts discussed in Assignment 11.
Assignment 11 - 2
You’re a social scientist, not a journalist. I’m not
after a “blow by blow” account of what
happened. Rather, I want you to apply what
political scientists have learned about both
mass and elite political behavior in analyzing
the politics of the two issues you select. Let’s
examine some of the useful electoral concepts
political scientists have formulated.
Assignment 11-2A
Most fundamentally, this is a paper about
politics, NOT policy. We’re primarily
interested in HOW each party tries to
advance its’ issue positions, NOT in the
policy itself. Thus, were not primarily
interested in who will benefit or what policy
experts think about the particular issue
positions of the two parties. So, don’t
spend much of the paper describing the
policy each party advocates.
Assignment 11 - 3
Easy issues may be understood at the
“gut” level while “hard” issues require
knowledge of subtle differences in
options, a coherent structure of political
beliefs and the ability to link policy
means to ends.
Assignment 11 - 4
For example, trying to explain to voters how, if
abortion were made illegal, you might penalize
women who had abortions (e.g., Should they
be executed?; costs - attorney’s fees, court
costs, etc.) and what the repercussions might
be (increased crime as the enforcement of
other offenses was reduced in order to
prosecute women who had abortions) would
be a “harder” issue position to explain to
voters than simply saying abortion is murder.
Assignment 11 - 5
You need to explain why you would
classify a particular party position as
either “easy” or “hard.” Thus, don’t just
use the concepts.
Closely related to the “easy” versus “hard”
distinction is whether the benefits from
the legislation are “particularized” or
“general.”
Assignment 11 - 6
Particularized benefits go to specific groups or
individuals. By contrast, general benefits go to
a much large number of people. An individual
may benefit from either type of benefit. For
example, the same college student may
benefit from a government guaranteed student
loan (particularized benefit) and a reduction in
the sales tax (generalized benefit – very large
group of beneficiaries). Typically,
particularized benefits are larger per recipient
than generalized benefits.
Assignment 11 - 7
So, are the benefits from the policy change
better thought of as particularized or
general? The “benefits” from outlawing
abortion (e.g., someone feeling society is
more moral) are typically generalized
where as the “costs” are more
particularized (e.g., women who would
not be able to obtain an abortion).
Assignment 11 - 8
Think through what type of benefits and
costs would result from each position on
the issues you select. If the legislation
has particularized benefits the
beneficiaries typically know who they are
(e.g., the wealthy heirs who would pay
the estate tax know who they are and
roughly how much they would benefit
from repeal).
Assignment 11 - 9
Alternatively, if the legislation promises
more generalized benefits (e.g., lives
saved from cleaner air), the beneficiaries
are less likely to know who they are (i.e.,
those who will not get lung cancer if the
air were less polluted do not know this).
Typically, more generalized benefits,
especially if they occur at some future
time point, are better thought of as “hard”
issues.
Assignment 11 - 10
For example, arguing that we should pay
higher gas prices today so that 25, or 50,
years from now people will have less
pollution is a “hard” issue position to
argue. Especially when the “losers”
(current gas users) know who they are
while the “winners” (e.g., people not born
yet) either don’t know, or the “gain” is so
far in the future as not to be relevant.
Assignment 11 - 11
So, indentify the “winners” and “losers”
under each parties’ position on the issue
from this standpoint.
Assignment – 11 - 12
How does each party “frame” each of the issues
you select? For example, if you select
national health insurance, does one party
focus attention on the notion that individuals
are losing health insurance through no fault of
their own and, hence, government should
insure the entire population? Conversely, does
the other party suggest that the lack of health
insurance is the fault of those who are not
insured and/or see the issue primarily as a
question of the size and scope of government?
Assignment – 11 - 13
Typically, a party will “frame” the issue as
an issue they “own.” For example,
Democrats would frame universal health
care as either security for workers and/or
fairness, while the Republicans would
likely try to frame universal health care
as either a tax increase and/or the size
and scope of government (i.e., “big
government”).
Assignment – 11 - 14
Republicans are perceived as better able
to handle foreign policy and defense
issues, reducing taxes, controlling
inflation, reducing government spending,
reducing crime and promoting moral
values than Democrats.
Assignment – 11 - 15
Conversely, Democrats are perceived as
better able to handle social welfare
policies and/or “fairness” issues such as
protecting Social Security, improving
health care, helping the poor, supporting
public schools, reducing unemployment,
solving farm problems, and protecting
the environment than Republicans.
Assignment – 11 – 15- B
Use the information in the “Political
Strategy” file under POSC 322, as well as
comments from your other sources (New
York Times, Washington Post and Los
Angeles Times), to show how the
statements Democratic and Republican
officeholders make fit with particular
“frames” that party frequently employs.
Assignment 11 - 16
To which socioeconomic groups does each party
appeal on economic issues? To which
socioeconomic groups does each party appeal
on noneconomic issues? Remember the
“basic” relationships between a person’s
socioeconomic status and their opinions: (1)
as a person’s income increases their support
for liberal positions on economic issues (e.g.,
national health insurance, having the wealthy
shoulder a greater share of the tax burden,
etc.) typically decreases;
Assignment 11- 17
(2) as a person’s educational attainment
increases their support for liberal positions on
noneconomic issues (greater tolerance for
difference of opinion, lifestyle, etc.) typically
increases.
In terms of the party in the government, your
paper should address the following: how large
is the policy difference between the two parties
in the government?
Assignment 11 - 18
For example, are the Republican and
Democratic positions in Congress very
different? How cohesive is each party in the
government?
Pages 69-75 in the coursepack contain an actual
outline. FOLLOW IT! THAT’S WHAT
YOUR OUTLINE SHOULD LOOK LIKE.
NOTICE THE DETAIL. YOU COULD
EASILY WRITE A FINE TERM PAPER
FROM THAT OUTLINE!
Remember!
1. Do NOT advocate a particular policy or
make “value judgments.” Remember,
you’re an analyst, NOT an advocate.
2. Do NOT make statements that imply there is
only one correct viewpoint (e.g., do NOT
say something such as “any rational
educated mind …”).
3. Do NOT use the first person or offer opinions
(i.e., do NOT say “I think that …” or “I feel
that”).
Assignment 11 – Final Thought!
Make sure that you use ALL of the
following in discussing EACH issue:
“easy vs. hard” issue; particularized vs.
general benefits; issue ownership; issue
framing and material from the Political
Strategy file at my website. If you haven’t
you CAN’T write a good paper!
Writing the Term Paper - 1
DON’T TAKE NOTES! ALL THAT FOLLOWS IS
IN THE COURSE MATERIALS!
As you write the final term paper, it would be
useful to keep the following points in mind:
1. START EARLY!! “All nighters” don’t produce
the best papers.
2. READ THE SAMPLE TERM PAPER
THOROUGHLY BEFORE WRITING YOUR
PAPER.
Writing the Term Paper - 2
3. Do NOT advocate a particular policy or
make “value judgments.” Remember,
you’re an analyst, NOT an advocate.
4. Do NOT make statements that imply there is
only one correct viewpoint (e.g., do NOT
say something such as “any rational
educated mind …”).
5. Do NOT use the first person or offer opinions
(i.e., do NOT say “I think that …” or “I feel
that”).
Writing the Term Paper - 3
6. Make sure your paper meets the
following “basic” requirements: (A) it ;
compares the stances of the two
major political parties on one
economic and one noneconomic
issue; (B) it uses the sources
mentioned in the coursepack (NY
Times, Washington Post, Center for
Budget and Policy Priorities,
Writing the Term Paper - 4
Columnists (Paul Krugman – NY Times,
E.J. Dionne – Washington Post, David
Brooks – NY Times, Ross Douthat – NY
Times, and Tom Friedman – NY Times);
(C); make MUCH use of the materials in
the coursepack (easy vs. hard issue,
particularized vs. general benefits, issue
ownership, how each party “frames”
each issue,
Writing the Term Paper - 5
who – by socioeconomic level – each party is
appealing to on each issue, how united or
divided each party is on each issue - use the
congressional vote, and how great is the
difference between the parties on each issue).
READ THE SAMPLE TERM PAPER
THOROUGHLY BEFORE WRITING YOUR
PAPER. USE THE STYLE OF THE SAMPLE
TERM PAPER (e.g., LEFT-SIDE HEADINGS,
BIBILIOGRAPHY, etc.).
Libertarianism - 1
I. Libertarianism
A. World View – Most Everything
flows from selfishness
B. Goal - Maximizes the "Freedom
To“ in both economic and
noneconomic situations
Libertarianism - 2
B. Method – The Free Market
1. Definition – voluntary exchanges
between mutually consenting
individuals
C. Economic freedom (the free market) is
part of total Freedom and a
precondition of political freedom
Libertarianism - 3
1. In this view political freedom
depends upon economic
freedom – not the other
way around.
2. When the Soviet Union
collapsed the opposite
happened: political freedom
preceded economic
freedom.
Libertarianism - 4
D. An individual must be able to
earn a living in order to use
political freedom.
E. The Free Market accomplishes this
by two methods:
Libertarianism - 5
1. It increases the number of decisions
necessary to restrict, or eliminate,
someone’s livelihood.
2. It encourages economic decisions
(buy/sell decisions) to be made on
the basis of production factors (e.g.,
quality or price) as opposed to nonproduction factors (e.g., the race or
political views of the workforce).
Libertarianism - 6
3. Since government can only
institute one set of priorities
libertarians see governmental
action as a restriction of
individual free choice.
4. Therefore, libertarians largely
reduce the government to
umpire like functions (e.g., antitrust, police, military)
Libertarianism - 7
II. Critique of Libertarianism
A. Goals – Doesn’t any goal other
than free choice matter (e.g.,
political and economic
inequality, mobility, security or
stability)?
Libertarianism - 8
B. Methods – Is an extremely strong
reliance on the free market the
best way to maximize freedom?
C. Libertarians assume that at any
one point in time the number of
free decisions is fixed – thus if
government makes more of
them individuals will make
fewer of them.
Libertarianism - 9
1. The number of decisions isn’t fixed.
For example, consider public
transportation: while the taxes paid
to build it may reduce personal
freedom the public transportation
system increases personal freedom.
2. How much freedom to use the beach
would we have if the beaches were
privately, rather than governmentally,
owned?
Libertarianism - 10
3. By not having universal health care
in the U.S. we have
approximately 18,000 additional
deaths per year. You can’t
make many free decisions after
you’re dead!
Libertarianism - 11
4. Even if you accept the goal of maximizing
individual free choice: Is the “freedom to"
maximized by (1) removing force (e.g., not
having to pay Social Security taxes) - with
the possibility of economic hardship, or
(2) reducing economic hardship - with the
possibility of political restraints (e.g., not
protesting government policy because you
fear the loss of government benefits) ?
5. Libertarians must opt for option #1 above.
Libertarianism - 12
6. Think of the reductions in personal
freedom through laws/political actions
that have resulted from economic
hardship (e.g., Hilter, Proposition 187
in California, etc.).
7. There is little evidence that citizens in
democracies with extensive social
safety nets (e.g., Sweden) are afraid
to speak out against government
policy.