Pursuit of Truthiness

my gut tells me I know economics

Self-Defeating Political Regimes: The Case of Inequality

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We can all think of specific times when a political party has shot themselves and their base in the foot.  In fact, the last eight years may have been one of these times.

If we believe what most say, that power corrupts, then any party long in power will get old and corrupt.  There is no one party, or set of ideas, which can govern well indefinitely; that is not how human nature works.  They must eventually be replaced by new people and new ideas.  In traditional political systems this could be accomplished through royal marriage to outsiders, or weak regimes being conquered, or revolution.  In a liberal democracy, the new regime can be voted in.

There will always be new political challenges that call for new leadership.  But there are also old challenges that emerge anew.  Some problems may move in a cyclical manner.  I posit that inequality is one of these.

For many voters (though not myself), relative equality is an important consideration; even if no one is starving, it is wrong or obscene for a CEO to make 400 times the pay of his company’s janitor.

In a place where inequality is greater, these voters are more likely to support policies which reduce inequality; where inequality is less of a problem, voters will not support redistributionist policies so strongly.  As these policies take effect, they will change the political reality and bring about the end of the economic reality which gave them political life.

Suppose one party, lets call them Republicans, became associated with policies which brought inequality, while another party, call them Democrats, became associated with redistributionalist policies to reduce inequality.  These parties, if strongly associated with these policies, could become tied up in the back-and-forth political cycle of equality.  So if Republican tax policies over the past 8 years increased inequality in America, then Republicans faced a more hostile political environment of their own creation.

David Frum in the New York Times from puts forward a similar thesis from an explicitly conservative perspective and with loads of anecdotal evidence.  This theory deserves further investigation using rigorous statistical analysis, comparing data on inequality at the most local level available with election results at static points in time, and how changes in inequality over an election cycle or over longer periods affects results.

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Written by James Bailey

January 10, 2009 at 5:18 am

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