Thursday, April 17, 2014

Not quite as cynical as it seemed

All the talk about income inequality I have marked down as simply cynical politics. From an economics perspective, there is no clear empirical evidence that there are any negative consequences to higher or lower inequality (within realm of reason). There are certainly moral arguments to be had but the economic arguments are fairly anemic. This article, The Polarized Partisan Geography of Inequality by Michael Zuckerman, suggests that perhaps there is more than cynical political desperation at play.
A few days ago, the Associated Press ran a short piece noting, "of the 10 richest House districts, only two have Republican congressmen." Later in the piece, the reporter, Stephen Ohlemacher, noted that although Democrats represent many of the richest districts, the overall difference in per-capita income between Democratic and Republican districts "is relatively small because Democrats also represent a lot of poor districts, putting the average in the middle."

That alone might lead us to draw a reasonable conclusion about the party leadership's focus on income inequality: If their caucus is made up of members who disproportionately represent the poorest and richest districts, Democratic leaders—taking a bird’s-eye view of the party’s overall constituent base—might be quicker to recognize the yawning gap between the rich and poor than their Republican counterparts. The Democratic rank-and-file, comparing districts, could reason the same among themselves.
Zuckerman then runs the numbers for intra-district income inequality.
As the data show, Democrats have a lock not only on the country's richest districts but also on the districts with the highest in-district income inequality.
His conclusion:
Considered alongside these well-established trends, the fact that Democrats represent districts that are (on average) more unequal than Republican districts suggests that the parties may have such divergent views on income inequality in part because their members (and constituents) have divergent experiences of income inequality. Could polarization, in other words, be driven by the availability heuristic?
Elaborating on this:
It’s not impossible to imagine this effect playing out in Congress. Given that Maloney and Fattah regularly pass between some of the richest and poorest neighborhoods in America within a few minutes, it’s not shocking that they might see income inequality as a bigger problem than, say, Republican Representative Michele Bachmann (Minn.-06), a staunch conservative who (perhaps ironically) represents the district with the least income inequality in America (Gini index of 0.385). Likewise, it’s not impossible to imagine that Maloney’s and Fattah’s constituents—who look across the street at people with wildly different incomes than their own—think of income inequality as a bigger deal than Bachmann’s constituents do.
An interesting argument and I think it has reasonable merit. I still wouldn't discount political cynicism as material contributor to the focus on income inequality, it just may not be quite as cynical as it seemed.

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