Thursday, October 30, 2014

Falling Prey to the Thatcher-Reagan Zeitgeist

A couple of weeks ago, I wondered if it was possible to say, discuss, think of, a just society because our reference points had moved so far to the right under the influence of Margaret Thatcher and Ronald Reagan.

Thomas Edsall provides an example:
What if the notion that a large segment of the electorate is made up of moderates who hunger for centrist compromise is illusory? What if ordinary voters are, in many respects, even more extreme in their views than members of Congress?
And I would ask
What if the political commentators who are so obsessed with centrist compromise are asking the wrong questions?

Edsall takes a single political science study at face value, always a bad idea. Even when it’s a good study, there’s usually a history and context around it that helps in understanding. Professors are delighted, of course, to have their paper flogged in the New York Times and too many will do their best to assure someone like Edsall that their study is totally new and totally addresses Edsall’s concerns. Just get our names in print, please!

In this case, according to Edsall, it’s graduate students. They asked voters about extreme views and found that more of them gravitated to the extremes than to the center. Edsall takes this uncritically, probably because it fits with the worldview he has inherited from Margaret Thatcher and her minions (see my earlier post), although he doesn’t seem to realize that.

Edsall gives an example of the choices that were given in the reported survey:

In the case of taxes, for example, the survey offered respondents seven choices, of which four were “extreme.”

The extreme choices on taxes on the left are: to establish a maximum annual income, with all income over $1,000,000 per year taxed at a rate of 100 percent, and to decrease federal taxes on the poor and provide more services benefiting the middle class and the poor; or to increase federal income taxes on those making more than $250,000 per year to pre-1990s levels (more than 5 percent above current rates). Use the savings to significantly lower taxes and provide more services to those making less and to invest in infrastructure projects.

The extreme choices on taxes the survey offers on the right are: to move to a completely flat income tax system where all individuals pay the same percentage of their income in taxes, accomplished by decreasing government services; or to move to a flat consumption tax where all individuals pay the same percentage of their purchases in taxes, banning the income tax, even if this means the poor pay more in taxes than the rich. Significantly decrease government services in the process.

Seven choices, of which four are “extreme.” (Quote marks Edsall’s, or perhaps from the study.) If responses are random, more than half, 4/7 or 57%, to be exact, will be “extreme.” This starts the study out with a tilt. But that’s not the worst part. Let’s look at how “extreme” these choices are.

Left: 1) All income over $1,000,000 taxed at 100%
2) Increase taxes on those making more than $250,000 to pre-1990 levels.
In both cases, lower taxes and provide more services to those making less and invest in infrastructure.

Right: 1) Flat income tax
2) Flat consumption tax
In both cases, decrease government services.

Edsall doesn’t say what the “centrist” options were. In this case, a majority, 59%, supported the “extreme” positions. This is suspiciously close to that random 57%, but we’ll ignore that, because the division between right and left is extremely lopsided: 19% on the right, 40% on the left. Twice as many favored “extreme” left options.

One should normalize for the political predelictions of the respondents; if twice as many identified as liberal as conservative, this would be a reasonable result. But Edsall doesn’t tell us that. For all the questions, the lean was 19% right, 30% left.

The study’s authors and Edsall take this to mean that, horror of horrors, the voters are MORE EXTREME than their representatives.

Let’s take a closer look.

In 1952 and 1953, the top marginal tax rate was 92%, for the rest of the fifties and into the sixties, 91%, for income over $400,000. That means that a citizen making over $400,000 kept only 8 or 9% of the income above that amount, equivalent to about $3,500,000 today. The first “extreme” liberal option is more extreme than this, but not by a lot. Apparently this “extreme” was acceptable to a Republican president through the 1950s, and a Congress that went back and forth between Republican and Democratic control. This continued into the 1960s, under a Democratic president. Bipartisan? Centrist, even? Those years were prosperous ones for the United States.

The other left “extreme” is to go back to pre-1990 levels of tax. Which led into the prosperous 1990s. That would have been under Republican presidents.

Both of these “extremes” have been tested, have been found acceptable to the voters and to the “elites” of both parties, and fit easily into current tax laws. The US has never tried the “extreme” right choices in the survey: flat taxes, income or consumption, which would require full revamping of our tax system. Yet Edsall and the authors of the study present the “extremes” as though they are equivalent.

The study was carried out by graduate students, according to Edsall. Perhaps no professor would be willing to take credit for it. Those graduate students, and likely even their professor, were born since Thatcher-Reaganism became normalized. But it looks like the voters they surveyed have better sense.

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