Polarized America: An Update Nolan McCarty Princeton University - - PowerPoint PPT Presentation

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Polarized America: An Update Nolan McCarty Princeton University October 22, 2018 McCarty Polarized America The Three Fundamental Changes in the U.S. Political Economy Increased polarization of the political parties McCarty Polarized

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Polarized America: An Update

Nolan McCarty Princeton University October 22, 2018

McCarty Polarized America

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The Three Fundamental Changes in the U.S. Political Economy Increased polarization of the political parties

McCarty Polarized America

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The Three Fundamental Changes in the U.S. Political Economy Increased polarization of the political parties Increased economic inequality

McCarty Polarized America

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The Three Fundamental Changes in the U.S. Political Economy Increased polarization of the political parties Increased economic inequality Increased immigration

McCarty Polarized America

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The Three Fundamental Changes in the U.S. Political Economy Increased polarization of the political parties Increased economic inequality Increased immigration Indicators of these changes track for more than a century.

McCarty Polarized America

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Polarization over 140 Years

r = .89 .2 .4 .6 .8 1 1.2 1 8 7 7 1 8 8 5 1 8 9 3 1 9 1 1 9 9 1 9 1 7 1 9 2 5 1 9 3 3 1 9 4 1 1 9 4 9 1 9 5 7 1 9 6 5 1 9 7 3 1 9 8 1 1 9 8 9 1 9 9 7 2 5 2 1 3 House Senate

Polarization McCarty Polarized America

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Party Positions

.5 1 1 8 7 7 1 8 8 5 1 8 9 3 1 9 1 1 9 9 1 9 1 7 1 9 2 5 1 9 3 3 1 9 4 1 1 9 4 9 1 9 5 7 1 9 6 5 1 9 7 3 1 9 8 1 1 9 8 9 1 9 9 7 2 5 2 1 3 Republicans Democrats

Party Mean DW-NOMINATE Score

Party Positions in the U.S. House 1877-2014

McCarty Polarized America

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Polarization and the Gini Index

r = .95

.5 .6 .7 .8 .9 1 1.1 Polarization Index .34 .36 .38 .4 .42 .44 Gini Index

1 9 4 7 1 9 5 1 1 9 5 5 1 9 5 9 1 9 6 3 1 9 6 7 1 9 7 1 1 9 7 5 1 9 7 9 1 9 8 3 1 9 8 7 1 9 9 1 1 9 9 5 1 9 9 9 2 3 2 7 2 1 1 Gini index of family income Polarization

Figure 1.1: Income Inequality and House Polarization

McCarty Polarized America

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Polarization and the Top 1%

r = .67

Polarization lagged 12 years r = .91

.5 .6 .7 .8 .9 1 1.1

Polarization Index

7 9 11 13 15 17 19

Percentage Share

1 9 1 3 1 9 2 1 1 9 2 9 1 9 3 7 1 9 4 5 1 9 5 3 1 9 6 1 1 9 6 9 1 9 7 7 1 9 8 5 1 9 9 3 2 1 2 9 Income share of top 1% Polarization index

Figure 1.2: Top One Percent Income Share and House Polarization

McCarty Polarized America

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Polarization and the Top .1%

r = .67

Polarization lagged 12 years r = .92

.5 .6 .7 .8 .9 1 1.1

Polarization Index

1 4 7 10

Percentage Share

1 9 1 3 1 9 2 1 1 9 2 9 1 9 3 7 1 9 4 5 1 9 5 3 1 9 6 1 1 9 6 9 1 9 7 7 1 9 8 5 1 9 9 3 2 1 2 9 Income share of top .1% Polarization index Note: World Top Income Database (2012). Used by permission.

Figure 1.3: Top 0.1% Income Share and House Polarization

McCarty Polarized America

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Polarization and the Top .01%

r = .78

Polarization lagged 8 years r = .94

.5 .6 .7 .8 .9 1 1.1

Polarization Index

2 4

Percentage Share

1 9 1 3 1 9 2 1 1 9 2 9 1 9 3 7 1 9 4 5 1 9 5 3 1 9 6 1 1 9 6 9 1 9 7 7 1 9 8 5 1 9 9 3 2 1 2 9 Income share of top .01% Polarization index Note: World Top Income Database (2012). Used by permission.

Figure 1.4: Top 0.1% Income Share and House Polarization

McCarty Polarized America

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Polarization and Immigration

r = .68 .5 .6 .7 .8 .9 1 1.1

Polarization Index

3 6 9 12 15

Percentage Foreign Born

1 8 8 1 8 9 1 9 1 9 1 1 9 2 1 9 3 1 9 4 1 9 5 1 9 6 1 9 7 1 9 8 1 9 9 2 2 1 Percent foreign-born Polarization index

Figure 1.3: Percent Foreign Born and House Polarization

McCarty Polarized America

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Broader Puzzles Democracy is generally considered to be a correction device for inequality.

McCarty Polarized America

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Broader Puzzles Democracy is generally considered to be a correction device for inequality. Other advanced democracies experiencing many

f the same economic shocks have much smaller

increases in inequality.

McCarty Polarized America

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Broader Puzzles Democracy is generally considered to be a correction device for inequality. Other advanced democracies experiencing many

f the same economic shocks have much smaller

increases in inequality. Why was the U.S. different?

McCarty Polarized America

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International Comparisons

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International Comparisons

McCarty Polarized America

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The Dance Our argument is not that any single causal relationship causes the conjunction of polarization, inequality, and immigration. There are several reinforcing relationships which account for these trends.

McCarty Polarized America

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Immigration Immigration ⇒ Inequality

Creates competition in low wage labor market Promotes economic growth

McCarty Polarized America

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Immigration Immigration ⇒ Inequality

Creates competition in low wage labor market Promotes economic growth

Immigration ⇒ Large fraction of low income households w/o voting rights

Republican party can move to right and still win Absence of public policies to reduce inequality and manage immigration.

McCarty Polarized America

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Inequality Inequality ⇒ Political conflict over redistribution Inequality with rising mean real income ⇒ move to right by Republicans, smaller move to left by Democrats Inequality with rising mean real incomes ⇒ demand for low-skilled service labor ⇒ immigration

McCarty Polarized America

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Polarization Polarization ⇒ policy gridlock Gridlock ⇒ deterioration in social benefits and non-responsiveness to economic shocks ⇒ Inequality Gridlock ⇒ lack of immigration reform

McCarty Polarized America

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Explanations of Congressional Polarization

The Southern Realignment Increased Party Discipline in the Legislature Redistricting Primary elections Income inequality

McCarty Polarized America

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Explanations of Congressional Polarization

The Southern Realignment Increased Party Discipline in the Legislature Redistricting Primary elections Income inequality

Voters more sorted on income (until very recently) District income better predictor of congressional voting More variation of incomes across districts

McCarty Polarized America

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Income and Voting

1 1.5 2 2.5 3 3.5 4 Stratification 1 9 5 2 1 9 5 6 1 9 6 1 9 6 4 1 9 6 8 1 9 7 2 1 9 7 6 1 9 8 1 9 8 4 1 9 8 8 1 9 9 2 1 9 9 6 2 2 4 2 8 2 1 2

Party ID President Voting McCarty Polarized America

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Is the Relationship Causal?

Hard to establish causal relationships between a single pair of trends Reciprocal causation (The “Dance”)

The policy channel Polarization clearly leads the Piketty-Saez series

Omitted variables

A lot of stuff happens in the 20th Century (much of it around inflections points)

Rise and fall of mass immigration Wars Great Depression, Stagflation, and the Global Financial Crisis Civil Rights movement and Southern Realignment

McCarty Polarized America

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Using the American States

US states vary widely with respect to levels and trends in polarization US states vary widely in levels and trends in income inequality Measurement

Until recently quality state-level data on polarization and inequality was unavailable State income inequality measures are often plagued by measurement error

McCarty Polarized America

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Polarization in the States

r = .996 1.2 1.4 1.6 1.8 2 1996 2000 2004 2008 2012 2016 Year Lower Chambers Upper Chambers

Polarization McCarty Polarized America

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Polarization by Region

1.2 1.4 1.6 1.8 2 2.2 Polarization 1996 2000 2004 2008 2012 2016 Year Northeast North Central South West

McCarty Polarized America

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Polarization in the States

McCarty Polarized America

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Inequality in the States

McCarty Polarized America

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Results

Inequality increases polarization by making Democratic parties more leftwing Works through moderate Democrats being replaced by Republicans Also moves Republicans to the right Effect is:

larger after 2008 larger in states currently controlled by Republicans

Overall inequality moves state legislatures to the right

McCarty Polarized America

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Unequal Participation

2008 2010

0% 25% 50% 75% 100% $ − 5 k $ 5 − 7 . 5 k $ 7 . 5 − 1 k $ 1 − 1 2 . 5 k $ 1 2 . 5 − 1 5 k $ 1 5 − 2 k $ 2 − 2 5 k $ 2 5 − 3 k $ 3 − 3 5 k $ 3 5 − 4 k $ 4 − 5 k $ 5 − 6 k $ 6 − 7 5 k $ 7 5 − 1 k $ 1 − 1 5 k > $ 1 5 k $ − 5 k $ 5 − 7 . 5 k $ 7 . 5 − 1 k $ 1 − 1 2 . 5 k $ 1 2 . 5 − 1 5 k $ 1 5 − 2 k $ 2 − 2 5 k $ 2 5 − 3 k $ 3 − 3 5 k $ 3 5 − 4 k $ 4 − 5 k $ 5 − 6 k $ 6 − 7 5 k $ 7 5 − 1 k $ 1 − 1 5 k > $ 1 5 k

Household Income

Noncitizen Nonvoter Voter

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Concentration of Campaign Contributions

McCarty Polarized America

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Donald Trump and 2016

Ideological heterodoxy

Ethno-nationalism Immigration restrictionist Anti-globalist

McCarty Polarized America

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Donald Trump and 2016

Ideological heterodoxy

Ethno-nationalism Immigration restrictionist Anti-globalist

Has received support from traditional conservatives on issues of overlapping interest

Judicial appointments Tax cuts Regulatory Rollback

McCarty Polarized America

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Donald Trump and 2016

Ideological heterodoxy

Ethno-nationalism Immigration restrictionist Anti-globalist

Has received support from traditional conservatives on issues of overlapping interest

Judicial appointments Tax cuts Regulatory Rollback

The response of the Left

McCarty Polarized America