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

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 America

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

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

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

Polarization over 140 Years Polarization 1.2 1 .8 r = .89 .6 .4 .2 7 5 3 1 9 7 5 3 1 9 7 5 3 1 9 7 5 3 7 8 9 0 0 1 2 3 4 4 5 6 7 8 8 9 0 1 8 8 8 9 9 9 9 9 9 9 9 9 9 9 9 9 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 House Senate McCarty Polarized America

Party Positions Party Mean DW-NOMINATE Score 1 .5 0 -.5 7 5 3 1 9 7 5 3 1 9 7 5 3 1 9 7 5 3 7 8 9 0 0 1 2 3 4 4 5 6 7 8 8 9 0 1 8 8 8 9 9 9 9 9 9 9 9 9 9 9 9 9 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 Republicans Democrats Party Positions in the U.S. House 1877-2014 McCarty Polarized America

Polarization and the Gini Index Gini Polarization 1.1 Index Index .44 1 .42 .9 r = .95 .8 .4 .7 .38 .6 .36 .5 .34 7 1 5 9 3 7 1 5 9 3 7 1 5 9 3 7 1 4 5 5 5 6 6 7 7 7 8 8 9 9 9 0 0 1 9 9 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 Gini index of family income Polarization Figure 1.1: Income Inequality and House Polarization McCarty Polarized America

Polarization and the Top 1% Percentage 1.1 Polarization 19 Share Index r = .67 1 17 Polarization lagged 12 years r = .91 .9 15 .8 13 .7 11 .6 9 .5 7 3 1 9 7 5 3 1 9 7 5 3 1 9 1 2 2 3 4 5 6 6 7 8 9 0 0 9 9 9 9 9 9 9 9 9 9 9 0 0 1 1 1 1 1 1 1 1 1 1 1 2 2 Income share of top 1% Polarization index Figure 1.2: Top One Percent Income Share and House Polarization McCarty Polarized America

Polarization and the Top .1% Percentage 1.1 Polarization 10 Share Index 1 r = .67 .9 7 Polarization lagged 12 years r = .92 .8 .7 4 .6 .5 1 3 1 9 7 5 3 1 9 7 5 3 1 9 1 2 2 3 4 5 6 6 7 8 9 0 0 9 9 9 9 9 9 9 9 9 9 9 0 0 1 1 1 1 1 1 1 1 1 1 1 2 2 Income share of top .1% Polarization index Figure 1.3: Top 0.1% Income Share and House Polarization Note: World Top Income Database (2012). Used by permission. McCarty Polarized America

Polarization and the Top .01% Percentage 1.1 Polarization Share Index 1 4 .9 r = .78 .8 Polarization lagged 8 years r = .94 .7 2 .6 .5 0 3 1 9 7 5 3 1 9 7 5 3 1 9 1 2 2 3 4 5 6 6 7 8 9 0 0 9 9 9 9 9 9 9 9 9 9 9 0 0 1 1 1 1 1 1 1 1 1 1 1 2 2 Income share of top .01% Polarization index Figure 1.4: Top 0.1% Income Share and House Polarization Note: World Top Income Database (2012). Used by permission. McCarty Polarized America

Polarization and Immigration Percentage 1.1 Polarization Foreign Born Index 15 1 .9 12 .8 r = .68 9 .7 .6 6 .5 3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 8 9 0 1 2 3 4 5 6 7 8 9 0 1 8 8 9 9 9 9 9 9 9 9 9 9 0 0 1 1 1 1 1 1 1 1 1 1 1 1 2 2 Percent foreign-born Polarization index Figure 1.3: Percent Foreign Born and House Polarization McCarty Polarized America

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

Broader Puzzles Democracy is generally considered to be a correction device for inequality. Other advanced democracies experiencing many of the same economic shocks have much smaller increases in inequality. McCarty Polarized America

Broader Puzzles Democracy is generally considered to be a correction device for inequality. Other advanced democracies experiencing many of the same economic shocks have much smaller increases in inequality. Why was the U.S. different? McCarty Polarized America

International Comparisons McCarty Polarized America

International Comparisons McCarty Polarized America

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

Immigration Immigration ⇒ Inequality Creates competition in low wage labor market Promotes economic growth McCarty Polarized America

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

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

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

Explanations of Congressional Polarization The Southern Realignment Increased Party Discipline in the Legislature Redistricting Primary elections Income inequality McCarty Polarized America

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

Income and Voting 4 3.5 3 Stratification 2.5 2 1.5 1 2 6 0 4 8 2 6 0 4 8 2 6 0 4 8 2 5 5 6 6 6 7 7 8 8 8 9 9 0 0 0 1 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 Party ID President Voting McCarty Polarized America

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

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

Polarization in the States Polarization 2 1.8 r = .996 1.6 1.4 1.2 1996 2000 2004 2008 2012 2016 Year Lower Chambers Upper Chambers McCarty Polarized America

Polarization by Region 2.2 2 1.8 Polarization 1.6 1.4 1.2 1996 2000 2004 2008 2012 2016 Year Northeast North Central South West McCarty Polarized America

Polarization in the States McCarty Polarized America

Inequality in the States McCarty Polarized America

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

Unequal Participation 100% 25% 50% 75% 0% $ 0 − 5 k $ 5 − 7 . 5 k $ 7 . 5 − 1 0 k $ 1 0 − 1 2 . 5 k $ 1 2 . 5 − 1 5 k $ 1 5 − 2 0 k $ 2 0 − 2 5 k $ 2 5 − 3 0 2008 k $ 3 0 − 3 5 k $ 3 5 − 4 0 k $ 4 0 − 5 0 k $ 5 0 − 6 0 k McCarty $ 6 0 − 7 5 k $ 7 5 − 1 0 0 k Household Income $ Noncitizen 1 0 0 − 1 5 0 k > $ 1 5 0 k Polarized America Nonvoter $ 0 − 5 k $ 5 − 7 . 5 k $ 7 . 5 − 1 0 k Voter $ 1 0 − 1 2 . 5 k $ 1 2 . 5 − 1 5 k $ 1 5 − 2 0 k $ 2 0 − 2 5 k $ 2 5 − 3 0 2010 k $ 3 0 − 3 5 k $ 3 5 − 4 0 k $ 4 0 − 5 0 k $ 5 0 − 6 0 k $ 6 0 − 7 5 k $ 7 5 − 1 0 0 k $ 1 0 0 − 1 5 0 k > $ 1 5 0 k

Concentration of Campaign Contributions McCarty Polarized America