Inequality: it's the politics, stupid

In the "Inequality: how'd that happen?!" thread, commenter crack drew my attention to this post which appeared yesterday on Dani Rodrik's blog. As it happens, Rodrik's posted a graph which is absolutely a metaphysically perfect illustration of that "how'd that happen?!" post. It is the following:

I mean, in terms of support for the thesis that politics is the engine driving inequality in this country, does it get any better than this?

The illustration is from a new book by political scientist  Larry Bartels, which sounds exciting and which I'm looking forward to. I'll let Rodrik explain:

When a Republican president is in power, people at the top of the income distribution experience much larger real income gains than those at the bottom--a difference of 1.5 percent per year going from the bottom to the top quintile in the income distribution. The situation is reversed when a Democrat is in power: those who benefit the most are the lower income groups. If you are in the bottom quintile, the difference between having a Democratic or a Republican president in office is an income gain (or loss) of more than 2 percent per year! Strikingly, compared to Republicans, Democratic presidents generate higher income gains for all income groups (although the difference is statistically significant only for lower income groups).

Moreover:

Bartels shows in his book that this difference is not a statistical artifact or a fluke.  It is not the result of Democrats coming to power during better economic times, or of Republicans reining in the unsustainable excesses of Democratic administrations they replace . . .  These numbers are real and they are the outcome of partisan differences in policy. So if you are one of those who have bought the story that income distribution is the result of pure market forces and technological changes, with politics playing no role--think again. (emphasis mine)

While I'm on the subject of Dani Rodrik, I want to heartily recommend not only his excellent blog but his book, Has Globalization Gone Too Far?  If you want to learn more about the economics of globalization, this is an excellent place to start. Rodrik, an economics professor at Harvard, does a great job of summarizing the research and laying out the relevant issues. He certainly has a point of view, but he does present both sides. And the book is lucidly written and accessible -- you don't have to have an economics background to understand it. Another big plus is that it's short -- a little over 100 pages.

True, the book is a bit old (it was originally published in 1997) but it's not out of date. It was one of the first things I ever read about globalization and it's had a big impact on how I think about the issue.

Comments

[Phoebe Fay]

I just finished reading "The Conscience of a Liberal" by Paul Krugman, and he makes many of these same points, tracking it all the way from Herbert Hoover to George W. It's a very good read.

Congrats on the new blog. It looks good.

[Batocchio]

It really is an extraordinary chart. And like Phoebe Fay, I immediately thought of Krugman's book, which I've been reading.