Inequality in America
How Institutional Gridlock and Racism Increase Income Inequality
Essential reforms to reverse rising income concentration
Joe Biden and Kamala Harris take office in a bitterly divided America. Some manifestations of that division have only recently become obvious. Other aspects of that division have been clear for years — cries for racial justice in the face of unarmed Black Americans killed by police, mass incarceration disproportionately affecting people of color, unequal pay for men and women, and deep partisan division. My most recent book analyzes yet another divide in America — the economic gap between the rich and the rest. The central argument of America’s Inequality Trap is that today’s astronomical disparities between America’s haves and have-nots are the product of reinforcing feedback between an unequal economy and American politics. In this post I focus on two key findings from the book and attempt to draw out some implications for the current political moment.
1) Policy inaction benefits the rich
One of the central findings of the book is that the status quo bias built into the American policymaking system benefits the wealthy. Based on an analysis of more than 60 years of data, I find that policy inaction is associated with income concentration. What’s more, policy inaction has its largest inegalitarian effects when the income gap is already large. On the other hand, when income inequality is relatively low, policy action vs. inaction is unrelated to income concentration. This means that in today’s context of extremely high inequality, institutional reforms that make it easier to overcome gridlock are essential for reversing economic disparities.
Numerous institutional factors make it possible for minorities to get in the way of policy action. Perhaps the most obvious, and the one receiving the most discussion these days, is the filibuster. Requiring 60 votes in the Senate, especially a Senate in which a subset of 41 Senators needed to maintain a filibuster could represent as little as 25 percent of Americans, opens the door to tyranny of the minority. Eliminating the filibuster is an egalitarian reform. Malapportionment in the Senate more generally is an issue, with Democrats needing far more votes nationwide to gain control of the Senate than Republicans. More broadly, proposals that make it easier to register and vote, expand the electorate, protect voting rights, and move toward proportional representation are also relevant. These institutional reforms are just as important as new policy proposals to combat inequality, in part because egalitarian policy efforts are more likely to succeed within a reformed institutional framework.
2) Racial and economic inequity feed on each other
There is broad support in the American public for a variety of policy changes that would enhance economic equality. But simply assuming that a more majoritarian democratic system would naturally lead to massive reductions in the income gap would be a mistake. One of the other core findings of my book is that many Americans become less supportive of economic redistribution as inequality rises. Over time, Democrats fare worse on average when national level inequality is higher. Republican congressional candidates in states with higher levels of inequality tend to over-perform their Democratic opponents. People living in more unequal states were more likely to vote for Donald Trump in 2016 even when controlling for a variety of other state-level and individual characteristics.
Importantly, the association between inequality and opposition to Democratic candidates depends on racial animosity (see Figure 1). Americans with more egalitarian racial attitudes are more supportive of redistributive policies when inequality is high, controlling for demographic and political characteristics. However, those with more racist attitudes are less supportive of redistribution when inequality is higher.
This suggests two important strategies for building enduring support for policies that undermine inequality. First, undermining racism is essential. For anti-democracy and anti-redistribution candidates to benefit from rising inequality, racial animosity is a pre-condition. By the same token, the benefits that accrue to these types of candidates from racism are heightened in contexts of high economic inequality. Fighting racial inequality and economic inequality go hand-in-hand. This result also points to the importance of designing anti-inequality policies in ways that don’t easily activate racial tension. This is especially important in initial policy efforts to reduce inequality, as such efforts are more likely to build durable public support if they effectively fight inequality by providing broad benefits.
Reversing the trend toward income concentration in America will take effort on multiple fronts: institutional change, traditional redistributive policymaking, and on the ground organizing. Many of the steps that must be taken may not even seem to be directly connected to economic inequality. But every step that balances the scales of political power between rich and poor and encourages public support for egalitarian policies has the potential to loosen the grip of America’s Inequality Trap.
