Chart of the Day: The Party of the Rich

In the Weekly Standard, Christopher Caldwell adopts the populist lefty position on financial reform (break up the banks, sow their smoking ruins with salt, and if they fail again just let them die) and then wonders why Republicans are fighting this. Is it because they're the party of the rich? That's surprisingly unclear. Exit polls show that, with the exeption of the most recent election, the moderately well-off (those with $200,000+ incomes) have voted pretty reliably for Republicans for decades, and Andrew Gelman has shown that this pattern is especially pronounced in poor states. But the really rich seem to support Democrats in pretty sizeable numbers. This chart shows the pattern of political contributions in the richest zip codes in America:

Now, this isn't bulletproof evidence of who the really rich support. Apparently there isn't any. But it's pretty suggestive. And Caldwell is disgusted with the conclusion he draws:

Republicans have been paying a high price in both public opinion and political coherence to defend the prerogatives of a class that despises them. It was to cosset just these people with tax cuts that George W. Bush destroyed the balanced budget. It would seem that Republicans are either an exceptionally idealistic political party (pursuing their ideology to the point of self-destruction) or an exceptionally foolish one (convinced that anyone with a great big pile of money is their friend). There may be another explanation. To paraphrase something Clinton aide David Dreyer said many years ago, Republicans have done Lord Acton one better — they’ve been corrupted by power they don’t even have.

There's actually an interesting question here: why do Republicans support the preferred policies of the rich so reliably, when that support isn't reciprocated? I can think of a few possibilities:

  • Inertia. The rich did support Republicans in the past and old habits die hard. Although party leaders seem to understand that ever since Nixon their base has been primarily among the white working class, they still haven't really internalized what this means. So they just keep on supporting the rich.
  • Why not? Republicans appeal to the working class mainly via social policies. So even if it won't get them overwhelming support, why not get whatever support they can from the rich by supporting economic policies they like?
  • Coincidence. The GOP is the party of big business, and the interests of big business mostly coincide with the interests of the rich.
  • Bad data. Actually, the rich do support Republicans more than Democrats. The top 20 zip codes are heavily urban and Jewish, which are traditional Democratic constituencies, so this isn't good evidence of their overall habits. A better survey of the rich might show that, in fact, they support Republicans pretty heavily.
  • Something else I haven't thought of. That should cover all the remaining possibilities.

Vote in comments!

Should Felons Be Allowed to Vote?

Over at The Corner, Roger Clegg writes:

The Supreme Court has asked the Obama administration for its views on whether to grant review in a case that challenges felon disenfranchisement as a violation of the Voting Rights Act. It will be interesting to see what the solicitor general does. The Left does not like it when felons are not allowed to vote, but the Justice Department in years past has defended these laws, and a partisan volte-face will, or at least should be, embarrassing.

Help me out here. Why should it be embarrassing for the Obama administration to take a different position than previous administrations? Don't presidential administrations do that all the time?

Woody Allen on God and Life

This is, I guess, Woody Allen's version of Pascal's wager:

I was with Billy Graham once, and he said that even if it turned out in the end that there is no God and the universe is empty, he would still have had a better life than me. I understand that. If you can delude yourself by believing that there is some kind of Santa Claus out there who is going to bail you out in the end, then it will help you get through. Even if you are proven wrong in the end, you would have had a better life.

It's from an interview with Robert Lauder, and this is actually one of the more cheerful parts.

What the Coast Thinks of BP

Erica Grieder has been reporting from the Gulf Coast and passes along this bit of commentary about the blowout at British Petroleum's Deepwater Horizon oil rig:

National public sentiment is running very high against the oil industry in general, and BP in particular. But the closer you get to the coast the more moderate the feeling becomes. I've talked to oilfield workers who were shocked that this happened on a BP rig, because in their experience BP is more stringent about safety measures than any other firm.

....It's not cheerleading — everyone is very clear that they want BP to take full responsibility. And feelings will change if the crisis worsens, if the joint command doesn't quickly get the leak and the spill under control, or if BP tries to shirk its responsibility now or in the years to come. To my ears, it sounds oxymoronic to describe BP as "a very responsible spiller" (Mary Landry, a rear admiral in the Coast Guard), but it's been an interesting perspective to see how differently offshore drilling and BP are perceived down here.

Of course, this isn't an unusual reaction. Loggers have a different attitude toward old growth forests and miners toward mountain top removal than outsiders do. When it's your job on the line, you have a lot more sympathy toward dangerous/polluting industries than your average urban white collar worker.

Still, it's an interesting note about BP. Just thought I'd pass it along as food for thought. The other side of the story is ably told by James Ridgeway here and Kate Sheppard here.

Public Workers Paid Less Than Private

A friend sent me a link to a new study that follows up on a question I asked a few weeks ago: are public sector employees paid more than comparable private sector employees? According to Keith Bender and John Heywood, who did a study for the Center for State and Local Government Excellence, the answer is no. In the chart on the right, the zero line (at the top) indicates parity. Anything below that indicates lower pay than the private sector. As you can see, pay for state employees crept up to near parity with the private sector in the late 80s, but ever since the late 90s the differential has been about -12%. If you add in the richer benefits that public sector employees get, the pay differential is about -7%.

I'm offering this as a data point only. There are loads of caveats. For starters, the authors use broad averages from the Current Population Survey and then adjust for things like education, age, gender, and so forth. However, this quite likely masks a considerable skew in the data. The very top jobs in the public sector — lawyers, doctors, executives — are paid quite a bit less than in the private sector. So if the average pay difference is -7%, it's quite possible that the majority of mid-range workers are paid more than their private sector counterparts. It would be interesting to see them do a similar comparison that excludes, say, the top 10-20% of earners.

It's also possible that this research underestimates the future value of public sector pensions, which appear to be badly underfunded right now. Data for current years may not capture this. And overall averages might not capture differences in specific job categories.

What's more, I don't know anything about Center for State and Local Government Excellence, so I don't know what kind of axe they may or may not have to grind.

Still, even with all those caveats, aggregate data is still worthwhile. What we're mainly interested in, after all, is the total payroll expense of state and local governments compared to a demographically similar private sector organization, and this data suggests that the difference is small but negative. The report also contains data for individual states, which shows, for example, that California workers are paid just slightly less than their private sector equivalents while Texas pays their workers nearly 15% less. Overall, I don't think this report settles the public-private question for all time or anything, but it's interesting data.

Quote of the Day: Obama on McCain

From Barack Obama, after witnessing first hand John McCain's complete bewilderment over the financial implosion during a White House meeting shortly before the 2008 election:

Maybe I shouldn't be president. But he definitely shouldn't be.

Roger that.

Is America Just an Oversized Ireland?

In a review of Fintan O'Toole's Ship of Fools, a book about the boom and bust of the Irish economy, Henry Farrell summarizes the pathologies of Irish political culture and then concludes:

Yet is American politics so very different? Irish politics is profoundly shaped by perceptions regarding the difference between those who have influence within the system and those who are relegated to the periphery....This is as plausible a description of the United States as of Ireland. In the U.S. system, too, the broad imperatives of globalization are marshaled by well-connected and "untouchable" business interests to defeat regulatory oversight, of the financial system and elsewhere. The American version of these interests is less roughly spoken than its Irish equivalents, and wears better suits, but otherwise it is not very different from the forces that brought Ireland to near collapse. If Ireland once seemed like a miniature America, America looks increasingly like an oversized Ireland. A comparison that was once all too self-congratulatory now has disturbing implications.

I had a hard time staying interested in Ship of Fools even though it's a short read. That's not because it's an especially bad book — though I would have preferred a little bit more analytical meat to go with the unrelenting outrage — but because if you covered up the names you could have fooled me into thinking it was just another book about America's financial collapse. If O'Toole is to be trusted, the only real difference is that American politicians will generally be prosecuted if they're caught in obvious and provable corruption while Irish politicians aren't. Beyond that, though, the political culture is pretty much the same, the financial culture is pretty much the same, the real estate boom was pretty much the same, and all the rhetoric that supported it was pretty much the same.

Obviously that's not O'Toole's fault, and certainly the details are often interesting in their own right. But basically, "Ireland was a mini-America" pretty much sums up the whole thing. Move along, nothing to see here.

Mirandizing the Times Square Bomber

Matt Steinglass on the arrest of Faisal Shahzad for the attempted Times Square bombing:

One unanswered question: will anyone bother trying to drum up a ridiculous controversy over whether or not the FBI read Mr Shahzad his Miranda rights when they arrested him? I predict not.

Matt wrote that around 7 am this morning. Within minutes, John McCain was on Imus.....drumming up a ridiculous controversy over whether or not the FBI read Mr Shahzad his Miranda rights: "Obviously that would be a serious mistake," he said. "Don't give this guy his Miranda rights until we find out what it's all about." Village idiot Peter King chimed in too. Others will undoubtedly follow.

But then, just to upset everyone's applecart, when Fox & Friends tried to get some mileage out of this pseudo-controversy this morning, Glenn Beck pushed back: "He's a citizen of the United States, so I say we uphold the laws and the constitution," he said. So now Glenn Beck is a voice of reason within the conservative movement? My world has been turned upside down.

Tallying Up the Cost of Gasoline

Jon Chait talks about the externalities associated with oil drilling and gasoline use:

Most public attention has focused on the cost of emitting carbon into the atmosphere, but the costs of cleaning up the inevitable spills, and the military foreign policy costs of enriching petro-states, which tend to be unfriendly, and having to secure foreign oil supplies are highly significant. If all these costs were paid at the point of sale, people would switch to other energy sources.

If you were to sum up the cost of IQ losses from leaded gasoline (now gone, of course, but the effects live on), the asthma epidemic among today's kids, military protection of the Middle East, global warming, garden variety smog, plus all the more prosaic things like traffic jams and so forth, I wouldn't be surprised if the real cost of a gallon of gasoline would have to go up by three or four dollars to pay for it all. Hell, if the BP blowout ends up costing, say, $5-10 billion, which isn't an unreasonable guess at this point, that's a nickel a gallon just for that.

On another note, William Galston has a piece here speculating that the real blame for the blowout ultimately rests with Dick Cheney. I sort of hope that turns out to be true. It would restore my faith in the proper workings of the universe.

Top Ten Financial Reform Loopholes

Ezra Klein points us to a White House list of "The 10 Most Wanted Lobbyist Loopholes," and it's good reading. Here are my top four from the list:

5. Removing the Derivatives Trading Requirement to Protect Wall Street Profits.

6. Stretching the Derivatives “End-User” Exemption into a Hedge Fund Loophole.

7. Creating an “AIG Loophole.”

9. Letting Firms Make Loans Without Skin in the Game.

Why these four? Because they're all related to limiting leverage. #5 is related because clearinghouses would require collateral for derivatives trades. #6 because it keeps the clearing requirement robust. (Clearing is a subset of exchange trading, and I assume that it's the clearing requirement that the White House is really interested in here.) #7 because it would extend capital requirements to at least parts of the shadow banking sector. And #9 because it effectively limits leverage at both the consumer level and the mortgage originator level.

But the whole list is worth reading. Even in its current state the Senate bill is only OK, not great. Holding the lobbyists at bay is the minimum requirement for keeping it even that good.