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November 30, 2012 12:30 PM Conservatives and Inequality

By Ed Kilgore

I’m not in the habit of paying a lot of attention to writers who are in the business of telling conservatives to do things they won’t in a million years do. Sure, American politics would be more productive and less apocalyptic if we could bring back the days of tony, mandarin moderate Republicanism, or finally drive a stake through the heart of supply-side economics, or reach a tolerant consensus on “fringe” cultural issues that embarrass urbane secular folk on the Right. But we need to understand the total conquest of the Republican Party by the conservative movement is a recent enough development that it will take quite a few years more of electoral defeats for the GOP or dysfunctional governance in Washington before a return to RINOism is practicable, particularly since most conservatives continue to believe RINOism is their party’s real problem.

Still, Josh Barro’s despairing advice to conservatives continues to fascinate because of its analytical clarity and power. His latest Bloomberg column on conservatives and income inequality perfectly explains why the GOP is in danger of forfeiting a competitive status with middle-class voters unless it concedes there’s a problem and accepts the responsibility of finding solutions that don’t make the problem worse. The headline—“Why Conservatives Must Surrender on ‘Redistribution’”—is provocative enough. But if you go through his reasoning, it’s very compelling.

Liberals talk about booming incomes at the top while lower-income households barely see benefits from economic growth. Conservatives talk about a rising share of the population that depends on government benefits and a shrinking share that pays income tax.
Though the frames are different, these are descriptions of the same economic phenomenon: rising inequality of pre-tax incomes. But only liberals are advancing a semblance of an agenda to address it.
The main liberal reaction to this phenomenon is to call for more progressive fiscal policy: higher taxes on the rich people who have benefited most from the last 30 years’ gains in gross domestic product to pay for programs that raise low- and middle-income people’s after-tax incomes. Obamacare, which raised taxes on the rich to fund a new health-care entitlement for the poor and middle class, is a key example of this agenda.
Liberals also advocate policies that are aimed at reducing pre-tax inequality: more subsidies for education, trade protection, industrial policy to support medium-skill jobs in manufacturing, easier unionization, minimum-wage increases, rent control….
One conservative message on inequality is to say that it doesn’t matter, and we should accept rises in both pre-tax and post-tax inequality. This is the implication of studies periodically put out by the Heritage Foundation, arguing that poor people aren’t really poor if they have microwave ovens.
This isn’t an appealing argument. The problem with rising inequality is not that lower-income families can’t afford ever-cheaper electronics; it’s that they can’t keep pace with the rising costs of health care, education and (in certain parts of the country) housing. There’s also no reason to think that, whatever standard of living we start from, an economy where nearly all the improvements accrue to a small fraction of families is either politically sustainable or morally acceptable.
Then there is the argument that government benefits reduce the productivity of people at the bottom, who would go out and earn more money if we made their entitlements less generous. When Mitt Romney says this he ends up more or less calling the bottom half of the income distribution moochers; people such as Paul Ryan manage to say the same thing more artfully.
The main problem with this position is the lack of evidence to support it: Lower taxes and a smaller government might raise GDP growth, but there’s no particular reason to assume that growth would accrue in a more equal manner than we have experienced recently. The main effect of Ryan-style fiscal policy, which makes taxes both lower and less progressive and while shrinking benefits, would be a rise in after-tax inequality.

Barro goes on to discuss some potentially fruitful strategies for dealing with pre-tax inequality that conservatives ought to be able to embrace but currently won’t, including aggressive government-managed health care cost containment and a big expansion of skills-based immigration. But he concludes no strategy will work if it does not include an acknowledgment of post-tax inequality—and the need for more progressive taxation—as an element.

Some redistributive policies are more economically damaging than others. If conservatives made peace with the need for more redistributive economic policy, they could fight to make sure it is pro-growth. For example, they could focus on minimizing poverty traps created by means-tested entitlements, and making sure the tax base is broad so progressivity can be achieved with relatively low tax rates.
Roughly, this is what right-of-center political parties in Europe do.
Obviously, it’s not something conservatives in the U.S. are interested in doing.

Barro does not in this column close the loop by saying exactly where this leaves conservatives, but you’d have to figure the GOP’s prospects remain confined to an ever-narrowing window of opportunity that can be occasionally exploited via some combination of luck, money, Democratic mistakes, and emotional appeals to declining segments of middle-class voters who can be persuaded by cultural arguments or resentment of those further down the income ladder. That’s pretty much the status quo, and for now, conservatives would much rather fight a losing battle than switch strategies.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

Comments

  • lou on November 30, 2012 1:18 PM:

    Flim flam framing on why preserving the distribution to the top is critical will continue to be the game of the GOP. That has been the aristocratic way since the beginning of the republic.

  • BillFromPA on November 30, 2012 1:18 PM:

    Please excuse the cliche',but to a hammer, everything looks like a nail. Conservatives already have 'the answer',and it's the same no matter what the question is. These folks are fundamentally unable to admit their approach is wrong,they can't possibly be wrong, they're just not explaining it properly. They forced Mittens into Batshit Crazy wingnuttery, he lost, the solution is to get a Real Conservative next time. The proof that they learned nothing is unfolding in Va right now as Ken Cuccinelli becomes the new Wingnut darling. He'll get creamed by Terry McAuliffe and the GOP will then look for someone even crazier than Cuccinelli.

  • c u n d gulag on November 30, 2012 1:35 PM:

    Right now, they can't change - they are too reliant upon their Manichean Dominionist Evangelical Christian base.

    Goldwater, who couldn't stand them, and was frightened by them, warned against their inclusion into Republican politics - which is exactly what Reagan did despite the warnings (though his and Fallwell's "Moral Majority" had its roots in Nixons "The Silent Majority," and "Southern Strategy).

    Back then, they were they footsoldiers. And they still are.
    They are the ones who are the small-money donors.
    They are the energy.
    They knock on doors, they man the phones.
    The are the backbone, the "morals" and "soul," of the party.
    Hell, after 30+ years, THEY are the politicians and policy-makers themselves.
    Lately, they've been joined by the remains of the old John Birchers - the Teabaggers.

    The Republican Party is no longer the old-school party of old and new corporate money.
    They are the party of the Wall Street uber-rich who are partially funding the Dominionists, the John Birchers, and any remnants of the former party - most of whom have long shifted to the Democrats.
    This IS their base, today: Jesus-freaks, John Birchers, and other assorted racists, misogynists, xenophobes, and/or homophobes - and all funded by Wall Street/Billionaires, looking for rubes to give cover for THEIR only goal: the lowest taxes possible.

    The Republican Party is currently in a symbiotic relationship with the very disease which will eventually kill it.
    They can no more seperate from it than conjoined triplets - one, two, or all three of whom may die when seperated.
    The Republican Party has no choice but to stick this out, and hope for the best - some terrible economic collapse, some horrendous terrorist attack, which they hope will make the country turn to them.

    If they try to move towards more rational, realistic, and more inclusive policies, the Jesus-freaks and Birchers will split-off, either together, or seperate, and that will be enough to turn the Republicans into a minority party.

    OR, finally free them up to finally change and adapt!
    But, I don't see the kind of leadership in the party that could make that work - even if they wanted to.

    And so, here they sit - hoping, praying, for some catastrophe: either via an economic collapse, or a monumental terrorist attack on US soil.
    And that's ALL they have.
    They had, barring terrible circumstances, their best chance at holding power a few weeks ago. And lost.

    But, like Zombie Jason, they will keep coming back and trying to rise from the dead.
    And they will never die - because there will always be Christian Jesus-freaks, racists, misogynists, xenophobes, and/or homophobes.

    So, don't cheer. VOTE! FIGHT!!!

  • Pete on November 30, 2012 1:37 PM:

    For example, they could focus on minimizing poverty traps created by means-tested entitlements (emphasis added)

    Note that the trend in the current GOP (and in same cases the Democrats) is toward, not away from, means-tested entitlements.

  • mmm on November 30, 2012 2:04 PM:

    I'm with BillfromPA, and you notice how far Santorum got the other day with his nutty remarks. Dig in deeper, Repubs until you disappear.
    Captcha... 7,300 kinglyho... huh? no virgins??

  • Joe Friday on November 30, 2012 2:23 PM:

    "This is the implication of studies periodically put out by the Heritage Foundation, arguing that poor people aren't really poor if they have microwave ovens."

    LET THEM EAT CAKE !

  • Peter Principle on November 30, 2012 2:33 PM:

    The only politically feasible conservative strategy for reducing -- or at least limiting -- income inequality is boosting growth to a high enough speed that we not only reach full employment but go beyond it, greatly increasing the bargaining power of labor (without those pesky unions).

    Call it the Greenspan strategy -- or, more accurately, the Greenspan/Robert Rubin strategy.

    The problem is Okun's Law -- the estimated relationship between GDP growth and job creation. Given the underlying productivity trends and a relatively open economy, the kind of growth needed to restore full employment, much less power through it, is probably not a realistic goal for a large advanced economy like the US, which sits at the edge of the technology curve.

    Greenspan and Rubin were able to achieve it for a brief time, with some help from the bond market and the Internet Bubble, and a lot of people thought the problem was permanently licked, but sadly, no.

    Conservatives have spent the last 30 years trying to restore a 19th century class structure. And now that they've succeeded, they're just going to have to live with the political consequences.

  • John on November 30, 2012 2:57 PM:

    We need to raise the minimum wage (which puts upwards pressure on other wages) and add a 55% marginal tax bracket for this earning more than two or three million a year. The point of that is to try to avoid people expecting to cash out quickly from a venture. With high marginal rates they'll have to keep a company going strong for thirty years to get out their $100M dollars, not just a few years.

  • Rahul on November 30, 2012 2:57 PM:

    Any glimmer of hope that you may start to see after reading an article like this is quickly distinguished by skimming through the comments on the page.

  • Col Bat Guano on November 30, 2012 3:44 PM:

    Both Barro and the weekend Monthly overseer both make the point that letting in more high skill immigrants such as doctors and engineers would drive down wages for those professions and make their services more affordable and reduce inequality. While increasing the number of physicians might reduce health care costs how is driving down the wages of IT engineers or other MA/MS and PhDs going to fix inequality? Are these really the folks that make up the 1%? I'm sure the CEO's of those corporations would like the effect on their bottom line though.

  • Rick B on November 30, 2012 5:06 PM:

    @Col Bat Guano - I don't see how the policies that expect to bring in more H1b professionals to fill highly skilled technical jobs while at the same time raising the cost of education for American citizens does anything positive for the American middle class. That's particularly true when you realize that those highly skilled professional were almost all trained by government subsidized education programs in their own countries and poached by the American economy.

    America needs its own home-grown physicians and engineers. We also need a lot fewer lawyers. (But better lawyers - just fewer.)

    @C u n d Gulag, you described the situation very, very well. I would add that the current crop of dominionists are very authoritarian and that has spread to the entire GOP. Culturally rural and authoritarian religious right-wingers will always oppose public education because it does not teach their indoctrination and because the public education creates enemies to their authoritarianism and fear-based governing style.

    One other thing. The conservatives want to increase personal financial uncertainty for the poor as a way to motivate greater productivity, but increased productivity is a result of greater training and professionalism among workers and the craft traders. If you cannot predict that the time and effort you are putting into getting trained to be more productive will pay off why bother? Just work for today and tomorrow and hope you don't get laid off. Certainty and predictability for the working class increased productivity and the same certainty and predictability will permit young people to create families and raise children.

  • Peter Principle on November 30, 2012 5:17 PM:

    "Both Barro and the weekend Monthly overseer both make the point that letting in more high skill immigrants such as doctors and engineers would drive down wages for those professions and make their services more affordable and reduce inequality."

    The trend that seems to be emerging among conservatives (see also the GOP idea of capping deductions, thus creating a new, higher marginal tax bracket for the upper middle class) is to wage class warfare on behalf of the 0.001% by attacking the 19.999% below them.

    Leave no billionaire behind.

  • Doug on November 30, 2012 9:37 PM:

    Never could understand that bit about not being poor if one has a microwave! Have any of these idiots ever priced a decent, let alone a high end, stove/range?
    "Out of touch" doesn't come close.

  • James M on November 30, 2012 11:42 PM:

    As usual very perceptive comments. The only difference I have with them is that they don't go far enough. We are writing on the assumption that the Tea Party et al., will eventually kill the GOP. I would argue that it is already dead!

    If I were to pick the time of death, I would say that it would have to be the moment St. Ronald pronounced that "Ketchup is a vegetable" in response to criticisms of his(proposed?)cuts in federal funding for school lunches. That signaled the beginning of a departure from reality in the GOP that has only grown since.

    You might wonder how I can say the GOP is already dead when it controls the House and still fields successful candidates. Former Japanese Prime Minister Kan Naoto was asked to describe the ruling LDP in an interview when he was still an opposition party member. Mr. Kan said that the LDP had so many members with such wildly differing views that you couldn't really call it a 'party'. Instead, he said, it was an 'election machine'.

    That is all the GOP is now: an election machine funded by the billionaires cundagulag described above, whose primary purpose it protect the fortunes of the wealthy. Thus, I don't think the GOP can be saved. Rather, it has to be reborn, but I can't imagine how long it will take before that happens.

  • Rick Massimo on December 01, 2012 11:39 AM:

    Ultimately, every possible solution to the GOP's problem involves at some point admitting that the Democrats were right about something.And that will never, ever happen.

    So the only thing to do is to wait for Rush and Sean Hannity to come up with some sort of framing that makes redistribution sounds like a Republican idea that they're forcing the Dems to go along with. And until that day comes, keep beating them in elections.