Jan 11th 2010

To Reduce Political Polarization in Washington, We Must Reduce the Economic Polarization of America

by Robert Creamer

Robert Creamer is a long-time political organizer and strategist and author of the recent book: "Stand Up Straight: How Progressives Can Win," available on amazon.com.

We frequently hear pundits pontificating about the rising level of political polarization in Congress.
Often the blame is ascribed to plummeting levels of civility among Members. In fact, ten years ago the House actually conducted several "civility retreats" aimed at fostering a more civil atmosphere inside the body. These events featured motivational speakers and smaller "encounter-group-like" seminars - and were widely attended by Members and their families. Needless to say, this approach didn't do much for the "civility index" in Congress.
And then there are the "centrists" who think that the partisan divide can best be bridged by proposals that seek to "moderate" the Democratic "change" agenda. Of course, most of these "moderates" want to water down Democratic proposals to change the status quo -- proposals that would reduce the power of the Wall Street gang, the private insurance industry, the energy companies and Chamber of Commerce. This presents a serious problem to most Democrats because the interests of these special interests are generally diametrically opposed to the interests of the American people. But it turns out they are also counterproductive when it comes to ending political polarization as well. Here's why:

Several years ago, a group of political scientists that included Nolan McCarty, Keith Poole and Howard Rosenthal, conducted an important study on the causes of political polarization. Their results were published in a fascinating book, Polarized America: The Dance of Ideology and Unequal Riches. Their study found that there is a direct relationship between economic inequality and polarization in American politics. [i]

The team measured political polarization in congressional votes over the last century, and found a direct correlation with the percentage of income received by the top 1% of the electorate.
They also compared the Gini Index of Income Inequality with congressional vote polarization of the last half-century and found a comparable relationship.

Why should this be? It doesn't take a political genius to figure out that if people have more in common they are more likely to support similar proposals and perspectives. Political polarization in Congress does not result from some new inability to "communicate" or "empathize." It results from the fact that the major constituencies of the two parties have increasingly divergent economic interests.

To put is simply, Republicans increasingly represent the interests of the wealthiest elements of American society, and Democrats represent everyone else. As the gap between the incomes of these segments of the population grows, so does the gap between their economic interests and the policy proposals they support.

So in other words, if you want to do something about the political polarization of Congress, you have to deal with the underlying cause. You have to reduce the growing level of income inequality in America. Unfortunately, when "Moderate" Democrats attempt to defang Democratic proposals to rein in private insurance companies, Wall Street banks, energy companies, and the Chamber of Commerce they have exactly the opposite effect. The actions of these "Moderates" serve to perpetuate income inequality - and as a direct consequence, the political polarization they are so quick to attack.

We should remember that the level of income inequality is far from being a static feature of American society.Paul Krugman points out that at the beginning of the Great Depression, income inequality, and inequality in the control of wealth, was very high. Then came the "the great compression" between 1929 and 1947. Real wages for workers in manufacturing rose 67% while real income for the richest 1% of Americans fell 17%. This period marked the birth of the American middle class. Two major forces drove these trends - unionization of major manufacturing sectors, and the public policies of the New Deal that were sparked by the Great Depression.

The growing spending power of everyday Americans spurred the postwar boom from 1947 to 1973. Real wages rose 81% and the income of the richest 1% rose 38%. Growth was widely shared, but income inequality continued to drop.

From 1973 to 1980, everyone lost ground. Real wages fell 3% and income for the richest 1% fell 4%. The oil shocks, and the dramatic slowdown in economic growth in developing nations, took their toll on America's and the world's economies.

Then came what economist Paul Krugman calls "the New Gilded Age." Beginning in 1980, there were big gains at the very top. The tax policies of the Reagan and Bush administrations magnified income redistribution.

In the last 20 years, there has been a massive re-polarization of incomes in America between the wealthiest 1% of the population and everyone else. The Center on Budget and Policy Priorities reports that fully two-thirds of all income gains during the last economic expansion (2002 to 2007) flowed to the top 1% of the population. And that, in turn, is one of the chief reasons why the median income for ordinary Americans actually dropped by $2,197 per year since 2000.
From 1990 to 2004, the income of the top 1% of the population has increased 57%. The richest Americans - the top one-tenth of 1% - have experienced income growth of 85%. Yet the median income of the bottom 90% has increased only 2%

* Now the CEO of the average company in the Standard and Poor's Index makes $10.9 million. That means that before lunch, on the first workday of the year, he (sometimes she) has made more than the minimum wage workers in his company will make all year. That translates to $5,240 per hour - or about 344 times that pay of the typical American worker.

* Most people would consider a salary of $100,000 per year reasonably good pay. But the average CEO makes that much in the first 20 hours of the work year.

* And that's nothing compared to some of the Kings of Wall Street. In 2007, the top 50 hedge and private equity fund managers averaged $588 million in compensation each- more than 19,000 times as much as the average U.S. worker. And by the way, the hedge fund managers paid a tax rate on their income of only 15% -- far lower than the rate paid by their secretaries.

So if all the "moderates" who say they want to help end the polarization of Congress are serious, they need to get to work supporting the Democratic agenda to end the stranglehold of the wealthiest, most powerful economic interests, and support measures to once again increase taxes on the wealthiest among us at least to the levels they were back in the Clinton Administration. In other words, if you want to end the polarization of Congress, you have to end the economic polarization of America.


Robert Creamer's recent book: "Stand Up Straight: How Progressives Can Win," available on Amazon.com.


[i] Nolan McCarty, Keith T. Poole and Howard Rosenthal, Polarized America: The Dance of Ideology and Unequal Riches (Cambridge, MA: The MIT Press, 2006)

Browse articles by author

More Current Affairs

Apr 11th 2021
EXTRACT: "Some presidents indulge in the “Mount Rushmore syndrome” making an obvious effort to achieve greatness. Normally soft-spoken and apparently modest Biden is making his own bid for immortality."
Apr 9th 2021
EXTRACT: "New ways of thinking about the role of government are as important as new priorities. Many commentators have framed Biden’s infrastructure plan as a return to big government. But the package is spread over eight years, will raise public spending by only one percentage point of GDP, and is projected to pay for itself eventually. A boost in public investment in infrastructure, the green transition, and job creation is long overdue."
Apr 7th 2021
EXTRACT: " One can, and perhaps should, take the optimistic view that moral panics in the US blow over; reason will once again prevail. It could be that the Biden era will take the sting out of Trumpism, and the tolerance for which American intellectual life has often been admired will be reinvigorated. This might even happen while the noxious effects of American influence still rage in other countries. For the sake of America and the world, one can only hope it happens soon.  "
Mar 28th 2021
EXTRACT: "By refusing (despite having some good reasons) to end electoral gerrymandering, Chief Justice John G. Roberts, Jr., has directly enabled the paralyzing hyper-partisanship that reached its nadir during Donald Trump’s presidency. By striking down all limits on corporate spending on political campaigns in the infamous 2010 Citizens United decision, he has helped to entrench dark money in US politics. And by gutting the 1965 Voting Rights Act in Shelby County v. Holder, Roberts has facilitated the racist voter-suppression tactics now being pursued in many Republican-controlled states."
Mar 24th 2021
EXTRACT: "the UK’s tough choices accumulate, and the problems lurking around the corner look menacing. Britain will have to make the best of Brexit. But it will be a long, hard struggle, all the more so with an evasive fabulist in charge."
Mar 15th 2021
EXTRACT: "Over the years, the approach of most American policymakers toward the Israeli-Palestinian conflict has been Israel-centric with near total disregard for the suffering endured by the Palestinian people. The architects of policy in successive US administrations have discussed the conflict as if the fate of only one party (Israel) really mattered. Israelis were treated as full human beings with hopes and fears, while Palestinians were reduced to a problem that needed to be solved so that Israelis could live in peace and security.  ..... It is not just that Israelis and Palestinians haven’t been viewed with an equal measure of concern. It’s worse than that. It appears that Palestinians were judged as less ​human than Israelis, and were, therefore, not entitled to make demands to have their rights recognized and protected."
Mar 8th 2021
EXTRACTS: "XThere’s a global shortage in semiconductors, and it’s becoming increasingly serious." ...... "The automotive sector has been worst affected by the drought, in an era where microchips now form the backbone of most cars. Ford is predicting a 20% slump in production and Tesla shut down its model 3 assembly line for two weeks. In the UK, Honda was forced to temporarily shut its plant as well." ..... " As much as 70% of the world’s semiconductors are manufactured by just two companies, Taiwan Semiconductor (TSMC) and Samsung."
Mar 5th 2021
EXTRACT: "Back in 1992, Lawrence H. Summers, then the chief economist at the World Bank, and I warned that pushing the US Federal Reserve’s annual inflation target down from 4% to 2% risked causing big problems. Not only was the 4% target not producing any discontent, but a 2% target would increase the risk of the Fed’s interest-rate policy hitting the zero lower bound. Our objections went unheeded. Fed Chair Alan Greenspan reduced the inflation target to 2%, and we have been paying for it ever since. I have long thought that many of our economic problems would go away if we could rejigger asset markets in such a way as to make a 5% federal funds rate consistent with full employment in the late stage of a business cycle."
Mar 2nd 2021
EXTRACT: "Under these conditions, the Fed is probably worried that markets will instantly crash if it takes away the punch bowl. And with the increase in public and private debt preventing the eventual monetary normalization, the likelihood of stagflation in the medium term – and a hard landing for asset markets and economies – continues to increase."
Mar 1st 2021
EXTRACT: "Massive fiscal and monetary stimulus programs in the United States and other advanced economies are fueling a raging debate about whether higher inflation could be just around the corner. Ten-year US Treasury yields and mortgage rates are already climbing in anticipation that the US Federal Reserve – the de facto global central bank – will be forced to hike rates, potentially bursting asset-price bubbles around the world. But while markets are probably overstating short-term inflation risks for 2021, they do not yet fully appreciate the longer-term dangers."
Feb 28th 2021
EXTRACT: "To be sure, calls to “build back better” from the pandemic imply some awareness of the need for systemic change. But the transformation we need extends beyond constructing modern infrastructure or unlocking private investment in any one country. We need to re-orient – indeed, re-invent – global politics, so that countries can cooperate far more effectively in creating a better world."
Feb 23rd 2021
EXTRACT: "So, notwithstanding the predictable release of pent-up demand for consumer durables, face-to-face services show clear evidence – in terms of both consumer demand and employment – of permanent scarring. Consequently, with the snapback of pent-up demand for durables nearing its point of exhaustion, the recovery of the post-pandemic US economy is likely to fall well short of vaccine development’s “warp speed.” "
Feb 20th 2021
EXTRACT: "Human rights abuses under Erdogan are beyond the pale of inhumanity and moral decadence. The list of Erdogan’s violations and cruelty is too long to numerate. The detention and horrifying torture of thousands of innocent people for months and at times for years, without being charged, is hard to fathom. Many prisoners are left languishing in dark cells, often in solitary confinement. The detention of tens of thousands of men and hundreds of women, many with their children, especially following the 2016 failed coup, has become common. It is calculated to inflict horrendous pain and suffering to bring the prisoners to the breaking point, so that they confess to crimes they have never committed."
Feb 20th 2021
Courtyard of the Amsterdam Stock Exchange, circa 1670, (Job Adriaenszoon Berckheyde).
Feb 12th 2021
EXTRACT: "Global regulators will no doubt be concerned about a potential volatility spillover from digital asset prices into traditional capital markets. They may not permit what could quickly amount to effective proxy approval by the back door for companies holding large proportions of a volatile asset on their balance sheets."
Feb 11th 2021
EXTRACT: "Since Russians began protesting opposition leader Alexei Navalny’s imprisonment, the security forces have apparently had carte blanche to arrest demonstrators – and they have done so by the thousands. If Russians so much as honk their car horns in solidarity with the protesters, they risk personal repercussions. The official response to the protests goes beyond the Kremlin’s past repression. It is war."
Feb 6th 2021
EXTRACT: ".......like Biden, Roosevelt was certainly no revolutionary. His task was to save American capitalism. He was a repairer, a fixer. The New Deal was achieved not because of Roosevelt’s genius or heroism, but because enough people trusted him to act in good faith. That is precisely what people are expecting from Biden, too. He must save US democracy from the ravages of a political crisis. To do so, he must reestablish trust in the system. He has promised to make his country less polarized, and to restore civility and truth to political discourse. In this endeavor, his lack of charisma may turn out to be his greatest strength. For all that he lacks in grandeur, he makes up for by exuding an air of decency."
Feb 2nd 2021
EXTRACT: "Europe must not lose sight of the long game, which inevitably will center on China, not Russia or relations with post-Brexit Britain. China is already establishing a presence in Iran, and demonstrating that it has the capital, know-how, and technology to project power and influence beyond its borders. Should it succeed in turning the Belt and Road Initiative into a line of geopolitical stepping-stones, it might soon emerge at Europe’s southeastern border in a form that no one in the EU foresaw."
Jan 29th 2021
EXTRACT: "One sign of this change is that, unlike all recent Democratic administrations, Biden’s hasn’t paid obeisance to Wall Street by giving bankers top jobs. The new Secretary of the Treasury, Janet Yellen, is a former Federal Reserve chair and academic who has made it clear that she understands the country’s pressing social needs. Moreover, Biden consulted Warren on her economic views, and has named a former Warren adviser as Yellen’s deputy. Yellen’s appointment demonstrates that Biden shares the insight that enabled Trump’s rise: that too many Americans feel that they cannot get a fair share. "
Jan 24th 2021
EXTRACT: "Barack Obama cautioned in his final speech as president that, “Our democracy is threatened whenever we take it for granted.” Yet isn’t that exactly what America has been doing? In a decade punctuated by the global financial crisis, the COVID-19 crisis, a racial-justice crisis, an inequality crisis, and now a political crisis, we have only paid lip service to lofty democratic ideals. ... Sadly, this complacency has come at a time of growing fragility for the American experiment. Internet-enabled connectivity is dangerously amplifying an increasingly polarized national discourse in an era of mounting social and political instability. The resulting vulnerability was brought into painfully sharp focus on January 6. The stewardship of democracy is at grave risk. "