Rising political polarisation in the US has gone hand-in-hand with rising income inequality, falling top-end tax rates, lower taxes on business, rising leverage and higher asset prices. These trends may be coincidental, but they seem to reinforce each other. The medium-term risk is that some of these trends reverse, as occurred after the 1920s.
Congressional political polarisation and income inequality in the US are at multi-decade extremes (Exhibit 1). The polity is split; incomes are unequal. The rise in polarisation partly reflects electoral gerrymandering that has sharply reduced the number of contestable seats (Exhibit 2). Only 20% of House of Representatives seats would change hands on a 5% swing. This increases the centrifugal influence of the party members who dominate the increasingly-decisive party primary elections.
However, rising political polarisation pre-dates the decline in contestable seats: it started as incomes became more unequal. Inequality has not risen because the rich got richer faster than the poor. It increased because the income gains of the past 30 years have gone to the top 1%. Average income for the bottom 99% is now unchanged in real terms over the past 40 years.
You should read the whole thing. It has a lot of graphs in support of statements made. Are they believable to you? Why or why not?
I feel like you would need to have a strong economic education to actually understand what any of those graphs mean. The last graph actually seems to be stabilizing and they seem to think it's false.
ReplyDeleteI wondered about the sources of all the graphs. While I am sympathetic to the argument, I like to know where data comes from and how reliable it is.
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