Wednesday, July 11, 2018

Inequality and Political Power

To those that have, more shall be given:
This article investigates the effects of economic inequality on legislative agendas. It considers two competing hypotheses: (1) that policymakers will act to counter rising inequality by renewing their focus on redistributive social policies, and (2) that rising inequality makes legislative agendas especially vulnerable to the influence of economic elites, and that these elites will attempt to keep redistributive social policies off the agenda. Empirical tests, which are designed to arbitrate between these hypotheses, use data on public laws and parliamentary bills introduced in the legislatures of nine European countries between 1941 and 2014. The evidence is supportive of the second hypothesis: as inequality becomes more acute, European legislative agendas become systematically less diverse and this narrowing of attention is driven by a migration away from social safety-net issues toward issues relating to law enforcement, immigration, and national defense. . . .

Thus, our findings are consistent with theories that economic inequality is a particularly difficult problem for democratic governments to solve.
From what I can tell the effect is not very large, but it seems to be real and robust. I do wonder if the effect is mainly driven by the extraordinary period after World War II, when welfare states were built in countries that were highly equal mainly from the effects of the war; I couldn't tease that out from the data.

Via Marginal Revolutions


G. Verloren said...

"From what I can tell the effect is not very large, but it seems to be real and robust."

The effect of the "House Advantage" in casinoes isn't very large either, but it too is real and robust. You don't blatantly rig a game in your favor - you rig it subtly, and make up the difference by running the game on a large scale over long periods of time.

Organized crime learned this lesson a long time ago. You don't steal $10,000,000 from a highly secure bank vault in a brazen heist that grabs everyone's attention and gets the hammer brought down on your head. You quietly "earn" that $10,000,000 by running a "legitimate" business that collects a few cents here, a dollar there, spread out over millions of people.

Rig the system just enough so that in the long run, you come out ahead, and then just let the system run, making occasional tweaks and improvements for efficiency - particularly as people get used to the gradual change and accept it as normal.

The House always wins...

Susi said...

The tale of the 1/2 penny in the early days of programming for banking. It skimmed the rounded down 1/2 pennies from interest on savings accounts. Busted by a persistent old lady who wanted to know where her 1/2 pennies were since they were supposed to round down one month and be credited the next.
Most people don’t notice or, if they do, rationalize it away.

Susi said...

Researched this fraud and found it called 'Salami slicing'. Fascinating.
I see inequality as inevitable. I think the world is trending toward trying to level it through redistribution of resources. We regret every death, but also worry about over population. Individual rights versus cultural norms.