The Populist Moment: Part 2

Business Week reported last month that the median pay of chief executives jumped 35%, to $8.4 million, for Standard and Poor's 500 CEOs in 2010.

Meanwhile, back in our home towns, average weekly earnings of Americans fell in 2010 and median family income has fallen quarterly since 2008. The number of people living in poverty has increased by nearly 20% during that period as well.

Clearly, there is no evidence of shared sacrifice during this great recession. Provisions in the Dodd-Frank act that were allegedly written to quell the greed that caused the downturn appear to be a sham.

Now is the Populist Moment - Part I

The current long period of stagnation has created a level of cynicism, disengagement and distrust greater than any other time in my life.

The public is convinced that a culture of greed in our financial sectors has brought the economy to it's knees, causing massive unemployment. A stalemate in Washington has curtailed any effort to stimulate the economy or even create the leadership to improve consumer confidence that could help spur things forward.

Stopping at a Union 76 station off I-5 in Tukwila, Washington, the station manager vented his frustration, "these greedy bastards should have to pay for this but if the government tries to fix it, they'll end up making me pay."

This is the populist moment. We are living in a time that too closely parallels the Gilded Age of the late 19th century when huge corporations and financial institutions gobbled up a bigger and bigger share of our nation's wealth.

Economist Robert Gilman in a 1969 study for the Bureau of Economic Research revealed that the share of wealth owned by the top one percent of the population increased from 21% in 1810 to 24% in 1860 to 31% in 1900.

This aggregation of wealth and it's ostentatious display led to a populist movement that resulted in the creation of labor unions, regulation of trusts and government reforms.

Today, according to a recent paper by Edward Wolfe, wealth has become event more concentrated then that earlier age of robber barons and trusts with the top 1% controlling 34% of the wealth in this country and the top 10%, 84% of the wealth.

Where is this populist movement today as luxury spending goes up and long term unemployment reaches record highs? Are citizens so cynical disengaged from civic government that they are willing to just sit and watch?

The only truly grass roots response has come from the right, the T-Party.

Is our friend in Tukwila right? That government, owned by special interests, can only make this worst?

Inequality and Democratic Responsivness

Martin Gilen's Public Opinion Quarterly article, "Inequality and Democratic Responsiveness" asks the question, "do elections help ensure that the voice of the people is heard in the halls of government"?

Gilens asks 1,935 survey questions of national samples of the population between 1981 and 2002. The surveys are undertaken by Gallup, Harris and other reputable and independent pollsters. Each survey question asks whether respondents support or oppose some change in U.S. government policy. After compiling the answers, Giles then divides the population by income level and compares the preferences of those surveyed with the actual decisions by U.S. policy-makers.

The first part of his finding is encouraging. It confirms previous research that indicates that overwhelmingly unpopular proposals are unlikely to be adopted.

The second part is disturbing. When Gilens organized the responses by income group on policy questions in which well-off and poor Americans disagreed by 8% points or more, outcomes fairly strongly related to the preferences of the well-to-do but wholly unrelated to the preferences of the poor. Median-income Americans fare little better than the poor when their policy preferences diverge from those of the well-off.

The probability of a proposed policy change being implemented rises almost 30% as support among high-income respondents increases but only rises 6% as attitudes among median-income respondents shift from strong opposition to strong support.

Gilens concludes, " Most middle-income Americans think that public officials do not care much about the preferences of 'people like me'. Sadly, the results presented above suggest they may be right."

The Irony of the Financial Collapse

I've often thought it ironic that many, many Americans blame the government for the financial collapse and believe that less not more government is the solution. After all, the collapse, at least in part, was caused by lack of regulation and certainly not because of it.

The only true grass roots response to the collapse was the rise of the T-Party, an organization that largely promotes libertarian and conservative policies. No such populist movement has arisen from the left to call for more government regulation or even more stimulus to get the economy moving again.

Perhaps this isn't so surprising given that the public believes that government or at least it's elected officials are clearly in the pockets of the special interests that appear to have caused the collapse. A Pew Memorial Trust poll indicated that Americans truly believe that government looks after big banks and big corporations and cares little about the middle class, poor people or small business.

There is some reason to believe that their fears are well founded. Research by political scientist Dr. Martin Giles from Princeton University concludes that policymaker's decision almost always reflect the views of the wealthiest members of our society.

We shouldn't be too surprised if Americans are unwilling to hand over more power to a leadership that seems to care so little about their interests.