Wednesday, July 19, 2017

The neoliberal period, part 2

As discussed in my last post, spending directed at helping the poor has increased, not declined, in the "neoliberal period" (since 1980).  What about regulation of business?  I found a study that gives estimates of federal spending on regulation since 1960.  It distinguishes between "social regulation," which "includes regulatory agencies that address issues related to "health, safety, and the environment" and "economic regulation," which "is more likely to be industry-specific."  Here are the figures for spending on economic and social regulation (excluding homeland security) in constant (2009) dollars.

Both types grew rapidly in the 1960s.  Spending on economic regulation has grown less rapidly since 1970, and spending on social regulation since 1980, but both have grown.  Of course, the economy has grown too--social regulation has stayed about the same relative to the economy as a whole, while economic regulation has grown somewhat.  This just measures the amount of spending, not the effect of regulation (and it doesn't count state and local spending), so the figures are just a rough estimate.  However, they aren't consistent with the claim that there's been a general move to the right.

So can we discard the whole idea of "neoliberalism"?  I wish the answer were yes, because I dislike the term (partly because there are too many "neo" and "post" terms already, and partly because it is bound to be confusing to most Americans, since the "liberalism" involved is pretty much the opposite of what we now mean by liberalism).  However, there is a germ of truth in it.  The report distinguished between "financial," "general business," and "industry-specific" regulation.  Spending on the first two increased pretty steadily, but spending on "industry-specific" regulation fell between 1970 and 1980, and didn't reach its 1970 level until 2000.  As a share of the economy, it's now less than it was in 1960.  At one time, there was a lot of regulation of prices and operations in industries like airlines, interstate trucking, and communications.  This was cut back in the late 1970s, and much of it hasn't been restored.  As I recall, the deregulation movement was supported by both conservatives and a significant number of liberals (who argued that regulatory agencies tended to be "captured" by the industries they were supposed to regulate).  You could say that the newer form of liberalism is more inclined to accept that markets are an effective way of producing goods and services, but not more inclined to accept the market distribution of income.  This is an important change, but it's not a simple move to the right.

Wednesday, July 12, 2017

The neoliberal period, part 1

In an interview published in the New York Times last week, Noam Chomsky spoke of "the shift of both parties to the right during the neoliberal period."  There's nothing remarkable about that--I've read many similar statements--but for some reason I started wondering what you would find if you looked for evidence of a move to the right.

A reasonable basic definition of left and right (on economic issues) is that the left is in favor of direct government assistance to the poor.  One major program of assistance to the poor is food stamps (SNAP).  The figure shows real per-capita spending on food stamps (2010 dollars) between 1969 and 2016.  It was about 70% higher in 2016 than in 1981, the year Ronald Reagan became president.

As everyone knows, Bill Clinton promised to "end welfare as we know it," and in 1996 signed a bill placing restrictions on welfare.  This figure shows federal spending on AFDC/TANF from 1975 to 2011.  There has been a slight upward trend since 1981, but the population has grown too, so basically there has been little change.  It is interesting that the 1996 reform didn't have any obvious impact on spending.

Two other programs that aid poor people are the Earned Income Tax Credit and the Child Tax Credit.

Spending on both has increased greatly during the "neoliberal period" (the CTC didn't exist until 1997).  Also notice the numbers on the vertical axis--total spending on the EITC and CTC is now about four times as large as TANF.

    For disability, see this report.  Both the percent of working-age people getting disability and the average payments per recipient have increased pretty steadily since 1970.
   Spending to help the poor has increased substantially the "neoliberal period."  You could argue about whether this change should be called a move to the left in policy--declining work opportunities for less skilled people means more government assistance is needed to produce the same standard of living for the poor.  But it's not a move to the right.

  What about regulation of business?  I'll look at that in my next post.

Sources:  SNAP 

Monday, July 3, 2017

It is what it is

In his speech announcing that he was pulling out of the Paris climate agreement, Donald Trump said something to the effect that other countries were taking advantage of the United States.  That led me to wonder if there were any survey questions on that issue.  I found one, in a 1999 Pew survey.  People were offered two statements, "Other countries generally treat the United States about as fairly as we treat them"
"Other countries often take unfair advantage of the United States" and asked which they agreed with more.
After they made a choice, they were asked if they felt strongly.

Among people who had graduated from high school but not gone to college, about 20% agreed with the first statement and 75% with the second; among people with graduate education, 44% agreed with the first, and 50% with the second.  The item was part of a series of about 12 with the same format, covering a variety of issues.  The correlation between education and opinions on fair treatment vs. take advantage was the strongest of all items, with one exception:  whether immigrants strengthen the country or are a burden on the country.

Most analyses of Trump's appeal to less educated voters hold that it was about race, or gender, or a long period of slow wage growth.  The alternative, that it was about what he talked about--taking a hard line on immigration and following an "America first" policy--hasn't gotten much attention.  But as these questions show, there's a lot of support for those general sentiments, especially among less educated people.  Opinions on immigration have become more favorable, as I have noted, but are still mostly negative. Unfortunately the fair treatment/take advantage question has not been repeated, but  I was surprised to see how lopsided the distribution of opinions was--even among people with graduate degrees, people who thought that other countries took unfair advantage were more numerous and more likely to feel strongly about it.  Trump seems to have found a strong current of opinion that no one else had tried to appeal to.  Although comparable questions are not available for a long period of time, there is some evidence that it has been around for quite a while.

[Data from the Roper Center for Public Opinion Research]

Saturday, June 24, 2017

Now for some speculation

According to exit polls, Donald Trump got 67% of the vote among whites without a college degree in 2016, which may be the best-ever performance by a Republican (Reagan got 66% of that group in 1984).  What explains Trump's support among less educated voters?  One popular idea is that he cared about them, or at least gave them the impression that he cared.  The popularity of this account has puzzled me, because it's not even superficially plausible.  Every other presidential candidate I can remember tried to show empathy by talking about people they had met on the campaign trail, or tough times they had encountered in their past, or how their parents taught them to treat everyone equally.  Trump didn't do any of that--he boasted about how smart and how rich he was.

A variant is that Democrats drove "working class" voters away by showing contempt for them.  This is more plausible, but raises the question of whether Democrats showed that much more contempt in 2016 than in 2012, 2008, 2004, etc.  That seems like a hard case to make--at any rate, I haven't heard anyone try to make it.  

So why are these explanations so popular?  My hypothesis is that it's because American society has become a lot more socially egalitarian over the last 60 years or so. Educated people don't want to be thought of as snobs or elitists, and less educated people are less likely to think they should "improve themselves" by emulating the middle class.  At one time, you could say that Democrats thought of themselves as the party of the common people, and Republicans thought of themselves as the party of successful people.  Now both parties think of themselves as the party of the common people, plus the fraction of the elites who care about or understand the common people.  The result is that people are attracted to an explanation that is more flattering to the "working class."  When thinking about this, it occurred to me that I've seen many books and articles on how the Republicans can win over working-class voters, but nothing on how they can win back the kind of educated people who used to vote Republican. That is, gaining working-class voters is thought of as a more worthy goal than gaining middle class voters.   

There are two possible objections to my account.  First, it's easy to point to examples of condescension and contempt today.  My reply is that there was probably always a lot of this in everyday political discussion, and that social media has just made it more visible for those who are paying attention.  A second is the recollections of people like Charles Murray (Coming Apart) and Robert Putnam (Our Kids) about how there used to be less social distance between classes.  I think that may be because they both grew up in small towns in the Midwest.  If you read something like E. Digby Baltzell's The Protestant Establishment, you get a very different picture of status differences in America.  

Saturday, June 17, 2017

There must have been a reason

My last post was one of several arguing that people in general, and less educated people in particular, didn't see Donald Trump as all that interested in their problems.  What was his appeal, then?  The survey I used in my last post asked people who said that they would probably vote in a Republican primary "How confident are you in X's ability to make the right decisions about the economy--are you very confident, somewhat confident, not too confident, or not at all confident?", and about confidence in ability to "handle an international crisis" and "make the right decisions about illegal immigration."  The questions were asked about Donald Trump, Ben Carson, and Carly Fiorina. That may seem like a strange choice of candidates, but Ben Carson was the strongest rival to Trump at the time--in this survey, 27% wanted Trump to get the nomination and 21% wanted Carson.  There was no clear third--Ted Cruz had 9%, Marco Rubio 8%, Fiorina and Jeb Bush had 6% ("don't know" had 11%).  The survey also asked people about their second choice, and Carson was the leader in combined first and second choices (41%), followed by Trump (38%), with Rubio (26%) and Fiorina (20%) farther behind.  

The mean ratings by education (lower numbers mean more confidence):

                    College Grad    Not Grad 
      Trump          1.82            1.70
      Carson         1.89            1.98
      Fiorina        1.95            2.27

Intl Crisis 
      Trump          2.56            2.23
      Carson         2.14            2.09
      Fiorina        2.23            2.46

      Trump          2.13            1.87
      Carson         1.84            1.97
      Fiorina        2.06            2.46

Both college graduates and less educated voters had high confidence in Trump's ability to make the right decisions about the economy.  On the other two issues, there was a bigger split by education, with the less educated seeing Trump more favorably.  International crisis was an area of relative weakness for Trump, while immigration was one of strength.  Less educated voters had substantially less confidence in Fiorina on all three areas.

My interpretation is that Trump's appeal to less educated voters was a matter of style--they saw him as tougher and less likely to compromise than "mainstream" candidates like Fiorina.    This is almost opposite to the "Trump cared" analysis--you could say that people recognized that Trump was an s.o.b., but thought that was what the country needed.  Although these data just apply to people who said they'd vote in a Republican primary, the general point is also relevant to the general election.

[Data from the Roper Center for Public Opinion Research]

Friday, June 9, 2017

Who Cared?

A few months ago, I wrote about the idea that Donald Trump appealed to less educated voters because he seemed to care about them.  I pointed out that he didn't do particularly well in surveys that asked if he "cared about people like you"--in fact, he ranked lower than almost all other recent nominees.  But the individual-level data weren't available at that time, leaving open the possibility that people with less education rated him highly.  Now the individual data for a relevant survey has been released:  a CBS News poll from early October 2015.  That survey asked "How much do you think that ___________ cares about the needs and problems of people like you--a lot, some, not much, or not at all?" for Republicans Donald Trump, Ben Carson, Carly Fiorina and Democrats Hillary Clinton, Bernie Sanders, and Joe Biden.  Here are the average scores (4 points for a lot, 3 for some, 2 for not much, 1 not at all) for non-Hispanic whites and non-Hispanic whites without college degrees:

                W          NCW   
Trump          2.38      2.51
Carson         3.17      3.20
Fiorina        2.70      2.69
Clinton        2.21      2.12
Sanders        2.81      2.67
Biden          2.72      2.61

Ben Carson stands out here.  I'm not sure why--maybe it was having grown up in poverty, maybe it was his calm demeanor, maybe people associate doctors with caring.  But for my purposes, the important thing is that Trump ranks fifth, ahead of only Hillary Clinton.  He did somewhat better among people without college degrees, but still ranked only fifth.

The survey also asked people if they expected to vote in a Democratic primary, a Republican primary, or didn't expect to vote in a primary.  Trump won over some non-college-educated Democrats and independents in the general election, so their perceptions are of particular interest.

                 R            D            N
Trump           2.96       1.92         2.32
Carson          3.42       2.97         2.98
Fiorina         2.87       2.41         2.36
Clinton         1.65       2.92         2.17
Sanders         2.31       3.27         2.64
Biden           2.28       3.24         2.56

Once again, Trump didn't do well--he got substantially lower scores than Carson or Fiorina among both Democrats and people who didn't support a party, although he did a little better than Fiorina among non-college-educated whites who intended to vote in a Republican primary.

What was Trump's appeal?  The survey also asked if candidates had "strong qualities of leadership," and Trump did well there.  Non-college-educated whites who didn't intend to vote in a primary rated him higher that all three Democrats and Fiorina.  Carson was equal to Trump among people who had an opinion, but had more don't knows.

It's true that voters didn't think that Hillary Clinton cared about them that much, but they didn't think that Trump cared about them that much either.  This raises the question of why many commentators think that they did.  I have no evidence on this, but I'll offer some speculations in a later post.

[Data from the Roper Center for Public Opinion Research]

Saturday, June 3, 2017

Cost disease or employment disease?

In his speech announcing that he's pulling the US out of the Paris climate agreement, Donald Trump once again displayed his preoccupation with coal mining.  That reminded me that I had once looked up figures on coal mining since 1900.  It took several different sources, which had to be spliced together, so it's useful (at least to me) to have it in one place:

The number of coal miners (the red line) has been declining pretty steadily since 1920.  But the number of tons mined has increased.   That means that the average miner is getting more coal--that is, productivity is increasing.

There are two distinct periods of productivity growth--averaging about 1.7% a year until 1950 and 3.9% since then.  So even though coal demand has grown by an average of 1.3% a year since 1950, employment has fallen to less than 1/6 of what it was in 1950.

The economist William Baumol, who died a few weeks ago, wrote about the consequences of different rates of productivity growth for different products.  There are some services for which productivity can't grow by much--for example, anything that requires one-on-one interaction, like getting a haircut or talking to a therapist.  Those services will get relatively more expensive--not less affordable in an absolute sense, but more expensive in terms of how many tons of coal (for example) you need to pass up in order to obtain them. This is usually discussed in terms of cost--people sometimes call it the "cost disease" of the low-productivity-growth sector.  But you could also call it the "employment disease" for the fast-growth sectors--the number of workers will decline unless you manage to keep selling more and more.  This point of view is more relevant to politics--coal miners vote (sometimes), but tons of coal don't.  

I've discussed the idea that politics might shift from a rich/poor to an open/closed alignment.   I think that the "employment disease" provides another reasons that this isn't likely to happen.  To protect jobs in the fast-growth sector, you have to restrict the rate of productivity growth, and reducing economic growth will reduce the chance of re-election.  An additional point is that it will produce a split between employers and workers in that sector, as employers push for productivity growth.  But what if the poles were reversed, so that the issue was protecting employment in the slow-growth sector?  David Brooks proposed something like this (he said he was drawing on Tyler Cowan):

"On the one hand, there is the globalized tradable sector — companies that have to compete with everybody everywhere. These companies, with the sword of foreign competition hanging over them, have become relentlessly dynamic and very (sometimes brutally) efficient.
      On the other hand, there is a large sector of the economy that does not face this global competition — health care, education and government. Leaders in this economy try to improve productivity and use new technologies, but they are not compelled by do-or-die pressure, and their pace of change is slower.
In politics, we are beginning to see conflicts between those who live in Economy I and those who live in Economy II. Republicans often live in and love the efficient globalized sector and believe it should be a model for the entire society. ....  Democrats are more likely to live in and respect the values of the second sector."

I think that the problem with this analysis is that Brooks assumes that differences in productivity growth between industries all come down to competition.  But as Baumol recognized, most of the difference is from the nature of what they do.  So there's not much need to protect employment in the "second sector," and you can't make that the basis of a strong political appeal.

People sometimes say that change is coming--maybe artificial intelligence will put me out of work in a few years unless the opponents of "creative destruction" succeed in stopping it.  One answer to that is historical:  education faced an enormous technological disruption before most other parts of the economy did, and it didn't lead to a decline in employment.  As Edward Gibbon said in the late 18th century:  "It has indeed been observed, nor is the observation absurd, that except in experimental sciences . . . the many valuable treatises that have been published on every subject of learning may now supersede the ancient mode of oral instruction. . . . But there still remains a material difference between a book and a professor:  the hour of the lecture enforces attendance; attention is fixed by the presence, the voice, and the occasional questions of the professor; and the more diligent will compare the instructions which they have heard in the school, with the volumes which they peruse in their chamber."  The more general implication is that if productivity growth takes place in these services, it will be mostly in the form of letting the worker give better service, rather than serving more people.  For example, there's been substantial growth in the ability of health care professionals to do things they couldn't do before, but not in the ability to do things faster.