Elite Failure?

 Ross Douthat recently had a column about "elite failure," which began by discussing Paul Ehrlich and his warnings about overpopulation.  This is a strange example, because Ehrlich had no discernible effect on American policy.  According to Wikipedia, he* recommended "a tax scheme in which additional children would add to a family's tax burden ...  as well as luxury taxes on childcare goods ...  incentives for men who agree to permanent sterilization before they have two children ...  a powerful Department of Population and Environment which 'should be set up with the power to take whatever steps are necessary to establish a reasonable population size in the United States and to put an end to the steady deterioration of our environment.' The department should support research into population control, such as better contraceptives, mass sterilizing agents, and prenatal sex discernment (because families often continue to have children until a male is born). ...  Legislation should be enacted guaranteeing the right to an abortion, and sex education should be expanded."  Abortion laws were loosened and sex education was expanded, but none of the other policies were adopted or even seriously considered.  Ehrlich also recommended that foreign aid should be given only to countries "with sufficient programs in place to limit population growth."  That also didn't happen.  

Douthat gives several more examples of elite failure, and they don't hold up either.  One is "left-wing politics in the Covid era, when bad ideas emanated from academia and were laundered through other credentialed institutions."  The major bad policy supported by the left was delay in returning to in-person schooling, but that wasn't particularly an "elite" idea--it was broadly popular.  And the largest policy failure was on the right:  resistance to the vaccine, which didn't come from academia.  The next is DOGE, which he acknowledges "partly reflect[s] a populist unwillingness to listen to credentialed experts about the sheer difficulty of budget cutting. But the belief that a group of high-I.Q. outsiders can come in and remake a complex system is itself a characteristic elite temptation."  However, DOGE wasn't an effort to remake the government--the idea was that there was a lot of  obvious waste, fraud, and abuse.  Finally, the war with Iran:  "the voices in Trump’s coalition who were supportive ... included members of the pre-Trump G.O.P. elite and think-tankers who had been making the case for intervention for years. The voices raised in opposition often belonged to the populist wing, including some of its most paranoid factions. "  Although some Republican elites have called for a harder line with Iran, those elites haven't had much influence on the actual policy.  A few weeks after Trump's inauguration, I wrote that there was an approach to international affairs that was popular among the general public, but not among elites: "impatient with diplomacy, international agreements, and long-term obligations:  we should intervene when the nation's interests are at stake and then get out."  That's been Trump's approach to the war, and the results show why it's not popular among elites.

Douthat's model seems to be that academic and intellectual elites come up with ideas and those ideas trickle down to political decision-makers and the educated middle classes.  Since academics and intellectuals lean to the left, that means that elites, even conservative elites, are influenced by the left.  For example, Douthat's description of the "elite temptation" to remake complex systems is similar to the Hayek/Schumpeter/von Mises account of why intellectuals are attracted to socialism.  

There are two problems with this model.  One is that the spread of ideas often isn't a process of trickling down.  Ehrlich was an elite academic (a professor at Stanford), but he wasn't an expert in human populations--his research was on insects.  But (again according to Wikipedia) his public writing and speaking on overpopulation attracted the attention of the executive director of the Sierra Club and the publisher of Ballantine Books.  Ehrlich also became a frequent guest on the Tonight Show.  I don't know how he got his initial invitation, but presumably he was invited back because he was good on TV.  That is, even in the days of media "gatekeepers," the process of getting public attention was entrepreneurial.  Although sometimes entrepreneurs create demand for something new, often they fill a demand that is already there. A second problem with the model is that policymaking elites have some distinctive views that set them apart from all parts of the general public.  Some of these are the result of the influence of experts--people who have specialized in studying an issue.  With population, the specialists had noticed that economic growth and modernization were generally followed by declines in fertility.  There's no information on elite opinions at the time, but my guess is that they were less concerned about overpopulation than the general public because they were aware of this pattern, so they continued to treat economic development as the priority.  

Of course, this doesn't mean that elite ideas always right, or even usually right--getting things right is hard.  But general claims of "elite failure," at least those that I've seen, are unconvincing.

*Apparently The Population Bomb was co-written with Anne Ehrlich, but Paul was listed as the sole author.  

The few or the many?

 A few days ago, Paul Krugman wrote that there has been a vicious circle in which rich people influence government policy to favor their interests, which allows them to get richer, which gives them more influence.....  This post will mainly be about the political side of his story, but I'll start with a few points about the economics.  The figure shows a general measure of income inequality over time:

It grew from the 1970s to the early 2000s, but has leveled off.  What about wealth?*

The share of the 99.0-99.9% peaked in 2018 and is now about where it was in 2009, but the share of the top 0.1% has continued to increase and is higher than ever.  So although you could argue about whether "inequality" is increasing, the very rich have been pulling ahead of the rest of us.

Krugman presents a figure showing the decline of corporate tax rates since the 1940s, which he says is a major cause of the gains at the top.    He says that the decline of corporate taxes reflects the power of the "oligarchs," and have happened "in the teeth of very broad public opposition," and points to a Gallup question about whether corporations "are paying their fair share in federal taxes, paying too much, or paying too little?"  The last time that was asked (2025), 21% said fair share, 7% too much, and 70% said too little.  

However, although agreement that corporations are paying too little in taxes may be broad, I don't think it's very deep.  First, when you mention specific rates, there's less support for an increase.  In 2021, an ABC/Washington Post survey asked "The top tax rate on corporate profits used to be 35 percent, then was cut to 21 percent. Would you support or oppose raising the corporate tax rate to 28 percent?"  58% were in favor and 36% were opposed.  That's a majority, but the question isn't even about returning to how things were, just going halfway back.  There aren't many other questions that specify rates, but back in 1986, Harris asked about raising the minimum rate to 25%:  61% were in favor and 33% opposed.  However, in 1985 a Business Week/Harris poll asked about "A gradual reduction of the maximum corporate income tax from 46 percent to 35 percent," and opinions were almost evenly divided, with 42% in favor and 47% opposed.  Second, in 2011 a CBS/New York Times survey asked "If you had to choose one, which would you prefer in order to reduce the federal budget deficit--raising taxes on corporations or cutting government spending?":  32% favored increased taxes on corporations and 64% favored cutting government spending.  As far as I know, this is the only question of its kind, but there's lots of evidence suggesting that people think that there's a lot of room to cut spending without losing services.  Third, strong majorities say that the middle class pays too much in federal taxes.  Putting these points together, the usual Republican package--cuts in corporate taxes combined with with smaller cuts for middle-income people and vague promises of savings by cutting waste, fraud, and abuse--can be fairly popular.  On the other side, when Democrats propose increasing taxes on high-income people and corporations, people may suspect that the increases will wind up applying to them too.  

Finally, here's a summary of the Gallup questions about taxes on high-income people, middle-income people, the poor, and corporations.  The numbers are percent who think the group pays too much minus the percent who think they pay too little:

Although federal taxes on corporations and upper-income people have declined over that period, public opinion hasn't moved towards saying that they pay too little:  in fact, there's been some movement in the other direction.  

So overall, I think that policy doesn't reflect the strength of oligarchs so much as the weakness of popular support for high taxes on anyone, even rich people and corporations.  This doesn't mean that Democrats shouldn't try to increase taxes on rich people and corporations--just that such attempts won't be especially popular.  Public opinion is likely to be pretty evenly divided, as it was with the Clinton and Obama tax reforms.  

[Data from the Roper Center for Public Opinion Research] 

*Data from the Federal Reserve

Get back

 A couple of weeks ago, the New York Times published an op-ed by Adam Grant, Marissa Shandell, and Courtney Elliott called "The Secret Reason Bosses Want Everyone Back in the Office, Every Day of the Week."  A few days ago, the Times promoted it in an e-mail, saying "Here’s what six years of data says is actually driving the push to get employees back to the office."  The reason they propose is narcissism--that many CEOs are narcissists, and narcissists want people to display deference to them and find displays of deference more gratifying when they are done in person.  The op-ed is based on a paper by Shandell, Elliot and Grant published in Organizational Behavior and Human Decision Processes with the title "Worship Me at the Office Altar."  They collected statements about remote work and several qualities that they regarded as measures of narcissism for a sample of about 250 CEOs of Fortune 500 companies and found that CEOs who ranked higher in narcissism were more negative in their comments about remote work.

Their argument for a connection seems unconvincing to me.  Fortune 500 companies are large organizations, so the CEO never has face-to-face contact with the average employee.  If the general claim about narcissists is correct, it would be relevant to the top management team--CEOs who rank higher in narcissism would want them to return to in-person work more quickly--but wouldn't have any implications for ordinary workers.  However, they do appear to have strong evidence of a connection (t-ratio of about 4), so how do I explain that?  

One factor is that the usual t-ratios assume that the errors are normally distributed.  In fact, the residuals from the regression aren't normally distributed:  

With an error distribution like this, the standard errors will tend to be underestimated so the t-ratios will be overestimated.  There is no perfect way to address this, but I tried a few reasonable alternatives and they produced t-ratios of about 2.5.  That's less impressive, but still reasonably strong evidence by conventional standards.  

The more important factor involves their measure of narcissism.   They propose four indicators:  size of signature on the annual reports, size of the CEO photo, cash compensation relative to the second-highest paid executive, and non-cash compensation relative to the second-highest paid executive.  If you have multiple measures of the same underlying concept, all of the measures should be positively correlated with each other.  In fact, the correlations among these variables range from -.113 to .160, with an average of .044.*  There are two possible interpretations:  either there is no underlying quality to measure, or that at least three of the four "indicators" are not good measures of that quality.  I'll go with the poor measures interpretation:  in particular, even CEOs don't have complete control over their own compensation or the compensation of other managers.   

 If you include the individual variables as predictors in the regression, relative cash compensation consistently is statistically significant, relative non-cash compensation sometimes is, photo size sometimes scrapes in as "significant at the 10% level," and signature size is never close.  So there's pretty good evidence that CEOs who are highly compensated (relative to the next highest paid employee) expressed more opposition to remote work.  How would I explain this?  My proposal is that managements generally wanted to get employees back to in-person work--maybe not all the way back, but faster and farther than the typical employee would want--and that more prominent CEOs took the lead in delivering the bad news.  "Prominence" could be understood as status within the profession--high compensation is a sign that someone is regarded as an outstanding leader.  Or it could be within the organization:  high compensation could indicate a hierarchical organization in which nothing was final until you heard it from the big guy.  In less hierarchical organizations, the CEO could stand back and let subordinates deliver the bad news.   

Although I disagree with their interpretation, Shandell, Elliott, and Grant deserve credit for collecting and compiling the data (the link is on p. 5 of their paper, which I think is open access).  Unfortunately, they don't include the names of the companies, which would let other researchers add to the data set.  Confidentiality isn't an issue, since all of the data are from public records.  

*If you're interested in Cronbach's alpha, it's about .125.  

Done them proud?

 In 1999, Gallup asked "Overall, do you think the signers of the Declaration of Independence would be pleased or disappointed by the way the United States has turned out?"  The question was repeated in June 2001, 2003, June 2008, 2013, and June 2026.  In 2007 and 2010, CBS asked a similar question:  whether the "founding fathers" would be pleased or disappointed.  Finally, in 2010 (January and June), 2011, 2016 and 2017 Fox News asked if the founding fathers would be "proud of the country if they could see it today."  Here is the percent positive (pleased or proud) answers:

The breakdown by party identification (June 2010 and June 2016 are unavailable):*

Partisan differences were small and Democratic and Republican opinions moved in the same direction for the first decade or so, but then diverged in 2010.  The next figure shows the gap between supporters of the President's party and supporters of the opposition:

    For some evaluations, like economic conditions, partisan differences have increased steadily in the 21st century:  growing from Bush to Obama, Obama to Trump, Trump to Biden, Biden to Trump II.  This is different:  the partisan gap was bigger under Obama than in either Trump term (unfortunately the question wasn't asked in the Biden years).  Why is this question different?  My guess is that people focus on the political situation when answering, and evaluation of the political situation involves views of the opposition as well as the party in power.  That is, someone might think that the president was doing a good job but that the founders would be distressed to see the amount or kind of opposition that he was encountering.  Of course, Democrats were upset about Republican opposition during the Obama years, but I think they were still somewhat hopeful about winning a clear majority or achieving some bipartisan successes.  As a result, they were more optimistic in assessing the general political situation than Republicans are now.  

*I don't show independents in order to keep things simpler.  As you'd expect, they are generally in between supporters of the president's party and the opposition, and I don't see any clear changes in their relative position.  

[Data from the Roper Center for Public Opinion Research]