Thursday, April 20, 2006

Income Growth: Republicans vs. Democrats

Look carefully at that graph. It makes two things very clear.

1) Income growth is overall much better under Democratic presidents than Republicans.

2) While the super-rich did about the same under Democrats and Republicans, the Democrats raised everybody else at the same rate while the Republicans failed everybody in the bottom 80 or 90%.

So not only do the Republicans only help the richest of the rich, but they can't even do that better than the Democrats!

The graph is from a paper (.pdf) by Princeton professor Larry Bartels. Here are some excerpts:

Census Bureau data reveal large, consistent differences in patterns of real pre-tax income growth under Democratic and Republican presidents in the post-war U.S. Democratic presidents have produced slightly more income growth for poor families than for rich families, resulting in a modest decrease in overall inequality. Republican presidents have produced a great deal more income growth for rich families than for poor families, resulting in a substantial increase in inequality. On average, families at the 95th percentile of the income distribution have experienced identical income growth under Democratic and Republican presidents, while those at the 20th percentile have experienced more than four times as much income growth under Democrats as they have under Republicans. These differences are attributable to partisan differences in unemployment (which has been 30 percent lower under Democratic presidents, on average) and GDP growth (which has been 30 percent higher under Democratic presidents, on average); both unemployment and GDP growth have much stronger effects on income growth at the bottom of the income distribution than at the top.


Under Democratic administrations income growth has been more vigorous among the poor than among the rich; under Republican administrations the reverse has been true. The cumulative effect of these differences has been enormous.


Using data from 1948 through 1978 (that is, before most of the recent substantial increase in income inequality) Hibbs (1987, 232-243) found that the ratio of the share of post-tax income received by the top 20 percent of the income distribution to the share received by the bottom 40 percent declined by about .037 during each year of Democratic control while increasing by about .008 during each year of Republican control. Applying these estimates to his entire period, Hibbs concluded that inequality declined markedly (by a total of about 25 percent) during the 14 years of Democratic control while remaining essentially unchanged during the 17 years of Republican control.

And lest you think this is just some strange coincidence:

[D]istinguishing between Democratic and Republican administrations (the black diamonds and white circles in the figure, respectively) reveals the regularity with which Democratic presidents reduced and Republican presidents increased the prevailing level of economic inequality, irrespective of the long-term trend. Indeed, the effect of presidential partisanship on income inequality turns out to be remarkably consistent throughout the second half of the 20th century. The 80/20 income ratio increased under each of the five Republican presidents in this period – Eisenhower, Nixon, Ford, Reagan, and the elder Bush. On the other hand, four of five Democratic presidents – all except Jimmy Carter – presided over declines in income inequality.

(via 3quarksdaily)


Sadie Lou said...

My husband is a 'phoneman'. He is a service tech for AT&T. He was working at a rich man's house yesterday and Dan asked," So what do you do for a living."
The man said," Nothing really. I buy real estate and sell it for profit."
Dan said," Cool. My wife and I are looking into making money from real estate."
The man said," It's a rich man's profession. I mean, who wants to service people's phones all their life?"
Then the man realized what he said was insulting but by that time, Dan had just said,"Yeah." and walked away.
What a buttface.
I can't understand a rich person's lifestyle. I don't understand a nation that rewards the rich and kick's the poor when their down.
Something needs to change BIG TIME!

JDHURF said...

And as this post illustrates this change, if going to occur at all, will likely only come from a democratic administration - not a republican one.

Esther said...

I have to say that I'm optimistic. People all over the country are waking up to the mess we're in and how bad it is for actual family values. Wages are stagnant, there's incontrovertible proof that the ice caps are melting, gas prices are skyrocketing, healthcare costs are through the roof and the quality of care is lousy and getting worse, we're in a quagmire of a war with no exit strategy and Bush is seriously contemplating nuclear confrontation with Iran!

And what do our Republican pals have to say for themselves?

"Pay no attention to all that stuff - let's all just focus on how much gay people are ruining everything by wanting to get married."

david said...

Very interesting stuff, j.a.

dbackdad said...

Nice post JA.

Sadie, I feel your pain. I have my own computer repair biz and I work on-site in a lot of multi-million dollar houses in Paradise Valley and Scottsdale. I've had more than a few encounters like the one you describe. It's like these people truly live in another world. They were born into a world of money that they didn't have to work for and have absolutely no understanding of people who do have to work for it.

asher said...

It's a very interesting chart. Too bad it didn't cover the years 1933-
1945 during which time a democrat president was in power (actually the same one) It should be pointed out that for the years 1933 through 1939 this country went through the worst depression in history and despite the New Deal things actually got worse. 1937 was deemed to be the worst year of the Depression even after FDR's New Deal had been in place for 4 years.

What got us out the Depression? A little thing called WWII.

Sadie Lou said...

I feel for you too. My dad is self employed like you. He's 50 years old and no chance of retirement in the near future. His body is too old to be doing the manual labor he's doing right now. My parents also have costly health insurance that really only kicks in if one of them get seriously injured. They pay cash for all their perscriptions.

asher said...

Sorry to keep adding to this subject: JA nor anyone else said there is something wrong with giving tax cuts to the rich other than that it's UNFAIR. I would be more impressed if you said, it was Bad for the Economy. But the thing that gets you is that some people are just making out better than others and it's really hard to believe it has anything more to do that with luck. I mean Ted Kennedy inherited his zillions and John Kerry married his (twice). Giving them tax cuts surely seems pretty unfair.

Jewish Atheist said...

asher, I'm not sure which side you're arguing, but I'm pointing out that tax cuts for the rich are BOTH unfair AND bad for the economy. (The chart shows that the economy, at least as measured by income growth, does better under Democratic presidents who tend to tax the wealthy more than under Republican ones who tax the wealthy less.)

I mean Ted Kennedy inherited his zillions and John Kerry married his (twice). Giving them tax cuts surely seems pretty unfair.

Agreed. And both of them agree, too. That's why they're Democrats.

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