08 April 2017

Polarized or Zero-Sum Politics?

Our politics has become more divisive. Republicans and Democrats seem to look at each as aliens and look back at the past as a kinder, gentler time.

Stagnating wages have contributed to this. Call it take-home pay economics. You could argue that since 1980 politicians have been giving tax cuts because employers aren't giving pay raises. (You could argue this. It doesn't really match the facts but it does seem to match popular perceptions.)

Assume Pradeep and Martina each make $50,000 a year. It turns out that Martina is very conservative and just doesn't understand why the government needs more of her money. Well, she understands it sort of but isn't a big fan. Pradeep thinks we should have better roads and schools and help for the homeless. He's a fan of government.

Now they each get a raise of 10%. An extra $5,000. Pradeep argues that 50% of this raise should go to government, a full $2,500. Martina thinks that is ridiculous. She thinks that 15% is more than enough. It's reasonable to think that in spite of their different values and passions, they might reach a compromise to, say, split the difference and pay about a third in taxes, less than Pradeep's $2,500 but more than Martina's $750. $1,500 say.

This goes on for years, heated debates culminating in some sort of compromise that neither one sees as particularly awful. In that world, politics are not so bad.

Now imagine a parallel economy where our heroes also make $50,000 a year. Again, Martina is very conservative and Pradeep is very liberal. That has not changed. What is different, though, is that in this world, wages are stagnant. Instead of a raise of 10%, they get a raise of only 2%. In the prosperous economy, their gross pay bumped up $5,000; in this stagnant economy their pay bumped up only $1,000. Pradeep sees how hard it is on people to live in this economy; he'd still like to give $2,500 but his raise is only a portion of that, so he thinks that maybe $500 of his $1,000 raise?  Martina? She thinks that $1,000 is already too little and isn't about to give any of it to the government. She doesn't want to give any of her tiny raise away. Well, maybe $100, $150 tops. The more she listens to Pradeep's inane proposals to take most of her raise, the more she feels inclined to just keep it all. She thinks he's nuts.

Maybe it is because they are fighting over such small amounts, but this question of how much they'll support the larger community vs. be allowed to keep to themselves is contentious. Already Pradeep knows that there won't be enough money to build the new school that he thinks the neighborhood deserves. He's appalled that not only will his neighborhood not get a new school but they might actually have to layoff some teachers and go from 22 kids per classroom to 32. Martina is appalled that not only will she not be able to afford her new car but it looks like she might not even have enough extra to get the repair she's been putting off. The debate about building a new school or buying a new car is heated but it is not viscous; the debate about teacher layoffs or car repair is.

It's probable that fragmentation of news sources has reinforced and magnified the differences in our politics. It's probable that politicians playing to primaries, making the effort to win their party's voters rather than the voters in a general election has made us more polarized. It's probable that the big divide into different communities, liberals who shop at Whole Foods and conservatives who dine at Cracker Barrel each self-segregating into their own neighborhoods has made us more polarized. Too rarely mentioned, though, is the effect of stagnating wages over the last 17 years.

There are numerous approaches to diminishing polarization and there is likely no one solution to this. That said, as policies create more prosperity, politics could become less viscous.

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