The Folly of Pocket Book Politics
A conservative friend of mine likes to say that he votes his pocket book. The push to cut taxes, roll back environmental regulations, eradicate unions, and reduce the size and scope of the safety net is good for him. He will have more money to spend and be able to live in more comfort and security. This conception of self-interested voting seems like common sense, but I wonder if it really captures all that is going on in their psyche when wealthy citizens endorse and support libertarian or corporatist political agendas.
Self-interest, even in narrow monetary terms, can be misjudged. In a recent blog post, Paul Krugman reminds us “just how consistently, awesomely wrong the [Wall Street] Journal opinion section has been for two decades now. Think about it… by reading that section you could have learned… that Clinton’s tax hike would cause a recession and send stocks plunging. Dow 36,000! American households are saving plenty thanks to capital gains on their houses. Interest rates will soar thanks to Obama’s deficits…”
Krugman goes on to add: “it seems likely that you could have made a lot of money by betting against whatever that page predicts.”
At the very least the wealthy seem a bit schizophrenic. If they vote their pocket books electing Tea Party or corporatist Republicans every time elections roll around, they also vote almost daily via stock, bond, commodity, and other forms of speculative investments. If those votes are any guide, wealthy investors hardly feel secure even as more governments embrace austerity, deregulation, and privatization.
Those fortunes have depended more on various forms of government intervention than they recognize or acknowledge. Robert Reich argues “An economy so dependent on the spending of a few is also prone to great booms and busts. The rich splurge and speculate when their savings are doing well. But when the values of their assets tumble, they pull back. That can lead to wild gyrations. Sound familiar?” As Financial Times columnist Martin Wolff puts it, “The massive fiscal deficits of today, particularly in countries where huge financial crises occurred, are not the result of deliberate Keynesian stimulus: even in the US, the ill-targeted and inadequate stimulus amounted to less than 6 per cent of gross domestic product or, at most, a fifth of the actual deficits over three years. The latter were largely the result of the crisis: governments let fiscal deficits rise, as the private sector savagely retrenched. To have prevented this would have caused a catastrophe.”
Reich argues that a real long- term escape from our economic troubles will require redistribution of income and wealth so that the economy is less dependent on volatile consumption by the most affluent, who in any case can and do generally save more of their income. A more egalitarian capitalism would give its dominant class a smaller share of the pie, but that pie would have both more stability and steadier growth. Whether this could become a compelling pocket book value for many remains to be seen. Since most Americans believe they have a right to keep what they “make,” tax policy alone cannot carry this burden. Getting from here to there would probably require changes in the structure and incentives of workplaces and an end to the government subsidies and policies that favor the rich. (See Dean Baker, “The Trick to Creating Middle Class Jobs: Stop Destroying Them”)
These steps, however, would further encourage long-term productivity, create a more collegial and stimulating atmosphere, and thereby enhance quality of life.
Another purported perk of great wealth is protection from the slings and arrows of outrageous fortune. Life within a gated community in the nicest spots may secure one from crime, disease, traffic, and other hassles of modern urban life. In an outstanding piece in the August 5, 2001 LA Times, Peter Gosselin commented that the nineties boom, unlike that of the fifties and sixties, left the United States with no “public monuments.” The earlier era brought the interstate highway system and universal phone service, but after the last decade of growth, “Americans are twice as likely to own a personal computer… But they're also more likely to run short of the power needed to operate it. They can purchase the most technologically advanced health care on Earth but face a rising risk of being unable to find an emergency room… They can buy Perrier but can't always get clean tap water.” Gosselin’s comments are just as compelling today as a decade ago.
Gosselin’s example of Perrier is now even more telling. Years ago many wealthy homeowners dug wells to avoid the chlorine taste in municipal systems and presumably assure themselves pure water. Yet with the proliferation of large lot suburban developments, individual septic systems, and intensively fertilized lawns and gardens, well water itself became problematic. Bottled water then became the apparent answer for those willing to spend what it takes to obtain safe water. Nonetheless, the bottled water industry itself is unregulated. Consumers have little more than the promise that such water is safe.
Wealth can mitigate every one of these problems, but it is hard to argue that the decay of such “public monuments” as quality medical centers, well trained and staffed public health professionals, public transit, clean air, and pure water doesn’t take a toll even on the most affluent. Might not their quality of life improve with the tradeoff of a little more in taxation and Federal spending for improvement in these public amenities?
If the answer is yes, then one can suspect that for some wealthy citizens resistance to taxation and the public sector is rooted in something more than economic self-interest as usually understood. As Wolff puts it, they are hardly even listening to their icon, the market, any more. With its near record level lows on long term bonds, the market is screaming that deficits are safe now and is begging the US government to borrow and spend.
Krugman is on to something when he comments that many wealthy readers of the WSJ don’t seem to punish it for its long history of misleading political/economic advice on such matters as government spending: "I guess it’s an affinity thing. The WSJ editorial page comes across as the work of people who love the rich (unless they support liberal causes), hate liberals and the poor, and feel personally affronted by lucky duckies too poor to pay income taxes; and a significant number of well-heeled readers see this and say, 'those are my kind of people!'"
Private affluence and freedom from any publicly imposed limits have become the core of an ever more narrow and even self-defeating conception of personal identity. Confidence in rugged individualism and domination of nature are to be sustained above all else. Though it is called “self-interest” or pocket book issues, it is really a politics of identity that colors how its adherents read the economic data. Sadly, an obsession with these private liberties may trump the very material prosperity and quality of life they are supposed to enhance.