The next big issue: inequality in America

About the author
Godfrey Hodgson was director of the Reuters' Foundation Programme at Oxford University, and before that the Observer's correspondent in the United States and foreign editor of the Independent. Among his books are A Great and Godly Adventure: The Pilgrims and the Myth of the First Thanksgiving (PublicAffairs, 2007) and The Myth of American Exceptionalism (Yale University Press, 2009)

The Labor Day holiday at the beginning of September is the traditional starting-gun for American political campaigns, and the critical 2006 mid-term elections are now well underway. The shape of the campaign in its main lines is now clear. Its lineaments are defined by two anniversaries: the fifth anniversary of the terrorist attacks on New York and Washington, and the first anniversary of the drowning of New Orleans.

The Republicans, led by President Bush and his White House posse, will beat the patriotic drum. They will talk about the war on terror, or the "long war" as they now like to call it. They will claim that President Bush's response to 9/11 shows that in his hands the fate of America is secure. They will accuse the Democrats of wanting to "cut and run" from Iraq, and imply that they are soft on terrorism, just as they once used to insinuate that they were soft on communism.

Hurricane Katrina, for the Democrats, will continue to be a symbol of Republican indifference to suffering, and in particular to the suffering of the poor, who in America are disproportionately black. The Democrats will talk about Iraq, but not as much as they should, in part because so many of them, and especially the leading Democrats in the Congress, did not vigorously oppose the war in Iraq or expose the specious link the Bush administration made between Saddam Hussein, the whisky-drinking dictator, and the puritan fanatics of al-Qaida. New Orleans will symbolise the Democrats' best hopes, because it has become the symbol of inequality.

At the moment, the tipsters and the political handicappers are not confident about how the elections will go. The Democrats need to win six seats in the Senate to win back control there, and a dozen seats to recapture the House of Representatives. Their chances are better in the House than in the Senate, if only because only one third of the Senate is up for re-election every two years, as against the whole of the House's 437 seats.

There is however a real opportunity for the Democrats. As many as twenty-six Republican seats could be vulnerable in the House, though some Democratic losses will probably have to be set against the highest number of gains the Democrats can realise. In district after district, the Democrats will be talking about an issue on which they have for some decades been strangely silent. In the northeast (Pennsylvania, Connecticut, New York State) and the industrial mid-west, economic inequality and economic fear have emerged as the key issues for the Democrats to exploit.

More equal than others

In 2000, I was commissioned to write a report for the Century Foundation in New York, a liberal institution founded in the early years of the last century by a Boston department store owner and philanthropist, Edward Filene. My brief was broad: to bring up-to-date a 1976 history I had written of the United States in the third quarter of the 20th century.

I looked at many aspects of American life, including the economy and the claims that were being made that, thanks to new technology, it had overcome all its problems. I assessed the status and mood of women, African-Americans and the new immigrants. I even wrote something about foreign policy. But the main thrust of the report, simply because the evidence was so compelling, was the growth of inequality in American life. When the report was published as a book, I called it (in ironic reference to George Orwell's Animal Farm) More Equal Than Others.

Whether you looked at wages, salaries and income, or at wealth, I found that America was becoming a more and more unequal society. Indeed, because the importance of money was increasing in allocating education, access to healthcare, and the amenity or otherwise of the suburban life that awaited most Americans, the United States was becoming exactly what it had been so proud of not being (at least since the New Deal of the 1930s and 1940s): a class society.

I noted that many Americans, including those who were most conspicuously the victims of class discrimination, were in denial, insisting that their opportunities in life were far greater than in fact they were. Only in America, to turn around the proud phrase of the boosters of the immigrant past, did people drive around in cars with bumper-stickers boasting that their children went to expensive schools.

Many solid indices showed that the United States was more unequal, and more of a class society, than other advanced capitalist democracies in Asia, Australasia and even in Europe. Moreover the two countries that seemed to be following most closely on this path to inequality were Britain and Australia, precisely those that had most closely followed the American model.

Most telling of all, for those of us who once saw America as a land of unparalleled opportunity, was the fact that the United States had the highest poverty rate of sixteen developed countries, and (after only Canada) the second-lowest rate of escape from poverty. Moreover, the growing inequality in America was not an accidental consequence of blind economic forces, but was the consequence of ideological shifts and deliberate policies.

The Bush administration's tax cuts, for example, have overwhelmingly gone to those in the top 1% of the population by income. The authoritative Brookings Institution, for example, has noted that under the latest tax-cut, households in the top 1% will pay more than $45,000 less tax, a far higher reduction than anyone else. This tax-cut, moreover, comes immediately after a twenty-year period in which both the pre and post-tax income of the top 1% grew much faster than for any other group.

Polarised America

My book received respectful reviews, but it cannot be said to have had much influence. Now a strikingly similar conclusion has been reached by three scholars - Nolan McCarty (Princeton), Keith Poole (University of California, San Diego) and Howard Rosenthal (New York University) - whose work is much harder to ignore. Their new book, Polarized America: The Dance of Ideology and Unequal Riches, researches voting patterns in Congress to document what most people would accept anecdotally, that the behaviour of politicians has indeed become sharply polarised. Republicans have become much more conservative, and Democrats have become somewhat more liberal.

In summary, with the full panoply of social science and in a narrative illustrated by showers of graphs, coefficients and equations, the three scholars demonstrate pretty conclusively that political polarisation is indeed related to economic inequality. They show how ideological polarisation and income inequality fell together from 1913 (when the progressive Woodrow Wilson became president) until 1957; and that both inequality and polarisation have been rising again since 1977.

They speculate that this may have something to do with the revival of mass immigration after the late 1960s, this time not from the impoverished corners of Europe but mainly from central and south America. It certainly has a lot to do with the conservative ascendancy since Ronald Reagan became president in 1981.

The three political scientists' most important finding, though, is that the connection between economic and political polarisation remains. Their work has several incidental but thoughtful conclusions, including disagreement with analyses of the 2004 elections that focused on "moral values", and with Republican strategists' belief in the importance of "terror" to voters. As they point out: political scientists observe that those who said fighting international terror was "very important" voted disproportionately for Bush, but it is also true that they were "whiter, richer, more male and more Republican".

Nolan McCarty, Keith Poole and Howard Rosenthal are cautious, even perhaps ultra-cautious, when it comes to extrapolating from their own analysis. They go out of their way to congratulate their compatriots for the steps that were made towards greater equality in the 1950s, half a century and more ago.

Their elaborate scholarly apparatus, however, does back up the argument I made, carefully, though without the mathematical tools of social science: inequality in America is real. It is getting worse. It amounts to the politics of class. It kills, both suddenly when the levees burst in New Orleans, and also slowly when tens of millions do not have adequate health insurance.

It can also motivate voters. And it could hand the Democrats the issue that could help them return to power. What we will have to watch is whether enough Democratic candidates are ready to grasp the politics of inequality, or whether too many of them have got used to what are essentially Republican habits of fundraising, campaigning, lifestyle and thinking.