April 17, 2006

Wealthy Liberals Cause the Rich/Poor Gap

Marc Comtois

Last week, Justin noted the strange alliance between "Old-Money Populists and the Working-Class/New-Money Elite" here in Rhode Island. Michael Barone writes that the dynamic is not unique to the Ocean State and can be seen in many "blue" states here in the northeast. In his post, Barone excerpts the conclusion to Michael Malanga's piece about the public sector unions in New Jersey. Malanga writes:

Aided by the courts and the vast expansion of budgets during the flush 1990s, New Jersey's tax eaters have little by little created a full-fledged example of the kind of regional government that the Left touts these days—a government that forces businesses and residents who have fled the dysfunction of the cities to pay the tab for those urban problems, whether they like it or not.

Further, Jersey is part of a cultural shift that is changing politics in many northeastern areas, as some high earners abandon traditional middle- and upper-class fiscally conservative values and vote liberal instead. In national elections, Jersey today is now reliably in the "blue" column...Jersey may soon resemble its neighbor, New York City, as a place where the rich who tolerate high taxes or consider them a social obligation live side by side with the poor, but with a shrinking middle class.

In short, it may be that New Jersey, having for years enthusiastically welcomed New York's residents and jobs, is now watching the Empire State take a measure of revenge as its neighbor settles into a familiar high-tax, low-growth inertia. Jersey has caught a bad case of the blue-state blues.

Barone doesn't think New Jersey is quite as "blue," but adds an interesting observation about that "gap between rich and poor" that the left tells us is growing larger.
. . .one of Malanga's most important points is that taxpayers aren't getting much value from the huge spending increases, and neither are the intended beneficiaries of the huge transfers from affluent suburbs to decaying central cities. Huge increases in spending on central city public schools have resulted in virtually no improvement in test scores. They have resulted instead in bloated salaries, benefits, and pensions for teachers and other public employees. And of course for public-sector union officials. And, through the unions, large flows of money have gone to the Democratic Party. All this is, evidently, gratifying to the upper-income liberals who vote Democratic in order to preserve the right to abort fetuses.

But it does nothing to help the kids who grow up in crime-ridden central cities with rotten schools. And by pillaging the private-sector economy, it strangles the goose that lays the golden eggs. Fortunately, not all state governments are run, as New Jersey's seems to be, by the public-sector unions, and the private sector can migrate elsewhere. Which of course is what is happening in New Jersey and has been happening in New York state for many years. The financial sector can continue to thrive, generating high incomes for people who don't mind paying high taxes, but less favored places—most of upstate New York, lower-middle-class towns in New Jersey—are left with declining economies.

Third, many on the political left complain about the disappearance of the middle class, the alleged tendency of our economy to produce hefty income growth for those at the upper end of the economic scale and relatively little income growth for the large number at the lower end. Interestingly, this tendency toward income inequality is most pronounced in states that have been voting Democratic in presidential elections—especially New York, New Jersey, Connecticut, and California. Income inequality tends to be much less in many states that vote heavily Republican. New York, New Jersey, Connecticut, and California have imported many high-income earners and low-income immigrants and have been exporting many more middle-income earners. This process is accelerated when, as in these four states, high-income earners have been eager to vote for Democrats backed by public-employee unions: The same people who have been complaining about this trend have been causing it.

UPDATE: Don Hawthorne has previously mentioned Malanga's most recent book, The New New Left: How American Politics Works Today, and excerpted both a review and portions of the book's introduction. (Thanks Don!)

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As you know, I have written two postings on Malanga's new book, which discusses some of these points further and are relevant to your posting as well -

The Radically Different Visions of Tax-Eaters Versus Taxpayers

Will The Voter Initiative Change The Status Quo If Our Core Problem Is The Large Size Of Government?


Posted by: Donald B. Hawthorne at April 17, 2006 3:55 PM