Henry Farrell calls this op-ed from Heritage's Michael Franc a steaming heap of buffalo dung for claiming:
A legislative proposal that was once on the fast track is suddenly dead. The Senate will not consider a plan to extract billions in extra taxes from mega-millionaire hedge fund managers.The decision by Senate majority leader Harry Reid, the Nevada Democrat, surprised many Washington insiders, who saw the plan as appealing to the spirit of class warfare that infuses the Democratic party. Liberal disappointment in Mr Reid was palpable at media outlets such as USA Today, where an editorial chastised: “The Democrats, who control Congress and claim to represent the middle and lower classes, ought to be embarrassed.”
Far from embarrassing, this episode may reflect a dawning Democratic awareness of whom they really represent. For the demographic reality is that, in America, the Democratic party is the new “party of the rich”. More and more Democrats represent areas with a high concentration of wealthy households. Using Internal Revenue Service data, the Heritage Foundation identified two categories of taxpayers – single filers with incomes of more than $100,000 and married filers with incomes of more than $200,000 – and combined them to discern where the wealthiest Americans live and who represents them.
Democrats now control the majority of the nation’s wealthiest congressional jurisdictions. More than half of the wealthiest households are concentrated in the 18 states where Democrats control both Senate seats.
Says Mr Farrell:
If it is true that Democrats tend to represent richer districts, both basic logic and an elementary grasp of statistics should tell you that this does not imply that they represent richer voters. Indeed, not only does it not imply this, we know that it isn’t true.
I think this might be a tad out of date; as pointed out in his comments, Pew research seems to show Democrats slightly outpolling Republicans at the very top of the income scale. But the bigger problem is that this confuses the voting base with the constituency. Democrats indisputably represent more rich voters than Republicans; their constituency is the people in their district, not the people in their district who voted for them.
Moreover, politically, this matters a great deal. The guy from Heritage is actually making a good point: the constituency of the Democrats will force many of them to support the interests of the rich, even where they might ideologically prefer to oppose, because doing so is good for their district. Voters, especially poor voters, are highly influenced by local economic conditions. It is thus in Chuck Schumer's strong political interest to keep the financial services industry happy, whether or not they vote for him. Ditto Nancy Pelosi and Silicon Valley. Thus the current quandary on carried hedge fund interest.
The Democratic leadership seems to be increasingly drawn from its most affluent districts, because those districts are where the money is. This means that the Democratic Party as a whole will increasingly serve the interests of the affluent, even if the rich people in those particular districts don't vote for those politicians. Personally, as I said on Bloggingheads, I don't think this is that big a problem; rich voters are few enough that the service is likely to take the form of small but annoying items like the carried interest tax. But I can see why it worries Paul Krugman.
Nancy Pelosi doesn't represent Silicon Valley. Her district is San Francisco. Silicon Valley is to the south of her, and its representatives are Anna Eshoo and Mike Honda.
Or, you know, it could just be a sign that hedge funds have marshalled their resources into "workin' the system" and are reaping the first gains.
The Democratic leadership seems to be increasingly drawn from its most affluent districts, because those districts are where the money is.
I can't say that's true in the House if you look just past Nancy Pelosi. Majority Whip James Clyburn's South Carolina district is among the poorest in the nation. Rahm Emanuel's IL-05 is undistinguished ethnic Chicago, no wealthier than IL-03 or IL-08. Steny Hoyer's southern Maryland district isn't particularly affluent, either, and you can guess that John Murtha's district is also modest.
So it's not true of the Congressional leadership. It may be true of the campaign committees, to some degree, but then that raises the question of how much that bleeds over into policy. With Schumer, quite a bit, but he's a Senator. Does Chris Van Hollen, the current DCCC chair who represents wealthy Maryland suburbs, have outsized influence in the House? No one's claiming so.
Chuck Schumer is certainly valuable as a fundraiser because he represents New York, but isn't it a little confusing when we expand district to refer to an entire state?
Steny Hoyer's district is pretty affluent, as I understand it, and the Senate also looks pretty ritzy . . .
Democrats indisputably represent more rich voters than Republicans; their constituency is the people in their district, not the people in their district who voted for them.
Good point!
Charlie Rangel, chairman of the Ways and Means committee represents Manhattan, but not the wealthy half. But seriously, if the poor people in a rich district are the ones who vote for you, how does that mean that you're somehow compelled to serve the interests of rich voters in that district at poor voters' expense?
yeah, this makes no sense -- you can pretty safely ignore the interests of those who didn't and won't vote for you. further, there are clearly a tremendous number of tremendously rich democrats (e.g., hollywood producer/entertainer types, excepting some anomalous repubs) who democrats can't target too agressively w/o risk of losing support. you really think some democrat's not going to run into opposition if they figure out some way to (e.g.) tax geffen or spielberg back down to only millionaire status? do you know (e.g.) many democratic lawyer in DC making north of $200K per year who are excited by the prospect of paying significantly higher taxes?
It's not just the voters who have influence, the donors do, too. The Democratic party is made up of many very rich politicians and has a lot of very rich donors. They won't get reelected without money and they don't get money from poor people.
EI
Herself:
Steny Hoyer's district is pretty affluent, as I understand it, and the Senate also looks pretty ritzy .
http://hoyer.house.gov/images/md05officialmap.gif
It looks like it's about 2/3 of Prince George's County, part of Anne Arundel, and all of Charles, Calvert, and St. Mary's. In my mind, and it's been 15 years since I left Southern Maryland, there's some rich/affluent people in there (particularly in the areas close to the big rivers or the Bay, I suppose), but a lot of normal middle class people, and quite a bit of actual rural agricultural land. I don't think Waldorf or Bowie are anyone's idea of Upperville. A lot of Navy jobs have moved down to the Patuxent River Naval Base now, I think.
The median home price may well be high by national standards, but that's arguably because of DC, not because the people living in "normal" townhomes in Waldorf or Bowie are different from the people living in similar townhomes anywhere else.
This is a good point, but what particular industries are in a district have far more of an impact that how wealthy the district is since business tend to employ people at a variety of income levels. If BlahCorp is one of the common employers in a wealthy district, it is probably also one in less-affluent adjacent districts, both of which will elect representatives that emphasize BlahCorp's interests.
Its kinda intellectually dishonest for you to link to that post and dismiss it with a snarky title without evening mentioning Farrel's prime piece of evidence: The Red State Blue State paper by Gelman et al. See here: http://www.stat.columbia.edu/~gelman/research/published/red_state_blue_state_revised.pdf
That's what Henry was citing, and it was published in September 2007. Its not out of date.
the Senate also looks pretty ritzy.
How so? You could make the argument that Democratic voting in the House is going upscale as Democrats capture districts in northeastern and midwestern suburbs, but the senate case is weaker.
Our Senate Majority Leader is from Nevada, which is not a center of the hedge fund industry, and his deputy is from Illinois, which admittedly has a financial center in it, is much more diverse than a House district and like New York as a state has had Democratic senate representation for a long time. Also, our previous Senate leader was from South Dakota, a state as far from ritzy as you can get.
I'm sorry, but I don't see the data supporting your argument at all, beyond the individual case of Chuck Schumer representing the financial capital of the U.S.
BP Beckley, the affluent MD suburbs are all in Van Hollen's district or gerrymandered into Albert Wynn's.
No, Harry Reid is the creature of another extremely large industry--one that disproportionately profits off of poor people . . .
Rickm wrote: Its kinda intellectually dishonest for you to link to that post and dismiss it with a snarky title without evening mentioning Farrel's prime piece of evidence
Actually, she should probably go ahead and re-post Farrel's entire piece for context. But since that might omit something else Farrel has written which he considers relevant to understanding the post, she should probably also give him administrator privileges to this blog so he can make certain for himself that her argument is satisfactory. Also, she should invite him over for tea.
...or not. Presumably, most of the people who got here did so with the benefit of working browser navigation, and a link has been provided that will readily allow readers to investigate Farrel's argument on its own merits. Seems fair enough to me. No reason why she should have to analyze the Gelman paper, especially when Farrel didn't even analyze it. Instead, he simply chose to -- wait for this -- provide a link to it!
Presumably, most of the people who got here did so with the benefit of working browser navigation, and a link has been provided that will readily allow readers to investigate Farrel's argument on its own merits.
You could investigate how his name is spelled, while you're at it.
As her argument crumbles, you have to love the effort to change the topic to Harry Reid being "the creature" of gambling.
Perhaps it's time to blame the teacher's unions.
Tom
one that disproportionately profits off of poor people
Right, because we know how many poor people flock to Vegas to stay at the Bellagio. All those "What happens in Vegas stays in Vegas" ads? Clearly targeted at urban ghettos.
I think you're confusing the Strip with Lotto. Or maybe computer poker in South Carolina.
Nope; most of the casino industry's profits come from the downscale "avid gambler" aka compulsive addict, at least as far as I understand it.
As her argument crumbles, you have to love the effort to change the topic to Harry Reid being "the creature" of gambling.
Yes, well, I think we can declare this particular subject an example of Availability Bias . . . remembering a few prominent examples vividly and mistaking that for statistical correlation, without taking into account the large number of data points that disprove the theory.
Brittain . . . you think there's a statistical universe of Democratic leaders?
"ts kinda intellectually dishonest for you to link to that post and dismiss it with a snarky title without evening mentioning Farrel's prime piece of evidence: The Red State Blue State paper by Gelman et al. See here:"
Gelman is analyzing state/County level data. Heritage is looking at congressional districts which often cut across counties.
Two different data sources. The Heritage data is also based on a smaller geographic area than Gelman.
Look, Megan attempted to rebut Henry's post by saying "this might be a tad out of date." Yet Henry's post was based on evidence published TWO MONTHS AGO. What the hell does 'out of date' mean for Megan? Today's blog posts? Or did she just not look at the evidence?
To break this down further... Megan quotes Henry here saying this:
"If it is true that Democrats tend to represent richer districts, both basic logic and an elementary grasp of statistics should tell you that this does not imply that they represent richer voters. Indeed, not only does it not imply this, we know that it isn’t true."
She then writes: "I think this might be a tad out of date"
But what Megan omits(or fails to understand, or failed to read) is Henry's citation: "See further Andrew Gelman et al."
Now, Henry is an academic, so presumably he is familiar with evidence, arguments, citations, etc. From Megan's post, we get a poor rebuttal ("I think this might be a tad out of date") from a obviously sound inference from a recently published (recent by standards outside of academia) paper that does more than support Henry's argument--It also informs and shapes it.
Her post is either lazy or stupid.
I dispute that "downscale" = "poor." In the world of 6 figure and way up Washington DC pundits, 50K a year may well be downscale and poor, but it's not poor in terms of US income distribution demographics.
Think about it, the "poor" simply don't have enough money to support the gambling industry. Poor people aren't the ones maxing pout their credit cards and even mortgaging their homes at casinos in order to continue gambling. Degenerate gamblers may become poor because they piss it all away, but they have to have the income in the first place.
Megan, you've been in DC how long? Already succumbed to the ruling class mindset even if you haven't joined them?
Remember the part in Viva Zapata where Brando realizes he's become one of them ("What's your name?") grabs his coat and storms out the door? Maybe it's time!
Brittain . . . you think there's a statistical universe of Democratic leaders?
There are data, and the only way to make certain statements about the "districts" that those leaders represent accurate is to ignore most of it.
Rickm,
That Henry Farrell cited an academic journal article published two months ago (i.e. therefor written two or more years ago) is not, ipso facto, proof that his contention is correct and up to date. If you want to show that Megan is wrong you might want to explain what the article claims and reconcile it with her citation from Pew Research.
George-
You are wrong. The article was not written two or more years ago. It cites articles from 2007 and 2006, so its presumably up-to-date.
I never intended to show that Megan was wrong. Apparently, she never cared to show anyone that she was right. She just dismissed Farrell's evidence as "out of date" when it clearly is not. If Farrell's inference from Gelman's paper is incorrect, then she, or anyone defending her position, should argue that point, not glibly dismiss his claim.
Funny, rickm, that after you lambaste Megan for ignoring Gelman, he weighs in http://www.stat.columbia.edu/~gelman/blog/ and, while not completely agreeing with her, is not nearly as dismissive as you are. Or do you think his data is stale -- wait, it's from today.
Firstly, this doesn't represent hedge funds "workin the system". This was just the Microsoft anti-trust prosecution but with fewer lawyers. A big, successful industry that doesn't pay money to pols and their once and future staffers (aka lobbyists and consultants) gets threatened with horrible consequences. Industry proceeds to spend all sorts of money getting "access" in DC to ensure that the insanity doesn't happen, former staffers buy houses in Georgetown after they leave, pols have more campaign funds, and more people are willing to work investment banker hours for bank-teller salaries in a congressional office for a few years so that they can be a lobbyist.
This is called rent extraction, or in plain language corrupt statist (and stasist) @#$%&s making Mafia Dons look respectable. Take away their power and you take away their money. Thus why dynamist/anti-statist politics are the only ethical politics. To be on the left (or a big government conservative) is to be inherently corrupt.
Trying to tax carried interest as regular income is simply tax discrimination against entrepreneurs in the finance industry. Sergei Brin didn't contribute any substantial liquid capital to Google. He brought his ideas and abilities. For this he rightly got a substantial fraction of the firm's equity. General Partners in hedge funds, private equity firms, and venture capital partnerships bring their talents and ideas. They are entrepreneurs just like Brin, but their corporate structure is different thanks to the idiocies of the tax system in dealing with financial firms. So you end up with partnerships rather than a public firm, but the work and compensation is the same.
Highly successful firms with small numbers of employees are only mistreated when they are in finance. Existing rules exist because we have wisely realised that this discrimination is idiotic and harmful, no matter how popular it may be. Arguing for harmful taxes aimed at the finance industry is simply shilling for London and far below the level of intellectual integrity and sophistication that we expect of you Megan. DC is seriously harming you, as is hanging out with people like Ezra and Matt.
jfalk-
Did you even read anything I wrote? I never said Gelman's data was stale. In fact, I SAID THE OPPOSITE!
Rickm -- irony is clearly not your strong suit, but you've got an excellent grasp of capitalizaton.
Megan writes "Brittain . . . you think there's a statistical universe of Democratic leaders?"
No one asked me, but yes, there is a universe of Democratic leaders. I think what Megan means is that the universe is too small to draw meaningful conclusions (which I guess means that it is not "statistical"). That seems odd as her post contained assertions about the Democratic leadership.
I am actually comfortable with her first approach about making assertions. We need to draw conclusions about our leaders so sometimes we need to take our best guesses.
Tom