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September 11, 2009

Economist's View - 4 new articles

The "Undeserving Rich" and White Working Class Voters

Hmmm. Did the working class voters who favored Bush over Kerry do so because they believed Bush, unlike Kerry, was part of the "deserving rich"?:

Democrats seen as the 'undeserving rich' face rejection by party voters, EurekAlert: In a recent study, researchers from several universities looked at why white working-class voters voted Republican in recent national elections even when they didn't like Republican policies.
The study, "The Undeserving Rich: 'Moral Values' and the White Working Class," is in the current issue of Sociological Forum. It finds that, even when Republican policies are unpopular, they often come bundled with an overarching moral framework that is extremely resonant to this set of voters, a framework marked by what voters considered an "appropriate" attitude toward personal wealth. [Note: ungated version of the paper.]
This attitude was characterized by respondents as a "down to earth" quality as opposed to "aloofness." Whether candidates see themselves as better than "normal human beings" because of their wealth, say the researchers, was to many respondents more important than how much money they actually have.
"For our respondents, this difference was not trivial," says one of the study's authors, Steven G. Hoffman, Ph.D., visiting assistant professor of sociology, at the University at Buffalo.
"In particular, the way in which the two candidates in the 2004 presidential election -- both wealthy men -- handled themselves in relation to their wealth was important to our respondents; it was seen as a clue to candidates' moral fiber," he says.
For example, John Kerry (described by various respondents as "aloof," "upper level" and "a little snooty") was identified as being part of what the study calls "the undeserving rich," Hoffman says. "Whereas George W. Bush's wealth did not demean his character, because he was seen as a member of the 'deserving rich' ('…he's just a regular cowboy, a cowboy rancher.')."
"In fact, of all the Bush voters interviewed, 25.8 percent spontaneously mentioned some variant of that theme," Hoffman explains. ...
The researchers explain that the behavior of white working-class voters has puzzled many scholars because Republican economic priorities seem to favor the wealthy at the expense of redistributive policies that would provide immediate benefits to larger segments of the population. ...
The researchers used in-depth interviews to uncover the framework that has supported the voting practices of these Democratic voters. The notion of an "appropriate" attitude to wealth, served for these voters as an indicator of a candidate's general moral philosophy and as a rule-of-thumb signal of whether the candidate will govern with working-class voters' interests in mind. ...
The authors point out that in attempting to explain why Republicans have attracted votes from the less-wealthy segments of the population, scholarly literature has previously settled on six possible explanations. These include: beliefs among voters that Republican policies will help the general economy, or one day may help them become rich; that such voters generally agree with the ideology behind Republican policies -- that the rich become rich through hard work and should be rewarded; that while Republican economic policies are unpopular with this group, they are bundled with other issues that are popular, such as Republican positions on abortion, gay marriage or foreign policy; or that the voters in question are unaware of Republican economic policies or misinformed about their true nature.
Still another explanation is that, while Republican economic policies are unpopular, voters vote in this way because they prefer the "moral values" of the Republican Party, a position which the Hoffman study clearly supports. ...

"When the Going gets Tough, the Tough Run to the Government"

Uwe Reinhardt notes that social insurance is much more pervasive than many people realize, and that many of the most vocal opponents of extending social insurance to health care are heavily dependent upon social insurance themselves:

Lehman's Last Contribution to Society: A Lesson on Social Insurance, by Uwe E. Reinhardt, Commentary, Economix: A year ago, century-old Lehman Brothers lapsed into bankruptcy... [T]he oligarchy that runs our nation's financial sector. ... had fully expected to see Lehman bailed out by the federal government that serves them, especially after the government had dutifully bailed out Bear Stearns earlier in the year. When Lehman was not so served, panic set in, unleashing global economic turmoil and pain. ...
In the end, like teenagers who hate Mother's strictures when all is well, but run to Mommy whenever they get in trouble, the swashbuckling oligarchs of the financial sector ran to government for cover, owning up once again to the time-honored mantra of this country's legendary rugged individualists:
When the going gets tough, the tough run to the government. ...
It is a social contract with government that Americans quietly love, but ... so often profess to hate — as when they cry for government to stay out of Medicare, or when they sit on their beachfronts in the Hamptons waxing worried about government intrusion in the economy, all the while basking in the security of federal flood insurance.
After seeing the evaporation of so much of the wealth they had imagined to reside in their 401(k) plans, mutual-fund accounts and private pension plans,... millions of middle-class Americans surely must have gained a renewed appreciation for ... Social Security ... along with two other popular social insurance programs: Medicare and Medicaid.
Social insurance is routinely called to the rescue also whenever governors of all political stripes ask the federal government for help after a natural disaster... Along with direct financial relief, the Federal Emergency Management Agency is an instrument of social insurance.
It can be asked, of course, why that form of social insurance generally is judged highly desirable — even by the most staunchly conservative politicians — when so often they mistakenly decry as "socialism" proposals that government come to the assistance of an individual ... struck by a natural disaster called "illness," like cancer. ... Why is it the American way ... to give financial help to a family whose beach house in Mississippi was blown down by a hurricane, but it is socialist and un-American to help a Mississippi woman struck by breast cancer?
One of the most thoughtful recent books on the topic of government risk-management is "When All Else Fails: Government as the Ultimate Risk Manager" (2004), by David A. Moss, a Harvard Business School professor. ... Professor Moss explains that the first application of social insurance in our latitudes actually was aimed ... at ... supporting the growth of modern capitalism. Its main instrument to that end was the legal sanction of the principle of limited liability of the owners of corporations.
Prior to this form of social insurance, the owners of a business were legally liable with their personal wealth for damages the business might have inflicted on others. With limited liability, the corporation's shareholders are liable only up to their equity stake in the company. ... Beyond that, someone else in society — often the taxpayer — bears the financial risk for damages attributable to the corporation.
One wonders how many business executives and members of chambers of commerce ... realize that the limited liability of shareholders is social insurance.
The most pervasive form of social insurance for the business sector in recent times, of course, has been the massive government bailout of the financial sector following the Lehman Brothers bankruptcy. Without the huge array of public assistance ... the financial sector would have collapsed...
One would hope that by now this lesson on the beneficial role of government in risk management in our society has sunk into the minds of the American public. One must also hope that eventually it will penetrate even the minds of economic theorists...

Poverty is Up, Median Income is Down, and Employer Based Health Insurance Continues to Trend Downward

The news on the number of people in poverty, median income, and the number of people who have lost employer based health insurance is not so good. Without public insurance programs and the stimulus package, the news would be even worse:

Poverty Rose, Median Income Declined, and Job-Based Health Insurance Continued to Weaken in 2008, by Arloc Sherman, Robert Greenstein, Danilo Trisi and Paul N. Van de Water, CBPP: Poverty increased, median household income fell, and the percentage of Americans with employer-based health coverage continued to decline in 2008, according to Census data for 2008 issued today.
The figures reflect the initial effects of the recession. Median household income declined 3.6 percent in 2008 after adjusting for inflation, the largest single-year decline on record, and reached its lowest point since 1997. The poverty rate rose to 13.2 percent, its highest level since 1997. The number of people in poverty hit 39.8 million, the highest level since 1960.
These data include only the early months of the recession. The figures for 2009, a year in which the economy has weakened further and unemployment has climbed substantially, will look considerably worse, and the figures will likely worsen again in 2010 if, as many economic forecasters expect, unemployment continues to rise in that year. (In the last two recessions, the unemployment rate continued rising for 15 to 19 months after the recession officially ended.)
Health Insurance Data The overall percentage of people without health insurance edged up from 15.3 percent in 2002 to 15.4 percent in 2008, a change that was not statistically significant, while the number of people who are uninsured jumped by 682,000 (a change that was significant) and reached 46.3 million. The continuing decline in job-based health coverage, which has been falling since 2001, did not lead to an increase in the overall percentage of people without insurance because it was offset by an expansion of public insurance programs. ...
Poverty Expected to Rise Much More in 2009 But Would Be Worse Without Recovery Act The worsening job situation since 2008 portends much higher poverty in 2009 and 2010. ...
While the increases in poverty in 2009 are likely to be large, they would have been much greater without the economic recovery legislation. A Center analysis issued on September 9 that examines the effects of seven recovery act provisions finds those provisions will keep an estimated 6.2 million Americans — including 2.4 million children — from falling into poverty and will reduce the severity of poverty for 33 million others.[2] These figures are conservative because they do not include the poverty-preventing effects of other recovery act provisions, such as increases in housing assistance and child care services, or the effects of the recovery package in preserving or creating jobs.
Income of Working-Age Households at Lowest Level in Years, Poverty at Highest ...
Employer-Provided Health Insurance Expected to Continue Dropping in 2009 and Beyond Some 46.3 million U.S. residents lacked health insurance in 2008, an increase of 682,000 over the previous year and 6.6 million more than in 2001. ...
The percentage of people with employer-provided health insurance, the principal source of coverage for the non-elderly, has been trending downward since 2001 and is the leading contributor to the increase over time in the number of uninsured. ...
Employment-based coverage is likely to drop significantly in 2009, due to the loss of jobs. In the short term, some families losing their jobs and health insurance may become eligible for Medicaid or qualify for other assistance such as temporary COBRA subsidies for formerly employed workers, which the recovery act temporarily strengthened. But, the long-term decline in private coverage is likely to continue to drive up the number and percentage of uninsured.
The Congressional Budget Office projects that under current law, the number of uninsured will continue to rise and reach 54 million by 2019. The health reform bill currently moving through the House of Representatives, as well as health reform bills in the Senate, would seek to reverse the sizable increase in the number of uninsured people that has occurred in recent decades. ...

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