It’s amazing how much can change in just a decade. I’ve been reading Modernization and Postmodernization by Ronald Inglehart. In the book, he proposes that the populations of the First World are undergoing a profound shift in their approach to the issues of statecraft. In his mind, the cleavages of the past (Right and Left approaches to economics) are fading, to be replaced by post-material concerns: the environment, social issues, etc.
His basis for this claim is the assertion that class issues are fading in significance – the rising tide of liberalism has produced relatively secure and equal societies. Further economic gains would produce diminishing marginal returns. The result: voters less concerned with economic issues. One particularly interesting quote:
Political life is also responding to a curve of diminishing marginal returns—in this case, the diminishing marginal utility of the classic program of the Left.
Equality of income distribution shows a curve of diminishing returns similar to those we saw for life expectancies and subjective well-being in chapter 2. Income equality increases sharply with economic development, up to a level of about $3,500 per capita in 1978 dollars (see Inglehart, 1990: 251); above that threshold, the curve levels off. In the overwhelming majority of countries with a GNP per capita below $3,500 (as of 1978), the top tenth of the population got more than one-third of total income (in some cases as much as 57 percent). In none of the nations with a GNP per capita above $3,500 did the top tenth of the population get more than one-third of the total income; their share ranged from as low as 17 percent, in communist countries, to a high of 33 percent, in Finland.
That was 1997, at the high water mark for the new liberal consensus and post-economic hype. Just a short decade later, the tide has receded, and this particular myth has been shattered – revealed to be the product of a unique historical moment rather than the inevitable trend of history. Less than 10 years later: “Income inequality grew significantly in 2005, with the top 1 percent of Americans — those with incomes that year of more than $348,000 — receiving their largest share of national income since 1928.”
That statistic about the top 10% never taking more than 33% of the income…well, in 2005 the number was 48.5% – just a shade lower than the 49.3% immediately prior to the Great Depression.
Inglehart also assures his readers that the economic programs of the Old Left have served their purpose but the new waves of financial security have obviated the need for the Welfare State – something that will surely surprise the 66 million people who just voted for the candidate promising massive new state investment in health care, energy development, and social welfare
The point here is not to pick on Inglehart, whose underlying premise is actually quite intriguing, but rather to emphasize just how contingent history really is. We love to look at trends and project them into the future, but rarely account for all of the factors that may intervene and complicate the stories we tell. This is especially common whenever we minimize the significance of economic factors.
For a nice demonstration of that point, check out Ezra Klein’s recent post about What’s the Matter With Kansas and the larger debate about economics, culture, and security.