Why people voting “against” their economic interests are not always so irrational
I love the poorly educated.
Donald Trump, Speech in Las Vegas, February, 2017
Warren Buffett’s 2018 Activist Investment
Older Americans are the Republicans’ most reliable voting bloc. Almost no politician has dared to propose cutting Social Security or Medicare, which goes primarily to the old and the disabled.
Social Security (24%), Medicare (15%), and Medicaid (9%) account for over half of all federal government spending. And each is expected to grow rapidly in coming decades. Donald Trump’s solution: Reduce Medicaid spending , which goes mainly to the poor.
Millions of people who voted for Donald Trump receive Medicaid, a program he wants to cut by almost 50 percent. These same voters nod approvingly when President Trump calls for eliminating “the death tax,” which falls entirely on the inheritances left by multi-millionaires. So it’s reasonable to ask why all these folks have voted against their apparent economic interests.
Are they so ignorant, they can’t understand which measures are in their economic interests and which are not? Are they simply being conned by Mr. Trump? Or is there anything else influencing their decisions?
The hourly wage rate for nonsupervisory workers has barely budged since 1973. Measured in dollars of 2014 purchasing power, the hourly wage rose from $19.18 in 1973 to just $20.15 in 2017. Over this period, the average hourly wage rate for men who were high school graduates, the hourly wage declined by almost 20 percent.
Since the early 1970s, both the Democrats and the Republicans have been in power, but a large segment of our population has been left farther and farther behind. It does not seem clear that if one party or the other had held power during this entire period, that this group would have been any better off than they were.
Still, the Democratic party has a reputation for doing more for the poor and the working class. After all, virtually every social welfare program from Social Security and Food Stamps to Medicare and Medicaid originated under Democratic administration and Congresses dominated by the same party.
In her book, Strangers in Their Own Land (The New Press, 2016), sociologist Arlie Hochschild explains why relatively poorly educated, white working-class Americans seemingly vote against their own economic interests. Using the analogy of waiting in an unmoving line for the fulfillment of the American dream of a better life, they see a lot of blacks, Hispanics, illegal immigrants and white women cutting in front of them – getting the better-paying jobs that had been reserved for working-class white men.
Maybe they’re eligible for Medicaid or food stamps, but if Trump cuts them, then just think of all the undeserving line-cutters who will lose those benefits. His supporters don’t want government handouts: They want better jobs for better wages, like the ones that President Trump is promising to them.
Just as the majority of Trump supporters voted against their own economic interests, so did many of the rich. They opposed Trump, even though he wanted to slash their taxes.
Capital gains accounts for half the income of those earning $10 million, and nearly all the income of those earning over $100 million. While the highest marginal tax rate on earned income is 39.6 percent, it is just 20 percent on capital gains, with an additional surtax of 3.8 percent paid by the highest earners. And yet, Bill Gates and Warren Buffet – for years the two wealthiest people in America – have called for raising the tax on capital gains to match the highest marginal tax rate on earned income, currently 39.6 percent.
The rich and the poor clearly do not cast their votes for presidential candidates who necessarily support their economic interests. But for relatively poorly educated white working-class voters, Donald Trump has promised better-paying jobs. No one has ever done that before. He has given them hope for the future. In the meanwhile, they don’t even notice their pockets being picked.
Steve Slavin has a PhD in economics from NYU, and has written sixteen math and economics books, including a widely used introductory economics textbook now in its eleventh edition (McGraw Hill) and The Great American Economy (Prometheus Books) due out in August 2017.