Moral values and distributive politics: An equilibrium analysis of the 2004 U.S. election

Th e Republican Party, whose economic policies are perhaps in the economic interest of the top 15 percent of the wealth distribution, is supported by approximately one-half of the U.S. electorate. President George W. Bush, during his fi rst term, made quite clear what his economic policies are - from tax cuts that benefi t primarily the very rich, engendering large defi cits, to abolition of the inheritance tax and privatizing Social Security. In contrast, the policies of the Democratic Party are not left -wing; they are moderate. It would seem that, if voters were rational and concerned largely about the economic issue, the Democratic Party would receive the vast majority of the vote. Why is this not the case? Many explanations can be off ered, but we believe the three most likely explanations are the following:1 • Cognitive errors and false consciousness. Voters make cognitive errors concerning economic policy or the theory that maps policies into economic outcomes. Th ey may not connect taxation with the supply of government goods and services. Or voters may be unsure how effi ciently the government converts tax revenues into the public good. Th is can be viewed as a case of not understanding the mapping from policies to outcomes.2 What voters are concerned with are economic outcomes (their consumption of various goods, and perhaps others' consumption - we do not assume voters are entirely selfi sh); what they do not understand is how policies engender outcomes, i.e., the theory of the economy. "False consciousness" might be one description of this phenomenon. But false consciousness also applies to another phenomenon, which is distinct from this one - The belief by poor people that rich people deserve their earnings and that it would be unjust to redistribute through taxation. • Imperfect representation. Politicians represent the wealthy. Bartels (2002), Gilens (2003), and Jacobs and Page (2003) have shown that politicians refl ect the preferences of the wealthy, not the average voter. One mechanism, of several, may be that political parties, under a regime of private funding, represent their contributors. Th us, the political competition between Democrats and Republicans may be one between two parties each of whom represents the wealthy, which would skew the equilibrium economic policies to the right. • Policy bundling. Other issues, besides the economic issue, are of importance to voters, and the support for the Republican Party may be in part due to the bundling of the economic issue with these other issues. Important noneconomic issues are race, gun control, abortion, gay marriage (family values), and foreign policy. Th us, the Republicans may have craft ed a program with a large constituency, in spite of their economic position. It is not our aim in this chapter to examine the relative importance of these three possible explanations for the vitality of the Republican Party. We focus on the third explanation and take the U.S. presidential election of 2004 as an example. In particular, we study the importance of religious and/or moral-value issues. Th e "American exceptionalism" literature, dating back to Alexis de Tocqueville's Democracy in America, emphasizes that moral Protestantism (in particular, that of evangelicals), together with racial division, has always had an unusually powerful infl uence on U.S. political culture.3 For the period 1972 - 1992, we have demonstrated the importance of the race issue in U.S. politics (Lee and Roemer 2006). Today, however, the "values" issue may be more important, although the race issue and the values issue are oft en interlinked, as can be seen in the case of the Ku Klux Klan movement in the 1920s and the prevalence of racially segregated religious schools.4 In this chapter, we study the electoral consequence of the moral-values issue in the 2004 presidential election by distinguishing what we call the policy bundle eff ect (PBE) from the moral Puritanism eff ect (MPE). Our model provides a theoretical explanation for the "what's the matter with Kansas" problem (Frank 2005). Th ere are at least two distinct ways in which the infl uence of values on equilibrium political outcomes might occur. First, because the Republican Party is identifi ed with a traditionalist stance on moral values, some voters who desire a large public sector may nevertheless vote Republican because traditionalist morality is important for them. We call this eff ect the policy bundle eff ect. Second, it may be the case that those who subscribe to a traditionalist morality take economic conservatism to be part of that view, in the sense that they view the state as, for instance, usurping the role of the individual and/or family. Indeed, some evangelicals are said to oppose taxation on the grounds that talents to persons are God given, and their fruits should therefore not to be redistributed. We call this eff ect the moral Puritanism eff ect. Th e next section carries out an econometric analysis of the 2004 election. Th en we describe our model and the method of decomposition that we will employ. Finally, we summarize our numerical computation results and conclude. Th e ANES variables used in this chapter are defi ned in the appendix.