Entries Tagged as 'wealth'

Romney Doesn’t Carry Small Change

December 12th, 2011 at 4:46 pm 47 Comments

Mitt Romney’s proposed $10,000 bet with Rick Perry has earned a lot of criticism for the candidate. Given that it was a rhetorical device (albeit a clumsy one) rather than an actual bet and given that a $10,000 is not really a lot of money for a presidential campaign, I’m personally inclined to give Romney a pass.

That said, another story that got much less media attention at the time it happened does really seem to show that he is out of touch on financial issues. Here are the basics: during a campaign stop, a small boy offered Romney a small bird he had folded out of a dollar bill, Romney glanced in his wallet and, at first, the Washington Post reports, could only find a $100 bill. (He eventually found a $5 to give to the boy.)

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America’s New Consumer Divide

David Frum June 10th, 2011 at 2:21 pm 61 Comments

Chrystia Freeland reports new research that suggests that 10% of US households account for 50% of US consumer spending.

Remember how folk singers back in the 1960s used to complain about the conformity of mass culture?

Little boxes on the hillside,
Little boxes made of ticky tacky,
Little boxes on the hillside,
Little boxes all the same.
There’s a green one and a pink one 
And a blue one and a yellow one,
And they’re all made out of ticky tacky
And they all look just the same.

Good news, reports Freeland: “mass affluence may be a thing of the past.” Instead, the American future will offer many culturally fascinating contrasts between rich and poor.

Trump’s Number Crunchers Get to Work

David Frum April 22nd, 2011 at 6:49 pm 24 Comments

So Donald Trump is working with his accountants to prepare disclosure forms. This reminds me of a favorite joke.

A CEO is interviewing accountants for his company. Three applicants sit in the waiting room to be interviewed.

The first applicant enters the magnificent office, very nervous. The CEO motions the accountant to take a seat. “I’m a simple man,” says the CEO, “and I have only one simple question for you. What is two plus two?”

The accountant cheers up. This is going to be easier than he dared hope. “Four!” he answers brightly.

The CEO shouts: “Next!”

The second accountant enters, takes a seat. The CEO asks again: “What is two plus two?” This accountant thinks for a moment. “Do you want the answer in binary format or base 10?”

The CEO nods, impressed. “You’re smart. Congratulations. Next!”

The third accountant enters, takes a seat. Once more the same question: “What is two plus two?” This accountant does not hesitate. “What would you like it to be?”

As the Donald would have said: “You’re hired.”


How Do the Rich Vote? Follow the Money

February 27th, 2011 at 10:39 am 11 Comments

In response to my recent blogpost arguing that the rich really are more Republican, FrumForum reader Ken writes that the truly wealthy “vote Democrat by a margin of two to one.” Ken cites a Wall Street Journal article from 2008 to support this claim. Unfortunately, the statistics in that article are unsourced. Robert Frank, the author of this article, cites a survey by Prince & Associates. Back when that article came out, I tried to track down the data and the claim and got nowhere. Here’s what I wrote back in 2008:

Do I believe [the claim that voters worth $30 million or more were favoring Barack Obama]? Not really. My problem here is that I don’t know where the survey is coming from. How did Prince & Associates sample people making $30 million or more? Without knowing at least something about the sampling, it’s hard to say anything at all about these claims. For example, a graph accompanying the article linked above gives estimates of about 0.1 million households with over $25 million and 9 million households with over $1 million. This ratio is about 1%; thus, in a simple random sample of 493 people worth over $1 million, you’d expect to see about a whopping 5 people in the survey worth over $30 million. Or maybe there were 6 such people in the sample; that would explain why the percentages of the super-rich cited in the linked article are 16% (1 in 6) and 67% (4 in 6). The survey might have more than 6 super-rich people in it; I don’t know since no details are given. (I searched on the web for the survey but all I could find were links to the Robert Frank article discussed here.) How do you take a sample of super-rich people? Prince & Associates is a Connecticut-based consulting company that describes itself as “the foremost empirical research firm in the realm of private wealth. . . Using purposive sampling methodologies, Prince & Associates, Inc. has created statistically valid single-study and panel samples providing detailed insights into the hard-to-reach and exceptionally private universe of the affluent.” I respect that this sort of sampling is difficult but it’s hard for me to evaluate it when no description is provided of the sample. I’ll email Russ Alan Prince to see if he can enlighten me on this, but really I’d think it would be the responsibility of a Wall Street Journal reporter to ask some questions here. (I guess it’s possible that Frank did ask some questions but for proprietary reasons did not want to describe the sampling methodology, but if so I would’ve appreciated just a sentence or two on it, to give me a little more confidence in the results.)

The substantive reason I’m skeptical about these findings (as well as a similar report by Daniel Gross in 2004) is the following passage from page 144 of our Red State, Blue State book:

Probably the best evidence [about the political views of the richest Americans] comes from studies of political contributions. Political scientist Thomas Ferguson has tracked political donations of top corporate executives and the Forbes 400 richest Americans (or their equivalents, in earlier periods). The data presented in his 1995 book, Golden Rule, indicate that America’s superrich have generally learned Republican, but with some notable exceptions that have changed over time. Certain industries have persistently higher rates of contributions to the Democrats. In the New Deal, these included industries with a strong interest in free trade. Since the Reagan years, finance, and high technology firms have been much friendlier to Democratic presidential candidates than most of the rest of American business. For 2004, Ferguson consolidated the lists of top executives and richest families into a lot of 674 firms and investors. Out of this list, 53% contributed to George W. Bush’s reelection campaign and 16% donated to Kerry, with Bush doing better among the oil and pharmaceutical industries and Kerry getting more from investment banks and hedge funds.

Given that this 53%-16% gap in contributions in 2004, I’m skeptical of the claim that, in 2004, “the haute millionaires, those worth more than $10 million, favored Kerry 59-41.” Which leaves me skeptical of the 2008 survey as well. Perhaps Prince & Associates is oversampling hedge-funders in Connecticut? I emailed Prince back in 2008 but received no response. That’s fine–I’m sure he’s a busy guy with better things to do that answer emails from statistics professors. But the bottom line is the data I’ve seen shows upper income Americans supporting Republicans (with exceptions in some states, some years, and some sectors of the economy). And the claims I’ve seen to the contrary do not seem supported by high-quality data.


Are the Rich More Republican?

February 26th, 2011 at 2:29 pm 15 Comments

I don’t want to spend my whole life on this red state/blue state thing, but I recently follow this Instapundit link and came across the following comment from lawyer and conservative blogger John Hinderaker:

Most rich people who are politically active are liberals, and the Democratic Party gets much more of its support from the wealthy than the GOP.

I’m like, huh? Do people really believe this? Let me take this in three parts.

1. Data. From the 2010 exit polls:

2010exits.png (I was thinking of making a graph but I like the direct feel of a screencap.)

And it’s not just 2010. You can see this in decades of pre-election and exit polls. And it’s not just voting. Political contributions from the richest Americans are generally more likely to go to Republicans than Democrats. In particular, the probability of being a conservative Republican goes up sharply with income.

Just to break this down more carefully: the claim that “most rich people who are politically active are liberals” might possibly be true–after all, the term “politically active” isn’t clearly defined–but I don’t see any evidence of it. Looking at wealthier Americans, rich campaign contributors, whatever, we see much stronger support for Republicans and conservative causes than for Democrats and liberals.

There are some exceptions (as in 2008 when Obama beat McCain in the vote and much more so in funding) and on some particular issues such as gay rights, but overall the pattern is clear.

2. Common sense (or, as we call it in political science, “theory”). Wealthier people tend to be more economically conservative; lower-income people are more likely to support taxes on the rich. This is no surprise: of course it makes sense that if you have more money you’ll have more sympathy with the argument that people should keep what they earn, and if you have less you’ll be more likely to favor redistribution. The correlation between income level and economic ideology is weak (we have graphs in Red State, Blue State making this point), but it’s not zero. Nor would you expect it to be.

3. Demonizing the rich. The above quote is from a conservative blog. At first sight, the view that politically active rich people are mostly Democrats could be comforting: the idea, perhaps, is conservative rich people are busy with their jobs, their families, being productive and enjoying life, while liberal rich people are discontented and can’t resist trying to use the political process to get their way. But the data don’t support this story. So why take that position at all? Why not say that richer people tend to have economically conservative views for good reasons? And that if you’re rich, it might make sense to participate a bit in politics to stop the government from doing things you don’t like?

That is, why can’t Hinderaker take the same reasoning that he uses for the Koch brothers and apply it more generally to rich people? This would have the virtue of being coherent with an economically conservative ideology and also consistent with survey data from campaign contribution records.

I’m not trying to suggest that Hinderaker is trying to mislead, merely that he is confused. It’s an instructive confusion, however, in that it points (to me) to a confusion in ideology.