Re-thinking the Median Voter Theorem

06 Apr 2016 1:59 PM | Mike Lillich (Administrator)

By Oren Levin-Waldman


First published in the Yonkers Tribune.


According to the Median Voter Theorem, when there is greater inequality there will be a greater tendency to redistribute. Why? Because self-interested politicians seeking to gain or retain power will strive to enact public policies that appeal to the median voter. As income inequality increases, the median voter will seek policies that redistribute. What, then, are the implications of this in this election year?


In its original conceptualization, Anthony Downs postulated that political parties converge upon the position of the median voter, i.e, the voter whose preferences are right in the middle of the distribution of voting preferences. That means that there are as many voters to the left of the median voter as there are to the right. At a minimum, this would imply that parties ought not to be ideological; rather they move to the center in order to win votes. The party that fails to do so does not get elected.


Still, what does this have to do with redistribution? As incomes are skewed to the right, i.e. more at the top, the preferred amount of redistribution will be a function of the relative position of the median voter on the income scale. The greater the distance between the median voter’s income and society’s average income, the greater is the preferred amount of redistribution. A couple of columns ago, I noted that in 2013 median family income in the U.S. was $56,000 while average family income was $76, 966. And in New York State, median family income was $52,000 while average family income was $98,071.


The implication would be that income ought to be redistributed so that the median and average match. It would also imply that redistribution ought to be greater in New York State than in the rest of the nation. Still, why redistribution per se? Because the median voter in New York State has as many voters with incomes below him or her as he or she has with incomes above. That isn’t the case with average incomes because a few very high incomes at the top can skew the income distribution to the right, when in reality there may be more people to the left.


If we follow the logic of this theorem, then both parties ought to be advocating redistribution of some sort. Of course, that assumes that it is in fact agreed that there really is growing income inequality. Our Democratic candidates acknowledge growing inequality while at best the Republicans acknowledge stagnant wages. Moreover, there is no reason to assume that any of our candidates read Downs’s classic An Economic Theory of Democracy, from which this theory came.


The median voter theorem also implies a role for taxation as the mechanism through which government will redistribute income in order to achieve a more equitable distribution. If inequality suggests the need for more redistribution, then taxes on the wealthy will be raised in order to finance programs and policies that benefit those at the bottom. In theory, this will achieve a more equitable distribution. Although it won’t result in an equal society, it may result in a narrowing of the gap between the top and the bottom.


Even if higher taxes on the wealthy aren’t used to finance programs for those at the bottom, the gap between the top and bottom will be narrowed in terms of after-tax income. If inequality, however, is denied, then there should be no need to redistribute at all. And yet, some questions remain. Would a supply-side tax cut, often advocated by Republicans which effectively redistributes from the poor and middle class then may it be said to represent the median voter theorem in reverse? Or is inequality being addressed simply through a policy that stimulates economic growth on the assumption that those at the top will take their tax cuts and invest and create jobs?


This assumption, however, assumes that wages will rise with those investments. If wages rise for those at the bottom and the middle, and especially if they do at a higher percentage than they do at the top, then this could narrow the gap between the top and the bottom, thereby reducing inequality. The problem with this assumption is that it assumes that wages will rise because productivity has risen. But the evidence in recent years suggests otherwise. Despite productivity gains following the end of the Great Recession in 2009, wages did not rise.


Perhaps the way out of this conundrum is to focus on wages. The logic of the median voter theorem and redistribution in the face of inequality could be applied to the minimum wage. Instead of redistributing income through taxes, there should be redistribution from profits to workers in the form of higher wages. Those opposed to minimum wage increases argue that minimum wage increases are nothing more than redistribution because it is taking from employers and giving to workers who offer nothing more in terms of value.


Early institutional economist John R. Commons acknowledged that institutions like unions and minimum wages represented a form of redistribution, but that since it was coming from the profits that workers’ labor contributed to it, it was indeed preferable. Arguably, since the firms would not be profitable without the labor of their workers, it is difficult to make the case that it is redistribution in the classic sense.

And yet, with more localities passing $15 an hour minimum wages, especially in localities with higher levels of inequality, it is hard not to see a different application of the median voter theorem. Although it is not being articulated by policymakers and public officials, the new version might be stated as follows: communities where income inequality is high may seek to narrow the gap between the top and the bottom adopting wage policies that not only raise the wages of those at the bottom, but also effectively raise those in the middle through spillovers.


Politically, this approach has to be preferable to simply overtaxing the wealthy as some advocate. Were Republicans really smart, they would advocate raising wages too, if for no other reason that to distinguish what we will call “good” redistribution from the traditional redistribution which they obviously consider to be “bad” redistribution. Why is this good redistribution? Because at the end of the day it can be justified on the grounds that workers worked for it. Their labor contributed to the profits from which their higher wages are coming.


Were political figures to argue this point — to actually re-calibrate the median voter theorem — we might actually find ourselves having a serious discussion about what would benefit the middle class. And what benefits the middle class is what benefits the median voter.

http://www.routledge.com/books/details/9780415779715/#reviews

Just published: Wage Policy, Income Distribution, and Democratic Theory
Oren M. Levin-Waldman, Ph.D., is professor at the Graduate School for Public Affairs and Administration at Metropolitan College of New York, Research Scholar at the Binzagr Institute for Sustainable Prosperity, as well as part-time faculty member in the Milano School for International Affairs, Management, and Urban Policy at the New School. Direct email to: olevin-waldman@metropolitan.edu

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