Abstract
In The New Economic Populism: How States Respond to Economic Inequality, William W. Franko and Christopher Witko examine the extent to which state governments are able to respond to rising economic inequality. This is an important topic, according to the authors, as the federal government has largely failed to respond to this phenomenon in a coherent and adequate manner and such inaction has also contributed to rising inequality (pp. 6-7). The central premise of the book is that in response to growing public awareness about income inequality and in part due to federal inaction, many states are picking up the slack and working to combat the growing divide between rich and poor through policies such as minimum wage increases, taxes on the wealthy, and expansion of tax credits for those at the bottom of the income distribution. Such action is populist because, according to the authors, each policy is favored by a majority of Americans (p. 11).
The book demonstrates many ways in which states can address the growing divide between rich and poor. In the second chapter of the book, the authors highlight how this “new” effort by the states is only new in that it’s a departure from the public’s expectations about governmental action, which have formed in the contemporary political era. Americans have come to expect action by the federal government when it comes to big problems facing society, but this only a recent phenomenon. The authors argue that the federal government’s lead role in combating economic problems between the New Deal and Great Society is actually out of the norm in American history. Instead, for much of American history, states regularly took a leading role while the federal government was slow to act (p. 26). Federalism creates a situation in which states have wide authority to act if they so choose, and given variation among them, policy entrepreneurs can take action to fill a void created by federal inaction (p. 40).
Key to the author’s argument is the idea that individuals need to be aware of growing inequality to demand action from their government. The third chapter examines not just variation in inequality among the states, but also develops a measure of citizen awareness of inequality by state. Here the authors show that not only are people responsive to local changes in inequality (measured as increases to the top 10% and 1% of earners within each state), but that these perceptions can vary depending upon the political and social context within a state. In fact, the partisanship of a state has the largest effect on awareness of inequality (p. 69).
The implications for public awareness about economic inequality within the states are examined in the fourth chapter. Importantly, the authors find that higher awareness about inequality is associated with higher levels of government liberalism, a much larger impact than a shift in the public mood would have (p. 88). And while state government liberalism has only a modest impact on the share of income going to the wealthiest (top 1 or 10 percent), it has a more substantial effect on the overall income distribution, as measured through the GINI coefficient.
Finally, the book examines three cases that differ in terms of salience and pre- and post-tax impact on redistribution—an effort to institute an income tax on the wealthy in the state of Washington (chapter 5), state action on the minimum wage (chapter 6), and state action to expand the Earned Income Tax Credit (EITC; Chapter 7). The case of Washington’s ballot initiative in 2010 is an interesting case, as voters were able to choose whether to institute a state income tax focusing solely on the top 2 percent of the state’s earners (Washington is one of nine states that has no state income tax; p. 108). The author’s find that perceptions of inequality, class, and party ID influenced whether individuals were more likely to support the ballot initiative. As with other egalitarian policies, the authors find a link between greater awareness of inequality and a state minimum wage higher than the federal level (p. 140) as well as whether states adopt their own version of the EITC (p. 160). Each is an important policy to examine, as the federal minimum wage has not kept pace with inflation (e.g., declined over time when measured in inflation-adjusted dollars) and the EITC has been shown to reduce poverty.
While the choice of the Washington state initiative is interesting, it seems somewhat problematic for the authors’ argument in that voters in the state ultimately rejected its passage—and by a wide margin. To the author’s credit, they point out that reformers likely learned from the defeat as California passed targeted tax increases on the wealthy via ballot initiative shortly thereafter. However, a redistributive-focused initiative raising taxes on corporations recently failed in another traditionally liberal bastion where perceptions of inequality are likely higher than average (Oregon in 2016). In reading the book, I also thought about states that are either more moderate politically or are traditionally swing states, but which face a takeover by one political party with the goal of dramatically changing the political and policy landscape. Ever present in my mind when reading about state action was Wisconsin and Republican led efforts to dramatically restructure policies that affect inequality such as those dealing with unions and education. Wisconsin is a perennial swing state in presidential elections and once a stronghold of progressive politics. When looking at perceptions of inequality in the states over time (p. 66), it seems that citizens in this state generally have higher than average awareness of inequality (though awareness seems to have declined over the past decade). Yet these recent effects to weaken unions will have a lasting impact on inequality. This is all to say that while states can certainly act to combat inequality, they can also take action to exacerbate it, a point that could receive more attention from the authors’ analysis. Franko and Witko end on a positive note and suggest the new economic populism is becoming more widespread. Efforts across the states to weaken unions (not just in Wisconsin but across the country) coupled with failures of redistributive ballot initiatives in traditionally liberal states like Washington and Oregon might give slight pause to such predictions.
Minor critiques aside, this is an excellent piece of scholarship, written in a way that both makes a scholarly contribution and is easily accessible to nonacademics, which is a difficult balance to strike. The text is highly interesting and readable for the general public as the statistical analyses and modeling are left to appendices. The historical analysis of federal and state action during the New Deal is stimulating and careful. The statistical analyses use a wide variety of data over a long period of time. The cases selected to illustrate the central thesis are highly relevant. The book makes a major contribution to the growing literature on the politics of economic inequality, state politics, and questions of how policy can address growing inequality. The book would be appropriate for a graduate seminar on the politics of economic inequality, though the book could be used for undergraduates in courses on state politics, economic policy, and public administration.
Overall, Franko and Witko’s book makes a number of important contributions to the burgeoning literature that examines the political causes and consequences of growing economic inequality. First among these contributions is the focus on subnational governments as a vehicle by which economic inequality can be combated. Much of the literature on the topic examines federal government action (or inaction). As the authors argue, state governments can play a key role in affecting the income distribution. A second contribution is that the authors develop a new state-level measure of citizen awareness about economic inequality, which is developed using multilevel regression and poststratification (MRP) based off of 34 national surveys between 1987 and 2012 (p. 64). This allows the authors to demonstrate that greater awareness about inequality has a significant effect on (ideologically) left/liberal government power, which in turn can have a significant effect on reducing inequality. This leads to an important finding as the authors state, “ . . . states have both the means and the opportunity to shape the income distribution, if they choose to do so” (p. 80). The authors illustrate this thesis throughout, and have excellent analyses of policies that affect low-income and high earners. This is important because studies of inequality often focus solely on the top of the income distribution. Reducing inequality, however, is about raising people up as much as it is about redistribution from the top.
In sum, Franko and Witko’s book makes a compelling case that states not only capable, but are acting to combat economic inequality. This is promising during a time in which the federal government either fails to act or makes the problem worse. This book should be read and engaged with by scholars, policy makers, and anyone concerned about rising inequality.