– September 11, 2020

Do Americans “vote their pocketbooks?” This near-ubiquitous cliche seems at first to pass the test of common sense. Why wouldn’t people vote for the candidates under whom they’ll do the best financially? A wealthy voter should favor the candidate who will lower their taxes. A chronically unemployed voter should support the candidate promising lavish government handouts.

In the most basic economic terms, however, this logic falls apart. If one votes, for example, to maximize the present value of their future income, the answer is to not vote at all. Given the vanishingly low probability of breaking a tie, voting isn’t worth the gasoline used to drive to one’s local fire station and cast a ballot.

Perhaps this critique says more about the limits of economic modelling than it does about voting. Slogans like “It’s the economy, stupid” and “Are you better off than you were four years ago?” suggest a bigger-picture view people can take when voting their pocketbooks. But once again, this view fails to hold water.

The concept of “voting one’s pocketbook” frequently causes partisans who don’t understand the other party’s voters to make strategic errors. It also perpetuates the destructive idea that different groups of citizens are playing a zero-sum game against each other. Finally, and perhaps most insidiously, it creates the myth that the right politician can make our pocketbooks grow.

The Seduction of Joe Sixpack

In late 2004, after voters delivered four more years of George W. Bush, my parents and their progressive friends were abuzz about George Lakoff’s book Don’t Think of an Elephant. Lakoff urged earnest lefties to get more politically savvy. To summarize the book, John Kerry had lost because of those crafty Republicans who through use of buzzwords like “pro-life” and “tax relief” had mesmerized Joe Sixpack into voting against his economic interest. A couple of years later came Thomas Frank’s What’s the Matter With Kansas?–similar in its cringeworthy myopia though subtly more scolding to Joe Sixpack himself in tone.

Unwilling to part with the idea that the GOP was fueled exclusively by the rich getting richer, progressives needed expert analysis and suburban book clubs to tell them why such a large fraction of the non-rich might be on board. The great irony is that most of the head-scratching about white working-class voters going against their economic interest was being done by upper-middle class progressives who wear their own votes against lower tax rates as a badge of honor. 

These prosperous-but-perplexed progressives in turn expose the mirror-image fallacy held by Republicans–that voters on the left just want “handouts” or “free stuff.” The vanguard of socialism, progressivism, and welfare-statism has always come from relatively well-off intellectuals. Rather than wanting free stuff, they want to see themselves as the givers of free stuff.

Two Economies?

Economic outcomes and political narratives don’t play nicely together, and the results increasingly harm more than just the two parties’ strategic efforts to win converts. A 2019 study from The Wall Street Journal and the Brookings Institution characterizes the current landscape as “Two Parties, Two Economies.” 

The study clearly and effectively presents the divergence of different types of voters over the last decade. Democrats are more concentrated in highly-educated urban areas that depend on professional and information-economy jobs; Republicans from rural areas built on manufacturing and agriculture. The differences have grown more stark with time.

The authors conclude that:

For at least the foreseeable future, therefore, the nation seems destined to struggle with extreme economic, territorial, and political divides in which the two parties talk almost entirely past each other on the most important economic and social issues, like innovation, immigration, and education because they represent starkly separate and diverging worlds. Not only do the two parties adhere to very different views, but they inhabit increasingly different economies and environments.

There’s an implicit idea here that, while the authors don’t explicitly endorse, I wish they would explicitly reject. The concept of two opposed and diverging economies suggests to many that government policy can help one economy prosper, albeit at the expense of the other. This is plainly false.

President Trump’s anti-trade policies, for example, have hurt the entire economy, including manufacturing, and even including the hand-picked industries he myopically sought to “protect.” Meanwhile, the Covid-19 lockdowns enforced by both parties but more enthusiastically on the left have been especially brutal on urban economies.

The political drama captured by the WSJ/Brookings study is indeed driven by economic forces. The decades-long shift in the composition of American labor demand–driven by globalization and a revolution in information technology–is likely the most important economic story of our time and defines this conflict. But the only path to resolution is an understanding that free, connected people unencumbered by the smoke and mirrors of politicians “favoring” one type of economy over another prosper together rather than at each others’ expense.

“People vote their pocketbooks” is a misleading and potentially insidious approximation of voter behavior. A better approximation for modern times is “People vote for the candidate or party that provides a better story about themselves.” That can be problematic itself, but when we bring economic performance along for the ride the problems only multiply. Putting our economic fortunes in the hands of politicians is a recipe for division and stagnation, every time.

Max Gulker

Max Gulker

Max Gulker is an economist and writer who joined AIER in 2015. His research focuses on two main areas: policy and technology. On the policy side, Gulker looks at how issues like poverty and access to education can be addressed with voluntary, decentralized approaches that don’t interfere with free markets. On technology, Gulker is interested in emerging fields like blockchain and cryptocurrencies, competitive issues raised by tech giants such as Facebook and Google, and the sharing economy. Gulker frequently appears at conferences, on podcasts, and on television. Gulker holds a PhD in economics from Stanford University and a BA in economics from the University of Michigan. Prior to AIER, Max spent time in the private sector, consulting with large technology and financial firms on antitrust and other litigation. Follow @maxgAIER.

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