Up Against the Wall Street Banks

April 22, 2010
Posted by Jay Livingston

President Obama could have stayed in Washington today to make his pitch for financial regulation of banks. But he decided to make the trip up to New York, and I think I know why. It’s all about “Wall Street.”

Words matter, as Bill Clinton recently said, alluding to an earlier speech by Barack Obama. Words matter to survey researchers too, not just to Democratic presidents. Ask people about the rights of “gays and lesbians,” you get one answer. Ask about “homosexuals,” you get less support. (See my earlier post here.)

Now it’s the banks. Should they be regulated? If you ask about “large banks and financial institutions,” the difference between Favor and Oppose is negligible* – three percentage points. But if you ask about regulating “Wall Street Banks” the difference jumps to 14 points – 50% in favor, 36% opposed. (From a recent Gallup poll.)

The choice of words matters, but it matters more to some people than others. Mostly Republicans. When you break down the Gallup data by political affiliation, the results look like this.

(Click on the chart for a larger view.)

For Democrats and Independents, the choice of words makes little difference.** A big bank is a big bank regardless of its address and regardless of what you call it. But not for Republicans. They are generally against regulation, of course. Only 22% of Republicans want to regulate “large banks,” and 70% oppose such regulation. But ask them about “Wall Street banks,” and regulation begins to look better. Thirty-five percent are in favor. And opposition drops to barely half (53%).

I leave it to readers to speculate as to why Republicans find that large banks are so much more in need of regulation when those banks are located in New York’s Wall Street district. But no wonder that the world’s largest banking group, HSBC, has been promoting itself, in the US at least, not as a multinational giant but as a repository of local values.


* That’s within the 0.95 margin of error of 4 points.
** The differences are within the margin of error, which is 5 points in the split-sample questions.

Who Do You Trust?

April 20, 2010
Posted by Jay Livingston

Last August, I said here that the TeaBaggers and other angry Republicans didn’t really believe in democracy. They don’t seem to accept the idea that the person who gets the most votes gets to be president. To them, Obama is an illegitimate usurper. He’s not the “real” president. And the people who voted for him are not “the real America.”

The recent Pew report on trust in government provides some support for this idea. The report also shows that these sentiments didn’t arise just with the Obama presidency. Generally, Democrats are more accepting of Republican administrations than are Republicans of Democrats.
The Pew survey did not ask about “legitimacy.” Instead, the key question is about “trust.” It asks whether the government in Washington can be trusted to do the right thing. The graph below shows the percent who answered either “always” or “most of the time.”


The trend is downward, and Democrats and Independents are generally not far apart in their levels of trust. Republicans are subject to greater mood swings.

Pew suggests that the low level of trust will translate into a loss of seats for incumbents come November. Political scientists, like John Sides at The Monkey Cage , suspect that if the economy bounces back, people will become more trusting of incumbent Democrats, or at least trust them enough to vote for them.

If the economy is the key, the Democrats may not have to fix the government to mitigate their losses in 2010, simply preside over an improving economy.

But when I look at the graph, I see Republicans whose trust of Republicans and distrust of Democrats seem impervious to economic winds. Look at the two previous presidencies. The Clinton era was, by any economic measure, a period of great economic prosperity. The Bush years, by contrast, started with a recession, continued with flat or slightly declining income for all but the top earners, and ended with the worst economic disaster since the Depression. Yet Republicans were twice as trusting of George W. Bush as they were of Bill Clinton.

April Showers / Finishing the Hat

April 19, 2010
Posted by Jay Livingston

Religion, says Durkheim, is all about group solidarity. Religious rituals both reflect and create this sentiment of unity and group feeling. The central ritual symbols, notably the group totem and objects imbued with its spirit, are really representations of the group. These objects are of the group, created by the group, and for the group – the group and not its individual members.

I don’t usually think of my world as particularly totemistic or even very religious – certainly not compared with the spiritually charged world inhabited by the members of the clans Durkheim was thinking about, with their churinga and other sacred objects. But I was at a baby shower yesterday, and the day before that, my wife went to a bridal shower. And both of these featured the Ceremony of the Hat.

This is a rite practiced by females in North America, particularly those of European descent, when they gather to celebrate one of their number who is in a state of transition – from single to married, from childlessness to motherhood. OK, no need to go all Horace Miner Nacerima here; most people know the drill. As the woman being honored unwraps her gifts, someone gathers the discarded ribbons and threads them into a paper plate or in some other way creates a hat, which the honoree then models.

(Click on the image for a larger view. Want to see more examples?
Search for “bridal shower hat” at Google Images.)

No doubt, showers have a very rational, utilitarian component. The bride-to-be or mother-to-be gets a lot of stuff that she’ll need in her new role. The online registry has rationalized the process even further, aligning demand and supply. No surprises. Gift-giving has become predictable, controlled, calculable (“number desired,” “number received”), and efficient.

So what’s up with the hat? I didn’t ask, but if I had, the explanation would surely have been along the lines of “Oh, it’s just silly, it’s just for fun.” But Durkheim, lurking in the far corner of the party room, sees something else. The shower is not just a party for the future bride or mom; it’s a ritual, and as such it is for the group itself. These people, come together from their disparate daily lives, and at least temporarily, they are united into something that transcends any individual.

The hat symbolizes the group – woven together from each person’s ribbon into a single unified and extraordinary object. If you’re at a shower and you have your camera, you might take a picture of the linens or lingerie, the porta-crib or Pat the Bunny. Or you might not. But you always take a picture of the hat.

Tax Day Post - Taxes On Parade

April 15, 2010
Posted by Jay Livingston

Greg Mankiw opened his copy of Parade on Sunday, and he didn’t much like what he saw. It was the “Annual Salary Survey,” and – surprise, surprise – readers saw a lot more rich celebs than they would have seen just by walking around their neighborhoods. Yes Parade was guilty – it “oversampled” the rich and the famous.

about 14 percent of the people in Parade's sample earn more than $1 million a year. In the real world, the actual percentage is about 0.2 percent.

Even worse than Parade’s methodology was its pernicious effect.

There is a common perception in some circles that we can solve all our fiscal problems if only we were willing to tax the rich some more. Yet, in reality, there are not enough rich for this to work. By presenting such a skewed cross-section of incomes, Parade inadvertently feeds an all-too-common misperception.

Now Greg Mankiw is a respected (and rich) economist, and I’m sure he doesn’t go making statements that can’t be supported by evidence. But this one seems awfully vague. These unidentified “circles”– what are they, and how large are they? Just how common is this “all-too common misperception.”

I also wonder how much power Parade has over public perceptions. Mankiw notes that Parade has a circulation of 32 million – all those folks who, just like Greg himself, find it folded into their Sunday newspaper along with the coupons for Pop Tarts and Fabreze. Do we really know what impact Walter Scott and Marilyn and the rest have had in shaping the American consciousness? (Surely someone has done this research. I just wish Greg had linked to it.)

Justin Wolfers at Freakonomics has the more important criticism: when you are deciding who to tax, the important variable is not numbers of people but numbers of dollars. So maybe the “misperception” is not really amiss.

Families earning more than $1 million probably do represent close to 14 percent of total income, and maybe more. By arguing that only 0.2 percent of families are this rich, Mankiw risks distracting his readers from the fact that increasing the taxes paid by the rich can be a big part of the solution to our fiscal woes.