November 18, 2012

The Curley Effect

From Mark Hendrickson writing at Forbes:
President Obama's Wealth Destroying Goal: Taking The 'Curley Effect' Nationwide
It�s hard to think of anything more perverse in American politics than the Curley effect. The Curley effect historically has been an urban phenomenon, but President Obama seems bent on taking the entire country down this wretched path.

As defined by Harvard scholars Edward L. Glaeser and Andrei Shleifer in a famous 2002 article, the Curley effect (named after its prototype, James Michael Curley, a four-time mayor of Boston in the first half of the 20th century) is a political strategy of �increasing the relative size of one�s political base through distortionary, wealth-reducing policies.� Translation: A politician or a political party can achieve long-term dominance by tipping the balance of votes in their direction through the implementation of policies that strangle and stifle economic growth. Counterintuitively, making a city poorer leads to political success for the engineers of that impoverishment.

Here�s an example of how the Curley effect works: Let�s say a mayor advocates and adopts policies that redistribute wealth from the prosperous to the not-so-prosperous by bestowing generous tax-financed favors on unions, the public sector in general, and select corporations. These beneficiaries become economically dependent on their political patrons, so they give them their undivided electoral support�e.g., votes, campaign contributions, and get-out-the-vote drives.

Meanwhile, the anti-rich rhetoric of these clever demagogues, combined with higher taxes to fund the political favors, triggers a flight of tax refugees from the cities to the suburbs. This reduces the number of political opponents on the city�s voter registration rolls, thereby consolidating an electoral majority for the anti-wealth party. It also shrinks the tax base of the city, even as the city�s budget swells. The inevitable bankruptcy that results from expanding expenditures while diminishing revenues can be postponed for decades with the help of state and federal subsidies (�stimulus� in the Obama vernacular) and creative financing, but eventually you end up with cities like Detroit�called by Glaeser and Shleifer �the first major Third World city in the United States.�
Dr. Hendrickson goes on for a bit more (well worth your time to read) and closes with this:
The Curley effect already has inflicted great economic damage on important American cities and states. It now presents an existential threat to our entire country. That one of our major political parties has based its own success on such a ruthlessly cynical strategy is disgusting, if not diabolical. How we get off this suicidal path is one of the most urgent challenges facing us today.
I always thought it was several pillars of an agenda and not one specific tactic. Crap! We need to get the adults back in charge now. The opriginal paper can be downloaded here: The Curley Effect Direct link here Posted by DaveH at November 18, 2012 2:46 PM
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