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Last Place Aversion: Why Middle-Class People Fear Tax Increases on the Rich

VIEW FROM HERE - Yesterday, I was idling behind a seven-year-old Saturn sedan with an anti-Obama bumper sticker reading: “Because everyone deserves some of what you’ve worked hard for.”
There’s a knee-jerk response to dismiss the driver as being some dupe naively parroting slogans not meaningful in his tax bracket. (You’d never see that sticker on a Rolls-Royce.) It’s not just the success of Republican “messaging,” there’s more to it than that:

According to the CafePress page selling these bumper stickers, the five-dollar decal was created on December 4, 2008. For all you history geeks, that was before the Obama presidency. This sentiment even existed before the bank bailout. It was also weeks before reputed capitalist, George W. Bush, approved the $17.4 billion American auto industry bailout. Specifically, for GM, the parent company of Saturn.

“If we were to allow the free market to take its course now, it would almost certainly lead to disorderly bankruptcy and liquidation for the automakers,” said Bush in the Roosevelt Room on December 19, 2008.

After GM took government money – taxpayer money – as an emergency loan to save their company suffering from a disturbing combo of willful blindness and ignorance of the market – the first thing the automaker had to do was downsize. They shut down factories and dealerships, shedding jobs; and even eradicated some brands. One of those was Saturn.

Now this driver can look forward to higher prices for parts and repairs for a vehicle that’s essentially worthless since it was discontinued. The Bush bailout of GM was paid for by this driver at least twice.

So the trade-in value losses for putting a sticker on that car? No longer an issue.

Why does this anti-wealth distribution sentiment resonate with him? Why doesn’t he want banksters and CEOs to pay up?

“Because everyone deserves some of what you’ve worked hard for.”

This message was written and uploaded before the tea party, when the economy was still in free fall. And even though “thinkers” like Samuel R. Staley, a fellow at the Reason Institute, wrote the unintentionally hilarious talking point now being repeated [link] by GOP lawmakers: “It appears we are two years into a ‘lost decade,’” the fact of the matter is the middle-class has already had a lost decade – the ‘00s.

In the middle-class wages are flat. The three million jobs Bush created in his eight years in office were moot since the population grew by 22 million. Prices have gone up, salaries have not. Home values have fallen, retirement plans are gone, savings are drained. Not since the 1930s has a generation been less prosperous than the one before.  In 2008, the economy for the middle-class went from long-term stagnation to suddenly much worse.

And this reasonably caused a fear reaction in this Saturn driver. What is he concerned about? Wealth distribution. Why?

It’s usually assumed that the reason Americans specifically don’t want to see taxes raised on the rich is because, in spite of driving a defunct GM brand four-door, they think of themselves as the “soon-to-be rich.” But a paper published in the National Journal of Economic Research in July suggests otherwise. They offer that it’s not hoping to be on top that makes us not want the wealthier to be taxed more – it’s the fear of being at the bottom. It’s referred to as “last-place aversion.”

The Economist wrote, “In keeping with the notion of ‘last-place aversion,’ the people who were a spot away from the bottom were the most likely to give the money to the person above them: rewarding the ‘rich’ but ensuring that someone remained poorer than themselves.”

So taxing the rich isn’t about the fantasy that we’re going to someday be rich – it’s about the very real visceral fear of being, well, the poorest. If the government helps those below you, then they’ll be at your level – that’s the unfairness they’re afraid of.

Named one of the worst CEOs of 2008, GM head, Rick Wagoner received a $20 million dollar retirement package and an owner of one of his beaters has a bumper sticker decrying higher taxes for him.

The driver isn’t fantasizing about being Wagoner – he’s terrified of being driven even lower in the middle-class. And the GOP has successfully exploited that fear.

Because when people are afraid, they do all kinds of irrational things…like vote Republican.

(Tina Dupuy is a nationally op-ed syndicated columnist, investigative journalist, award-winning writer, stand-up comic, on-air commentator and wedge issue fan. She blogs at tinadupuy.com where this column was first posted.) –cw

Tags: Obama, Bush, GM, Saturn, middle class, last place aversion, CEOs, GOP, bailout, GM bailout, rich, poor, Rick Wagoner





CityWatch
Vol 9 Issue 76
Pub: Sept 23, 2011

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