July 16, 2012 11:59AM

Majority Rule?

The economist Greg Mankiw reports some disturbing news.  In 2009, a majority of households in the United States received more in government transfers than they paid in taxes. The middle quintile have recently changed from being a net contributor to government (they paid more in taxes than they received in transfers) to a net recipient. Perhaps the recent recession caused that change, but as Mankiw notes, the deep recession of 1982 did not have the same effect on the middle quintile.

Under pure majority rule, we might expect that the wealthiest 50 percent of the population will pay all taxes while the poorest 50 percent will consume all government spending. The United States is not governed by pure majority rule, but we might wonder if we are on the way to outcomes consistent with it.