Winner-Take-All Politics

The major shift in US society toward corporatism, occurred in the 1970s because businesses and the super-rich began a process of political organization that enabled them to pool their wealth and contacts to achieve dominant political influence.

Winner-Take-All Politics How Washington Made the Rich Richer--and Turned Its Back on the Middle Class  by Paul Pierson, Jacob S. Hacker

Henry J. Farrell

Transforming American politics, September 16, 2010

This review is from: Winner-Take-All Politics: How Washington Made the Rich Richer--and Turned Its Back on the Middle Class (Hardcover) This is a transformative book. It's the best book on American politics that I've read since Rick Perlstein's Before the Storm. Not all of it is original (the authors seek to synthesize others' work as well as present their own, but provide due credit where credit is due). Not all of its arguments are fully supported (the authors provide a strong circumstantial case to support their argument, but don't have smoking gun evidence on many of the relevant causal relations). But it should transform the ways in which we think about and debate the political economy of the US.

The underlying argument is straightforward. The sources of American economic inequality are largely political - the result of deliberate political decisions to shape markets in ways that benefit the already-privileged at the expense of a more-or-less unaware public. The authors weave a historical narrative which Kevin Drum (who says the same things that I am saying about the book's importance) summarizes cogently here. This is not necessarily original - a lot of leftwing and left-of-center writers have been making similar claims for a long time. What is new is both the specific evidence that the authors use, and their conscious and deliberate effort to reframe what is important about American politics.

First - the evidence. Hacker and Pierson draw on work by economists like Picketty and Saez on the substantial growth in US inequality (and on comparisons between the US and other countries), but argue that many of the explanations preferred by economists (the effects of technological change on demand for skills) simply don't explain what is going on. First, they do not explain why inequality is so top-heavy - that is, why so many of the economic benefits go to a tiny, tiny minority of individuals among those with apparently similar skills. Second, they do not explain cross national variation - why the differences in the level of inequality among advanced industrialized countries, all of which have gone through more-or-less similar technological shocks, are so stark. While Hacker and Pierson agree that technological change is part of the story, they suggest that the ways in which this is channeled in different national contexts is crucial. And it is here that politics plays a key role.

Many economists are skeptical that politics explains the outcome, suggesting that conventional forms of political intervention are not big enough to have such dramatic consequences. Hacker and Pierson's reply implicitly points to a blind spot of many economists - they argue that markets are not `natural,' but instead are constituted by government policy and political institutions. If institutions are designed one way, they result in one form of market activity, whereas if they are designed another way, they will result in very different outcomes. Hence, results that appear like `natural' market operations to a neo-classical economist may in fact be the result of political decisions, or indeed of deliberate political inaction. Hacker and Pierson cite e.g. the decision of the Clinton administration not to police derivatives as an example of how political coalitions may block reforms in ways that have dramatic economic consequences.

Hence, Hacker and Pierson turn to the lessons of ongoing political science research. This is both a strength and a weakness. I'll talk about the weakness below - but I found the account of the current research convincing, readable and accurate. It builds on both Hacker and Pierson's own work and the work of others (e.g. the revisionist account of American party structures from Zaller et al. and the work of Bartels). This original body of work is not written in ways that make it easily accessible to non-professionals - while Bartels' book was both excellent and influential, it was not an easy read. Winner-Take-All Politics pulls off the tricky task of both presenting the key arguments underlying work without distorting them and integrating them into a highly readable narrative.

As noted above, the book sets out (in my view quite successfully) to reframe how we should think about American politics. It downplays the importance of electoral politics, without dismissing it, in favor of a focus on policy-setting, institutions, and organization.

• First and most important - policy-setting. Hacker and Pierson argue that too many books on US politics focus on the electoral circus. Instead, they should be focusing on the politics of policy-setting. Government is important, after all, because it makes policy decisions which affect people's lives. While elections clearly play an important role in determining who can set policy, they are not the only moment of policy choice, nor necessarily the most important. The actual processes through which policy gets made are poorly understood by the public, in part because the media is not interested in them (in Hacker and Pierson's words, "[f]or the media, governing often seems like something that happens in the off-season").
• And to understand the actual processes of policy-making, we need to understand institutions. Institutions make it more or less easy to get policy through the system, by shaping veto points. If one wants to explain why inequality happens, one needs to look not only at the decisions which are made, but the decisions which are not made, because they are successfully opposed by parties or interest groups. Institutional rules provide actors with opportunities both to try and get policies that they want through the system and to stymie policies that they do not want to see enacted. Most obviously in the current administration, the existence of the filibuster supermajority requirement, and the willingness of the Republican party to use it for every significant piece of legislation that it can be applied to means that we are seeing policy change through "drift." Over time, policies become increasingly disconnected from their original purposes, or actors find loopholes or ambiguities through which they can subvert the intention of a policy (for example - the favorable tax regime under which hedge fund managers are able to treat their income at a low tax rate). If it is impossible to rectify policies to deal with these problems, then drift leads to policy change - Hacker and Pierson suggest that it is one of the most important forms of such change in the US.
• Finally - the role of organizations. Hacker and Pierson suggest that organizations play a key role in pushing through policy change (and a very important role in elections too). They typically trump voters (who lack information, are myopic, are not focused on the long term) in shaping policy decisions. Here, it is important that the organizational landscape of the US is dramatically skewed. There are many very influential organizations pushing the interests of business and of the rich. Politicians on both sides tend to pay a lot of attention to them, because of the resources that they have. There are far fewer - and weaker - organizations on the other side of the fight, especially given the continuing decline of unions (which has been hastened by policy decisions taken and not taken by Republicans and conservative Democrats).

In Hacker and Pierson's account, these three together account for the systematic political bias towards greater inequality. In simplified form: Organizations - and battles between organizations over policy as well as elections - are the structuring conflicts of American politics. The interests of the rich are represented by far more powerful organizations than the interests of the poor and middle class. The institutions of the US provide these organizations and their political allies with a variety of tools to promote new policies that reshape markets in their interests. This account is in some ways neo-Galbraithian (Hacker and Pierson refer in passing to the notion of `countervailing powers'). But while it lacks Galbraith's magisterial and mellifluous prose style, it is much better than he was on the details.

Even so (and here begin the criticisms) - it is not detailed enough. The authors set the book up as a whodunit: Who or what is responsible for the gross inequalities of American economic life? They show that the other major suspects have decent alibis (they may inadvertently have helped the culprit, but they did not carry out the crime itself. They show that their preferred culprit had the motive and, apparently, the means. They find good circumstantial evidence that he did it. But they do not find a smoking gun. For me, the culprit (the American political system) is like OJ. As matters stand, I'm pretty sure that he committed the crime. But I'm not sure that he could be convicted in a court of law, and I could be convinced that I was wrong, if major new exculpatory evidence was uncovered.

The lack of any smoking gun (or, alternatively, good evidence against a smoking gun) is the direct result of a major failure of American intellectual life. As the authors observe elsewhere, there is no field of American political economy. Economists have typically treated the economy as non-political. Political scientists have typically not concerned themselves with the American economy. There are recent efforts to change this, coming from economists like Paul Krugman and political scientists like Larry Bartels, but they are still in their infancy. We do not have the kinds of detailed and systematic accounts of the relationship between political institutions and economic order for the US that we have e.g. for most mainland European countries. We will need a decade or more of research to build the foundations of one.

Hence, while Hacker and Pierson show that political science can get us a large part of the way, it cannot get us as far as they would like us to go, for the simple reason that political science is not well developed enough yet. We can identify the causal mechanisms intervening between some specific political decisions and non-decisions and observed outcomes in the economy. We cannot yet provide a really satisfactory account of how these particular mechanisms work across a wider variety of settings and hence produce the general forms of inequality that they point to. Nor do we yet have a really good account of the precise interactions between these mechanisms and other mechanisms.

None of this is to discount the importance of this book. If it has the impact it deserves, it will transform American public arguments about politics and policymaking. I cannot see how someone who was fair minded could come away from reading this book and not be convinced that politics plays a key role in the enormous economic inequality that we see. And even if it is aimed at a general audience, it also challenges academics and researchers in economics, political science and economic sociology both to re-examine their assumptions about how economics and politics work, and to figure out ways better to engage with the key political debates of our time as Hacker and Pierson have done. If you can, buy it.

Great Faulkner's Ghost (Washington, DC)

This review is from: Winner-Take-All Politics: How Washington Made the Rich Richer--and Turned Its Back on the Middle Class (Hardcover) Many people have observed that American politics and the American economy reached some kind of turning point around 1980, which conveniently marks the election of Ronald Reagan. Some also pointed to other factors such as the deregulation of stock brokerage commissions in 1975 and the high inflation of the 1970s. Other analysts have put the turning point back in 1968, when Richard Nixon became President on the back of a wave of white, middle-class resentment against the 1960s. Hacker and Pierson, however, point the finger at the 1970s. As they describe in Chapter 4, the Nixon presidency saw the high-water market of the regulatory state; the demise of traditional liberalism occurred during the Carter administration, despite Democratic control of Washington, when highly organized business interests were able to torpedo the Democratic agenda and begin the era of cutting taxes for the rich that apparently has not yet ended today.

Why then? Not, as popular commentary would have it, because public opinion shifted. Hacker and Pierson cite studies showing that public opinion on issues such as inequality has not shifted over the past thirty years; most people still think society is too unequal and that taxes should be used to reduce inequality. What has shifted is that Congressmen are now much more receptive to the opinions of the rich, and there is actually a negative correlation between their positions and the preferences of their poor constituents (p. 111). Citing Martin Gilens, they write, "When well-off people strongly supported a policy change, it had almost three times the chance of becoming law as when they strongly opposed it. When median-income people strongly supported a policy change, it had hardly any greater chance of becoming law than when they strongly opposed it" (p. 112). In other words, it isn't public opinion, or the median voter, that matters; it's what the rich want.

That shift occurred in the 1970s because businesses and the super-rich began a process of political organization in the early 1970s that enabled them to pool their wealth and contacts to achieve dominant political influence (described in Chapter 5). To take one of the many statistics they provide, the number of companies with registered lobbyists in Washington grew from 175 in 1971 to nearly 2,500 in 1982 (p. 118). Money pouring into lobbying firms, political campaigns, and ideological think tanks created the organizational muscle that gave the Republicans a formidable institutional advantage by the 1980s. The Democrats have only reduced that advantage in the past two decades by becoming more like Republicans-more business-friendly, more anti-tax, and more dependent on money from the super-rich. And that dependency has severely limited both their ability and their desire to fight back on behalf of the middle class (let alone the poor), which has few defenders in Washington.

At a high level, the lesson of Winner-Take-All Politics is similar to that of 13 Bankers: when looking at economic phenomena, be they the financial crisis or the vast increase in inequality of the past thirty years, it's politics that matters, not just abstract economic forces. One of the singular victories of the rich has been convincing the rest of us that their disproportionate success has been due to abstract economic forces beyond anyone's control (technology, globalization, etc.), not old-fashioned power politics. Hopefully the financial crisis and the recession that has ended only on paper (if that) will provide the opportunity to teach people that there is no such thing as abstract economic forces; instead, there are different groups using the political system to fight for larger shares of society's wealth. And one group has been winning for over thirty years.

Citizen John (USA)

In Winner-Take-All Politics, two political science professors explain what caused the Middle Class to become vulnerable. Understanding this phenomenon is the Holy Grail of contemporary economics in the U.S.

Some may feel this book is just as polarizing as the current state of politics and media in America. The decades-long decline in income taxes of wealthy individuals is cited in detail. Wage earners are usually subjected to the FICA taxes against all their ordinary income (all or almost their entire total income). But the top wealthy Americans may have only a small percentage (or none) of their income subjected to FICA taxes. Thus Warren Buffett announced that he pays a lower tax rate than his secretary. Buffett has cited income inequality for "poisoning democracy."

When you search the Net for Buffett quotes on inequality, you get a lot of results showing how controversial he became for stating the obvious. Drawing attention to the inequity of the tax regime won him powerful enemies. Those same people are not going to like the authors for writing Winner-Take-All. They say these political science people are condescending because they presume to tell people their political interests.

Many of studies of poverty show how economic and political policies generally favor the rich throughout the world, some of which are cited in this book. Military spending and financial bailouts in particular favor the wealthy. Authors Jacob Hacker and Paul Pierson document a long U.S. policy trend favoring wealthy Americans. This trend resulted in diminished middle class access to quality healthcare and education, making it harder to keep up with the wealthy in relative terms. Further, once people have lost basic foundations of security, they are less willing and able to take on more risk in terms of investing or starting a business.

The rise of special interests has been at the expense of the middle class, according to the authors. Former President Carter talked about this and was ridiculed. Since then government has grown further from most of us. Even federal employees are not like most of us anymore. In its August 10, 2010 issue, USA Today discussed government salaries: "At a time when workers' pay and benefits have stagnated, federal employees' average compensation has grown to more than double what private sector workers earn, a USA TODAY analysis finds."

An excellent documentary showing how difficult it is to address income inequality is One Percent, by Jamie Johnson of the Johnson & Johnson family. Collapse: How Societies Choose to Fail or Succeed, by Pulitzer Prize-winner Jared Diamond Collapse: How Societies Choose to Fail or Succeed shows examples of what can happen when a society disregards a coming disaster until too late. I hope that Winner-Take-All will prompt people to demand more of elected officials and to arrest the growing income gap for the sake of our democracy.

Michael Emmett Brady "mandmbrady" (Bellflower, California ,United States)

4.5 stars-Wall Street speculators control both parties, September 19, 2010  See all my reviews

This review is from: Winner-Take-All Politics: How Washington Made the Rich Richer--and Turned Its Back on the Middle Class (Hardcover)

This book basically argues that Wall Street controls both political parties through the use of massive campaign contributions and lobbyists who buy off both the Republicans and Democrats in the White House,Senate and House.This is essentially correct but obvious.Anyone can go back to the 1976 Jimmy Carter campaign and simply verify that the majority of his campaign funds and advisors came from Wall Street.This identical conclusion also holds with respect to Ronald Reagan,George H W Bush,Bill Clinton,George W Bush and Barack Obama. The only Presidents/Presidential candidates not dominated by Wall Street since 1976 were Gerald Ford, Walter Mondale, Ross Perot, Ralph Nader and Pat Buchanan.

For instance,it is common knowledge to anyone who carefully checks to see where the money is coming from that Wall Street financiers, hedgefunds, private equity firms and giant commercial banks are calling the shots. For example, one could simply read the July 9,2007 issue of FORTUNE magazine to discover who the major backers of John McCain, Hillary Clinton and Barack Obama were. One could also have read Business Week(2-25-2008) or the Los Angeles Times of 3-21-2008.Through February, 2008 the major donors to the McCain campaign were 1)Merrill Lynch, 2) Citigroup, 3)Goldman Sachs, 4)J P Morgan Chase and 5)Credit Suisse

The major donors to the Hillary Clinton campaign were 1)Goldman Sachs, 2)Morgan Stanley, 3)Citigroup, 4)Lehman Brothers and 5)J P Morgan Chase.

Guess who were the major donors to the Obama campaign ? If you guessed 1)Goldman Sachs,2)UBS Ag,3)J P Morgan Chase ,4)Lehman Brothers and 5)Citigroup, then you are correct.

It didn't matter who became President-Hillary Clinton,Barack Obama or John McCain.All three had been thoroughly vetted by Wall Street. The campaign staffs of all three candidates ,especially their economic and finance advisors, were all Wall Street connected. Wall Street would have been bailed out regardless of which party won the 2008 election.

Obama is not going to change anything substantially in the financial markets. Neither is Rep. Barney Frank, Sen. Chris Dodd, Sen. Kerry or Sen. Schumer, etc. Nor is any Republican candidate going to make any changes, simply because the Republican Party is dominated even more so by Wall Street(100%) than the Democratic Party(80%). The logical solution would be to support a Third Party candidate, for example, Ross Perot .

One aspect of the book is deficient. True conservatives like Ross Perot, Pat Buchanan and Lou Dobbs have been warning about the grave dangers of hallowing out and downsizing the American Manufacturing -Industrial sector, with the consequent offshoring and/or loss of many millions of American jobs, for about 20 years at the same time that the " financial services " sector has exploded from 3% of the total service sector in 1972 to just under 40% by 2007. This is what is causing the great shrinkage in the middle class in America . 

Matt Milholland (California)

An Important Book, October 9, 2010 See all my reviews

This review is from: Winner-Take-All Politics: How Washington Made the Rich Richer--and Turned Its Back on the Middle Class (Hardcover)

This is a phenomenal book and everyone interested in how American politics works (or more accurately, doesn't work) should pick it up. It's both really smart and really accessible to a lay audience, which is rare for a political science book.

Extreme economic inequality and the near paralysis of our governing institutions has lead to a status-quo that is almost entirely indifferent to the needs of working families. Hacker & Pierson chronicle the rise of this corrupt system and the dual, yet distinct, roles the Republican and Democratic Parties have played in abetting it.

Seriously, it's top-notch. Read this book.

Loyd E. Eskildson "Pragmatist"  By(Phoenix, AZ.)

4.0 out of 5 stars Interesting and Timely, but Also Off-Base in Some Regards, September 15, 2010 See all my reviews

This review is from: Winner-Take-All Politics: How Washington Made the Rich Richer--and Turned Its Back on the Middle Class (Hardcover) The thirty-eight biggest Wall Street companies earned $140 billion in 2009, a record that all taxpayers who contributed to their bailouts can be proud of. Among those, Goldman Sachs paid its employees an average $600,000, also a record, and at least partially attributable to our bailout of AIG, which promptly gave much of the money to Goldman. Prior to that, the top 25 hedge fund managers earned an average of $892 million in 2007. "Winner-Take-All Politics" is framed as a detective story about how we got to inequality levels where the top 300,000 (0.1%) receive over 20% of national income, vs. 13.5% for the bottom 180 million (60% of the population).

Between 1947 and 1973, real family median income essentially doubled, and the growth percentage was virtually the same for all income levels. In the mid-1970s, however, economic inequality began to increase sharply and middle-incomes lagged. Increased female workforce participation rates and more overtime helped cushion the stagnation or decline for many (they also increased the risk of layoffs/family), then growing credit card debt shielded many families from reality. Unfortunately, expectations of stable full-time employment also began shrinking, part-time, temporary, and economic risk-bearing (eg. taxi drivers leasing vehicles and paying the fuel costs; deliverymen 'buying' routes and trucks) work increased, workers covered by employer-sponsored health insurance fell from 69% in 1979 to 56% in 2004, and retirement coverage was either been dropped entirely or mostly converted to much less valuable fix-contribution plans for private sector employees. Some exceptions have occurred that benefit the middle and lower-income segments - Earned Income Tax Credit (EITC), Medicaid, and Medicare were initiated or expanded, but these have not blunted the overall trend. Conversely, welfare reform, incarceration rates rising 6X between 1970 and 2000, bankruptcy reform, and increased tax audits for EITC recipients have also added to their burden, Social Security is being challenged again (despite stock market declines, enormous transition costs, and vastly increased overhead costs and fraud opportunity), and 2009's universal health care reform will be aggressively challenged both in the courts and Washington.

Authors Hacker and Pierson contend that growing inequality is not the 'natural' product of market rewards, but mostly the artificial result of deliberate government policies, strongly influenced by industry lobbyists and donations, new and expanded conservative 'think tanks,' and inadequate media coverage that focused more on the 'horse race' aspects of various initiatives than their content and impact. First came the capital gains tax cuts under President Carter, then deregulation of the financial industry under Clinton, the Bush tax cuts of 2001 and 2003, and the financial bailouts in 2008-09. The authors contend that if the 1970 tax structure remained today, the top gains would be considerably less.

But what about the fact that in 1965 CEOs of large corporations only earned about 24X the average worker, compared to 300+X now? Hacker and Pierson largely ignore the role of board-room politics and malfeasance that have mostly allowed managers to serve themselves with payment without regard to performance and out of proportion to other nations. In 2006, the 20 highest-paid European managers made an average $12.5 million, only one-third as much as the 20 highest-earning U.S. executives. Yet, the Europeans led larger firms - $65.5 billion in sales vs. $46.5 billion for the U.S. Asian CEOs commonly make only 10X-15X what their base level employees make. Jiang Jianqing, Chairman of the Industrial and Commercial Bank of China (world's largest), made $234,700 in 2008, less than 2% of the $19.6 million awarded Jamie Dimon, CEO of the world's fourth-largest bank, JPMorgan Chase.

"Winner-Take-All Politics" also provides readers with the composition of 2004 taxpayers in the top 0.1% of earners (including capital gains). Non-finance executives comprised 41% of the group, finance professionals 18.4%, lawyers 6%, real estate personages 5%, physicians 4%, entrepreneurs 4%, and arts and sports stars 3%. The authors assert that this shows education and skills levels are not the great dividers most everyone credits them to be - the vast majority of Americans losing ground to the super-rich includes many well-educated individuals, while the super-rich includes many without a college education (Sheldon Adelson, Paul Allen, Edgar Bronfman, Jack Kent Cook, Michael Dell, Walt Disney, Larry Ellison, Bill Gates, Wayne Huizenga, Steve Jobs, Rush Limbaugh, Steve Wozniak, and Mark Zuckerberg).

Authors Hacker and Pierson are political science professors and it is understandable that they emphasize political causes (PACs, greater recruitment of evangelical voters, lobbying - eg. $500 million on health care lobbying in 2009, filibusters that allow senators representing just 10% of the population to stop legislation and make the other side look incompetent, etc.) for today's income inequality. However, their claim that foreign trade is "largely innocent" as a cause is neither substantiated nor logical. Foreign trade as practiced today pads corporate profits and executive bonuses while destroying/threatening millions of American jobs and lowering/holding down the incomes of those affected. Worse yet, the authors don't even mention the impact of millions of illegal aliens depressing wage rates while taking jobs from Americans, nor do they address the canard that tax cuts for and spending by the super-wealthy are essential to our economic success (refuted by Moody's Analytics and Austan Goolsbee, Business Week - 9/13/2010). They're also annoyingly biased towards unions, ignoring their constant strikes and abuses in the 1960s and 1970s, major contributions to G.M., Chrysler, and legacy airline bankruptcies, and current school district, local, and state financial difficulties.

Bottom-Line: It is a sad commentary on the American political system that growing and record levels of inequality are being met by populist backlash against income redistribution and expanding trust in government, currently evidenced by those supporting extending tax cuts for the rich and railing against reforming health care to reduce expenditures from 17.3+% of GDP to more internationally competitive levels (4-6%) while improving patient outcomes. "Winner-Take-All Politics" is interesting reading, provides some essential data, and point out some evidence of the inadequacy of many voters. However, the authors miss the 'elephant in the room' - American-style democracy is not viable when at most 10% of citizens are 'proficient' per functional literacy tests ([...]), and only a small proportion of them have the time and access required to sift through the flood of half-truths, lies, and irrelevancies to objectively evaluate 2,000+ page bills and other political activity. (Ideology-dominated economic professionals and short-term thinking human rights advocates are two others.) Comments (2)

Brian Kodi

 "Americans live in Russia, but they think they live in Sweden." - Chrystia Freeland, March 26, 2011 See all my reviews

This review is from: Winner-Take-All Politics: How Washington Made the Rich Richer--and Turned Its Back on the Middle Class (Hardcover)

No one should doubt the rising income inequality in America, which the authors trace back to the late 1970s since the latter part of Carter's presidency in what they call the "30 Year War". Zachary Roth, in a March 4th Time magazine article stated "A slew of conservative economists of unimpeachable academic credentials--including Martin Feldstein of Harvard, Glenn Hubbard, who was President Bush's top economic adviser, and Federal Reserve chair Ben Bernanke--have all acknowledged that inequality is on the rise."

And why should we care that most of the after tax income growth since 30 years ago has gone the way of the richest Americans in a "winner-take-all" economy? Because as Supreme Court justice biographer Melvin Urofsky stated, "in a democratic society the existence of large centers of private power is dangerous to the continuing vitality of a free people." (p. 81) Because if unchecked, a new economic aristocracy may replace the old hereditary aristocracy America's Founders fought to defeat (p. 298). Because unequal societies are unhappy societies, and inequality can foster individual resentment that may lead to a pervasive decline in civility and erosion of culture.

And why should we be concerned that this trend in rising inequality may not experience the period of renewal the authors are optimistic about? Because unlike the shock of the 1930s' Great Depression that served as the impetus for the politics of middle class democracy, the potential shockwaves of the 2008 Great Recession were tempered by massive government stimulus, resulting in no meaningful financial reform, and an extension of the tax cuts for the wealthy. And because of the lottery mentality of a large swath of the population which opposes tax increases on the rich. One day, they or their children too can share in the American dream. According to an October 2000 Time-CNN poll, 19 percent of Americans were convinced they belonged to the richest 1 percent. Another 20 percent thought they'd make the rank of the top 1 percent at some point in their lives. That's quite a turnover in the top 1 percent category to accommodate 20 percent of the population passing through.

Mr. Hacker and Mr. Pierson have put together powerful arguments on the root causes of income inequality in the U.S., its political and economic ramifications, and to a lesser extent, a roadmap to returning democracy to the masses. This is an eye opening and disturbing, yet informative book, even for readers who may disagree with their opinions.

J. Strauss (NYC)

3.0 out of 5 stars great history of big money influence on policy but needs more analysis of the ways policy affects the winner-take-all economy, September 21, 2011  See all my reviews

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This review is from: Winner-Take-All Politics: How Washington Made the Rich Richer--and Turned Its Back on the Middle Class (Hardcover)

Writing:

A bit hokey and repetitive for the first couple chapters. Much better after that. Stick with it if you're interested in the subject.

Content:

This book does a very good job explaining how and why certain special interest groups (notably those that represent the wealthiest .1%) have come to have such a stranglehold on government, particularly Congress. I come away with a clear understanding of how the wealthiest citizens are able to exert their influence over legislative policy and enforcement at the federal level.

What I would have liked more of are better explanations of the mechanisms through which government policies exacerbate the winner-take-all economy. Tax policy (rates and loopholes) is the most obvious answer, and the book provides plenty of stats on the regression of tax policy over the past 30 years.

But complicated, interesting, and largely missing from public discourse is why PRE-TAX incomes have become so much more radically skewed during that time. This is certainly touched on - the authors are deliberate in saying it's not JUST tax policy that's contributing to increased inequality - but I would've liked much more analysis of the other policy-driven factors. "Deregulation" is too general an explanation to paint a clear picture.

The authors make it clear that they believe the increasing divide in pre-tax incomes (the winner-take-all economy) is not the inevitable result of technological changes and of differences in education ("the usual suspects"), but of policy decisions made at the state and, especially, federal levels. Personally, I wasn't fully convinced that technological change has little or nothing to do with the skew (though I agree that while education goes a long way toward explaining the gap between poor and middle class, it doesn't explain much of the gap between middle class and super rich). But I do believe, as they do, that public policy plays a large role in influencing the extent of inequality in pre-tax incomes, even beyond more obvious market-impacting factors like union influence, and mandates including the minimum wage, restrictions on pollution, workplace safety and fairness laws, etc.

Off the top of my head, here are some regulatory issues that affect market outcomes and can influence the extent of winner-take-all effects in the marketplace (a few of these may have been mentioned in the book, but none were discussed in detail):

• the enforcement of antitrust laws and other means of encouraging pro-consumer competition in the marketplace, such as cracking down on explicit or implicit price-fixing and collusion schemes [concentration of market share and/or collusion will certainly contribute to winner-take-all effects at the expense of consumers, small businesses and the dynamics of the economy as a whole.]
• regulations that seek to minimize conflicts of interest in the corporate world, particularly those with far-reaching effects [i.e. some policy makers and regulators are in a position to decide whether it makes sense for bond ratings agencies with the authority they have over so many investment decisions to be paid, in negotiable fashion, by the companies whose bonds they rate. i'd wager the status quo exacerbates winner-take-all and not in a way that rewards the right things - but i'd be glad to hear an intellectually honest counter-argument]
• net neutrality [should internet service providers be allowed to favor their corporate partners' websites to the point that eventually you'll no longer be able to publish a blog and expect that anyone will be able to access it expediently?]
• insurance regulation [should we rely on reputation threat alone to discourage insurer's from stiffing their policyholders' legitimate claims? status quo we don't, but there are those who argue against regulation of insurers]
• broad macroeconomic goals, such as relative balance between imports and exports, or attempts to encourage educational institutions to help align workforce skills with projected job opportunities for instance - enforced preferably through various incentives rather than mandates [the U.S. isn't big on this at the moment but many other rich countries are, in varying forms]
• preferential treatment of small businesses to help them compete with "the big boys", thereby increasing competition in the market and job-creation
• preferential treatment of businesses who do various things deemed to be in the public interest
• intellectual property laws (the extent of patent, copyright, trademark rights)
• securities law, including bans on insider trading, front-running, etc
• food safety and labeling laws
• allocation and extent of government-sponsored R&D in industries deemed important or potentially beneficial to the public
• restrictions on what can be bought and sold [almost no one would argue judge's decisions should be for sale to the highest bidder. how about cigarette sales to kids, should that be allowed? heroin to anyone? spots in the class of a competitive public university?]

And many more. I know regulatory issues like that play huge roles in the distribution of pre-tax "market" incomes, but I'd like to have a better understanding of how, and also to be better able to articulate how in response to those who seem to believe taxes (and perhaps obvious restrictions, such as on pollution or the minimum wage) are the only significant means through which governments influence wealth disparities.

There wasn't a whole lot of discussion of these or similar regulatory issues in the book. I would like to see another edition, or perhaps another book entirely, that does. Please let me know if you have any recommendations.

Brian C. - See all my reviews

This review is from: Winner-Take-All Politics: How Washington Made the Rich Richer--and Turned Its Back on the Middle Class (Audio CD)

I usually like to write lengthy, in depth reviews, particularly when I really like a book (and I really liked this book). Unfortunately I listened to this book in the car and was unable to take my usual detailed notes so I am going to have to settle for a more succinct review.

This book is one of the best political books I have ever read (or, in this case, listened to). The book attempts to figure out why inequality has been steadily rising in the United States since at least the mid-1970s, and why wealth has been redistributed steadily upward, especially to the top 1% or even top .01% of the income bracket. The answer is complex and has to do with greater organization on the part of business interests since the mid-1970s and a failure of organization on the part of the interests of labor and the working classes. The book makes its case with a great deal of data and there are many very interesting facts presented along the way as well as a very interesting analysis of the nature of our political system in the United States.

The authors argue, correctly in my opinion, that the economy cannot be separated from politics. The question about growing inequality cannot be answered if one limits one's view to the economy. The rules of the economy are determined in the political sphere. The authors also argue that the standard focus on elections in analyses of our political system is misleading. Elections are, in some ways, merely a sideshow. When it comes to actual policy-making organization is what matters, and since the mid-1970s business interests have been far more successful in organizing lobbying efforts than the interests of labor and the middle classes. This means that the policies that are able to make it through the political process and actually become law have overwhelmingly been policies that favor the interests of the wealthy.

The authors diagnose a number of problems in our current political system. One of the most important has been the growing importance of obstruction. The growing use of the filibuster, for example, has made it possible for small minorities, representing very limited interests, to obstruct progressive change. This is a serious problem when one takes into consideration the notion of "drift", which is a major principle of the book. Drift occurs when the political process fails to keep up with changing economic conditions. It turns out that one of the most effective ways to block progressive change is to simply do nothing. The proponents of progressive change, therefore, often wind up needing a super majority in order to overcome obstruction, while the enemies of progressive change have a distinct advantage since it only requires a small minority to obstruct change leading to inherent drift.

The authors manage, somehow, to remain relatively optimistic about our situation despite all these obstacles to progressive change. If growing inequality is, in fact, largely a political problem then it is possible for us to do something about it. The problem, of course, is that we have to use a political system that is already heavily weighted towards business interests and the interests of the wealthy to reform the political system itself, which is analogous to lifting oneself up by one's own bootstraps. The challenges are real, but the more we know about the obstacles in our way, the better our chances for overcoming them, and this book sheds a great deal of light on the current obstacles to progressive change in our current political system.

There is far more in this book than I have been able to summarize. It is one of the few books on political science that I fully intend to read again at some point. I highly recommend this work to anyone interested in our current political and economic situation. 

Richard Hofstetter "C. Richard Hofstetter" (San Diego, CA) - See all my reviews
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Winner Take All Politics is an important book that describes the current political system in America and how it has developed during the last 50 years. Cogently written and well documented, this short book describes how both the Republican and Democratic parties have come to be dominated largely by the super wealthy class, and how this has resulted in a tremendous redistribution of wealth and income from the less affluent to a tiny minority of super rich persons at the very peak of the social structure. The authors compile a powerful argument, buttressed by a multitude of examples, that the organization of interests have altered the calculus of electioneering and the formulation, implementation, and evaluation of public policy to further policies that benefit the top tiers of the society. One might wonder why growing problems involving the less affluent and the poor have not been a campaign issue in recent elections. Who defines issues has great influence over the outcomes of policies. This book provides the answer as well as many other issues that arise from the dominance of the rich in politics from Hawaii to Maine and should be read by all citizens.

Retired Reader (New Mexico) - See all my reviews

Political Economy, January 17, 2011

This book is an effort by two political scientist to explain how in the last thirty years or so wealth in the U.S. has become concentrated in the hands of a smaller and smaller number of people. The fact that this has occurred is indisputable. So is the fact that the gap between the richest Americans and everybody else has grown exponentially just as the U.S. middle class is gradually disappearing. The explanation of why this has occurred offered by Hacker and Pierson is rather more controversial.

They begin by noting that over the last thirty years not only have the already rich gotten much richer, but that the U.S. National Economy has been transformed into a system that no longer serves the interests of the once broad and thriving American Middle Class that once was the backbone of that economy. In their view the system now serves the interests of a small minority of the rich and very rich (one to five per cent of the population). So their book begins by asking how and why did this occur and why over the last thirty years?

Since Hacker and Pierson are political scientists not economists, they argue that this transformation was due to political, not economic factors. Using what appears to be accurate statistical data they cite three `clues' or factors that point to what happened to the U.S. economy: 1) hyper-concentration of wealth; 2) sustained hyper-concentration; and 3) during the thirty years under study, while wealth concentrated at the very top of the income scale, the economy essentially stopped working for the middle and working classes who continually lost ground during this period.

This economic transformation in favor of the rich they argue is not the result of impersonal economic forces but of deliberate government actions or at times inaction (drift). Their central thesis is that mostly incremental government policies over the last thirty years have had the cumulative effect of changing the U.S. economic system into a `winner take all' system heavily biased in favor of the rich and very rich. At the same time federal government policies undermined the traditionally strong labor unions that served as a counter weight to corporations' power and systematically deregulated financial markets and executive compensation.

Of course the other phenomenon that they observed is that as wealth becomes more and more concentrated, the influence of the wealthy on all aspects of the political process becomes more and more pronounced. This is evidenced by the fact that politicians ignore the bulk of their constituents in favor of the views of a small number of their wealthiest backers. They note Plutarch's comment that "An imbalance between rich and poor is the oldest and most fatal ailment of all republics." They also note that the reason the Democrats and Republicans, rhetorical differences aside, essentially support the same policies is because both are now beholden to the super wealthy. Not by conspiracy, but more or less by accident the U.S. in the 21st Century has become an oligarchy in which a very small number of very rich people control the powers of government over the increasingly disadvantaged majority.

So how accurate is this account of how the U.S. is becoming a nation of the privileged few controlling the destiny of the majority? Well they make a pretty good case for it and their argument that this state affairs is due to political not economic factors is quite plausible.

Marc C. Puckett (California) - See all my reviews
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These political scientists have written a well documented history of the demise of the middle (and lower) class participation in American governance. It shows how the Democrats have been co-opted into the 'big money' game of politics. While it 'says' there is a way back, short of revolution it's hard to believe.

Combined with '13 Bankers' by Johnson & Kwak it is easy to see that we have the best government money can buy ... it's just not our money!

Galgar - See all my reviews

This book does a good job describing the role of politics in the decline of the United States, particularly its transformation from a capitalist to a feudal economy over the past 40 years or so, a process that is thankfully not yet complete, but which seems to be accelerating. It is telling that many critics of the book focus on the assumption that all economies are either completely capitalistic and free, or totally centralized and communistic, ignoring the many other possibilities, including a balance between socialism and a free market as is practiced (with varying degrees of success) in European countries, or the nearly complete laissez-faire system used by the drug trade worldwide. This oversimplification, in my opinion, pretty well invalidates their arguments.

To return to this book, however, there are a number of strengths and a few weaknesses that I'd like to emphasize. The use of the history of the current problem of unequal wealth is valuable, not merely in the success of the top tiers of society in manipulating politics to their advantage and the detriment of the country, but also the way that more left-leaning politicians and groups have abandoned economic issues and the needs of the working and middle classes in favor of their own narrow agendas. This is eye-opening stuff, and points out that the problem is more than simply a few villains at work.

I would have enjoyed more discussion of the social elements behind the politics of inequality, particularly the way that American Christians from the 1980s to the present have largely abandoned economic and social injustice as issues of concern, and instead voted not only against their own personal interests, but against Christian issues such as caring for the poor, in favor of a Republican party that seems committed to reducing them to serfdom. Instead, most conservative churches focus their attentions on sex (in the form of abortion, homosexuality, opposing women's rights, etc.), which the right-wing political class cynically exploits. Since these Christian evangelical voters are largely responsible for the success of the Republicans over the past 40 years, I don't think you can divorce the social issues from the political ones.

The book's biggest weakness, however, is its failure to treat the decline of organized labor in America in any real detail. The argument is made that labor unions have grown weak because of organized attacks from the right, particularly the business community. While such attacks have certainly occurred, and have had their effect, it is equally true that American labor unions have declined largely because they themselves ceased to help workers, being consumed by a far-left confrontational ideology that meant they spent (and still spend) most of their time and energy providing excessive benefits to their leadership and an increasingly small percentage of their members, at the expense of everyone else. In order to maintain themselves in comfort, their leadership has now become a major cause of unemployment in the United States, and they have done at least as much harm to the average American worker as selfish business interests have. The decline of organized labor is largely a self-inflicted wound, which large businesses have taken full advantage of. Ironically, this has created a situation where unions are increasingly needed in America, but such unions would have to fight existing unions just as much as unfair businesses in order to help their workers, a situation that is unlikely to occur.

The reasons for this would have been a fascinating and helpful addition to this otherwise fine study, but the authors do not seem to have felt it important to include them. As a result, I cannot give the book five stars, but it certainly deserves four.

 

 

Thomas J. Farrell (Duluth, MN USA) - See all my reviews
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5.0 out of 5 stars The Rich Are Not Paying Their Fair Share in Taxes!, November 25, 2010

After reading Jacob S. Hacker and Paul Pierson's new book about the great expansion of income inequality in recent decades, WINNER-TAKE-ALL POLITICS: HOW WASHINGTON MADE THE RICH RICHER AND TURNED ITS BACK ON THE MIDDLE CLASS [and on the lower class as well] (2010), I have come to the conclusion that we should paraphrase scripture to read as follows: "From everyone to whom much has been given [in income], much will be required [in taxes]; and from the one to whom much has been entrusted [such as the money manager of other people's money], even more will be demanded [in taxes]" (Luke 12:48; NRSV).

In his 1939 State of the Union address, Franklin D. Roosevelt famously said, "To us much is given; more is expected." So there is a famous precedent for invoking the spirit of this biblical passage in our political discourse.

Hacker and Pierson see FDR's New Deal in a very positive light because of its commitment to redistributing material wealth through legislative interventions. Because of their strong interest in redistributing material wealth through legislative interventions, Hacker and Pierson work with the terms "nonmaterial" issues/grounds and "postmaterialist" to characterize various issues that would do little to help redistribute material wealth to the middle class and lower class. For example, they characterize both pro-choice and pro-life advocates as being concerned with nonmaterial issues. And the authors' neutrality about nonmaterial issues can be summed up in their rather crudely worded statement, "We have no dog in this fight" (page 204). Other nonmaterial issues include affirmative action, women's rights, civil rights, and environmental concerns, which they see as upper-middle-class issues that would do little to help redistribute material wealth to the middle class and lower class. In plain English, "the Democrats lost their capacity to speak of the economic concerns of the little guy" (page 184).

Whether they understand it or not, most Americans have been the losers in the rise of winner-take-all politics, except for the tiny percentage at the top who have been winners. In the authors' view, both Republicans and Democrats begat the great expansion of economic inequality in recent decades, because both groups contributed, but not necessarily equally, to the legislative rise of winner-take-all politics. Their book is remarkably readable and even mildly entertaining at times. No doubt we should cultivate a sense of humor about the grim rise of radical conservatives in American politics.

To jolt us into greater awareness about legislative developments, Hacker and Pierson start with the obvious superficial media coverage of politics, which usually is characterized as treating elections of political candidates as horse races (i.e., whose ahead in the polls and by how much, and the like). Because the rise of television has also produced a phenomenal rise in professional-sports on television, perhaps it is not surprising that media coverage of electoral contests decidedly resembles media coverage of sports contests. The media do cover electoral contests as horse races. How many American adult have not noticed this? But contests are contests, eh?

Well, no, not exactly, Hacker and Pierson point out. After all, there are many legislative contests that are not all that well covered by the media because they usually unfold in a very slow process and the details are often hard to understand unless you understand the technicalities involved. Granted, the media usually do cover the outcomes of the legislative contests, the actual final legislation that gets enacted into law. But not the boring details of the legislation, or the boring details of the legislative contests themselves, which is where real political combat occurs. The well-known saying has it that the devil is in the details, and this is certainly true of legislation. The details of legislation are the central focus of Hacker and Pierson's book. In their view, the contests about the details in legislation involved are real political combat, not the electoral contests.

Hacker and Pierson set out to rectify the situation a bit by bringing us up to speed about the legislative details that cumulatively over recent decades, roughly from 1978 onward, have produced the winner-take-all politics highlighted in the title of their book. Even though I was familiar with the general pattern of political developments that the authors detail, I learned about a number of legislative details that I had not known about previously, perhaps because of my own inattentiveness to certain matters at the time of their unfolding.

In one of their many attempts to be entertaining, Hacker and Pierson tell us that there have been no good guys in white hats in the sad story they recount of the seemingly inexorable rise of winner-take-all politics. Radical conservatives such as Phil Gramm and Newt Gingrich have been the bad guys in the black hats, not moderate Republicans such as Presidents Eisenhower and Nixon, both of whom seem liberal compared to the radical conservatives. But the Democrats have not been the good guys in the white hats. As Hacker and Pierson recount the story of the rise of winner-take-all politics, no good guys in white hats emerge. Both Republicans and Democrats begat the deregulation that culminated in the economic crisis of recent years.

Let us be clear here. From Hacker and Pierson's account of the rise of winner-take-all politics, Presidents Carter and Clinton do not emerge as bad guys wearing black hats. The bad guys wearing the black hats are the radical conservatives. But Hacker and Pierson see the decisive rise in winner-take-all politics as occurring from the late 1970s onward. In their recounting, both Republicans and Democrats begat winner-take-all politics.

Hacker and Pierson refer repeatedly to the Christian right and the religious right (pages 139, 146-49, 160, 201-04, 205, 234-35). But the authors do not discuss Catholics, except to note that John F. Kennedy was a Catholic (page 202). However, as Garry Wills discusses his fine book HEAD AND HEART: AMERICAN CHRISTIANITIES (2007, pages 523-30), conservative antiabortion Roman Catholics have worked closely with conservative antiabortion evangelical Protestants in recent years to strengthen the voter turn out for the Republican party. Nevertheless, Hacker and Pierson do point out that in the 1980s and 1990s the Republican party "[a]ttract[ed] a huge new GOP voting block brought to the party for cultural reasons" (page 211). One of those cultural reasons was the antiabortion movement, and many conservative antiabortion Catholics were among the new voting block brought to the GOP in the 1980s and 1990s and later.

I should point out that Hacker and Pierson themselves suggest no possible way to break up the appeal of radical conservative Republican candidates. However, it strikes me that Wills has set an important example for other liberals to follow by lining up arguments against the different antiabortion arguments advanced by the different Christian groups. The potential payoff to debating with antiabortion Christians is to get them to stop voting for Republican candidates on the basis of this one issue alone. No doubt debating with antiabortion Christians will be a slow and arduous undertaking.

Has anybody else advanced any ideas about how to combat the well-funded radical conservatives? As I stated, Hacker and Pierson haven't.

I myself have set forth my own thinking about abortion in the first trimester in my lengthy essay titled "The Catholic Bishops Want No Debate About Sexual Morality" that was published at OpEdNews.com on October 28, 2010.

Finally, as is well known, FDR has long been considered a traitor to his class for helping the little guy. In light of his example, perhaps the Democratic party should try to cultivate more traitors to their economic class to help the little guy. In any event, Democratic politicians should figure out more ways in which the Democratic party might help advance the economic interests of the little guy.

 

David S. Rush "[email protected]" (St. Louis, MO) - See all my reviews
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This book needs another review like a hole in the head. Typing the full title into Google resulted in close to 30,000 hits. But hey, why not!

First and foremost, while I found the book deeply troubling and depressing, it is an important book to read if you want to really understand what is happening in Washington currently. This book really did not tell me anything that I did not intuitively already know from decades of watching the American political scene. It did reaffirm and document my intuition.

One thing I did take away from the book is a sense that we need fixed our constitution. The Senate, as now composed, guarantees an over-representation of the rural, conservative, lightly populated rural states over the more densely populated, coastal, urban states. This results in the minority dictating to the majority. Can you imagine the mess we would end up in if were to try to change or amend the constitution to correct this?

I've been angry about the growing wealth gap in this country that is only of late getting any real attention. After reading this book I am now not only angry, but seriously depressed. The extent to which our politicians are essentially in the pockets of the big corporations and wealthy, is amazing. The Republicans were there first and are the party most identified and deepest in bed with these players, but the Democrats are not far behind and they are working hard to catch up.

The basic premise of this book is that the big business, especially the financial sector, and the wealth have teamed up to defeat labor and any social guarantees for the vast majority of Americans. The Republicans guiding star for the last 30 years has been to reduce taxes on the wealthy and on businesses. Going hand in hand with this is a belief that any regulation of business is bad, and that market forces can and should be doing this. Any social program is not good because it results in a redistribution of wealth from the rich to poor. This is essentially the 3 plank platform of the Republican Party.

The Democrats are as addicted to the money spread by lobbyist and large donors as the Republicans. Business is unified in its goal of supporting the 3 planks they have given to the Republicans. Where the middle class and labor lose out is their lack of organization and cohesiveness. Business and their bought-and-paid-for politicians speak in one voice. The Democrats and the middle class are increasing a din of unheard voices.

The book details a history of how we got where we are at in this country, politically and economically. It also details example after example of politicians favoring business interests over the interests of the majority of their own constituents. It details how the tax burden has really shifted from the rich to the middle and lower classes. How the income of the wealthy has been growing at a fast pace while the real income of the middle class has been shrinking. Throw in decreasing social nets and it is not a pretty picture.

The book's conclusion was supposed to offer some hope that all is not lost in the inevitable march to the United Corporations of Richistan (Richistan is the author's phase; I've added the United Corporations). I did not find it hopefully at all. In the best case scenario it painted these things as cyclic and hopefully we will cycle out of this march to a two class society. I am not holding my breath.

Winner Take All Politics, April 19, 2012 

By 

F. Kline (LA CA) - See all my reviews
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Amazon Verified Purchase(What's this?)

This review is from: Winner-Take-All Politics: How Washington Made the Rich Richer--and Turned Its Back on the Middle Class (Paperback)

Winner-Take-All Politics: How Washington Made the Rich Richer-And Turned Its Back on the Middle Class by Jacob S. Hacker & Paul Pierson, Simon and Schuster Paperbacks, 2010, 357 pages.

Like the majority of Americans I feel there is something seriously wrong with this country's direction and governance. I agree with a 90% plus of Americans who disapprove of Congress and its decisions and the 50% or so that have serious doubts about the administration. I have struggled for some time trying to understand what is going on.
In the 1960s I went on a retreat with the University of Southern California Medical Faculty. We took two buses to Death Valley and all I remember from the outing was that we spent the day listening to scientific papers, playing tennis and Gary Franklin's speech. We also visited Scotty's Castle. Someone on the faculty had invited Gary Franklin, a news reporter for one of the local TV stations, to give a talk. I remember three things about him. One, he talked for the entire trip to and from Death Valley. I don't think he was silent for more than two minutes. Two his family had escaped Nazi Germany when he was a teenager. So he had powerful memories of how an entire country could go off the rails. And he understood that the United States could also lose its way. But third, in his formal talk, he said something I never forgot. He said, "If you gave me control of all the media for six months I could elect anyone President". This shocked me but I never forgot it. I grew up on American history, as taught in American grade and high schools. Essentially I learned that Americans wore white hats and everyone else black hats. Our national heroes were presented as some combination of comic book heroes. I firmly believed that this was the best country in the world with the best citizens and the finest government. So what Gary Franklin said shocked me. But some part of my brain stored it. I thought about his comment many times and very sadly and slowly came to believe that it was accurate.
My recent reading, particularly Michael Lewis, helped me to understand what went wrong with banks, investment banks, and Wall Street firms. I reviewed several of Michael Lewis's books in the January and February E-Jonah. But none of my reading helped me understand why the government let this happen. I assumed our leaders didn't understand what was going on and/or didn't know what to do. Then I watched Bill Moyers interview with one of the authors of Winner-Take-All-Politics. I promptly ordered the book. It is an eye-opener. The writing is superb and while it is not as amusing as Lewis's work it helped me understand how and why we went off the fiscal rails.
The authors approach the problem from the point of view of liberal Democrats and in the tradition of Franklin Roosevelt and Harry Truman. They firmly believe in an activist government that regulates. They have serious doubts about unrestrained and unfettered capitalism. They cite the Gilded Age and the Great Depression of the 1920s as evidence of capitalism run amok. On page 55 they say, "Governments do redistribute what people earn. But government policies also shape what people earn in the first place, as well as many other fundamental economic decisions that consumers businesses and workers make". They use statistics to show that while the gross domestic product has increased, very little of the increase has gone to the lower classes and only a small amount to the middle class. If you compare 1979 to 2006, the poorest fifth has seen an 11% rise in income, the fourth quartile a 32% rise and the top 1% a 256% rise. Well over 40% of the gain has gone to the upper 1% of our population. They also note that more and more of the richest 1% work in "finance". The authors seem to accept the fact that capitalism does what capitalism does and that it is up to the government to regulate it and to regulate it for the benefit of the middle and lower classes. They note that Ralph Nader's movement and the Unions pressured the government for consumer and worker benefits. This organizational model was eventually adopted by the Republican Party. For a long time the Republicans got most of their funding from the rich. And he who pays the piper calls the tune. In essence, when there isn't a sense of emergency, elections are won by organization and money and not by policy or substance. In the recent past the Republicans had the edge in both organization and money. Then the Democrats caught on. They began to go after the big donors who also happen to be the richest 1% of our population. As a result, while the Republicans pushed directly to benefit the rich, the Democrats increasingly, mostly by drift, allowed the 1% to have lower taxes, got rid of Glass Steagall and were indirectly supportive of the increasing irresponsible fiscal behavior of borrowers, banks and Wall Street. Unions slowly shrank to only a few percent of non-governmental workers. As a result of this and citizen ignorance and apathy there was nothing to counterbalance the increasing political power of CEOs and the richest Americans.
On an optimistic note the authors say that we have had this problem before. It occurred after the American Civil War and with the financing of railroads. It occurred during the Gilded Age and again in the 20s. They suggest that change will require careful organization and financing. As they point out at the very beginning of the book, when Edmund Hillary climbed Everest it looked as if he did it by himself. But there was extensive planning, organization and an extended support system that made his accomplishment possible. The task for the American people is to understand the necessary role of government and to organize and fund change. As to the 1930s the authors note," The key conditions for the politics of renewal would not emerge until the crisis of the 1930s. But when they did, and the politics and policy of middle-class democracy were constructed, reformers were able to build on the foundation laid down by sustained organized action over the preceding decades. In those fateful years of foundation - laying a reform movement grew up state-by-state and debate by debate bringing with it changes whose full support would only become clear with time. Progressive reformers, not just in the White House but in state capitals and the newly democratized Senate - men like Robert LaFollett of Wisconsin and Robert Wagner of New York - kept the Pot of reform simmering".
So did TARP etc. prevent a new depression, which might have started new reform, or did it just save a few politicians and the rich? Only time will tell.
In effect, and through conscious and unconscious action and drift, our major parties have created a fiscal disaster. The Democrats showed the Republicans how to use organizations to get elected. Ralph Nader and the unions taught them well. Then the Democrats, after several severe reverses, learned to cultivate big money. In the end both parties turned the means into the ends. Effective government lost out to re-election and raising money. Money buys advertising and staff and this gives you control of the media. Now the middle and lower classes have much less power and less freedom of choice. While the 1% has more power to manipulate the media and to force their agenda on the rest of us. What the 1% don't seem to understand is that if the krill and the plankton die the whales die. It is up to all of us to understand what went wrong and to begin to correct it.
I remember the Depression in the 30s, WWII, the Cold War, the Viet Nam police action and more recent "police actions". I remember the terrible pain and fears of the Depression, WWII and The Cold War. I read enough history to know that things are more often on the brink of disaster than not but somehow we got our act together and muddled through. I hope we can do it again. Frank Kline 

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