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May 1st, 2011

Book Review: Winner-Take-All Politics: How Washington Made the Rich Richer and Turned Its Back on the Middle Class

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Estimated reading time: 5 minutes

Blog Admin

May 1st, 2011

Book Review: Winner-Take-All Politics: How Washington Made the Rich Richer and Turned Its Back on the Middle Class

1 comment

Estimated reading time: 5 minutes

Steve Coulter comes across painstakingly argued theories but is not convinced by Hacker and Pierson‘s account of America’s wealth distribution.

 

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

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The US is the world’s richest country, and also a vibrant democracy. So why have American voters tolerated the diversion of a huge portion of the wealth created in the last 30 years to the already super-rich?

The share of income earned by the top 1 per cent increased from 8 per cent in 1974, to more than 18 per cent in 2007. The really startling thing is that the share of the top 0.1 per cent has grown from 2.7 per cent to 12.3 per cent in the same time, while the richest 15,000 families constituting the top 0.01 per cent each now earn more than $35m a year.

At the same time, real incomes of the working and middle classes have stagnated or declined. For all but a tiny minority it appears, the American dream has stalled. Are Americans indifferent to extreme inequality, or is there something wrong with the democratic process that hinders attempts to alter the institutions which regulate reward?

In Winner-Take-All Politics, Paul Pierson of Berkeley and Jacob Hacker of Yale make the latter argument, although they do acknowledge the importance of the ‘culture wars’ in shaping the non-materialist voting preferences of many Americans. Their work examines changes in interest group politics since the 1970s and how business and financial elites have allegedly rigged the system to ensure they benefit from globalisation at the expense of the rest – or how America has changed from ‘Broadland’ to ‘Richistan’, as they put it.

Interest group politics, rather than electoral politics, are critical because decisions about how wealth is created and distributed are not taken at the ballot box. Instead they have occurred behind the scenes. There are two main reasons for this.

First is the importance of ‘drift’ in policymaking. It is not necessary for the beneficiaries of globalisation to actively press for reforms to regulatory and tax policies that will let them keep their spoils – all they have to do is block changes that might alter the fiscal and economic environment which has increasingly tilted in their favour. This hands them a massive positional advantage. For Washington politics, with its plethora of veto points or ‘checks and balances’ as the Founding Fathers might have put it, automatically favours the status quo. In other words, it’s the politics, not the economy, stupid.

Second, business and financial lobbyists have become formidably well organised and they hedge their bets by funding both Democrat and Republican politicians. This lobbying onslaught began as a reaction to the creation of the Great Society and the social liberalism of the 1960s, and in particular to counter the then powerful influence of trade unions.

This is a persuasive thesis, which explains much. It is also painstakingly and convincingly argued, with a wealth of detail that may numb those who aren’t obsessive about American Congressional politics. But it’s also a little too neat. It doesn’t really explain how Obama, having got himself elected President (the easy part, apparently) is now enacting healthcare and other reforms (the bit Pierson and Hacker say should be impossible). The best they can do is explain that dire circumstances may concentrate the minds of lawmakers enough to get them to undo some of the deregulatory harm and curb Wall Street. So they’re not that impotent after all, then?

The authors also have an annoying need to express almost every idea in terms of a movie story, as though readers interested in the intricacies of lobbying structures will not be able to grasp what they’re being told unless it’s conveyed as akin to the plot of Basic Instinct.

These flaws aside, this is a fascinating and absorbing book on a very important subject.

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Steve Coulter is Senior Economics and Business Analyst for BBC News, and writes regularly for the BBC News website on UK economic policy. He is also an Associate Fellow of the Social Market Foundation think tank and wrote the SMF’s recent paper on industrial policy, Manufacturing Prosperity. He is currently working on a project on the media’s coverage of the financial crisis with the Journalism School of City University. Steve received his PhD in European Political Economy from the LSE’s European Institute. Read reviews by Steve.

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Posted In: British and Irish Politics and Policy | Economics and the Financial Crisis | Global Politics

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Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported
This work by British Politics and Policy at LSE is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported.