Unnatural Selection

How a politically rigged economic system has been sold to Americans as a force of nature.

By Ed Kilgore

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Winner-Take-All Politics: How Washington Made the Rich Richer—And Turned Its Back on the Middle Class
by Jacob S. Hacker and Paul Pierson
Simon & Schuster, 368 pp.

n their very influential 2006 book, Off Center, political scientists Jacob Hacker and Paul Pierson conducted a persuasive analysis of the dynamics by which conservative theorists and practitioners pulled the Republican Party and then the terms of national debate to the right. Now the duo is back, with a complex analysis of how the U.S. economic system has also moved “off center” toward an extreme concentration of wealth, and how progressive efforts to reverse that trend have run aground against a variety of institutional and political obstacles.

Framed as a “detective story” about how the economy has arrived at the current juncture, Winner-Take-All Politics: How Washington Made the Rich Richer—And Turned Its Back on the Middle Class begins by elucidating trends in the distribution of total income over the last thirty years, in absolute terms and as compared to other wealthy countries, and focusing on the truly rich: the top 1 percent of Americans. This section also forcefully argues that income distribution is not some sort of “natural” phenomenon that government sometimes counteracts (at the cost, we are usually told, of inefficiency), but the product of government policies themselves:

There are no pre-political markets. Markets are inevitably shaped and channeled by political forces, dependent on the rules that are set up and enforced by those who control the coercive power of the state. The laissez-faire vision of the economy held up in the Supreme Court’s 1905 decision in Lochner v. New York [a case that gave its name to an era in which the Supreme Court abrogated a slew of Progressive Era workplace reforms] was a political choice, one with distinct, sometimes brutal consequences, and one that required a great deal of government intervention to emerge and survive.

Hacker and Pierson apply the same principle to the belief, common among Democrats and Republicans alike, that contemporary income inequality is the result of a globalized economy in which education and skills levels are the great dividers. While acknowledging that these assets matter, they stress that the vast majority of Americans who have been losing ground to the super-rich for decades include many well-educated people, and in many respects it is government policies that both promote inequality and fail to counteract it.

The authors explore those policies and the political dynamics in the second part of the book, beginning with the Carter administration and three big fights in Congress (at a time when Democrats controlled both houses of Congress and the White House). What they found was a new level of organization and militancy by the business community in synch with a Republican Party that was rapidly growing more conservative. Two big Democratic initiatives, labor law reform and a new consumer advocacy agency, were defeated; a third, tax reform, turned into a reduction in business and investment taxes.

These unexpected conservative policy victories turned out to be dress rehearsals for the big tax and budget battles in Congress that followed the election of Ronald Reagan in 1980. The growing power nexus of conservative and business interests kicked into high gear, and the fight against the Clinton health care initiative was another great leap forward for the organized right, with the big payoff ultimately being the deregulation of the financial industry in the late 1990s, and then the Bush tax cuts of 2001 and 2003.

It’s in the last third of their book that Hacker and Pierson begin to assess the complicity of Democrats in what they call a “thirty-year war” over the direction of the U.S. economy. While they do score the Donkey Party for some important sins other than fecklessness—most notably support for financial deregulation—their account does not devolve into the standard “populist” account of “betrayal” by the corporate whores of the DLC or the Clinton and Obama administrations. Indeed, they express considerable sympathy that Democrats are outgunned financially and institutionally in Congress. Interestingly, they choose not some DLC type or Blue Dog for the poster child of Democratic complicity in financial deregulation and the subsequent meltdown, but Chuck Schumer, who is an impeccably partisan progressive Democrat on most issues but thinks of Wall Street as a New York constituency group. On this as on many subjects, the authors stress the contrast between the GOP’s ever-increasing ideological unity and the Democrats’ difficulty in reining in election-fearing red-and-purple-state members of Congress along with “Republicans for a Day” (not only the New Yorkers fighting for Wall Street, but the Californians defending tech-industry stock options), who have parochial reasons for voting to defend privilege.

Hacker and Pierson also note how the relatively modest “renewal” efforts of Obama and congressional Democrats have spurred a fierce reaction that has moved the GOP even further to the right and created powerful momentum for economic policies redolent of the pre–New Deal era.

Reagan’s party was more conservative than Nixon’s; Gingrich’s, more conservative than Reagan’s; George W. Bush’s, more conservative than Gingrich’s. The transformation of the GOP, along with its manifest failures as a governing party, finally caught up with it in the 2006 and 2008 elections. Yet, strikingly, this has only made the party more conservative. Neither electoral rebuke nor the economic catastrophe fueled by financial deregulation nor the Democrats’ passage of health-care reform has done anything to shake the party’s commitment to the restoration of the Gilded Age.

On the one hand, GOP leaders appealed openly to bankers for financial support by touting their opposition to financial reform. On the other hand, conservative organizations and leading GOP strategists crafted “populist” commercials and sound bites for voters that described the Democrats’ reform legislation as just another bailout that put taxpayers on the hook for corporate irresponsibility. It’s the political equivalent of having one’s cake and eating it too.

The authors’ prescription for restoring “balance” to the political system and thus to the U.S. economy is reasonable sounding, but hard to envision occurring in the immediate future:

Reversing the stark trend toward economic hyperconcentration at the top will take more than concerted and sustained government action to improve the economic and political standing of the middle class. Political reform geared at diminishing the advantages of the privileged will also be essential. The aims should be threefold: to reduce the capacity of entrenched elites to block needed reform; to facilitate broader participation by those whose voices are drowned out; and to encourage the development of groups that can provide a continuing, organized capacity to mobilize middle-class voters and monitor government and politics on their behalf.

That means, above all, breaking the power of the Senate filibuster; restoring the labor movement’s economic and political power; and creating mass political movements equivalent to the Obama campaign’s organization that can be deployed between elections. These are all laudable, important goals—but with the possible exception of filibuster reform, they probably can’t be achieved in time to help Democrats in 2010 or 2012.

f I had one criticism of this very valuable book, it would be that the authors never quite come to grips with the persistent voter ambivalence about public-sector activism that invariably undermines progressive politics and governance. The Republican resurgence that thwarted the Carter administration and fed the Reagan Revolution was not just the result of more effective mobilization of business interests; it was also facilitated by an acute sense of national decline as stagflation struck the economy and the Iranian revolutionary regime thumbed its nose at Uncle Sam. The Gingrich revolution rose because government seemed helpless to rescue the economy or control the federal budget, and crashed because voters decided that they really did value government to perform services the GOP wanted to abandon.

The Bush tax cuts, an action so momentous that the authors say “[a] senator’s vote on this bill says more about his or her commitment to the middle class than one hundred votes on the minimum wage,” were enacted for reasons other than corporate lobbying. Faced with the unlikely prospect of budget surpluses, Democrats led with their trump card, arguing that they should be used to protect Social Security. Bush’s counter was, “The American people have been overcharged, and on their behalf, I am here to ask for a refund.” This worked because many middle-class Americans in swing states with vulnerable Democratic senators didn’t trust government to do anything positive with their money. TARP and the economic stimulus package, whatever their macroeconomic merits, have produced a similar reaction.

The “thirty-year war” over economic policy has been conducted against a background of post—New Deal declining faith in government to get things right, and all the laudable steps Hacker and Pierson prescribe will only work if that faith is restored. It’s terrible but true that many middle-class Americans would rather let the rich get richer than trust government with a nickel more in tax revenues than they deem essential. Ending “winner-take-all politics” will require an end to “everyone loses” perceptions of activist government.

If you are interested in purchasing this book, we have included a link for your convenience.

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Ed Kilgore is managing editor of the Democratic Strategist and a senior fellow at the Progressive Policy Institute. He is also a special correspondent for the New Republic.  
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