Inequality is the policy

Winner-Take-All Politics:

How Washington Made the Rich Richer—And Turned Its Back on the Middle Class

AS CONGRESS and the White House careened toward an endgame over legislation to approve an increase in the federal debt ceiling in August, it was painfully obvious that almost all of the trillions in “sacrifice” in the plan would come in the form of cuts to programs that benefit working people. Republicans had ruled “off the table” any discussion of tax increases on the rich, and the Democrats had accepted that.

So only a few years after Wall Street crashed the economy, and the government bailed out the bankers to the tune of trillions of dollars, austerity will be enforced on working people. In the midst of jobs and foreclosure crises, the federal government has moved on. No wonder millions of people believe their vote doesn’t count for anything.

To political scientists Jacob S. Hacker and Paul Pierson, the outcome of the debt ceiling fiasco would be a perfect demonstration of the “winner-take-all politics” that is the subject of their book. Winner-Take-All Politics tells the story of how, over the last four decades, federal policy has abetted a transfer of wealth to the richest of the rich, while leaving the rest of us to fend for ourselves.

To them, winner-take-all politics isn’t simply about government failing to promote policies that take the rough edges off the inequality created by a neoliberal economy. It’s about government actively promoting inequality and enacting government policy on behalf of the rich and capital. Commenting on policy toward finance, corporate pay, taxes, and other “winner-take-all” areas, Hacker and Pierson write: “Government put its thumb on the scale, hard. What’s so striking is that it did so on the side of those who already had more weight.”

Calling on the work of economists Thomas Piketty and Emmanuel Saez, they demonstrate how the richest 0.01 percent of the population lives in a world that is increasingly disconnected from the rest of the population—from the merely wealthy on down to the poorest. When including public and private benefits in calculations, the after-tax income of the richest 1 percent of the population increased 256 percent between 1979 and 2006.

Hacker and Pierson marshal many data points to knock down the standard status quo arguments to explain this obscene inequality: what they call SBTC or “skill-biased technological change,” the idea that the twenty-first century economy rewards those with the proper training and education to work in a globalized, technologically driven economy.

Using cross-national comparisons, the authors show that skills and education levels in the United States aren’t significantly different from those in other advanced capitalist countries. The U.S. economy is actually less exposed to the global economy than are many European economies. Yet U.S. income inequality is far more severe than that in Europe or Japan. So after dispatching the “usual suspects,” they end up at their quarry: U.S. government policy.

How did government policy shift so decisively to the right over the last generation? One standard explanation focuses on the crack-up of the Democratic Party’s New Deal coalition during the 1968 election that brought Republican Richard Nixon to power. However, Hacker and Pierson point out that Nixon oversaw the largest increase in domestic spending since the New Deal. “Compared to leaders of today’s GOP—or even many current Democrats—Nixon looks like a full-throated Social Democrat,” they write.

The hard shift to winner-take-all politics can really be pegged to 1978, when Democratic President Jimmy Carter and a Democratic-controlled Congress failed to pass labor law reform, while approving deregulation and a cut in the capital gains tax for business. These Carter policies merely set the table for what became known as “Reaganomics.”

To Hacker and Pierson, the chief explanation for these shifts in the late 1970s and early 1980s was the ability of business to organize itself to adjust to (and to define) “politics as organized combat.” This was the political complement to what this magazine has called “the employers’ offensive” of the era. This paired a more aggressive fight against unions on the shop floor with a concerted effort to bring the organized pressure of business—through political action committees, lobbies, and campaign contributions—on the Washington political process. In other words,

the center of ideological gravity has shifted substantially rightward among political elites. The same has not been true among American voters. Voters are about as likely to identify as conservative as they were a generation ago, and their views on left-right issues have—if anything, since measuring ideology is notoriously difficult—moved leftward.

Yet these popular attitudes have no genuine expression in the current set-up of the U.S. government.

When most people and the media focus on politics, they tend to focus on “the huge shows we call elections, circuses that bring together two broad groups under a red-white-and-blue tent.” But the authors remind us that of all the money that is poured into the U.S. political system, “only a fairly small fraction is directly connected to electoral contests. The bulk of it goes to lobbying—sustained, intense efforts to shape what happens in Washington.”

This explains why elections—like the strong Democratic victory over a discredited Republican Party in 2008—seems to bring no change to the fundamental direction of federal policy. In fact, if President Obama ends up cutting Social Security and Medicare in the way the Bowles-Simpson commission or various other “deficit-reduction” schemes prescribe, he will have accomplished what decades of conservative Republican politicians never dared try.

Not only is this one more piece of evidence of the impact of big business on both major parties, but it’s also a testament to the disorganization of what might be loosely defined as “our” side. Hacker and Pierson are particularly attentive to the far-reaching impacts of the decline of organized labor in the American political economy. They also note that most of the “new advocacy groups of the last generation” are “Washington-based, wholly professionalized, and funded not by dues-paying members but by nonprofit foundations.” This one-two punch has virtually eliminated from the American political system any broad-based advocacy tapping into the power of working people on behalf of working-class issues.

Without that sort of “clout” to pressure politicians (particularly Democratic ones) to address working-class people’s demands, the politicians comfortably adapt to the blandishments of Corporate America. Some Democratic politicians, like Sen. Charles Schumer (D-N.Y.), Wall Street’s gofer in the Senate, get to play “Republicans for a day,” providing key support for the fiscal and regulatory policies that benefit their plutocratic paymasters.

Hacker and Pierson correctly describe the myriad economic and political processes that have brought us to the sorry state of U.S. politics today. But their basically social-democratic outlook gets in the way of fully illuminating the forces at play.

They heap plenty of well-deserved scorn on the Democrats. But they still fall back on a hope that somehow, change depends on New Deal/Great Society Democrats reclaiming their party again. “Today, it means the fate of renewal rests not just on the fortunes of Democrats as a whole but on the balance between these internal factions [i.e., economic liberals vs. conservatives—LS].”

They tend to treat the Democratic Party as a bystander whose politicians try to weigh which interest group they’ll respond to. Yet however lame the Democratic Party appears today, it shouldn’t be forgotten that it is a big business party. It will try to blunt—or make amenable to business—the organized popular pressure that is brought to bear on it.

For instance, during the 2009 health care battle in Congress, the main liberal lobbies in Washington formed Health Care for America Now (HCAN) to lobby for the Obama health care proposal. HCAN became an instrument of the White House to corral support for Obama’s corporate-friendly plan, and to crowd out of the debate any voices for genuine health care reform to its left.

This hope for the Democrats is part of a larger hope that the system can somehow reform itself. They point out what they see as a Catch-22: “that the only viable and defensible route to fixing our broken political system runs through our broken political system.” Perhaps it isn’t surprising that two reform-minded (but not radical) authors would draw this conclusion.

Without minimizing the real challenges that face anyone who wants to change the broken U.S. political system, the authors tend to see change as the product of years of toil in legislative and institution-building vineyards until political conditions allow for this labor to be realized.

But the clearest examples of social change in the last century—the 1930s labor upsurge and the 1960s civil rights movement—were changes that came, in the first instance, from “outside” the mainstream system. These movements forced political change on an unwilling system. Only the kind of shift in an entire political era that a mass movement can bring about has any hope of producing the kind of change the authors want to see.

As our side debates how to create a movement to fight today’s plutocratic politics, Winner-Take-All Politics is a valuable contribution to identifying the disease. But more audacious strategy and action than Hacker and Pierson contemplate will be needed to reach a cure.

Issue #103

Winter 2016-17

"A sense of hope and the possibility for solidarity"

Interview with Roxanne Dunbar-Ortiz
Issue contents

Top story