From Broadland to Richistan

I’ve written other posts about 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.  But their book is so significant that I believe it is worth revisiting.

The big story of the past 30 to 35 years, according to the two political scientists, is not just how income has been redistributed upward to the top 10 percent of income earners.  It is even more the story of the top 1 percent, the top 1/10th of 1 percent and the top 1/100th of 1 percent.

During the 30 or so years following World War Two, they say, the United States was what they call Broadland.  There was income inquality, but income rose for all groups, rich and poor, at roughly the same rate.  During the past 30 or so years, they say, the U.S. has been Richistan.  The top income groups have progressed, but the majority have stood still or, by some measures, fallen back.

Why?  They claim it is a result of government policy – not just reductions in tax rates for the top income earners, but policies which allowed corporate executives and financiers – managers of other people’s money – to milk the system for their own benefit, while holding down the wages and salaries of the middle class.

They say this has happened under Democratic and Republican administrations, and is going on today under the Obama administration.  The reason is that the leaders of the upper class have been able to organize in their own interests more effectively than the leaders of the working class and middle class. Corporate and Wall Street interests have become increasingly assertive and sophisticated in asserting their interests, moving the Republican Party to the right while neutralizing the Democrats.

Winner-Take-All Politics has brief sketches of the hard-charging Senator Gramm, the Texas Democrat-turned Republican, who pushed aggressively and successfully for deregulation of the financial markets, and of Senator Chuck Schumer, the New York Democrat, who raises millions of dollars for his party from Wall Street, and has quietly derailed reforms, such as ending special tax breaks for hedge fund managers.

Labor unions, the only organized force that represents the economic interests of working people as a whole, have declined in power, partly as the result of laws such as the Taft-Hartley Act, the Landrum-Griffin Bill and state right-to-work laws.

Other organizations broadly representative of the middle class such as the American Legion (which was responsible for the G.I. Bill of Rights) and fraternal and civic organizations such as the Elks, Masons and Eagles.

How income has been redistributed upward

Jacob S. Hacker and Paul Pierson, in Winner-Take-All Politics: How Washington Made the Rich Richer and Turned Its Back on the Middle Class, point out how almost all the income gains in the United States have flowed to the top income earners.

Income gains are concentrated at the top

This divergence was much less outside the United States.