The Politics of Inequality

Winner-Take-All Politics: How Washington Made the Rich Richer—And Turned Its Back on the Middle Class
by Jacob Hacker and Paul Pierson
Simon and Shuster, 2010, 357 pp.

TWO AND A HALF YEARS AGO, in the midst of economic collapse, it seemed as if the long era of Republican political dominance might be coming to an end. Economic crises have often preceded political change. The trauma of the Great Depression led Democrats to use government to restore economic security. In the 1970s, the failure of liberal economic policy to solve the problems of inflation and unemployment produced conservative victories and an emphasis on deregulation, tax cuts, and attacks on the government.

The economic disaster of 2008 should have discredited the GOP’s free-market ideology and undermined its claims of competence. Yet despite the massive economic collapse and the continuing stagnation—unemployment has been 9 percent or above for twenty-two months with little sign of improvement on the horizon, foreclosures have forced millions of Americans out of their homes, and for the typical family real incomes have fallen precipitously—the wealthiest Americans, among them many of the people whose actions brought about the collapse, continued to benefit from Republican “competence.” In 2009, the average income of the top 5 percent of families went up while everyone else’s went down.

In his pathbreaking 1984 book The New Politics of Inequality, Tom Edsall warned about “a major shift in the balance of power in the United States,” reflecting an erosion of political influence “of the bottom half of the economic spectrum” and a significant increase in the political cohesion and effectiveness of the wealthy. Edsall traced the conversion of the Democrats to more business funding and the decline of labor and working-class voting. He predicted that “as long as the balance of political power remains so heavily weighted towards those with economic power, national economic policy will remain distorted regardless of which party is in control of the federal government.”

The imbalance in power and its “distorted” effect on policy that alarmed Edsall twenty-seven years ago was a small tumor compared to the metastasized cancer that now threatens our democracy. Jacob Hacker and Paul Pierson’s Winner-Take-All Politics is the best book on the American political economy since Edsall’s. It is also the essential guide to how the United States went from New Deal egalitarianism—in the thirty years after the Second World War the incomes of the poorest 20 percent of American families actually increased a bit faster than the income of the richest 20 percent—to our present day American plutocracy.

Hacker and Pierson begin by summarizing the stunning inequality in the United States. From 1979 until the Great Recession, the top 1 percent of Americans received 36 percent of all gains in household in...