Review: Jacob Hacker and Paul Pierson – Winner-Take-All Politics

by Henry on September 15, 2010

Available from Amazon Powells .

This is a transformative book. It’s the best book on American politics that I’ve read since Before the Storm. Not all of it is original (the authors seek to synthesize others’ work as well as present their own, but provide due credit where credit is due). Not all of its arguments are fully supported (the authors provide a strong circumstantial case to support their argument, but don’t have smoking gun evidence on many of the relevant causal relations). But it should transform the ways in which we think about and debate the political economy of the US.


The underlying argument is straightforward. The sources of American economic inequality are largely political – the result of deliberate political decisions to shape markets in ways that benefit the already-privileged at the expense of a more-or-less unaware public. The authors weave a historical narrative which Kevin Drum (who says the same things that I am saying about the book’s importance) summarizes cogently here. This is not necessarily original – a lot of leftwing and left-of-center writers have been making similar claims for a long time. What is new is both the specific evidence that the authors use, and their conscious and deliberate effort to reframe what is important about American politics.

First – the evidence. Hacker and Pierson draw on work by economists like Picketty and Saez on the substantial growth in US inequality (and on comparisons between the US and other countries), but argue that many of the explanations preferred by economists (the effects of technological change on demand for skills) simply don’t explain what is going on. First, they do not explain why inequality is so top-heavy – that is, why so many of the economic benefits go to a tiny, tiny minority of individuals among those with apparently similar skills. Second, they do not explain cross national variation – why the differences in the level of inequality among advanced industrialized countries, all of which have gone through more-or-less similar technological shocks, are so stark. While Hacker and Pierson agree that technological change is part of the story, they suggest that the ways in which this is channeled in different national contexts is crucial. And it is here that politics plays a key role.

Many economists are skeptical that politics explains the outcome, suggesting that conventional forms of political intervention are not big enough to have such dramatic consequences. Hacker and Pierson’s reply implicitly points to a blind spot of many economists – they argue that markets are not ‘natural,’ but instead are constituted by government policy and political institutions. If institutions are designed one way, they result in one form of market activity, whereas if they are designed another way, they will result in very different outcomes. Hence, results that appear like ‘natural’ market operations to a neo-classical economist may in fact be the result of political decisions, or indeed of deliberate political inaction. Hacker and Pierson cite e.g. the decision of the Clinton administration not to police derivatives as an example of how political coalitions may block reforms in ways that have dramatic economic consequences.

Hence, Hacker and Pierson turn to the lessons of ongoing political science research. This is both a strength and a weakness. I’ll talk about the weakness below – but I found the account of the current research convincing, readable and accurate. It builds on both Hacker and Pierson’s own work and the work of others (e.g. the revisionist account of American party structures from Zaller et al. and the work of Bartels). This original body of work is not written in ways that make it easily accessible to non-professionals – while Bartels’ book was both excellent and influential, it was not an easy read. Winner-Take-All Politics pulls off the tricky task of both presenting the key arguments underlying work without distorting them and integrating them into a highly readable narrative.

As noted above, the book sets out (in my view quite successfully) to reframe how we should think about American politics. It downplays the importance of electoral politics, without dismissing it, in favor of a focus on policy-setting, institutions, and organization.

First and most important – policy-setting. Hacker and Pierson argue that too many books on US politics focus on the electoral circus. Instead, they should be focusing on the politics of policy-setting. Government is important, after all, because it makes policy decisions which affect people’s lives. While elections clearly play an important role in determining who can set policy, they are not the only moment of policy choice, nor necessarily the most important. The actual processes through which policy gets made are poorly understood by the public, in part because the media is not interested in them (in Hacker and Pierson’s words, “[f]or the media, governing often seems like something that happens in the off-season”).

And to understand the actual processes of policy-making, we need to understand institutions. Institutions make it more or less easy to get policy through the system, by shaping veto points. If one wants to explain why inequality happens, one needs to look not only at the decisions which are made, but the decisions which are not made, because they are successfully opposed by parties or interest groups. Institutional rules provide actors with opportunities both to try and get policies that they want through the system and to stymie policies that they do not want to see enacted. Most obviously in the current administration, the existence of the filibuster supermajority requirement, and the willingness of the Republican party to use it for every significant piece of legislation that it can be applied to means that we are seeing policy change through “drift.” Over time, policies become increasingly disconnected from their original purposes, or actors find loopholes or ambiguities through which they can subvert the intention of a policy (for example – the favorable tax regime under which hedge fund managers are able to treat their income at a low tax rate). If it is impossible to rectify policies to deal with these problems, then drift leads to policy change – Hacker and Pierson suggest that it is one of the most important forms of such change in the US.

Finally – the role of organizations. Hacker and Pierson suggest that organizations play a key role in pushing through policy change (and a very important role in elections too). They typically trump voters (who lack information, are myopic, are not focused on the long term) in shaping policy decisions. Here, it is important that the organizational landscape of the US is dramatically skewed. There are many very influential organizations pushing the interests of business and of the rich. Politicians on both sides tend to pay a lot of attention to them, because of the resources that they have. There are far fewer – and weaker – organizations on the other side of the fight, especially given the continuing decline of unions (which has been hastened by policy decisions taken and not taken by Republicans and conservative Democrats).

In Hacker and Pierson’s account, these three together account for the systematic political bias towards greater inequality. In simplified form: Organizations – and battles between organizations over policy as well as elections – are the structuring conflicts of American politics. The interests of the rich are represented by far more powerful organizations than the interests of the poor and middle class. The institutions of the US provide these organizations and their political allies with a variety of tools to promote new policies that reshape markets in their interests. This account is in some ways neo-Galbraithian (Hacker and Pierson refer in passing to the notion of ‘countervailing powers’). But while it lacks Galbraith’s magisterial and mellifluous prose style, it is much better than he was on the details.

Even so (and here begin the criticisms) – it is not detailed enough. The authors set the book up as a whodunit: Who or what is responsible for the gross inequalities of American economic life? They show that the other major suspects have decent alibis (they may inadvertently have helped the culprit, but they did not carry out the crime itself. They show that their preferred culprit had the motive and, apparently, the means. They find good circumstantial evidence that he did it. But they do not find a smoking gun. For me, the culprit (the American political system) was like OJ. As matters stand, I’m pretty sure that he committed the crime. But I’m not sure that he could be convicted in a court of law, and I could be convinced that I was wrong, if major new exculpatory evidence was uncovered.

The lack of any smoking gun (or, alternatively, good evidence against a smoking gun) is the direct result of a major failure of American intellectual life. As the authors observe elsewhere, there is no field of American political economy. Economists have typically treated the economy as non-political. Political scientists have typically not concerned themselves with the American economy. There are recent efforts to change this, coming from economists like Paul Krugman and political scientists like Larry Bartels, but they are still in their infancy. We do not have the kinds of detailed and systematic accounts of the relationship between political institutions and economic order for the US that we have e.g. for most mainland European countries. We will need a decade or more of research to build the foundations of one.

Hence, while Hacker and Pierson show that political science can get us a large part of the way, it cannot get us as far as they would like us to go, for the simple reason that political science is not well developed enough yet. We can identify the causal mechanisms intervening between some specific political decisions and non-decisions and observed outcomes in the economy. We cannot yet provide a really satisfactory account of how these particular mechanisms work across a wider variety of settings and hence produce the general forms of inequality that they point to. Nor do we yet have a really good account of the precise interactions between these mechanisms and other mechanisms (see here for more on this).

None of this is to discount the importance of this book. If it has the impact it deserves, it will transform American public arguments about politics and policymaking. I cannot see how someone who was fair minded could come away from reading this book and not be convinced that politics plays a key role in the enormous economic inequality that we see. And even if it is aimed at a general audience, it also challenges academics and researchers in economics, political science and economic sociology both to re-examine their assumptions about how economics and politics work, and to figure out ways better to engage with the key political debates of our time as Hacker and Pierson have done. If you can, buy it.

{ 62 comments }

1

Russell L. Carter 09.15.10 at 8:10 pm

Ok, I have already ordered it on the basis of Drum’s almost embarrassing praise, but his account causes me to ask one question:

What exactly is new here that has not already been discussed endlessly by the Left Business Observer crew? And as others have recently complained, more or less ignored by anyone to the right of them.

And your account, Henry, prompts another:

Why, exactly is there no smoking gun? For instance? All you have to do here to answer my query is to anticipate a specific Tyler Cowen objection.

2

Henry 09.15.10 at 8:23 pm

Russell – I’m an enormous fan of Doug Henwood et al. and an LBO subscriber. What I’d say is provided by Hacker and Pierson is a more systematic account of the underlying mechanisms. To put it a different way – I think that you would have to do a fair amount of conceptual work to turn the LBO account into social science (the ideas are there, but they are not trying to figure out the kinds of conditional relationships that social scientists are interested in). Hacker and Pierson are writing for a general readership, but the clues as to the conditional relationships are there (and are more explicitly developed in the _Politics and Society_ special issue intro that I linked to a few months ago). That said, I would _love_ to see Henwood write a mid-length history of the boom and what went before, and would enthusiastically pimp it in all ways available to me.

As for the ‘why no smoking gun’ – to have that, you would really need to have the outlines of a map of the relationship between US politics and the US economy. You don’t have that in political science for a variety of reasons (some to do with the vagaries of ‘Americanist’ political science, others to do with the insistence of comparativists interested in the US in treating it as a free market system even when it isn’t). So while I think they have damning evidence that the US political system is _set up_ to promote the interests of business and the rich in ways that any reasonable person would expect to promote inequality, I don’t think that they have the final proof that this _is_ the major cause of inequality. They have caught Professor Plum in the library with a very guilty expression on his face, but they haven’t yet found the candlestick.

3

Russell L. Carter 09.15.10 at 8:50 pm

All right fair enough. I look forward to confirming my biases.

4

geo 09.15.10 at 9:02 pm

I’m sure it’s a terrific book, as were Hacker and Pierson’s previous ones. But like Russell above (and, I suspect, others below), I’d want to see credit given to others as well: David Cay Johnston, Kevin Phillips, William Greider, and the Multinational Monitor. When you write that “a major failure of American intellectual life” is that “there is no field of American political economy,” perhaps you mean “a major failure of American academic life”?

5

johann tor 09.15.10 at 9:08 pm

Could you be so kind and point an interested layman to some of those ‘detailed and systematic accounts of the relationship between political institutions and economic order’ for the euro countries?

6

Ahistoricality 09.15.10 at 9:37 pm

there is no field of American political economy

That’s really weird. Because I’m an Asianist, I missed it, I guess. Political economy is a standard genre in Asian studies, even for scholars that aren’t really economists or political scientists: the analysis of social and cultural institutions, their reflection in the political sphere and the influence of political and social difference on economics are pretty standard stuff.

7

Omega Centauri 09.15.10 at 9:39 pm

My copy arived last night, but I only had time to read the first ten pages or so. I think the objections expressed here are the lack of rigour that would be needed by a professional analysis. I really doubt you can have both academic rigour, and general public impact. I don’t think we have time for an academic analysis to filter out into the general public, we need to begin reversing the trend now, not ten years from now. I think the argument among the general public probably has more relevance to the process of changing the overall dynamic.

My main concerns are, (1) How accessible to a lay audience is this stuff really? and (2) if the book lives up to the claims, how can we get centrists and conservatives to digest the material? I think only a tiny percentage of conservatives belong to the super-wealthy elite, but they have been played by the ideology to enable this change to take place. Getting some of them to discover that fact would be the best way to initiate change.

Originality. Probably not, at least in terms of pieces of the puzzle are well known. But, a synthesis that puts it all together into a coherent narrative could be very valuable.

8

John Quiggin 09.15.10 at 10:10 pm

Tim Noah has quite a good series running at Slate, which covers various explanations of rising inequality and basically supports Hacker and Pierson.

9

LFC 09.15.10 at 10:13 pm

The hunt for causal mechanisms, and for the precise specification of how these mechanisms operate to produce outcomes, is the holy grail of one kind of social science. That the book apparently falls short in this area probably is not going to upset the ‘general reader’ too much.

Re “drift”: from your description, this sounds like it results from legislative gridlock, procedural features of the system, etc. So do the authors propose procedural reforms that would address this problem? (Btw I happened to hear P.Orszag, former OMB director, being interviewed last night by Charlie Rose: Orszag said the US political system in his view is “dysfunctional.”)

10

bob mcmanus 09.15.10 at 10:18 pm

Can I be the first to refer to the last Thesis on Feuerbach? Richard Seymour is already organizing to resist Cameron, and not waiting for “a decade or more of research.” Do you think the science you achieve will finally end the class struggle forever?

1) With all due respect, and I am completely sincere, this feels like JQ’s struggles over the last few years that led him write his book, and Krugman’s “How did we forget Keynes? Why did we ignore Minsky?”, and what I am hearing is the same “But we lack the microfoundations, the math, the rigour.” that has been apparently been some mainstream academic project since the early 80s. And I have long thought that this framing of the problem is the problem, is as geo says, “a major failure of American academic life”

2) As for “what happened” and “hoocodanode”, I do notice Kevin Drum highlights a different aspect of his book in his first bullet point that you don’t:”In the 60s, at the same time that labor unions begin to decline, liberal money and energy starts to flow strongly toward “postmaterialist” issues: civil rights, feminism, environmentalism, gay rights, etc” Now here I could go in several directions, the post-1968 European turn, Stuart Hall and his followers and critics. I do not consider 40 years of Anglo-European analysis and controversy irrelevant or useless, as little as I might understand it. The question is not why we have greater inequality than Europe, the question is why have they been able to maintain competing organizations longer than America. “The rich have money” is not the answer.

3) I can drop names too. They are Legion. The UMKC and Bard crowds, whose economics certainly have political aspects. Hudson, Hardt & Negri, Hedges.

Look, whatever. Neo-Liberalism. Organize. Welcome aboard.

11

Akshay 09.15.10 at 10:21 pm

Henry@2: But what would a candlestick look like in this case? Are you thinking of concrete inequality increasing legislation? I think in practice we will find death by a thousand cuts. (So apologies for the loooong comment)

Let’s start with these reports by Public Citizen, which follow the campaign finance money. One of them follows the money for the campaign against the estate tax to a total of 18 families worth over ten billion dollars on average. This campaign would benefit the top 0,25% of the US population at the expense of a hundred billion dollars a year. Here, surely, the dagger has been lifted and the Screech!Screech!Screech! music from Psycho is playing in the background? In the Case of the Bush Tax Cuts for the Super Rich, my Holmesian intuition suggests we will find that the same suspects have left their fingerprints on the bent lead pipe.

As for the revolver, it can be traced to billions of lobbying and campaign finance money paid by the financial sector. I will read Zombie Economics for the details, which for financial instruments are beyond my ken, but it seems pretty clear that the FIRE sector has increased inequality. Bill Black has mentioned large scale semi-legal fraud as a mechanism. What else to call Goldman Sachs selling products designed to fail? The current bail outs appear a straightforward case of taking our money and giving it to them. Jon Stewart explains a particular money printing system here.

For even larger scale causes, we have known since Ricardo and Marx that collective bargaining helps workers. So the weakening of unions through political decisions must have had a wage-depressing effect. The weakening of union power has also left executives free to decide their own pay and add the zeroes they deserve.

So as an honest question, what specific proof do you want? The mechanisms seem reasonably well understood by experts. Do you want gory details? A synthesis? Numbers? Perhaps you are looking for econometric/statistical evidence. That would be very hard, since cross-country comparisons are iffy and the proposed mechanisms, especially concerning the balance between union and management power, and financial “fraud”, are impossible to model quantitatively. The probable weakening of labour bargaining power because of the technological/political process of globalization is another big question and hard to model.

12

More Dogs, Less Crime 09.15.10 at 10:22 pm

Drum references “What’s the Matter With Kansas?”, but Andrew Gelman (and I believe Bartels) have shown there are some faulty assumptions going into that book. Kansas has been heavily republican for many decades, well before the demise of labor unions. And it is the rich rather than the poor who vote based on cultural issues.

13

More Dogs, Less Crime 09.15.10 at 10:25 pm

This also reminds me of what Will Wilkinson calls the “Inequality Road to Serfdom“.

14

Daragh McDowell 09.15.10 at 10:32 pm

I’ve ordered my copy too. I have one quibble with your review –

“If it has the impact it deserves, it will transform American public arguments about politics and policymaking.”

Pardon me, but when in the last 30-odd years has America ever had a proper ‘argument’ about politics and policy-making beyond the most craven and banal blathering about the horse race. Moreover, given that the corporate oligarchies that control most of the US media make up a significant section of the organisational pressure groups Hacker and Pierson criticise, why would they be in favour of a public debate on the authors’ terms?

Having the book despatched post-haste to Ireland at considerable expense. Better be worth it cuz! :)

15

bob mcmanus 09.15.10 at 10:33 pm

But it should transform the ways in which we think about and debate the political economy of the US.

I got goose pimples.

I wander among rage, frustration, confusion, and finally more than a little bit of pity for y’all here at CT. I’ll ban myself.

16

Akshay 09.15.10 at 11:09 pm

In support of Bob Mcmanus@10: I am sure Henry does not wish to discourage action and his love of ‘more analysis’ is an academic virtue! But we should also emphasize that we do know enough to take action, just as in the case of (passive) tobacco smoking or global warming. Emphasizing doubt merely strengthens the case for inaction, indeed it is a strategy for strengthening the case for inaction, as Naomi Oreskes has investigated

Take the case of tobacco. Why was there so much emphasis on large scale epidemiological studies on the harm of passive smoking? The causal story of how tobacco smoke contains lots of known carcinogens is quite simple. I suspect that the emphasis is a result of the power of the tobacco lobby. To battle it, one needs to construct knowledge so detailed, you can only escape it by entering the parallel universe. That construction is a worthwhile contribution, but it’s not that the case for action was weak before the detailed studies. The case that money corrupts American politics to loot the people and aid the super-rich is very strong already and widely believed. Does anyone like Wall Street?

17

Salient 09.15.10 at 11:10 pm

I wander among rage, frustration, confusion, and finally more than a little bit of pity for y’all here at CT. I’ll ban myself.

whoa, I think you’re reading the word “should” in the wrong way… not as in the mechanic’s “there, this should fix the problem” but as in the somewhat more exasperated “in a sane world, this should be the definitive word on the topic”

18

burritoboy 09.15.10 at 11:44 pm

“We cannot yet provide a really satisfactory account of how these particular mechanisms work across a wider variety of settings and hence produce the general forms of inequality that they point to. Nor do we yet have a really good account of the precise interactions between these mechanisms and other mechanisms (see here for more on this).”

I would suggest that this level of understanding is essentially impossible. We simply can’t know how politics and economics work in this detailed of a sense. It’s actually worse than requiring that we understand politics and economics separately, we actually would need to understand them together.

Further, there is a severe informational problem: when we are talking here about organizations, we’re talking about corporations / large firms, and private associations. These types of organizations deliberately are extremely opaque, to the point where even most of the participants within the organizations are intentionally fed misleading data. In general, we cannot create a sociology of the corporation or any precise understanding of an internal labor market within a large firm – firms under study will not have the data (corporate politics is completely unrecorded), destroy what data they do have and intentionally mislead any investigators.

19

Laurel 09.16.10 at 12:19 am

burritoboy, you’re missing the fact that scholars in most other regions really have made significant efforts to dig out that data and consider the distinctive ways in which the countries they study shape their economies. American political scientists have not. American political economy simply isn’t a part of American political science: there are neither classes nor dissertations on it. And Ahistoricality is right that that’s really weird. Nevertheless true.

20

djw 09.16.10 at 1:40 am

Henry (and others who’ve read it): how would evaluate this book’s appropriateness and accessibility for undergraduates?

21

shah8 09.16.10 at 4:15 am

ok uh…

slavery?

It drove veto point sensibility into institutions when they are formed.

It determined economic growth patterns in the country, and dictated a labor conscious sensibility that was never wiped out by the transportation revolution as it had in other first world countries.

It created ready made social memes that undermined the class consciousness of different groups and also created a rather extreme acceptance of psychological warfare. This made for a rather closed society within and without, which made revolutionary upheaval kinda hard to achieve. No fear of revolution means no ownership of bad events. If people don’t have to own bad events, the top end of the society eventually devolves to an aristocracy, which is usually the most inefficient form of government.

eh, theories, theories. All I’m really saying is that the original sin probably holds the greatest explanatory power for the difference between the US and Western Europe.

22

cripes 09.16.10 at 5:22 am

We do know enough to conclude the oligarchy has usurped the feeble electoral democracy, captured the judiciary and regulatory agencies, and out organized and propagandized opposing civil institutions on a massive scale, leaving just a shadow play of puppeteers that passes for a national discourse. Really, there are some things that don’t require more evidence to be deemed true.

This period will go down in history as one of the most evil , deluded, violent and shameful episodes of western “civilization.” That, gentlemen, is quite an accomplishment.

23

alex 09.16.10 at 7:57 am

“Hacker and Pierson’s reply implicitly points to a blind spot of many economists – they argue that markets are not ‘natural,’ but instead are constituted by government policy and political institutions.”

Fack me gently. If that’s news, no wonder you’re all screwed. But what do I know, I’m just a sarcastic troll.

24

Harald Korneliussen 09.16.10 at 8:31 am

Regarding the (lack of) work of American academics about figuring out the institutions which shape the economy… I admit I don’t quite understand what such research looks like for my country, for instance. What about Robert A. Dahl’s studies of New Haven? Would that be something like it? If so, since Dahl is very much an American academic, was there not more work done in that direction?

About the “alibis” of the other suspects in the case of increased inequality, I read almost exactly the same in “The Spirit Level”.

25

Robert 09.16.10 at 9:00 am

The absence of academic work among economists in the USA on these topics, except in certain outposts, might have something to do with periodic purges (e.g, at Harvard, Rutgers, and Notre Dame).

I think of both major media firgures and academic economists as producing
propaganda, nonsense, and lies. Vile multimillionaires (e.g., Harold Luhnow,
Antony Fisher) have been paying them to do this for decades.

The mainstream economic textbook treatment of income distribution lacks both empirical and theoretical backing. This has been known for about 50 years. I haven’t read any Krugman textbooks, but I find it hard to believe he addresses my favorite issues.

26

Smoking Gun 09.16.10 at 11:29 am

There are several scenarios with unwanted outcome where there will be no smoking gun linking the outcome to a specific individual or organisation. One such type of scenario is the stampede. If someone is crushed to death in a stampede you will in most cases not have anyone in the crowd to blame. You may identify what caused the stampede – it may have started because of the smell of smoke. It may have started because someone heard that the pop star was in the other end of the corridor.

In the scenario described in this book I would not expect to find a smoking gun since I would not expect the current situation to be the result of one will or a single plan (or conspiracy). I would only expect to find that those with an interest in changing the existing regulations of the market used their resources in order to push for these regulations to be changed. Since those with resources have a reason to establish organisations in order to voice these goals, such organisations will be formed. Those who want change will try to use all organisations they are part of to push this change.

So you have a stampede running over existing regulations, and you have observed that all those running in that stampede each had their own individual (although of same kind) interest in moving in that direction. Why do you look for a smoking gun? Do you really think there is an identifiable OJ the smoking gun could point to? Looking for smoking guns is only usefull if you want to analyse the herd of people stampeding as one body with one will. You may find some individuals being more active than others and funding several organisations, but the main picture is a herd of already wealthy stampeding to the low tax no regulation nirvana of even more personal wealth. I find that this search for smoking guns will only bring you away from the facts and not closer to truth.

27

Roger Albin 09.16.10 at 12:23 pm

For anyone who wants an excellent summary of the primary evidence and the analysis, Hacker & Pierson have a very nice review article in Politics & Society. Readily accessible online; http://pas.sagepub.com/content/38/2/152.full.pdf
This is an impressive analysis.

28

Antonio Conselheiro 09.16.10 at 12:37 pm

Drum lists four points. I think that #3 (wekaening of unions without anything replacing them) and #4 (the Democrats give in and become neoliberals) are results of the first two.

The first fruit of #2, the wellfunded and determined rightwing political and public-opinion machine, was the election of Reagan, and since 1981 government has been actively and passively anti-union, and strong unions were always symbiotic with union-friendly friendly government.

#1, the flow of liberal energy into postmaterialist politics, has ended up meaning that the left advocates a piecemeal hodgepodge of competing single issues without uniting behind a party which can actually win these issues. This is presumably an outcome of the 1968 battles, when much of the left came to hate Democrats and unions, and conversely. As it developed, single issues less threatening to the right did rather well (gay rights, women’s rights, multiculturalism, and the easy part of environmentalism) whereas the more threatening ones (labor, equality, war and peace, and tougher environmentalism) did poorly. It became increasingly tempting to dedicate oneself to issues where “something can be accomplished” instead of hopeless issues. Furthermore, those engaged in the less threatening issues remained socially acceptable and did not have to end up as pariahs and outcasts.

I’ve wondered incidentaly whether what used to make moderate and liberal Republicans Republicans was specifically their anti-labor committments. Many were liberal only on social issues and sometimes war and peace (e.g. Hatfield and Packwood in Oregon) but conservative on fiscal and economic issues.

In effect, part of the liberal coalition ditched the other part, as we see with NARAL, Log Cabin Republicans, and genteel environmentalist groups. Or to put it differently, the liberal coalition ceased to exist. And the Democrats responded to this. (Liberals, of course, often really are well off elitists with predominantly cultural political interests, or whose economic interests are really Republican).

29

Henri Vieuxtemps 09.16.10 at 1:13 pm

The case, as presented in the post, seems so obvious that I don’t understand why anyone would need a “smoking gun”.

30

Horach 09.16.10 at 1:36 pm

Can I just add the main the reason for income inequality, the one we never discuss?

The rise of distributed ownership.

Overwhelmingly, the new superrich are formed come from investment bankers, fund managers and corporate executives.

All people formed out of the rise of pension funds and ‘lazy’ investors. When investors are lazy, and never vote against executive pay, or payments to bankers, it goes up. A lot.

I really really wish people would think about this reason a lot more.

31

Anderson 09.16.10 at 1:48 pm

Off topic, why is Chris Bertram such a touchy bastard?

Like no one reading this blog would be able to talk about what they’ve done with a philsophy degree?

32

Daragh McDowell 09.16.10 at 1:51 pm

@Anderson – did you say something nice about Nick Clegg? That might have set him off.

33

Henry 09.16.10 at 2:28 pm

Anderson – please don’t use terms like ‘bastard’ – I don’t imagine that you want to give offense but it probably doesn’t help the general tone of discourse. And I think that Chris’s decision to shut down discussion on that post is an entirely reasonable one. I’ve no particular objection meself to hundreds-of-comment threadwars as long as they don’t get in the way of more serious discussion (e.g. I knew that when I posted on Gambetta and engineers again, it would likely get some people roused up for the obvious reasons). But it’s pretty obvious where that debate was going to go, and it wasn’t going to be to anywhere very pretty.

34

Anderson 09.16.10 at 2:35 pm

But it’s pretty obvious where that debate was going to go, and it wasn’t going to be to anywhere very pretty.

That seems to give CT readers very little credit. But presumably your evaluation of your blog’s readers is more accurate than mine.

And sorry, “touchy bastard” is a term of art, I thought ….

35

Daniel 09.16.10 at 2:53 pm

Shorter: limousine liberals.

36

y81 09.16.10 at 2:56 pm

I find Mark Lilla’s analysis much more persuasive. No doubt, markets are constituted by political institutions and policies, but politics is driven by culture. A dramatic increase in individualism has led Americans away from unions, towards greater disparities in corporate pay, towards more sexual nonconformity, away from unhappy or unfulfilling marriages, away from academic study of a uniform canon, towards churches which offer a personal relationship with Jesus Christ, towards having “My Way” played at their cremations, etc.

37

Tom 09.16.10 at 3:01 pm

How much attention do Hacker and Pierson pay to changes in tax policy? It seems to me that a vastly under-described reason for the increase in observed inequality over the past thirty years has been changes in tax policy, specifically (1) the decreases in marginal tax rates beginning in 1981, (2) expanded use of the S-corporation pass-through entity from 1982, and (3) the general changes, culminating in the Tax Reform Act of 1986, that greatly reduced a corporation’s ability to take deductions for non-business employee expenses. Any analysis that fails to take into account those incentives for paying money out as taxed cash compensation rather than as untaxed in-kind compensation in looking at an increase in observed inequality strikes me as incomplete, but most people don’t know enough about tax policy to even look in its general direction.

38

Henry 09.16.10 at 3:05 pm

On this here post.

(1) My criticisms of the book should be taken as friendly ones, and certainly not as an implicit suggestion that they should have waited ten years before publishing it. They are criticisms that the authors (I think) would agree with at least in part – Hacker and Pierson observe that one of the reasons for skepticism of the ‘politics did it’ case is that “there has yet to be a systematic accounting of the full range of things that American public officials have done (or, in some cases, deliberately failed to do) to propel the winner-take-all economy” and “To be sure, it is sometimes difficult to know exactly what the effects of these rules are. But there’s no question that these rules, taken together, have a massive cumulative impact.”

So I read the book as having both a message to the public and a challenge to research. I have no doubts that the book is right – but then, like many others in this comment section, I was already persuaded of its case. And the alternative claim – that this radical form of inequality jest naturally growed and has _nothing to do_ with government seems to me to be the kind of hopeless argument that only a libertarian economist could love. But the book is not only a statement of a case – it is an invitation and a challenge to _do the work_ of actually mapping these relations out in a more systematic way. So what I am doing, since CT has a largely academic readership, is picking up on the challenge more – seeing the book as an effort to kickstart a serious debate – and serious follow-up work – over the medium run, as well as to reshape the public debate in the US. If the book has the impact that it deserves to have, it will do both.

George – This is indeed more a failure of the academy than of public life – but I also think that the kinds of sustained and systematic work that academics can do are necessary to public life, and that the lack of this has vitiated this debate. When libertarians can point to systematic findings, and people who care about market inequality cannot, it makes it harder to maintain the political case.

johann – Wolfgang Streeck’s new book on Germany is a good example. Not that I agree with everything he says.

omega centauri – if you want to view the book as simply a popular commercial press book, it is way, _way_ above the usual bar. But its strength in my eyes derives from its ability to take arguments from the academic literature and to repurpose them in plain and forthright language for more general discussion. And from its originality – this is not just a synthetic work. The claims about policy drift as a mechanism of change are important.

Akshay – econometrics is too much to ask for (although I _would_ be interested to see some indicative research combining e.g. some proxy for business power, however crude, with say Tsebelis’ veto-points data). They do provide some quantitative data on the tax code, suggesting that it has a considerably bigger impact on inequality than is usually realized. But what I’m looking for in the long run is, as noted, a rough mapping out of the relations between politics and the economy across different branches of government and sectors. This would allow us better to map out the ways in which government policy contributes (or, perhaps in some areas, alleviates) inequality.

bob mcmanus – What Salient said. More trivially, your repeated departures and returns from this blog’s comment section are getting a bit reminiscent of Status Quo ‘last’ tours. You do have a couple more chords though …

Roger Albin is right. And the entire “special issue”:http://pas.sagepub.com/content/38/2.toc is still on-line, and has lots of good stuff responding to Hacker-Pierson, with them responding in turn to their critics.

39

Henry 09.16.10 at 3:06 pm

bq. I find Mark Lilla’s analysis much more persuasive. No doubt, markets are constituted by political institutions and policies, but politics is driven by culture.

When I hear the word culture I reach for my power-based analysis … More seriously – read the Neil Fligstein piece in the _Politics and Society_ special issue I just linked to.

40

Henry 09.16.10 at 3:08 pm

bq. That seems to give CT readers very little credit. But presumably your evaluation of your blog’s readers is more accurate than mine.

I wouldn’t presume that – but when I saw Chris’s post, my immediate prediction was that the section was going to quickly degenerate into commenters slagging off philosophers, and philosophers getting outraged. I was betting on the ‘more fries’ joke coming up by #5, but didn’t expect it to be the very first one …

41

Henry 09.16.10 at 3:09 pm

Tom – the short answer is _lots of attention._

42

geo 09.16.10 at 4:18 pm

the kinds of sustained and systematic work that academics can do are necessary to public life, and that the lack of this has vitiated this debate. When libertarians can point to systematic findings, and people who care about market inequality cannot, it makes it harder to maintain the political case

Thanks, Henry, this sounds plausible enough — and I don’t want to derail substantive discussion of the book, so feel free to postpone discussion of this question to another occasion — but I’m not sure I accept the implications of “systematic” (or its cousins, “rigorous” and “adequately conceptualized”). As I and others above have pointed out, the Nader-derived organizations and many other independent scholars, journalists, and activists have been making these same points, with plenty of evidence and rigor — more than enough of both to underwrite citizen action, legislation, and judicial decision-making — for a long time. Arguably the main contribution of academic economists and political scientists to civic debate about these matters has been to manufacture doubt about radical criticism, in something like the way (though not nearly so blatantly, of course) that corporate-funded scientific research does in the cases of tobacco, pollution, GM foods, climate, etc.

(For an example, see the new issue of Boston Review, where Lawrence Lessig sensibly decries the effects of the Citizens United decision, and Will Wilkinson’s response is essentially: “No controlled studies, nyah, nyah!”)

I admit that this suspicion of academe may have everything to do not only with ignorance (I’m a statistics virgin) but simple ressentiment (I wish I had tenure). Not to mention long observation of Chomsky’s total lack of influence on academic IR. And of course, as acknowledged above, this may not be the occasion …

43

ebenezer smooth 09.16.10 at 5:12 pm

Ahistoricaliy and Lauren

But that’s the point isn’t it. People from elsewhere are products of culture but we’re modern, our culture is a product of us. Ain’t freedom grand. Cogito ergo sum.
We’re free because we say so. This goes double for academics.

44

Anon 09.16.10 at 5:41 pm

Economics does do political economy but it shies away from these big picture ideas – Alesina, etc. all do political economy. I always assign “When is life too costly to save?” in environmental economics, which looks at the implicit value of life in various EPA regulatory decisions. Its much more (like in everything) that the public face of economics doesn’t recognize the insights from this political economy work, and it doesn’t worm itself into the key accepted doctrines all economists accept. I think the power and money based explanations for that are right on. Economics departments have an ingrained fear of moving towards left political economy becuase of the history of purges in the field. Right based political economy, Buchanan’s public choice, is all good.

Notice I am writing this anonymously becuase of I have a well-founded suspicion that left sympathies would harm my tenure chances.

45

Ahistoricality 09.16.10 at 6:10 pm

Ebeneezer (#43): yeah, I realized that shortly after I posted the comment. We are the default; everyone else is the exception.

It still doesn’t make sense: there are long-standing political positions with regard to the relationship between regulation and business, with regard to trade policy and business, with regard to business size and profitability, with regard to corporate culture and efficiency (surely the importation of “Japanese” methods in the 80s and 90s wasn’t a mere accident?) very little of which has been, as near as I can tell, tested despite the insatiable desire of untenured faculty for juicy projects in new areas.

46

alex 09.16.10 at 6:25 pm

@31 – One of the reasons why Chris Bertram is a touchy *ahem* gentleman is that he’s a professor of philosophy at one of the UK’s more elite HE institutions, and it pains him to be confronted with suggestions that he’s not, thus, a champion of the downtrodden.

Either that, or he just doesn’t like sarcastic trolls.

47

someguy 09.16.10 at 6:37 pm

The PDF was pretty weak.

Just breaking down the union section regarding CEO compensation and trying to come up with some numbers->

http://cep.lse.ac.uk/pubs/download/dp0720.pdf

So 18% union decrease x 10% less CEO pay for union firms = 1.8% difference?

Ok I am not sure what the fairest counterfactual number would be but the above seems like the right starting place.

The finance section was worse.

Overall a lot of airy counterfactuals that can only convince the already resolutely convinced.

More Dogs, Less Crime,

Will Wilkinson is great. What style! Plus I agree with what he wrote!

48

Jerry Miner 09.16.10 at 7:06 pm

No field of American political economy? What then is the Journal of Political Economy?
What is it that the faculty of various schools and programs dealing with public policy and public administration (e.g. Kennedy School, Maxwell School, etc. ) are teaching and researching about if not political economy?
Perhaps Henry can explain what he is thinking of when he contends that we lack a field of American political economy.

49

Henry 09.16.10 at 7:50 pm

bq. Q: No field of American political economy? What then is the Journal of Political Economy?

A: A journal that publishes precious little on the American political economy.

bq. Q: What is it that the faculty of various schools and programs dealing with public policy and public administration (e.g. Kennedy School, Maxwell School, etc. ) are teaching and researching about if not political economy?

A: They are teaching public policy and public administration. These are quite different from political economy.

If you want to see what an American political economy might look like, it is worth reading some of the literature e.g. in comparative political economy – this “syllabus”:http://psweb.sbs.ohio-state.edu/courses/syllabus%20project/ps735/ps735_Brooks_sp02.pdf found via Google is as good a place to start as any.

50

JM 09.16.10 at 8:35 pm

A dramatic increase in individualism has led Americans away from unions, towards greater disparities in corporate pay

Is that what happened? Because what I remember was an unceasing drumbeat of private propaganda to the effect that unions were the same thing as the mafia and salaries are set by a rational market, which alone can value all things, and that furthermore the only alternative was Communism, which at first was scary because it was so powerful, then rewritten to be scary because it was so weak.

Marketing, not culture, established the new norms necessary for the acceptance of a more stratified America.

When I think of people who lack the initiative and courage to stick up for themselves through organization, the last word that comes to mind is “individualist.”

51

JM 09.16.10 at 8:38 pm

… the effects of which private propaganda can be seen in the only negative review so far:

THE SAME IDEAS KARL MARX ADVOCATED 100 YEARS AGO.

52

Henry 09.16.10 at 8:58 pm

George – A lot depends on what you take as your starting point for useful forms of knowledge. I recognize that social science cannot neatly isolate many of the interesting and important causal relations determining politics and society- but I also think that its emphasis on control, testing against alternative explanations etc is extremely intellectually valuable. And often the solution to the deployment of social science to pooh-pooh inconvenient arguments is more social science. Wilkinson is right to point out that there is only weak evidence of linkages between campaign donations and roll-call voting – but the literature on interest groups emphasizes that much of the important action goes on in determining which issues get to be voted on, and which do not, which helps maintain the kinds of stability and drift that Pierson identifies (most lobbyists are more interested in maintaining the status quo than trying to upset it). Here, campaign donations do plausibly play an important role. More generally, Frank Baumgartner, who is the key figure in this literature concludes a “very useful recent review of the debates on group influence”:http://www.unc.edu/~fbaum/articles/Baumgartner_OUP_Handbook_of_Groups_2009.pdf.

bq. Assessing the roles of groups in affecting what policymakers in Washington hear about is sobering because it is so apparent that the group system amplifies the voices of many corporate actors and virtually shuts out millions of Americans, as Schattschneider noted so forcefully. The massive mobilization of resources to save “Wall Street” but which ignored “Main Street” in the 2008 financial bail-out is a case in point. However, the political system is not made up only of interest groups, and politicians must reflect broader interests as well. There is certainly nothing in the interest group system to suggest accurate representation of the views and concerns of all Americans. Thus, understanding the processes described here has theoretical and great practical importance as well.

53

y81 09.16.10 at 10:33 pm

@39: I read Fligstein, but wasn’t impressed. First of all, the part about how the Obama administration is going to change the capital gains treatment of carried interests rings a little hollow. The part about how the Great Recession has trimmed the wealth of the top tier undercuts Hacker’s and Pierson’s claim about the primacy of politics. And it doesn’t appear, as of this morning’s WSJ, that the Bush tax cuts are going to be allowed to expire.

Leaving that aside, I agree with Fligstein that there have been changes in the culture and behavior of the executive suites, and that those changes have led to higher executive compensation. But the most he shows is that the government did little to prevent those behavioral changes, which by itself is an inadequate explanation of the changes. There are a lot of things the government doesn’t prevent (e.g., women walking around New York City topless), but not all of those things happen.

Finally, it simply isn’t true that the government has done nothing to rein in executive compensation. Bill Clinton campaigned on this issue, and the Clinton administration induced Congress to enact Internal Revenue Code Section 162(m). It would be a good exercise to read this Code section, and a few dozen post-162(m) executive compensation plans. The SEC is also very active in mandating disclosure of executive compensation and perks. The real issue is why these and other government actions have so little effect.

54

alex 09.17.10 at 7:39 am

THE SAME IDEAS KARL MARX ADVOCATED 100 YEARS AGO.

Well, with that level of chronological ignorance, we’re not going to get anywhere, are we?

55

Anderson 09.17.10 at 3:33 pm

I was betting on the ‘more fries’ joke coming up by #5, but didn’t expect it to be the very first one …

When I was getting my B.A. in philosophy, all of us made that joke, and variants on it (“would you like me to advise you on the existential implications of having fries with that?” etc.).

Perhaps American philosophy students have a better sense of humor.

56

david 09.17.10 at 11:56 pm

“Hacker and Pierson’s reply implicitly points to a blind spot of many economists – they argue that markets are not ‘natural,’ but instead are constituted by government policy and political institutions. If institutions are designed one way, they result in one form of market activity, whereas if they are designed another way, they will result in very different outcomes. Hence, results that appear like ‘natural’ market operations to a neo-classical economist may in fact be the result of political decisions, or indeed of deliberate political inaction.”

I haven’t thought of Gomer Pyle in quite a while.

What libertarian cited rigor are you talking about? I’m probably one of those misguided weenies who the post-modern left pulled away from rigorous causal proving work, but then again, I don’t need more information to conclude that OJ is guilty.

57

Tom 09.18.10 at 10:27 pm

Hmm. Ok if there is an argument for studying “political economy”, but I thought some reasons for growing inequality in the U.S. are easy to understand. In my own case having a good job with an aerospace Fortune 500 allows me 401(k)’s, flexible spending accounts, untaxed medical insurance premiums, stock options, and with some extra income the ability to use Roth IRA’s. All this allows me to starve, delay or deny the tax bogeyman. My neighbors, self employed or working for less generous firms, don’t get to share in this. After 20 to 30 years it adds up to a significant difference in savings.
So, some really meaningful tax breaks go to those who are already doing well. The tax codes are full of special treatments.

58

Cory 09.20.10 at 2:28 am

No quibbles with the review, as I’ve not read the book, but it was intriguing enough to get me to put in an order for it at my local bookstore – can’t wait.

59

jsmith 09.20.10 at 5:46 am

So the rich use their money to buy government. Is this news? I though Mancur Olson said it all long ago.

60

burritoboy 09.20.10 at 6:14 pm

“We do know enough to conclude the oligarchy has usurped the feeble electoral democracy, captured the judiciary and regulatory agencies, and out organized and propagandized opposing civil institutions on a massive scale, leaving just a shadow play of puppeteers that passes for a national discourse. Really, there are some things that don’t require more evidence to be deemed true.”

The problem is that the term “oligarchy” is doing too much work here. There may be many different kinds of oligarchy – many countries may all conceivably be oligarchies, but their respective oligarchies may be extremely different in character. An oligarchy composed of landed aristocrats may be quite different from an oligarchy composed of corporate executives, for example. And oligarchies could have extremely widely variation in quality – it’s probably true that Showa Japan and modern-day Japan are both oligarchies, but the earlier regime was indescribably worse than the current one.

Without a serious understanding of what oligarchy means, we also won’t know what to do to transform an oligarchy into another regime. What things would we need to change? The needed changes may again be very different in different kinds of oligarchies (removing land from titled aristocrats versus removing ownership of natural resources from Russia’s kleptocracy, etc). If we understand these things wrongly, we will attempt reforms that will fail.

61

burritoboy 09.20.10 at 6:39 pm

“So the rich use their money to buy government. Is this news? I though Mancur Olson said it all long ago.”

But that only tells us very limited things. There may be many different kinds of rich people, who do very different things. There may well be rich people who oppose other rich people’s attempts to buy the government (i.e., there might be rich people who disagree about the ends or means or character of other rich people). What “buy the government” means is also a very vague phrase. It might mean a vast array of things from wanting minor regulatory changes to the single wealthiest person in a country running the nation explicitly as a brutal personal dictatorship.

In fact, we can even say that it’s likely that simple economic class does not translate into political action very well. If you’re a wealthy billionaire who’s an adherent of, say, Jacob Viner – you (probably) believe that Viner’s economic ideas will make both yourself wealthier as well as the nation/the world/ the economy wealthier, etc. If you’re a wealthy billionaire who’s an adherent of Eduard Bernstein – you might equally well believe that Bernstein’s economic ideas will both make yourself more happy (if not perhaps technically wealthier) as well as making the nation / the world / the economy wealthier or more happy.

It’s by no means obvious how the billionaire’s economic class will impact his political economy ideas. There seems to me to be very little predictable about it: obviously, the billionaire will not intentionally want to make himself less happy, but “less happy” may encompass almost anything. “More happy” certainly has included many instances where billionaires gave away much (or all) of their wealth to religious or political or educational or charitable or artistic causes. “More happy” certainly has included numerous instances where wealthy people wasted their entire fortunes on various addictions.

Finally, it may be very deceptive to view “rich people” as operating uniformly. The group of “Swedish small-business owners” may operate very differently from “British hedge fund managers” or “Russian kleptocrats”, even though all three are probably wealthy by most plausible descriptions.

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burritoboy 09.20.10 at 6:47 pm

“I agree with Fligstein that there have been changes in the culture and behavior of the executive suites, and that those changes have led to higher executive compensation. But the most he shows is that the government did little to prevent those behavioral changes, which by itself is an inadequate explanation of the changes.”

But it’s relatively straight-forward to argue that the cultural change in the executive suite was something probably endemic to society as a whole (and that’s why the government would do nothing about the effects of that cultural change – because the government itself also believes those changes to be positive). Fligstein sometimes does argue that the change was driven by the internal needs of the firm, but also sometimes argues that the change was driven by change in the general society’s understanding of the economy (or the world more generally).

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