Winner-Take-All Politics

"Winner-Take-All Politics puts complex economic ideas into language that we understand. It takes a fresh look at the increase in inequality over the last 30 to 40 years. Why are the economic scales tipping in favour of the richest among us? How did this happen? He pinpoints a series of public policy decisions – not some faceless scientific market force, but decisions made by individuals and institutions that resulted in this very lopsided economy that we’re in right now. Support Five Books Five Books interviews are expensive to produce. If you're enjoying this interview, please support us by donating a small amount . I think this book is required reading because it helps folks understand why the union movement is taking such a beating. Is it because Americans don’t want unions? No. Every poll says they want them. But why don’t they get them? Because of money in politics. The needs of the average citizen are slow to be met because of the overwhelming influence of the wealthiest people and corporations. I don’t think the book uses the term, but it describes America’s slide toward plutocracy. It’s not just the bill we pass, it’s the bill we don’t pass, the actions we neglect to take. We have corrective tools like antitrust laws. But unless the judiciary or attorney general do something about market concentration, power will continue to concentrate and people will take their profits to buy the favour of those who will do things to their liking. Unfettered unions, easy-to-access job markets, low interest, excellent education, a robust middle class with a retirement to look forward to, and competition based on price and quality not trickery."

"There’s a lot of moving parts to this book. I have to say that when I first read it, I wasn’t as blown away by it as some other people were. At a micro-level, I don’t think they’ve fully nailed down the economics of what they’re talking about. But the more I’ve thought about it, the more I’ve come to appreciate some of their conceptual insights. The American political system is resistant to change in a very literal sense. It’s just difficult to pass laws. We have many different branches of government, and a lot of diffusion of power. Consequently, we have what they call a policy drift. Things change in the world – things that have caused income to tend to concentrate at the top. There are some very natural responses to that. We should have stepped up progressive taxation, and we should have introduced certain reforms to our financial system and to our intellectual property laws. In a lot of other countries, it’s relatively simple to implement those kinds of reforms. You need to win an election, form a government, and then you write some laws for a while. But in America it doesn’t work that way. Even defeated minorities have this enormous ability to block change, as we saw in the first few years of President Obama’s administration. The situation can keep drifting and drifting over time, and then it starts to feed back on itself. As wealth becomes more and more concentrated at the top, the wealthy have more and more influence over the political system, and it becomes more and more difficult to dig us out of this spiral of inequality. Yes, but also the slow accumulation of these kinds of problems. The underlying economy changes, but the politics don’t change to lean back against it. That in turn changes the political system, and then the political system starts to undermine the traditional sources of power – labour unions and other things that provided a counterweight to wealthy individuals. So then you have more change in the economy, more change in the politics. All countries are somewhat susceptible to this. But in America – even when we have breakthrough, populist electoral moments – the way Congress works makes it difficult to translate those election gains into major reforms. You have the possibility of what’s going on now – you have a brief reform moment and you get some very important things done. But you don’t come close to accomplishing everything that was on the list, and then the backlash comes. There are always things that can be done. This particular book doesn’t have all the answers, and neither do I. But I do think that just trying to understand the situation better helps. To some extent, when the Democrats came in in 2009 they didn’t have the best understanding of what had happened to American politics and to the American economy. They weren’t quite prepared, on a tactical level, to understand what the roadblocks were that they needed to get rid of. There’s never an easy way to defeat the power of the powerful. That’s what makes them powerful. Progressive change is necessarily difficult. But it’s made easier if you understand the situation correctly. And I think the Hacker-Pierson book is really crucial for that – for understanding what the nature of the problem is. It’s had a huge impact among people who are inclined to read and talk about books. I’m not sure how far that goes in Washington. Unfortunately, one of the problems with becoming a powerful politician is that you don’t really have time to read anything. But its importance is definitely not just an idiosyncratic inclination of mine. Everyone has been reading it. Everyone has been writing and talking about it. I should also point out that Jacob Hacker was one of the major intellectual movers behind what became the healthcare reform law, the signature achievement of the Obama era. These are people who have the capability to make a difference, but the timing isn’t quite right for it just yet. I hope so."

"This book is about rising inequality and it traces back to fundamental causes. I like books that get back to ultimate causes and that think like social scientists about these causes. The question is, ‘Why is inequality getting worse in so many different countries?’ This book particularly focuses on the US. There are a number of traditional answers, but the most prominent among them is this idea that in a modern economy there is a skill bias in technical change. Our computers and communications have led to a winner-take-all society, where only the really smart can make money. Everyone else is technologically obsolete, with all these computers that are replacing people. It is, I think, a very important theory. But Hacker and Pierson point out that it doesn’t really fit the recent data. In the US, we’ve seen a rapid concentration of wealth at the extreme high end. The top tenth of a per cent of the top hundredth of a per cent of the population is getting wealthy very fast. They point out that this is not true in Europe, and yet the economies are very similar and growing at similar rates. If the technology is the same, why would there be a difference at the extreme high end? And they argue that the answer is really political. There have been political changes in the US that allow the extreme high end to garner more wealth. Ultimately, it represents a failure of our society to take account of the fact that the extreme high end can lobby and can organise for its own interests, and we’ve let it happen. Yes – and there is very little concrete talk about addressing it. It’s a very difficult problem. You might think that in a system of majority voting, the middle class and the poor would dominate and would prevent this kind of inequality from developing. But it hasn’t been that way. It’s been even less so that way lately, especially in the US. And once again, we have to attribute that to some change in our zeitgeist, in our way of thinking about what people view as important. That’s an underlying theme in all of these works, going back to Adam Smith. I don’t think he uses the word inequality very much, but it is about poverty and the alleviation of poverty. In Adam Smith, of course, the wealthy tend to be the kings and lords… They did have some wealthy business people. That’s an interesting question: In the 18th century, who were the super-rich? It doesn’t call to mind any famous, super-wealthy business people. Isn’t that a line from the movie Wall Street ? Gordon Gekko? That’s what Adam Smith is talking about in the Theory of Moral Sentiments . This is the dialogue. You’re right to use that very direct phrase to summarise the question. The idea of medieval Christians was that greed is a positive, unadulterated evil, and you must go to confession every time you have this feeling. But it led to a more advanced knowledge. We are people, and we have certain psychological traits and emotions, some that we call greed, that are programmed into us by forces of evolution. We are greedy in a way. So are all the other animals. I watch birds fighting over food, they’re greedy and they fight each other. But they usually don’t seem to get into too bad a fight. That’s a thing that develops in society and we have to understand it. But greed, in our language, is actually a name for excessive self-centredness. So it is, by definition, bad. But some degree of self-interest is just part of our society. I’m actually writing another book now with George Akerlof, where we want to get into some of these issues, but it won’t be out for years… The question that has always bothered people is whether society is really optimising our spiritual life, our sense of community, in the optimal way. There may be some nudges that we need, even if we remain in a capitalist system, and I think this is what Akerlof and I are trying to get at. We have to understand human psychology; we have to accept an impulse towards selfishness, which is the reality. We cannot change that. It’s through millions of years of evolution that this has come. And yet, we do have an engineered environment. Our economy is an invention, a reaction to past crises and depressions, and we can try to coordinate it. We can’t change people’s emotions, so part of what we do is we tolerate greedy behaviour, within limits. If it follows certain rules, and if there’s a certain integrity that underlies it, we tolerate it. These are deep issues that interest me a lot. And what do these people do with the billion dollars? That’s the question. What can anyone do with a billion dollars except give it away? I’m referring to Bill Gates’s Giving Pledge, going to billionaires around the world and telling most of them to give it away. My parents raised me as a Methodist, but my Sunday school teacher complained I had a chip on my shoulder. I thought he was a moron, so I wasn’t very good at Sunday school. I didn’t think much of the preachers. But I suppose I have spiritual feelings. I think the year was 1958, when I was 11 years old, or maybe a little after that. I read Galbraith’s The Affluent Society and it had a great impact on me. It talks about deep issues: We have rapidly growing wealth, but what is it doing for us? I don’t know that I agree with him, but there’s some element of truth to what he says, that we end up being manipulated by marketers and corporations, who try to create demand for things we don’t need. Yes, I think that’s right."

"It lays out the critique that Occupy Wall Street is making. It’s a critique which liberal democrats and union people have been making for a while now – that the political system [in America] works well for those who have a lot of money but poorly for most others. It lays out a theory as to why we have the tax policy we have, and why income shares have gotten more unequal over the last two decades. It’s a scholarly but well-written book by two liberal political scientists. It’s really trickled down – it gets talked about on television and written about on op-ed pages. Get the weekly Five Books newsletter It’s a very detailed study of the lobbying techniques, think tank pressures and ideas that led to the status quo that the Occupy movement is objecting to. It includes intellectual ammunition that someone who wants to make a case against the 1% would need to have. It really backs up the slogans that you hear in Zuccotti Park and elsewhere about the system being rigged against working people."