Those of you who read more fiction than I are probably used to this. You’re reading along, convinced—absolutely convinced—you know where the plot is leading, what’s going to happen next. But the plot twists, and all of a sudden, you’re someplace you didn’t expect to be.
I’m reading Winner-Take-All Politics by Jacob Hacker and Paul Pierson.1 They begin by showing just how skewed income distribution is in the United States, not so much between rich and poor but between the extremely rich—as in the top 0.1 percent or top 0.01 percent of the population—and everyone else. Suffice it here to say that this is obscene.
But these two authors are political scientists, not economists. Their real agenda is looking at how this came to happen. I’m not alone in interpreting particularly Federalist No. 10 to mean that this is how the government was designed, that as I have written previously, it was designed to protect the minority interests not of any disadvantaged or stigmatized group, but the property interests of wealthy white male property-owners.2
Hacker and Pierson argue at length that the political system was actually intended to balance political democracy against a tendency for the wealthy to concentrate power. And as they make their argument, I became convinced that they were heading to a point I saw in Joseph Stiglitz’ book, Making Globalization Work, that poorly managed economic globalization undermines political democracy by allowing multinational corporations to pit countries against each other in a race to the bottom for the least labor and environmental regulation and the lowest labor costs.3
Hacker and Pierson might still be headed there. The notion of multinational corporation as free agent might be expected to destabilize the precarious balance that they attribute to the founders’ intent in the U.S. Constitution. But here’s the twist. To set the context, here’s a passage I’ve previously quoted from Scott Sernau:
At the same time [the 1970s], the loss of industrial jobs and declining incomes for the working class created new fears of competition and struggles between workers. Working-class whites felt abandoned by the loss of the progressive New Deal agenda. In particular, they directed their anger and frustration at welfare programs, which they believed rewarded people for not working, and at affirmative action programs, which they feared would limit their own opportunities (Faludi 1991).4
Hacker and Pierson shift the timeline to the end of the 1970s. As they describe the period of time between 1968 and 1977:
In fact, the surge of government activism actually accelerated under Nixon—exactly the opposite of what the conventional story would lead you to expect. Nixon, not Johnson, oversaw the most rapid increase in domestic spending since the New Deal. He signed on to a huge expansion of Social Security, as well as to the creation of a national food stamps program. Nixon also approved the transformation of Old Age Assistance into a much larger and fully national Supplemental Security Income program.
Nixon, not Johnson, signed into law the huge extensions of national regulator policy that marked this period, creating the Environmental Protection Agency (1970), the Occupational Safety and Health Administration (1970), the National Traffic Safety Commission (1970), the Consumer Product Safety Commission (1972) and the Mine Safety and Health Administration (1973). And while Nixon had been forced out of office by the time that the massive Employee Retirement Income Security Act (1974) made it through Congress, his successor, Gerald Ford, signed the bill, which transformed the entire system of employer-provided benefits for workers.5
We don’t get to blame Richard Nixon. Or, for that matter, Gerald Ford. This happened on Jimmy Carter’s watch. As Hacker and Pierson put it, “So cocky were Democrats that they rejected Nixon’s (and later Ford’s) overtures for compromises on a range of issues like welfare reform and health care, anticipating that they would be in a stronger position in 1977.”6
By 1978, at a time of unified Democratic control of the House, Senate, and White House, the precursors of the Reagan revolution were already visible. Congress passed a tax bill whose signature provision was a deep cut in the capital gains tax—a change that would largely benefit the wealthy. This followed hard on the heels of a decision to sharply raise payroll taxes, the most regressive federal levy.7
What Nixon did do was to split the New Deal coalition. “Even as he moved to challenge Democrats from the right on matters of race, culture, and crime, he was convinced that competing for the center required a strong dose of economic populism and a willingness to use government to manage or moderate markets.”8 Hacker and Pierson credit Kevin Phillips for explaining that
it was liberals who had repudiated the New Deal by moving “beyond programs taxing the few for the benefit of the many (the New Deal) to programs taxing the many on behalf of the few (the Great Society).” The main obstacles to Republican inroads among northern blue-collar workers were “[f]ears that a Republican administration would undermine Social Security, Medicare, collective bargaining and aid to education.” If a Nixon administration could “dispel these apprehensions,” it would gain the political loyalties of the white working class.9
- 1. Jacob S. Hacker and Paul Pierson, Winner-Take-All Politics: How Washington Made the Rich Richer—And Turned Its Back on the Middle Class (New York: Simon & Schuster, 2010).
- 2. David Benfell, “A Country Without War,” February 10, 2010. Original at http://www.parts-unknown.org/drupal6/?q=node/1319 Publicly available at http://benfell.livejournal.com/370962.html
- 3. Joseph E. Stiglitz, Making Globalization Work (New York: W. W. Norton, 2007).
- 4. Scott Sernau, Worlds Apart: Social Inequalities in a Global Economy, 2nd ed. (Thousand Oaks, CA: Pine Forge, 2006), p. 320.
- 5. Hacker and Pierson, Winner-Take-All Politics, pp. 96-97.
- 6. Hacker and Pierson, Winner-Take-All Politics, p. 99.
- 7. Hacker and Pierson, Winner-Take-All Politics, p. 99.
- 8. Hacker and Pierson, Winner-Take-All Politics, p. 97.
- 9. Hacker and Pierson, Winner-Take-All Politics, p. 98.
- 10. Dan Balz, “Obama’s debt commission warns of fiscal ‘cancer’,” Washington Post, July 12, 2010. Retrieved from http://www.washingtonpost.com/wp-dyn/content/article/2010/07/11/AR201007… Archived at http://www.parts-unknown.org/drupal6/?q=node/3605
- 11. Paul Krugman, “Attacking Social Security,” New York Times, August 15, 2010. Retrieved from http://www.nytimes.com/2010/08/16/opinion/16krugman.html?_r=1&nl=todaysh… Archived at http://www.parts-unknown.org/drupal6/?q=node/3605#comment-552
- 12. Glenn Greenwald, “The fear campaign and Social Security,” Salon, August 16, 2010. Retrieved from http://www.salon.com/news/opinion/glenn_greenwald/2010/08/16/democrats?u…(Glenn+Greenwald) Archived at http://www.parts-unknown.org/drupal6/?q=node/3605#comment-557
- 13. Dean Baker, “Social Security: The Republicans Are Right,” Truthout, August 23, 2010. Retrieved from http://www.truth-out.org/social-security-the-republicans-are-right62574 Archived at http://www.parts-unknown.org/drupal6/?q=node/3605#comment-583
- 14. Joan McCarter, “The deficit commission’s conservative bias,” Daily Kos, September 2, 2010. Retrieved from http://www.dailykos.com/story/2010/9/2/897540/-The-deficit-commissions-c… Archived at http://www.parts-unknown.org/drupal6/?q=node/3605#comment-602
- 15. Michael O’Brien, “Liberals: We’ll vote down fiscal panel if it hits Social Security,” The Hill, September 30, 2010. Retrieved from http://thehill.com/blogs/blog-briefing-room/news/121857-liberals-well-vo… Archived at http://www.parts-unknown.org/drupal6/?q=node/3605#comment-714
- 16. Dean Baker, “The Wall Street TARP Gang Wants to Take Away Your Social Security,” Talking Points Memo, November 9, 2010. Retrieved from http://tpmcafe.talkingpointsmemo.com/2010/11/09/the_wall_street_tarp_gan… Archived at http://www.parts-unknown.org/drupal6/?q=node/3605#comment-909
- 17. Alexander Bolton, “Pelosi, political left rip proposal from debt commission chairmen,” The Hill, November 10, 2010. Retrieved from http://thehill.com/blogs/on-the-money/budget/128713-pelosi-left-rip-prop… Archived at http://www.parts-unknown.org/drupal6/?q=node/3605#comment-906
- 18. Kevin Drum, “Is the Deficit Commission Serious?” Mother Jones, November 10, 2010. Retrieved from http://motherjones.com/kevin-drum/2010/11/deficit-commission-serious Archived at http://www.parts-unknown.org/drupal6/?q=node/3605#comment-917
- 19. Dean Baker, “Deep-Six the Deficit Commission Report,” New Republic, November 11, 2010. Retrieved from http://www.tnr.com/article/politics/79093/deep-six-the-deficit-commissio… Archived at http://www.parts-unknown.org/drupal6/?q=node/3605#comment-911
- 20. Jackie Calmes, “Deficit Reduction Plan Draws Scorn From Left and Right,” New York Times, November 11, 2010. Retrieved from http://www.nytimes.com/2010/11/12/us/politics/12fiscal.html?_r=1&nl=toda… Archived at http://www.parts-unknown.org/drupal6/?q=node/3605#comment-916