Sunday, November 04, 2012

Justin Trudeau & The Middle Class: Justin, read Winner-Take-All Politics if you are serious

My advice to Justin Trudeau and his team if he is serious about standing up for the middle class, is to buy a copy of Winner-Take-All Politics: How Washington Made the Rich Richer — And Turned Its Back on the Middle Class by political scientists Jacob Hacker and Paul Pierson.

The authors talk about their findings in  an interview earlier this year with Bill Moyers – click  here to see the  interview.

The full transcript of the Moyers' interview is to be found here, and is worth reading, as well.

Summary of the book:

The merge-left blog describes the work of these two scientists this way:

How, in a nation as wealthy as America, can the economy simply stop working for people at large, while super-serving those at the very top? Through exhaustive research and analysis, the political scientists Hacker and Pierson — whom Bill regards as the “Sherlock Holmes and Dr. Watson” of economics — detail important truths behind a 30-year economic assault against the middle class.

Who’s the culprit? “American politics did it– far more than we would have believed when we started this research,” Hacker explains. “What government has done and not done, and the politics that produced it, is really at the heart of the rise of an economy that has showered huge riches on the very, very, very well off.”

Bill considers their book the best he’s seen detailing “how politicians rewrote the rules to create a winner-take-all economy that favors the 1% over everyone else, putting our once and future middle class in peril.”

Extract from the Moyers' interview:

This extract from the transcript gives a good flavour of the interview:

Bill Moyers: Our once and future middle class is in trouble. Their share of the nation’s income is shrinking, while the share going to the top is growing. Wages are at an all-time low as a percentage of the economy, and chronic unemployment is at the highest level since the Great Depression, but the richest Americans now hold more wealth than at any time in modern history.

This gross inequality didn’t just happen. It was made to happen. It was politically engineered by powerful players in Washington and on Wall Street. You can read how they did it in this book, Winner-Take-All Politics, by two of the country’s top political scientists, Jacob Hacker and Paul Pierson.

They were drawn to a mystery every bit as puzzling as a crime drama: How Washington Made the Rich Richer—and Turned Its Back on the Middle Class.

Quote: “We wanted to know how our economy stopped working to provide prosperity and security for the broad middle class.” And that’s what you saw.

Paul Pierson: I think a lot of people know that inequality has grown in the United States. But saying that inequality has grown doesn't begin to describe what's happened. The metaphor that we had been using lately is if you imagine a ladder, with the rungs in the ladder, and you think, "Okay, well inequality's growing. So the rungs are getting further apart from each other."

That's not what's happened in the United States. What's happened in the United States is that the top one or two rungs have shot up, you know, into the stratosphere while all the other ones have stayed more or less in place. It's really astonishing how concentrated the gains of economic growth have been.

Jacob Hacker: You know, the startling statistic that we have in the book is that if you take all of the income gains from 1979 to 2007, so all the increased household income over that period, around 40 percent of those gains went to the top one percent. And if you look at the bottom 90 percent they had less than that combined.

And it is not just a one or two year story. I mean, we've seen a terrible economy over the last few years. And the last decade is now being called "The Lost Decade" because there was no growth in middle incomes, there was no, there was an increase in the share of Americans without health insurance, more people are poor. So there was a terrible ten years.

But we were actually looking at the last 30 years, and seeing that the middle class had only gotten ahead to the extent that it had because of families working more hours.

So this is a story that isn't just about those at the top doing much, much better. But is, also, we found, a story about those in the middle not getting ahead, often falling behind in important ways, failing to have the same kinds of opportunity and economic security that they once had.

Bill Moyers: Let's take a look at just how dramatic the inequality is. You have a chart here. I'm not an astute reader of charts, but this one did hit me. What are you saying with that chart?

Jacob Hacker:  It says how much did people at different points on the income ladder earn in 1979 and how much did they earn in 2006 after adjusting for inflation?

It exploded at the top. The line for the top one percent, it's hard to fit on the graph because it's so much out of proportion to the increases that occurred among other income groups including people who are just below the top one percent. So, that top one percent saw its real incomes increase by over 250 percent between 1979 and 2006. Yeah. Over 250 percent.

Paul Pierson: And actually, even this graph-- we couldn't find a graph that fully describes it because even this graph actually really understates the story. Because it—

Bill Moyers: Understates it?

Paul Pierson: Understates it.

Bill Moyers: I mean, this is pretty powerful. When I looked I thought it was a showstopper.

Paul Pierson: Okay, so well, if you really if you really want the showstopper you have to go one step further because that big increase is for the top one percent. But the real action is inside the top one percent. If you go to the top tenth of one percent or the top hundredth of one percent, you know, you would need a much bigger graph to show what's happening to incomes for that for that more select group. Because they've gone up much faster than have incomes for just your average top one percent kind of person.

Bill Moyers: But we've all known for a long time that the rich were getting richer, and the middle class was barely holding its own. I mean, that was no mystery, right?

Jacob Hacker: Oh, it is. It's a mystery when you start to look beneath the familiar, common statement that inequality has grown. Because when you think about rising inequality, we think, "Oh, it's the haves versus the have-nots." That the top third of the income distribution, say, is pulling away from the bottom third.

And what we found is it's not the haves versus the have-nots. It's the have-it-alls versus the rest of Americans. And those have-it-alls, which are households in say the top one-tenth of one percent of the income distribution, the richest one-in-a-thousand households are truly living in an unparalleled age.

Since we've been keeping records on the incomes of the richest from tax statistics in the early 20th century, we never saw as large a share of national income going to the richest one-in-a-thousand households as we did just before the great recession.

Their share of national income quadrupled over this period, to the point where they were pulling down about one in eight dollars in our economy. One-in-a-thousand households pulling down about one in eight dollars in our economy before the great recession began.

Bill Moyers: You set out to try to solve three mysteries: who done it, who created the circumstances and conditions for the creation of a winner-take-all economy. And your answer to that in one sentence is?

Jacob Hacker: American politics did it far more than we would have believed when we started this research. What government has done and not done and the politics that produced it is really at the heart of the rise of an economy that has showered huge riches on the very, very, very well off.

Bill Moyers: It's the politics, stupid?

Jacob Hacker: Exactly.

Bill Moyers: How did they do it?

Paul Pierson: Through organized combat is the short answer.

Bill Moyers: And why did they do it?

Jacob Hacker: Because they could. Because the transformation of political organization, the creation of a powerful, organized business community, the degree to which that was self-reinforcing within both parties has meant that politicians have found that they can on issue after issue cater to the interests of the very well off while either ignoring or only symbolically addressing many of the concerns that are felt by most Americans and get reelected and survive politically.

It is uncomfortable reading for anyone who works for one of our major political parties. The lesson to be learned is that we are all guilty. We all participated and participate in the distortion of our democracy in ways which result in a substantial degrading of democratic rights, and an increasingly massive democratic deficit.

If Justin Trudeau really wishes to fight for the middle class, he will have to adopt policies which remedy these deficits and stop this rot.

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