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September 17, 2014
Wednesday, May 14, 2014

US politics is a game of winner takes all

Former US president George W. Bush continued with the neoconservative policies of previous presidents by making big tax cuts.
Thomas Picketty’s new book explains how wealth return is greater than growth and how 40 years of neoliberal capitalism has made the rich richer and the poor poorer

NEW YORK — Income inequality has grown so much in the US since the mid-1970s that it is hardly news. Thomas Picketty’s new book, Capital in the Twenty-First Century, an economy work of almost 700 pages, ranks number three on The New York Times bestsellers list and number one on Amazon’s, where only pre-orders are accepted because the book is out of print. Liberals praise the French professor’s documented detail of how wealth return is greater than growth, creating a system that automatically makes the super-rich richer and the middle and lower classes poorer. Conservatives laugh at his proposal of a global tax on wealth (real assets) and progressive higher taxes for higher incomes.

Hype aside, Picketty’s book has got virtually only great reviews. Like his previous work, also in collaboration with the French economist based in Berkeley Emmanuel Sáez (he has now added the help of Anthony Atkinson, Facundo Alvaredo, Gilles Postel-Vinay, Jean-Laurent Rosenthal, and Gabriel Zucmán among other scholars: a global research team), his focus is the interpretation of figures. However (and against the conviction of Karl Marx, properly alluded to), there is something else intertwined in the dynamics of the system that Picketty’s describes.

Slavojiek wrote in The Guardian that, after the collapse of the socialist world and the failure of the US to become the one and only superpower, different centres of global capitalism have been born. “In the US, Europe, China and maybe Latin America, too, capitalist systems have developed with specific twists: the US stands for neoconservative capitalism, Europe for what remains of the welfare state, China for authoritarian capitalism, Latin America for populist capitalism,” he wrote.

Neoliberal capitalism has its specific features: winner-takes-all politics, which Jacob S. Hacker (professor at Yale) and Paul Pierson (Berkeley) have branded as the most relevant, responsible not only for the end of prosperity, but for potentially undermining a main concept of the US Revolution such as the Founding Fathers outlined in the Declaration of Independence: all men are created equal.

You study, you work hard, and you don’t form a family until you have a solid base: you will succeed. That seems to be untrue: 23 percent of US nationals hold a university degree, take low wages in the stagnated labour market and postpone having children just to be entangled by debt — beginning by the student loans they took to pay for skyrocketing tuition. Only the educated rich get richer.

In their 2010 book (which quotes Piketty’s work of 2003, the prequel of his Capital), Hacker and Pierson blame US politics for the change of the tide that, after decades of prosperity “broadly distributed up and down the income ladder,” following World War II, the gains of an economic growth that has not stopped, have gone down to the one percent, and in even more stunning figures, to 0.1 and 0.01 percent.

The Perspective of Winner-take-All Politics: How Washington Made the Rich Richer and Turned its Back on the Middle Class, which is being discussed again, sees politics as an “organized combat,” and emphasizes “the role of organized interests in shaping large-scale public policies that mediate distributional outcomes.” Inequality is not just a consequence of global capitalism: it is the decision of Capitol Hill and the White House, sponsored by corporations that have worked both with Republicans and Democrats. “Winner-take-all inequality is substantially rooted in fundamental shifts in four core areas of US public policy — related to financial markets, corporate governance, industrial relations, and taxation — that have been powerfully driven by this political-organizational transformation,” they propose.

Profits have become concentrated among the richest one percent after remaining stable during the presidencies of John F. Kennedy/Lyndon Johnson, Richard Nixon/Gerald Ford and Jimmy Carter. The curve goes dramatically up during the years of Ronald Reagan and George Bush, and continues up and up during Bill Clinton’s two terms, just until the end, when it goes down a little. But promptly George W. Bush signed into law the tax cuts. The curve has continued upwards ever since.

The triumph of neoconservative capitalism was the combination of “serious declines in economic performance and corporate profitability in the 1970s that fuelled doubts about existing policy arrangements” and “galvanized conservatives and business elites,” explain the political scientists. An example: by the beginning of the 1970s, 175 corporations had registered lobbyists in Washington; one decade later, 2,445 did. The trend continued: in 2013, there are 12,341 registered lobbyists, according to OpenSecrets.org.

Voting is not only optional in the US: it is also — according to Larry Bartels, Vanderbilt University, author or Unequal Democracy — an exercise of ephemeral attention. And policy matters require long-term dedication. “These are struggles that involve drawnout conflicts in multiple arenas, extremely complicated issues where only full-time, well-trained participants are likely to be effective, and stakes that can easily reach hundreds of billions of dollars.”

At the same time, the other organized groups that could serve as a counterbalance — unions — shrank. By the mid-1950s, more than one-third of US workers were unionized; fifty years later, only 12.3 percent (and even less, 7.2 percent, in the private sector) were.

Now ordinary voters not only lack bargaining-power to get better wages but they lost a source of policy-shaping information, and they mostly have to rely on media campaigns, another reinforcement of the need for money in politics.

“If the politics of electoral spectacle is about winning elections, the politics of organized combat is about transforming what government does,” Hacker and Pierson point out the roots to the current scenario of inequality. Few actors have access to that battlefield. Conspicuously, the top of the now widely debated top one percent are at the same time those that receive most (military contractors executives, bankers, corporate managers) and those who spend the most in lobbying.

Ten million households make up the one percent. And 16,000 taxpayers are the top of that elite. And then there are the rest of US citizens, a country of 318,000,000 people.

@gesq
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