Winner-Take-All Politics: how America's super-rich got so much richer

Paul Pierson and Jacob S. Hacker's Winner-Take-All Politics is a fascinating attempt to explain the broadening gap between the rich and the poor in America. Starting with the orthodox economist's view that political action — laws, policies and regulation — are insufficient to explain the enormous gains made by the richest Americans and the falling away of the rest of the pack (especially the decline in the fortunes of the middle- and upper-middle-classes), Piersen and Hacker take a much closer look at the politics of wealth distribution.

What follows is a number-dense (but highly readable) fine-tooth-comb examination of the policies that effect the wealth of the super-rich — the 1% and higher whose share of America's wealth has ballooned to kleptocratic heights since the 1970s. In this close-up view, the authors uncover the subtle (and not-so-subtle) ways in which Congress tilted the playing field.

Mostly, this consists of creatively doing nothing: for example, not pegging the minimum wage to inflation, but inflation-indexing the alternative minimum tax (which means that the workforce whose labor provides wealth to the nation's CEOs take an inflationary pay-cut every year, while the middle-class find their taxes creeping up as they enter the AMT bracket thanks to inflation). Or, more simply, not passing new regulations to account for newly discovered tax loopholes such as the one that allows billionaire hedge-fund managers to pay a mere 15% tax (a lower rate than that paid by their janitors) or the notorious Silicon Valley stock-option dodge.

Of course, there's also active measures that Congress can take to widen the rich/poor gap: starving the IRS, or "rationalizing" the Alternative Minimum Tax such that the middle classes (and the merely wealthy) are taxed at a higher rate to pay for tax-cuts to pay for the hyper-rich.

Piersen and Hacker don't just look at what rules (or lack thereof) changed America's finances. They also want to know how the politics of America changed to make strategic inaction and action possible — and here their account is every bit as compelling as in their economic analysis. They trace the shift in American politics to the rise of TV-based election campaigning, which favors parties who have money for expensive media campaigns (and hence those who have access to corporate donations) over parties who can mobilize doorbell ringers (e.g. parties with the support of organized labor).

This shift is the first in a series of dominoes whose fall Piersen and Hacker detail, shifts such as the rise of an activist, super-conservative Republican party, the changes in organized evangelical protestantism, the growth of the astroturf industry and so on. For the authors, "it's the economy, stupid!" is incomplete — "it's the economy and politics, stupid!"

This is one of those books that feels like it made me smarter, like it connected things I didn't connect before.

Winner-Take-All Politics: How Washington Made the Rich Richer–and Turned Its Back on the Middle Class