Political Scientists Jacob Hacker and Paul Pierson have a new book out, Winner-Take-All Politics: How Washington Made the Rich Richer–and Turned Its Back on the Middle Class, and it’s making a big splash in the blogosphere. I came across Hacker and Pierson’s work when, on the recommendation of one of their graduate students who was visiting Ann Arbor, I read the article version of this book in Politics and Society. The entire June issue of P&S was devoted to the article and several excellent responses, I recommend checking it out (and if you are feeling cheap, the article is a decent substitute for the book).

To briefly summarize the argument, Hacker and Pierson note first that economic inequality in the United States in the last 30 years has risen dramatically, that most of that increase is driven by the top 1% and even .1% receiving a much larger share of the pie (e.g. the top 1% have gone from something like 8% of all pre-tax income in 1980 to something like 18% in 2007). They argue that this hyperconcentration of income at the very top cannot be explained by traditional arguments about growing income inequality which privilege outsourcing or “skill-biased technical change” (i.e. the increasing value of a college degree). Instead, American politics is to blame, and the story of exactly how American politics led to increases in the very top is the bulk of the argument.

I’m still finishing the book itself, but I think it’s a fantastic piece of research, and incredibly accessible. If I were teaching an undergraduate economic sociology, political economy, stratification, or related course, I’d probably assign the book or large chunks of it. But why take my word for it? Here’s a round-up of excellent reviews and commentary.

Henry Farrell on Crooked Timber:

This is a transformative book. It’s the best book on American politics that I’ve read since Before the Storm. Not all of it is original (the authors seek to synthesize others’ work as well as present their own, but provide due credit where credit is due). Not all of its arguments are fully supported (the authors provide a strong circumstantial case to support their argument, but don’t have smoking gun evidence on many of the relevant causal relations). But it should transform the ways in which we think about and debate the political economy of the US.

Farrell also has one of the best summaries of the book.

Tyler Cowen on Marginal Revolution: “[T]his is an important book for raising some of the key questions of our time. I would recommend that people read it and give it serious thought.” Cowen goes on to give the book some criticism for failing to clearly establish its second argument – “The guilty party is American politics.” – by paying insufficient attention to the role of finance. Cowen argues that:

If the top earners are screwing over their wage earners in the big companies, by pulling in excess wages, options, and perks, we should observe non-stagnant median pay for people who avoid working in firms with fat cat CEOs. Or we should observe talented lower-tier workers fleeing the big corporations, to keep their wages up. Yet no evidence for these predictions is given, nor are the predictions considered. It is likely that the predictions are false.

Thus, Cowen concludes:

In my view, most likely we have two largely separate phenomena: a) median wage growth slows in 1973 because technology stagnates in some regards, and b) liquid financial markets, in various detailed ways, allow people with resources to earn a lot more than before. Politics may well play a role in each development, but with respect to b) its role has been largely passively, rather than architectural and driving.

I recommend reading his entire review, along with a follow-up post.

The Economist blogs have also chimed in, with posts by W.W. and M.S. W.W. hasn’t read the book yet, and instinctively argues against its central points (including the empirics, suggesting that inequality in the U.S. has not in fact gone up, in part of inflation accounting issues*). M.S. discusses in detail Hacker and Pierson’s views on the Median Voter Theorem and its failures, and concludes, “It’s a pretty good book.”

Last but not least, James Kwak of the Baseline Scenario:

In 13 Bankers, Simon and I argue that the key forces behind the transformation of the financial sector and the resulting financial crisis were political, not simply economic. To this argument, at least two good questions spring to mind: Why finance? And why then? Hacker and Pierson have good answers to both of these questions. Their answer to the latter question is better than (though not inconsistent with) the answer we gave in our book.

Judging by the blogging world, Hacker and Pierson may have written the most important book in the last few years. I hope so. Agree or disagree, I think Hacker and Pierson will help move the conversation in Political Science, Sociology and Economic (among other places) back towards focusing on the big and interrelated questions of growing inequality, the failure of political institutions to protect the poor and middle-class, and the nuts and bolts of policy-making that let it happen. I’ll let Henry Farrell of Crooked Timber have the last word on the failures of the American academy that Hacker and Pierson may help remedy:

The authors set the book up as a whodunit: Who or what is responsible for the gross inequalities of American economic life? They show that the other major suspects have decent alibis (they may inadvertently have helped the culprit, but they did not carry out the crime itself. They show that their preferred culprit had the motive and, apparently, the means. They find good circumstantial evidence that he did it. But they do not find a smoking gun.
…
The lack of any smoking gun (or, alternatively, good evidence against a smoking gun) is the direct result of a major failure of American intellectual life. As the authors observe elsewhere, there is no field of American political economy. Economists have typically treated the economy as non-political. Political scientists have typically not concerned themselves with the American economy. There are recent efforts to change this, coming from economists like Paul Krugman and political scientists like Larry Bartels, but they are still in their infancy. We do not have the kinds of detailed and systematic accounts of the relationship between political institutions and economic order for the US that we have e.g. for most mainland European countries. We will need a decade or more of research to build the foundations of one.

It’s Sunday morning, September 26, 2010. Let’s get going!

* See Stapleford’s, The Cost of Living in America: A Political History of Economic Statistics, 1880-2000 for an excellent historical account of the politics of inflation accounting.