Friday, August 03, 2012

The Great Divergence by Timothy Noah

There's one true story of this year, and it's a simple one: whether the answer to all of America's woes is to let the already rich and powerful do whatever they want, by lowering all of their burdens (tax, regulatory, common sense, moral) so that they will then be incentivized to "create jobs", or whether we instead should add to the now historically low burdens on those rich and powerful, because they're already running away with all of the spoils of our economy. You can probably guess where I fall on that question, just by how I've phrased it -- though I'm still a registered Republican, even if my particular breed of GOPers have been an endangered species for the last decade or more -- but I could make it even clearer: how much do you trust rich people and their bankers?

Really, the fact that the question even needs to be asked, this soon after a financial crisis -- one caused almost entirely by insufficient regulation and oversight, that is by a lack of government action, on the one hand, and by the monumental arrogance and greed of a small cabal of financial manipulators masquerading as investment bankers, on the other -- shows how much the debate has been captured wholesale by those rich and powerful folks. Though we shouldn't be surprised: they've captured almost everything else.

Timothy Noah's new book, The Great Divergence, is an exhaustively researched look at how we got to this state: how the richest people in America have become vastly more rich, comparatively, than the richest people in other rich nations, until we have a wealth distribution more typical of banana republics and dictatorships. (Strangely, even the people who think capitalism must be utterly unfettered don't talk much about how the US should be more like Somalia or Yemen.) He shows that it has happened, what sectors of the US public it has most affected (comparing various quintiles and deciles and even more exotic slices to each other), and looks at some of the possible explanations, all the while showing only a mild bias (but always a willingness to dig into the data).

Unless you're already one of the top 1% by wealth -- not even by income, since the truly wealthy are hosing even high-earners -- The Great Divergence will present you with facts that, assuming we're all completely convinceable by new evidence, which of course is not true, will lead you inescapably to the belief that something really must be done about this situation, because it actually could continue to get worse. Noah does have a final chapter of policy prescriptions, designed to return the gap between rich and poor -- because, despite what the scare-mongers might try to tell you, no one actually plans a Maoist-style rustication of kulaks and intellectuals in service of radical equality -- to what it was, roughly, during the prosperity of the 1945-1980 period. Those prescriptions, I'm sorry to say, are unlikely to happen any time soon, as long as there's a large group of relatively poor people who continue to vote to increase their relative poverty and further enrich the already wealthy.


Midnight Philosopher said...

Great review. This is such a hugely important issue and I'm glad it's getting a lot of attention lately. Chris Hedges also has a new book out about largely the same things.

Jordan179 said...

Increasing state economic intervention will only make the rich relatively richer, since they are the ones with the money to capture legislators and regulatory agencies. It is not a war of the rich against the poor, but a war of the very rich against the moderately rich and middle classes, using the poor as dupes.

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