Like many political scientists, I am an avid mystery novel reader. So, I found Jacob Hacker and Paul Pierson's framing of the questions of the book in the form of a mystery to be creative. The pemise of the book is that the economy of the United States over the past thirty years has been “hijacked” by the broad area of American politics, defined as business lobbies, labor unions, Democrats and Republicans, liberals and conservatives, and presidents, both Democrats and Republicans, and structured to benefit the very wealthy to the detriment of the American middle class. As intriguing as the conclusions are, I wonder how surprised scholars of American politics will be by them? Another question that arises: How complete is a picture of the effects of legislative and executive decisions on the economic plight of the middle class when racial differences are not explored?

Hacker and Pierson find that the top 1% of income earners received 36% of all gains in household income from 1979 to 2007. Looking only at the period between 2001 and 2006, this group's share of income gains stood at over 53%. Also during the 1979 to 2007 period, the top 0.1% of households received over 20% of all after-tax gains (p. 3). Those in the poorest 20% of American households realized a paltry 10% increase over the 27 years, $14,900 to $16,500. For those in the middle quintile (20%) of households, average inflation-adjusted income rose from $42,900 to $52,100, a gain of 21%, but this equates to just 0.7% per year over the period under discussion. Much of the gain came not from raises but from longer working hours in 2000 than in 1979.

One of the early reasons for the differential examined here is the widely accepted theory that income inequality is the result of globalization and technological changes. The argument is that these changes require a highly educated workforce and that education inequality accounts for the observed income inequality. Hacker and Pierson dismiss this theory early on as they find that many of those in the middle class who are falling farther and farther behind in household income are also highly educated, for example, those with bachelors and advanced degrees. These individuals believe that education is the key to success, yet find that their degrees do not earn them salaries as high as those at the top who also have college degrees. This effect is known as within-group inequality; those at the top also have college degrees but are earning substantially more than those in the middle with the same level of education.

The entity identified by Hacker and Pierson as responsible for the rise in economic inequality is American politics. They characterize American politics as “organized combat,” with the business lobby heavily financed and able to outorganize labor unions, which have lost the large segment of the workforce that they had in the 1950s, and have lost the ability to compete financially with the business lobby. This differential in organization and money has tilted the policies passed by Congress and supported by both Republican and Democratic presidents in favor of the very wealthy, creating a “winner-take-all economy.” The increasing conservatism of the Republican Party has worked in concert with the powerful business community to benefit the wealthy. The authors highlight the activities of then-Senator Phil Gramm (R-TX), who was “an ever more zealous and increasingly powerful advocate of tax cuts for the wealthy and full-throttle deregulation” (p. 197). As chair of the Senate Banking Committee, he pushed through legislation that loosened regulations on investment and commercial banking, opened the doors to the subprime mortgage market and predatory lending, and essentially deregulated anything that came under the purview of the committee.

While Hacker and Pierson put more weight on Republicans for creating this situation, they were not alone is working for policies that favor the wealthy. Democrats helped as well, or as the authors say, “climbed aboard.” Liberal Democratic senators, such as Charles Schumer of New York, worked actively for policies that benefited Wall Street and its brokerage, investment, and stock firms, as he saw them as part of his constituency. But Schumer also knew that the Democratic Party had an increasing reliance on finance-industry donations (p. 227). Hacker and Pierson suggest that Democrats recognized the significance of the vast amounts of funds necessary to compete in this organized combat, and so there were incentives for Democratic politicians to accommodate the winner-take-all-economy.

The current debate over the reduction of the deficit appears to be continuing the winner-take-all-politics approach to solving national problems. Congressman Paul Ryan (R-WI) and the Republican Congress's proposed 2012 budget appears to put the weight of deficit reduction on the poor and on the working and middle classes, while protecting the incomes and assets of those at the top of the income scale. The outstanding question is how much of a hit these groups will take in the compromise with the Democrats, who easily signed onto policies in the past that benefited the superrich.

One of the Hacker and Pierson's laments is the demise of the organizations and organized interests that were concerned with the economic conditions of the middle class, and they highlight the efforts of the American Legion in passing the GI Bill and the attendant benefits of that piece of legislation. This bill is widely viewed as the mechanism that enabled millions of working-class Americans to get an education, purchase a home, and become members of the middle class. But the story of the GI Bill and of New Deal policies that were responsible for building the middle class, the white middle class, is also an indictment of American politics in pushing income and benefits to white Americans, while denying those same benefits to black Americans. While Hacker and Pierson talk about the losses of the middle class, in general, it would be helpful to break down the middle class and see if there is a racial dimension to the losses. While I do not know if the data of Thomas Piketty and Emmanuel Saez would allow for this level of disaggregation, the question of a racial differential effect is important.

Ira Katznelson's When Affirmative Action Was White: An Untold History of Racial Inequality in the Twentieth-Century America (Reference Katznelson2005) chronicles the disparate and selective application and benefits. The GI Bill, officially the Selective Service Readjustment Act, was written under the auspices of Congressman John Rankin (D-MS), chair of the Committee on World War Legislation, and deliberately designed the bill to accommodate Jim Crow. The administration of the act was to be handled by local jurisdictions to ensure that southern locations would be able to withhold benefits from black veterans. Katznelson argues that its administration widened the country's racial gap.Footnote ¹ Moreover, the American Legion and the Veterans Administration assured Rankin that the “racial status quo would be guarded zealously by the VA.”Footnote ² As a result, many black veterans were denied education funds, as well as housing loans through the VA loans program, thereby denying them the possibility of moving into the middle class with the same government assistance provided to their white counterparts.

There are numerous examples of American politics as organized combat privileging whites and disadvantaging blacks. For example, exclusion of farm workers and domestics from coverage in the original Social Security Act put fully 65% of blacks outside the coverage of the new program.Footnote ³ The Wagner Act of 1935 granted unions collective bargaining rights, while also giving unions the right to exclude blacks and other nonwhites from membership, hence from access to high-paying jobs.Footnote ⁴ The National Housing Act (1934), which chartered the Federal Housing Administration, provided loans to whites to purchase homes that generated wealth, while at the same time setting up a national neighborhood appraisal system that tied loans and risk to the racial characteristics of a neighborhood, commonly referred to as “redlining.”Footnote ⁵ The present-day version of redlining, created by the deregulation of the financial industry, is the subprime mortgage market, whereby blacks with similar incomes and credit ratings as whites and who qualify for prime loans are steered to the subprime market. Black borrowers in the subprime market will lose $71–$92 billion, while Latinos will lose $75–$98 billion. Footnote ⁶ As such, it is important to take into account the differential baselines when talking about the effects of the winner-take-all economy on the income and wealth of the middle class.

Income and wealth are two different concepts and are used in different ways, but are often confused. Wealth is the sum of a family's financial resources and, coupled with income, provides the foundation to secure a comfortable life for the family and to pass assets to their children.Footnote ⁷ The wealth gap between whites and blacks between 1984 and 2007 increased more than four times, from $20,000 to $95,000. The greatest wealth produced went mainly to whites in the highest income categories, but middle-income white households had greater gains in financial assets than high-income blacks.Footnote ⁸ In 1984, middle-income whites had less wealth than high-income blacks, but by 2007, middle-income whites had four times the wealth of high-income blacks.Footnote ⁹ Given that the single most important wealth asset an individual has is his or her home, it is not difficult to see how provisions of the GI Bill created wealth for whites, while denying the ability to accumulate wealth for blacks. According to Thomas Shapiro, “Two families with similar incomes but widely disparate wealth most likely do not share similar life trajectories, and we must consider this when thinking about inequality and public policy.”Footnote ¹⁰ Shapiro's point drives home why it is important to ponder the racial disparities in the effects of the winner-take-all economy.

The missing element in this narrative is whether the voters are aware of the complicity of both parties in pushing income and wealth upward. Moreover, will they do anything about it? Hacker and Pierson's proposals for reform seem to rest, on the one hand, on the very institutions and individuals who are responsible for creating the winner-take-all economy in the first place, and on the other, on the creation of mass social movements to reverse the effects of the past three decades. They say that the aims of reform should contain three elements (p. 303):

They want to reclaim democratic governance and are hopeful and optimistic about the possibility. But how likely will these reforms come about?

Hacker and Pierson hope for a resurgence of labor, specifically highlighting the role of the American Legion in the passage of the GI Bill, but, as has been shown, this group was also responsible for ensuring that racial discrimination was a part of the legislation and a force in American politics. But the attacks on public sector unions in a number of states demonstrate labor's vulnerability, rather than its strengths. Money facilitates the formation of organized groups likely to have influence in the organized combat of American politics, and most of the individuals who, according to Hacker and Pierson, should be mobilized do not have access to the money necessary to do so. The era of the sustained social movements of the latter phase of the Civil Rights movement or the women's movement or the anti-Vietnam War movement no longer have salience in an era where social media dominate. I am not sure where the mobilization mechanisms will come from or who will pay for them.

The authors call for monitoring harkens back to Theodore Lowi's call in The End of Liberalism (Reference Lowi1969) for a similar monitoring of interest group influence in the implementation of policy in the bureaucracy. It is not clear that call was ever answered, and so I am doubtful that this one will be either.

As a scholar of American politics, specifically race and politics, I found Hacker and Pierson's results interesting and enlightening, but at the same time limited in scope and applicability to the many questions left unanswered Are racial disparities and discrimination a part of the policies of the winner-take-all politics today, as they were in the past? Will nonwhite members of the middle class continue to fall farther behind their white counterparts economically as a result of these policies? As convincing and persuasive a case as Hacker and Pierson make, the picture of the effects of winner-take-all politics is still incomplete. We will have a complete picture only when outcomes for racial and ethnic groups are included in the analysis and in the process for reforms.