Here it is 2013, and suddenly the punditocracy is discovering that economic inequality and political inequality may be related to each other.
Have a look at this:
Bonica, Adam, Nolan McCarty, Keith T. Poole, and Howard Rosenthal. 2013. "Why Hasn't Democracy Slowed Rising Inequality?" Journal of Economic Perspectives, 27(3): 103-24.
And here’s the stunning point:
“…the rich have been able to use their resources to influence electoral, legislative, and regulatory processes through campaign contributions, lobbying, and revolving door employment of politicians and bureaucrats.”
Where do they find these economists? It's jaw-dropping that people can make a living from this.
This seems to be a battle that has to be re-fought every few decades. Listen to the FDR speech below ("Refighting 1936"). Who has the guts now to talk about "economic royalists" or "malefactors of great wealth"?
We got a Gilded Age in the 1890s, in the 1920s, in the 1990s. It may not be an accident that each culminates after a prolonged period of Republican dominance. (And if you're wondering, from an economic perspective, Jimmy Carter and Bill Clinton were moderate Republicans!) What’s really striking is that each time the result is (1) An economic Depression, followed by (2) Changes in politics that begin to reduce the inequality and bring back general prosperity, although slowly.
A naïve spectator might begin to link these things causally, eh? I'll have more on that later.
But last time we didn’t have trash TV and trash sports to distract people from what needed to be done. This worries me.