"A change in the power dynamic between employers and employees

[pampango]

is a central reason for the rise in inequality."

http://economix.blogs.nytimes.com/2011/03/03/inequality-and-political-power/?partner=rss&emc=rss

Much of our book traces how major changes in policies governing finance, corporate governance, taxation, and industrial relations helped fuel the “winner-take-all economy.” These changes, we show, directly reflected the declining clout of middle-class voters and unions relative to a much more organized and mobilized corporate sector.

(E)conomists generally err in thinking that unions influence the income distribution mostly through direct negotiations with employers. Instead, we argue the most important role these forces play is to create some organized countervailing pressure in Washington. Cross-national research suggests that strong labor unions are associated with greater government redistribution through taxes and transfers. The United States is one of only a handful of countries where government taxes and benefits have become less redistributive as inequality has grown.

If we were passing out grades (without grade inflation!) we would give the administration a B. The political system, on the other hand, gets a D. And we would include a note indicating that it’s in danger of failing.

The big achievements of the first two years were health reform, financial reform, and a major stimulus package (including additional payroll tax relief in the recent tax deal). All these are major breakthroughs, even if they clearly do not match the scale of the crisis we face. To be sure, the president made mistakes: His economic team was too close to Wall Street, for example, and he over-claimed for the recovery package and didn’t leave himself sufficient room for additional action. But we’re convinced that the really deep problems aren’t with Obama or his team. They’re with our political process, which makes meaningful reform that threatens powerful economic interests extraordinarily hard.

The last two-and-a-half years have vividly showcased the basic problems we identified in “Winner-Take-All Politics.” First, there is the entrenchment of narrow economic interests, which are very well connected and powerful in both parties. Second, there is the vastly increased role of the Senate filibuster — a huge change in the character of American governance, which essentially makes 60 votes a requirement on all nonbudget legislation. And third, there is the reality that the Republican Party has become both increasingly cohesive and increasingly conservative on economic issues. Actually, we should say “radical” rather than “increasingly conservative” since prominent G.O.P. figures now express many views on economic matters (tax cuts reduce deficits, slashing spending creates jobs, markets are self-regulating) that are well outside the mainstream consensus of the past 60 years or so.

[Hannah Bell]

1. and what is responsible for the change in that power dynamic, the decline of unions?

then what is responsible for the decline of unions?

[madrchsod]

2. the cowardice of the leadership of the democratic party.

we have always known who are enemy was but now we have to fight a two front war. if there is one thing that wisconsin has shown us is that we are on our own.

[elocs]

8. As a Wisconsinite and one who was in Madsion last Saturday

I want to say that this is a people's protest, a people's movement. I would rather not see the leadership of the Democratic Party involved in this other than to give support from afar. If they were to become more directly involved then the debate would become about them and they would be a distraction. In this particular situation now I think that in Wisconsin we are doing well on our own without help from leadership.

[madrchsod]

9. i agree with you 100%

[pampango]

3. "major changes in policies governing finance, corporate governance, taxation, and industrial

relations"

"The key to getting the answer right, we argue, is to look beyond the economics of rising inequality to examine the politics. Much of our book traces how major changes in policies governing finance, corporate governance, taxation, and industrial relations helped fuel the “winner-take-all economy.” These changes, we show, directly reflected the declining clout of middle-class voters and unions relative to a much more organized and mobilized corporate sector."

"You date the key change in American politics to the late 1970s, when you argue that corporate America realized it needed to become more aggressive in Washington. “Business must learn the lesson,” a Chamber of Commerce official named Lewis Powell (who later became a Supreme Court justice) wrote at the time, “that political power is necessary.” The Business Roundtable formed in the 1970s, and the Chamber and the American Enterprise Institute both grew rapidly.

In several areas, you offer the kind of details that are too often missing from critiques of corporate power — the surprising 1978 defeat of a new consumer-protection agency, the defeat of a bill that would have curbed antiunion practices, the pre-Reagan decline in tax rates that mostly affected the affluent.

"One reason we stress government’s hand in generating extreme top-end inequality is because we think Washington’s role isn’t limited to passing big new laws. We also have to look at how the enforcement of existing regulations was politically undercut and, even more important, at how policy makers failed to step in as existing laws were rendered obsolete by decades of rapid economic change. A big part of the policy story is what we call “drift” — the deliberate failure to update policies to reflect changing economic realities (despite viable and popular alternatives) due to the pressure of those benefiting from such calculated inaction."

The decline of unions is largely the result of corporations' realization that they "needed to become more aggressive in Washington" starting in the late 1970's. Their increasing influence has led to passage of legislation favorable to corporations and their executives (and the failure of pro-union legislation) and the increasingly ineffective regulation of corporations. The increased activism ("aggressiveness" in the words of the authors) of corporate America had been quite effective (unfortunately) in tilting the rules increasingly in their favor.

[Hannah Bell]

4. iow, the manifestation of corporate power. and the fact that the corporations

were able to wield that power implies that it always existed, it was just that they chose to hold it in abeyance as it previously had not served their ends to manifest it so openly -- at least against the people of the US or western europe.

[pampango]

5. Have corporations always had power? Sure.

Did they not manifest it so openly in the 50's, 60's or early 70's because they were content with the strong unions, progressive taxes and effective regulations? Did corporate America not want to challenge unions, high taxes and regulations back then? (Was their mindset different?) Or did they have every desire to confront unions, taxes and regulations but were effectively blocked from doing it by countervailing powers? (Their mindset wasn't different; they just hadn't figured out how to defeat the forces arrayed against them.)

My guess is that it was some of both. Coming out of the Depression and WWII most of America had a different mindset than we have had for the past few decades. Back then those in the corporate class and far-right wingers who didn't share the dominant mindset, and would have loved to attack unions, taxes and regulations, were held in check by other forces. That doesn't mean that corporate power didn't exist back then - just that either a different mindset or countervailing powers kept it in check.

[Hannah Bell]

6. because they were making high profits & there was the countervailing power

and example of the communist bloc.

as soon as the commies crumbled, corporate power became visible.

nothing to do with mindsets, just profit & realpolitik.

[Stinky The Clown]

7. If You're Not Part Of the Solution, Then You're Part Of The Problem.

Some will try to convince us that the problem is too big for any one person to cure, making anything done truly heroic.

I don't see it that way.

Yesterday's Uneducation Dog and Pony Show in Florida points that out in one more small example.