Christopher Hayes’ Twilight of the Elites surveyed American elites’ – corporate leaders, government, professionals such as lawyers and doctors, and the media — self-dealing and failure to live up to their claims to be “acting on behalf of all citizens.” While his critique of the hypocritical claims of various elite groups rings true, his remedies were pale and under-powered for the problem. Nevertheless, we clear evidence of elite self dealing from this NYTimes article.
Importantly, “elites” are potentially a broader slice of the income hierarchy than the 1%. Richard Reeves argues that the top-20% are leaving the rest of American behind.
Based on an analysis of the “top 1%” of industrial countries, the only place where the top-1% has gained more since 1980 relative to the rest of the population is the kleptocracy, Russia (see charts below).
“Almost all of the growth in top American earners has come from just three economic sectors: professional services, finance and insurance, and health care, groups that tend to benefit from regulatory barriers that shelter them from competition.
The groups that have contributed the most people to the 1 percent since 1980 are: physicians; executives, managers, sales supervisors, and analysts working in the financial sectors; and professional and legal service industry executives, managers, lawyers, consultants and sales representatives.
Without changes in these largely domestic services industries — finance, health care, the law — the United States would look like Canada or Germany in terms of its top income shares.”
Others are noticing these trends. A new book, “The Captured Economy” by Brink Lindsey and Steven Teles, argues that regressive regulations — laws that benefit the rich — are a primary cause of the extraordinary income gains among elite professionals and financial managers in the United States and of a reduction in growth.
This year, the Brookings Institution’s Richard Reeves wrote a book about how people in the upper middle class have shaped both legal and cultural norms to their advantage. From different perspectives, Joseph Stiglitz, Robert Reich and Luigi Zingales have also written extensively about how the political power of elites has undermined markets.”
Problems cited by these analysts include subsidies for the financial sector’s risk-taking; overprotection of software and pharmaceutical patents; the escalation of land-use controls that drive up rents in desirable metropolitan areas; favoritism toward market incumbents via state occupational licensing regulations (for example, associations representing lawyers, doctors and dentists that block efforts allowing paraprofessionals to provide routine services at a lower price without their supervision).
These are just some of the causes contributing to the 1 percent’s high and rising income share. Reforming relevant laws can make markets more efficient and egalitarian, and in contrast with trade, immigration and technology, the political causes of the 1 percent’s rise are directly under the control of citizens.