Unequal Democracy: The Political Economy of the New Gilded Age

… as our economy grows, market forces work to
provide the greatest rewards to those with the
needed skills in the growth areas. … This trend …
is simply an economic reality and it is neither fair
nor useful to blame any political party.

—Treasury Secretary Henry Paulson, 2006¹

SECRETARY PAULSON'S ATTRIBUTION of increasing economic inequality to impersonal “market forces” is politically convenient, given his prominent position in an administration that has presided over booming corporate profits but stagnant wages for most working people. Nonetheless, his perspective is symptomatic of a much more general tendency to think of the economy as a natural system existing prior to, and largely separate from, the political sphere.

In the run-up to the 2004 presidential election, for example, the Associated Press (AP) reported that, “Over two decades, the income gap has steadily increased between the richest Americans, who own homes and stocks and got big tax breaks, and those at the middle and bottom of the pay scale, whose paychecks buy less.” While the AP story noted that Democratic presidential candidate John Kerry was attempting to make the economy a campaign issue, the last word went to the chief economist for Wells Fargo: “This really has nothing to do with Bush or Kerry, but more to do with the longer-term shift in the structure of the economy.” Similarly, in the run-up to the 2006 midterm election business columnist Ben Stein noted that “there is extreme income inequality in this country. It is hard to say whether it's the fault of President Bush, since there was also extreme income inequality under former President Bill Clinton, and in fact there has always been extreme income inequality.”²

The tendency to think of economic outcomes as natural and inevitable is politically significant because it discourages systematic critical scrutiny of

¹ Remarks Prepared for Delivery by Treasury Secretary Henry H. Paulson at Columbia Uni-
versity, August 1, 2006, http://www.treas.gov/press/releases/hp41.htm.

² Associated Press, “Gap Between the Rich, Others Grows,” Trenton Times, August 17, 2004,
A6; Ben Stein, “You Can Complain, or You Can Make Money,” New York Times, October 15,
2006, BU 3.

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