You often hear inequality has widened because globalization and technological change have made most people less competitive, while making the best educated more competitive. There’s some truth to this. The tasks most people used to do can now be done more cheaply by lower-paid workers abroad or by computer-driven machines.
But this common explanation overlooks a critically important phenomenon: the increasing concentration of political power in a corporate and financial elite that has been able to influence the rules by which the economy runs.
As I argue in my new book, “Saving Capitalism: For the Many, Not the Few” (out this week), this transformation has amounted to a pre-distribution upward. Intellectual property rights — patents, trademarks, and copyrights — have been enlarged and extended, for example, creating windfalls for pharmaceutical companies. Americans now pay the highest pharmaceutical costs of any advanced nation.
At the same time, antitrust laws have been relaxed for corporations with significant market power, such as big food companies, cable companies facing little or no broadband competition, big airlines, and the largest Wall Street banks. As a result, Americans pay more for broadband Internet, food, airline tickets, and banking services than the citizens of any other advanced nation.
Bankruptcy laws have been loosened for large corporations — airlines, automobile manufacturers, even casino magnates like Donald Trump — allowing them to leave workers and communities stranded. But bankruptcy has not been extended to homeowners burdened by mortgage debt or to graduates laden with student debt. Their debts won’t be forgiven.