Everyone knows that inequality in the US has been increasing since the early 1980's. This raises two questions for those who worry about the prospect of plutocracy in the US: It is important to understand the causes of rising inequality, and to make changes that might reverse our descent into plutocracy. Robert Reich's new book provides his answers to both of those questions. Paul Krugman argues that Reich's explanation for rising inequality is superior to explanations which focus on the role of technology in the labor market. There is little evidence to support the idea that incomes are rising for workers with technical skills and falling for those who lack those skills. Its also difficult to support the argument that machines are reducing the demand for human labor. Reich argues that rising inequality has been coupled with growing political power within the economic elite. The economic elite has been able to use government to reduce competition and produce monopolistic profits in many industries. They have also been able to reduce the power of unions in the US. In short, the growth in income inequality is a result of a rising imbalance in political power.
Krugman is generally sympathetic to Reich's explanation for rising inequality in the US. He also agrees with many of Reich's suggestions about what might be done to create a more equal society. He is more pessimistic, however, about the political prospect for reversing a trend that has been well organized carefully managed over the last 40 years. The plutocrats know what they want and how to get it. All of the GOP candidates for the presidency are in general agreement about what they want. They differ from each other primarily on style and personality. Its not easy to see this kind of agreement within the Democratic Party.