The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality
Book of the week
“This is a thin book, with a fat book inside, struggling to escape,” said Mark Kleiman in The Washington Monthly. Its co-authors, a libertarian scholar and a liberal professor, have landed upon a cause that both conservatives and progressives can get behind, but “the devil is in the details,” and 180 pages prove insufficient for more than a rough sketch. To Brink Lindsey and Steven Teles, the great overlooked source of income equality in America is government regulation that benefits the well-off at the expense of the poor and the middle class. Consider, for example, the way restrictive zoning laws make affordable housing scarcer, or how licensing requirements protect high incomes for doctors and lawyers. But until Lindsey and Teles add meat to their valuable insights, their call for an end to pernicious regulations is “a slogan, not a policy prescription.”
To begin with, the special interests that have captured the regulatory apparatus won’t give up their advantages without a fight, said Annie Lowrey in The Atlantic. “The rich and powerful are, it goes without saying, rich and powerful.” Still, it’s worth thinking about how policy changes in the four areas Lindsey and Teles focus on could both kick-start growth and spread the wealth. Besides licensing and land-use restrictions, the authors look at government oversight of Wall Street and intellectual property rights, arguing that in one case, perverse incentives have produced our bloated financial sector, and that in the other, trademark and patent protections put startups in many fields at a severe disadvantage.
“Unfortunately, Lindsey and Teles’ proposed solutions are less compelling than their analysis of the problem,” said Ilya Somin in WashingtonPost.com. To limit the power of lobbyists to write legislation, they recommend increasing staffing for lawmakers at all levels, and they suggest that courts should be more active in striking down regulations that benefit special interests but not the common good. “Unfortunately, the authors dismiss what may be the best strategy for fighting capture”: shrinking government, and thus shrinking the advantages of the special interests that have the time to navigate its byzantine ways. Whatever shape a reform effort takes, “it will be hard,” said Robert Samuelson in The Washington Post. But something must be tried before America becomes a spoils society in which growth dies and the only way to get ahead is to take what others have. “This is a formula for resentment and discord,” and “the consequences could be dire.” ■