Tunku Varadarajan reviews Martin Wolf's The Crisis of Democratic Capitalism

See ‘The Crisis of Democratic Capitalism’ Review: The End of the World as He Knows It. Excerpts:

"“Alas, as I write these last paragraphs in the winter of 2022, I find myself doubting whether the U.S. will be a functioning democracy by the end of the decade.” Anyone who watched the State of the Union earlier this week, which was as clear an example of democratic business as usual as any in the past few decades, would have reason to question Mr. Wolf’s judgment, as well as his grasp of American politics."

"The descent into political Hades is fueled, in Mr. Wolf’s telling, by widening inequality and the “rise of rentier capitalism.” By rentier he means something more than an American version of “Downton Abbey,” with landlords drinking champagne and raking in oppressive rents, but the image isn’t entirely amiss. He sees the U.S. economy as a place where financiers and moguls and privileged people game the system, collecting fees and exploiting the masses. Indeed, he accuses the U.S. health system of rentier privilege—doctors, hospitals, insurance companies and pharma companies all feed at an “overflowing trough”—without acknowledging that these “monopolies” are granted and imposed by government.

As for the apparently galloping inequality, Mr. Wolf reads at times like Thomas Piketty, the French economist who soared to celebrity with his assertion that wealth gaps are “the central contradiction” of capitalism. Mr. Wolf shows no sign of having read “The Myth of American Inequality” (2022)—by Phil Gramm, Robert Ekelund and John Early—which points out that conventional U.S. inequality numbers are nearly worthless since government statistical reports exclude “noncash” sources of income, a large category for those in lower percentiles who receive benefits from social programs.

Although the vast majority of Americans live better than their parents, Mr. Wolf insists that there has been a “failure to deliver generational improvements in standards of living.” In any case, what are you supposed to make of his book if your view of the economy is not that “predatory capitalism” has hollowed out the middle class and led to soaring inequality? What if you believe that the decline in growth is due to the massive distortions of an ever-expanding welfare and “green” state, the dependency engendered by 100% marginal tax rates (earn a dollar, lose a dollar of benefits), or the sclerosis and financial instability induced by out-of-control regulation? His remedy for our economic malaise is “a ‘new’ New Deal”—as platitudinous in its detail as it is in its nomenclature.""