The spirit of any age must be addressed, even when inconvenient. I doubt Bill Clinton entered politics to be the tough-on-crime President whose policies helped turn the nation into a penal colony within a colony, but there he was in the 1990s, not realizing that crime was about to mysteriously and precipitously decline, waving a badge and a billy club. Clinton likely never dreamed of a scenario in which he would be chastening “welfare queens,” yet there he was doing a better job of it than Ronald Reagan, who coined that odious term. It was no different than when Richard Nixon, having at long last having won the White House, argued in favor of universal healthcare and a basic-guaranteed-income tax plan, something he certainly wasn’t considering before the Sixties happened.

Chief among the prevailing winds of our time is wealth inequality, the enduring gift of an Occupy movement that framed a single election and otherwise sputtered out, at least for now. So GOP candidates must, at minimum, pay lip service to the concern. Donald Trump is suddenly a reformer taking aim at hedge-fund managers. Jeb Bush has spoken about how income disparity has threatened the American Dream (without mentioning, of course, that his proposed tax cuts would only exacerbate the situation). Rick Santorum and the sweater-vest wing of the party want to raise the minimum wage. 

What’s true of politicians is also so of economists, and academics have descended on the problem, which makes this moment ideal for Joseph Stiglitz, who’s spent much of his career, from thesis forward, on the topic. In a NYRB piece, James Surowiecki analyzes the economist’s most recent slate of books, finding fault with Stiglitz’s identification of the twin devils of the contemporary financial arrangement: rent-seeking and a lack of corporate oversight. Surowiecki doesn’t believe these issues explain our 99-and-1 predicament. He doesn’t dismiss Stiglitz’s suggestions and likewise sees no reason why CEOs should be earning so much, but he believes a remedy is more complicated.

An excerpt: 

It’s possible, of course, that further reform of corporate governance (like giving shareholders the ability to cast a binding vote on CEO pay packages) will change this dynamic, but it seems unlikely. After all, companies with private owners—who have total control over how much to pay their executives—pay their CEOs absurd salaries, too. And CEOs who come into a company from outside—meaning that they have no sway at all over the board—actually get paid more than inside candidates, not less. Since 2010, shareholders have been able to show their approval or disapproval of CEO pay packages by casting nonbinding “say on pay” votes. Almost all of those packages have been approved by large margins. (This year, for instance, these packages were supported, on average, by 95 percent of the votes cast.)

Similarly, while money managers do reap the benefits of opaque and overpriced fees for their advice and management of portfolios, particularly when dealing with ordinary investors (who sometimes don’t understand what they’re paying for), it’s hard to make the case that this is why they’re so much richer than they used to be. In the first place, opaque as they are, fees are actually easier to understand than they once were, and money managers face considerably more competition than before, particularly from low-cost index funds. And when it comes to hedge fund managers, their fee structure hasn’t changed much over the years, and their clients are typically reasonably sophisticated investors. It seems improbable that hedge fund managers have somehow gotten better at fooling their clients with “uncompetitive and often undisclosed fees.”

So what’s really going on? Something much simpler: asset managers are just managing much more money than they used to, because there’s much more capital in the markets than there once was.•