The “deep state” as a tool for redistribution of income in favor of the rich. Review of Mike Lofgren’s “The deep state”

An economist looks at Mike Lofgrens's The Deep State.

We should, it seems, stop thinking of government spending as the opposite of private spending. This is because government spending has two radically different constituencies and two very different objectives. One part of government spending (the one that we traditionally emphasize) serves the needs of the middle class and the poor: social security, Medicare, Medicaid, unemployment benefits. This is the part that, from the point of view of the deep state, should be cut. The second part of government spending is support (when needed) of the financial sector and military spending. There, the beneficiaries are the people from the other end of the income distribution: the financiers, owners and managers of large military supplier companies, telecommunications, private security firms and the like. When we think of government in this way, the apparent paradox of Republicans (and many Democrats) being at the same time in favor of smaller government, and TARP and larger military spending vanishes. We are really witnessing a struggle over a quarter of GDP that is redistributed through the federal government: will most of that money go to the pockets of the rich, or to the pockets of the middle class and the poor?

What Lofgren argues is that the deep state has effectively kidnapped the government. Its objective is to use this enormous money-churning machine to help its own members. But the deep state was able to kidnap the government because it was able to kidnap the Congress, that is to make sure that majority of the members of Congress vote the way that the deep state wants. They were able to do so thanks to an electoral system where winning is practically synonymous with having access to more money than your opponent. This is why Lofgren in the last chapter, where he discusses the changes that need to be done, puts the reform of electoral funding (“ Eliminate private money from public elections”) as the number 1 priority. It all starts there, and then logically unfolds further.

As I have been saying, get the money out of politics, shut down K Street (lobbying), and lock the revolving door between the top level of the public and private sectors.

Global Inequality
The “deep state” as a tool for redistribution of income in favor of the rich. Review of Mike Lofgren’s “The deep state”
Branko Milanovic | Visiting Presidential Professor at City University of New York Graduate Center and senior scholar at the Luxembourg Income Study (LIS), and formerly lead economist in the World Bank's research department and senior associate at Carnegie Endowment for International Peace