NEW YORK, Sept 21 (Reuters) - Though decades in the making, rising economic inequality in the United States has encouraged something of a national identity crisis in the last year.
Occupy Wall Street protests shoved the issue on to front pages and a numerous intellectuals - including former President Bill Clinton and economists Paul Krugman, Joseph Stiglitz and Jeffrey Sachs - have penned books that delve into the controversial subject.
Not surprisingly, it's a major issue in the presidential election, whether we're talking about the 99 percent, the 1 percent, or the 47 percent.
The latest think piece on the economy and its discontents is "Who Stole the American Dream?" by Hedrick Smith, a former Pulitzer Prize-winning foreign correspondent and Washington reporter with The New York Times and an Emmy Award-winning producer and correspondent with PBS.
"We have fallen from being the envy of the world," Smith writes in this critique of Big Business and Congress.
"It is now easier, in fact, to climb the economic and social ladder in several Western European countries than it is in the United States."
Smith reviews well-trod ground in this survey of the last 40 years, including the de-regulation of financial markets from the late 1970s through the late 1990s and the disrupting influence of money in the political process.
But his account is informed by the lively eye and ear of a journalist, as when he details for example the cascading impact of the 95th Congress in 1978. That session is one he says many political analysts overlook despite being "one of the most pivotal in our modern political history."
Influenced by the rising power of big business lobbying, it was the 95th Congress, Smith says, that made seminal changes in the economy's structure.
Corporations were the big winners. New laws passed that put corporate managements in control of their bankruptcy process, allowing them to shed debt and union contracts; tucked an "antiseptically titled 401(k) subparagraph" into an omnibus tax bill that would revolutionize and relieve the corporate pension system, leaving complicated, long-term investment decisions to millions of employees; and created a sweeping business-friendly tax bill that altered "the traditional pattern of using the tax system to redistribute income from the affluent and from corporations to the less well-off."
"The tax victory was one of those pivotal moments in politics, just as in sports, when the lead changes hands and the dynamics of the game change," Smith says.
"For the victories that business won in the Carter Congress dramatically shifted the thrust and direction of America's economic policies to suit the agenda of the business elite. Those victories set a pattern pursued to this day."
Smith also examines evolving social mores of business leaders. Rooted in Henry Ford's theory that high wages were a matter of social justice and smart business, post-World War II corporate leaders. He says, practiced "stakeholder capitalism," balancing the needs of shareholders as well as workers, customers and the public.
That changed with the Reagan years in the 1980s, Smith writes, as executives embraced free-market champions like Milton Friedman who argued that CEOs should focus solely on maximizing shareholder returns.
"During the long postwar era of shared responsibility, from the mid-1940s to the mid-1970s, the prevailing ethos of business leaders was radically different from the prevailing mind-set of today's CEOs," the author says.
These are weighty subjects but Smith enlivens his narrative with portraits of the people caught up in events, humanizing complex subjects often rendered sterile in economic analysis.
Smith thinks the human face of the story is inseparable from the history, as seen in his PBS documentaries or his account of life in Soviet Russia in the best-selling book, "The Russians."
So in this volume readers meet the likes of Pat O'Neill, a United Airlines mechanic for 35 years whose dream of retiring at 55 vanished when the airline filed for bankruptcy in late 2002, or Win son Crabb, a maintenance technician with National Semiconductor whose 401(k), once totaling about $120,000, dropped to $26,000 because of the 2001 market downturn.
Smith offers steps the country can pursue to cut inequality, including public-private partnerships to modernize the country's infrastructure and create jobs; generating a "manufacturing renaissance" in America; and creating a constitutional amendment to ban campaign contributions from corporations, unions and other interests.
But these and other steps he advocates won't likely happen without a massive grassroots effort, he concludes.
"What is needed is a modern political crusade by average Americans on the model of the civil rights and environmental movements of the 1960s and '70s," he writes. (Editing By Peter Bohan)