The book is a history of wealth and income gaps in the US in the 20th century. The book documents that the gap between rich and poor diminished greatly in mid-century—he refers to this as the "Great Compression"—then widened again, starting in the 1980s, to levels higher than those in the 1920s. Most economists—including Krugman himself—have regarded the late 20th century divergence as resulting largely from changes in technology and trade, but now Krugman writes—particularly in Chapters 1, 3, and 4—that
government policies—particularly the establishment of, and subsequent attacks on, the
social safety net or "
welfare state"—has played a much greater role both in reducing the gap in the 1930s through 1970s, and in widening it in the 1980s through the present. He talks about the history of
American conservatism, both, in Chapter 2, pre–
New Deal conservatism—dominating the period between the
American Civil War and the
Great Depression (which he calls the "Long
Gilded Age")—and, in Chapter 6, modern-day "
movement conservatism". He argues—particularly in Chapters 5, 6, and 9—that the subtle exploitation by
movement conservatives of racial and cultural resentments through small-government rhetoric (see "
dog-whistle politics") and of national-security fears were key in the movement's ability to win national elections—even though its policies concentrating wealth at the top should be deeply unpopular. He talks extensively, in Chapter 6, about
William F. Buckley, Jr.'s,
Irving Kristol's and
Ronald Reagan's role in building the movement—and, in Chapters 7 and 8, about the role of "institutions [particularly
labor unions] and norms [particularly corporate policy]"—vis-à-vis government policy—in increasing or decreasing economic inequality. He rebukes the
George W. Bush administration for policies that were currently widening the gap between the rich and poor. Nevertheless, Krugman expresses optimism in Chapter 10 that demographic trends—particularly on race and culture—and what he sees as conservative overreach during the Bush years—are creating a new
center-left political environment and are slowly undermining the conservative movement, referencing
John Judis and
Ruy Texeira's book,
The Emerging Democratic Majority. Krugman proposes, in Chapters 11 and 12, that
Democrats propose a "new
New Deal", which includes placing more emphasis on social and medical programs—particularly
universal health care—and less on national defense. Finally, in Chapter 13, he talks about what it means to be a "
liberal", about the rise in new progressive organizations—which, unlike conservative
think tanks, publications and other organizations, are actually more
de-centralized and independent-thinking—and how many more people appear to support "liberal"
policies than are prepared to use that word to describe themselves. The book concludes with advice that, for the time being, liberals must be
partisans until both major political parties accept the rationality of the New Deal. ==Reviews and critiques==