Joseph Stiglitz thinks he's writing about income inequality and plutocracy, but there's a deeper meaning to this passage.
Rent-seeking distorts the economy. Market forces, of course, play a role, too, but markets are shaped by politics; and, in America, with its quasi-corrupt system of campaign finance and its revolving doors between government and industry, politics is shaped by money.

For example, a bankruptcy law that privileges derivatives over all else, but does not allow the discharge of student debt, no matter how inadequate the education provided, enriches bankers and impoverishes many at the bottom. In a country where money trumps democracy, such legislation has become predictably frequent.
The strongest case for enumerating and limiting the powers of government, and changing those numbers and those limits only after careful and lengthy deliberation, might be that in the absence of such restraints,   the temptation to spend money to influence those changes, or, as appears to be the case, with Wisconsin's recall elections, to suggest that money alone influences policy.  Walter Russell Mead suggests it is not yet time to give up on logic and content.
[M]oney does matter in politics, but money alone is rarely enough, especially on an issue which voters care deeply about. When the left — or the right — can summon popular passion and energy to its side, it can not only put up a noble fight. It can win. This actually happens quite a lot in American politics: poorly funded campaigns with charismatic candidates tap into some deep reservoir of popular sentiment and they deal out bitter defeats to the pallid, colorless but well-moneyed Establishment candidates. This has been happening relatively frequently in Republican politics of late. There have been times in American history when it happened also on the left. Milwaukee, Wisconsin has had Socialist mayors.

The left’s problem in Wisconsin wasn’t that the right had too much money. The left’s problem is that the left’s agenda didn’t have enough support from the public. Poll after poll after poll showed that the public didn’t share the left’s estimation of the Walker reforms. Many thought they were a pretty good idea; many others didn’t much like the reforms but didn’t think they were bad enough or important enough to justify a year of turmoil and a recall election.

The left lost this election because it failed to persuade the people that its analysis was correct. The people weren’t a herd of sheep dazzled by big money campaign ads on TV; the Wisconsin electorate chewed over the issues at leisure, debated them extensively, considered both points of view — and then handed the left a humiliating, stinging and strategic defeat.
And perhaps we can return to one dimension of normalcy. It is unusual for electoral events in Wisconsin to make Illinois politics look good, but the past eighteen months have surely had that effect.

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