The Winner-Take-All Society: Why the Few at the Top Get So Much More Than the Rest of Us [Paperback]

-Technology. National distribution channels such as network television make it easier for an individual to penetrate the market. For example, at one time villages and towns had their own musicians. Now a singer can make a CD and sell it nationally.

-Falling transportation and tariff costs. Goods have gotten lighter. It is easier to send computer discs all over the world than books. CD's are lighter than phonograph records

-- Mental shelf space constraints. We have a limit to the number of items we can keep in our head..."the amount of information we can actually use is thus a declining fraction of the total information available."

-Weakening of regulations and civil society. At one time, informal and formal rules limited the winner take all markets. Now, like free agents in baseball, the top performers have the leverage to demand high prices.

-Self-reinforcing processes. This is another way of saying "success begets success." For example, a sales person does well and gets bigger customers. A person does well and the word of mouth referral causes them to saturate the market. This virtuous cycle increases the income and power of top performers.

The author argues that winner take all markets are not good for society. People are unrealistically optimistic about their own chances of winning "a prize." Thus they are siphoned off from other productive endeavors.

This book was helpful to me in understanding today's economy and job market. If anything, the winners are doing better than ever today, long after the book was published. Just take a look at the latest article on CEO salaries.

While winner take all markets can, with the aid of technology, make the goods and services of the few available to everyone in the world, they also have many negative consequences. Winner take all markets magnify the consequences of first mover advantages, making it difficult, if not impossible, for those late to the competition, be they corporations or countries, to establish themselves. Winner take all markets continue to increase the disparity between wealthy, industrialized countries of the North and the impoverished, besieged economies of the South. Winner take all markets continuously lure our most talented individuals into socially unproductive and often individually and socially destructive tasks. Many of the worldï¿s economies already invest too little for the future, be they nations struggling to develop (such as those on the African continent), or fully industrialized nations (such as the United States), and the growth of winner take all markets has encouraged wasteful patterns of investment and consumption. Finally, winner take all markets have the proven ability to undermine what is in the best interests of our culture and society, and given the terrifying ability of winner-take-all markets to rigidly engender and enforce conformity, standardization, and one-upmanship, this growing phenomenon can only be counter-productive and disruptive to the efforts of indigenous peoples to maintain and preserve their fragile and threatened cultures.

Quite literally, in winner-take-all competitions, the rules really are there are no rules. As such, these competitions lead people to do very crazy things. When large payoffs are at stake and there is a very real certainty of the loser(s) getting absolutely nothing for their effort, contestants have powerful incentives to spend money to enhance their chances of winning, and have little or no moral compunction to exercise restraint and sensibility in their behavior. This is especially the case where unfettered, free competition is the rule and covenants and/or regulations to ensure orderly, equitable markets are not the norm.

Thus, there seems to be an inverse, negative relationship between investment in these all or nothing competitions and their (social) value to the larger group. As the pace of investment, size of the investment and the risk associated with the investment in the winner take all competition increases, the social and economic value of the competition steadily decreases. While these investments look justifiable from the individualï¿s or nationï¿s standpoint, especially if there is a considerable chance that the individual stands to win, and win big, the concomitant dueling that these investments fuel almost always appears excessive from the standpoint of the society. As such, these all-or nothing competitions have led to a plethora of economic versions of military arms races between individuals, corporations and nations.

Although one could surmise much of the content from experience and simple common sense, I generally found the book to be a straightforward and thought-provoking read. Yet, many of the examples demonstrating the extent to which such competitions have infiltrated all aspects of our economic life, as well as the often ridiculous, comical and increasingly desperate attempts by individuals to thrive in these all-or-nothing environments, profoundly scared and disturbed me. The authors could have done away with the last chapter, a rehashing of the same old remedies to the problem, and written a much better ending which could have summarized the main points of the book and discussed their implications, going forward, for all participants in the new global economy.

In conclusion, these all-or-nothing competitions have steadily become ï¿the only game in townï¿. Yet, I seriously doubt that these dangerous economic games are really worth playing.