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October 23, 2006

When The Revolution Comes...

Roger Lowenstein is lucky we don't have class warfare in this country because, if we did, a front would surely be opened up against him. His review of Jacob Hacker's The Great Risk Shift in this weekend's NY Times is one of the more appallingly myopic and -- in the old, populist sense -- elite documents I've had the displeasure of running into lately.

"To buttress [Hacker's] point," Lowenstein writes, "the author trots out a familiar-seeming list — of people who burned through their savings to finance a medical expense, or who retired only to see their corporate pension plan go bust, or who lost a job that was once secure. But as predictable and, at times, whiny as his examples seem, Mr. Hacker does make a contribution to our understanding." I wonder how predictable and whiny such examples seem to the millions of Americans who watch a loved one die from cancer because they couldn't afford to take them to the doctor for early screening, or to Jim Horner, who lost his $900,000 of accumulated pension savings from twenty years of work when Worldcom went bust. I'm sure he'd be comforted to know that the past few years have been "very good years as measured by the Dow Jones industrial average." First against the wall, man, first against the wall.

More substantively, Lowenstein appears to have either not read the book or not understood it. There are perfectly good critiques to make of Hacker -- I'll be making one later this week in a forum we're doing -- but Lowenstein's charge that Hacker doesn't realize we're in a globalizing age,is both directly contradicted by the book and totally inane. Structural though some of the trends may be, nothing about them forces an increase in risk: Western Europe and Canada haven't let globalization deprive their citizens of health coverage, secure retirements, unions, or paid family leave. They've done what governments are supposed to do, surveyed the landscape, and legislated so as to protect their citizens from destabilizing forces.

The remarkably cycle that Hacker is pointing out is that, in an age when structural economic trends are pushing risk and insecurity onto individuals, Republicans have hastened the transfer, trying to push even more risk onto individuals through HSAs and privatization. Hacker, in contrast, is calling for some (so-to-speak) countercyclical policy-making that responds to rising risk with policies designed to combat it. Whiny and predictable, I know, but important nonetheless.

October 23, 2006 | Permalink


"Structural though some of the trends may be"

I don't think those trends are all that structural, but I am probably not enough of an economist to convince you that the last thirty years of fiscal and monetary policy were a very important factor in promoting globalization. But for instance, the "counter-cyclical policy-making" will have both direct and indirect costs to capital.

One can imagine an early 80s that didn't have Reagans's tax cuts/military spending/discretionary cuts/deficits and instead had intense gov't promotion of a high-speed national transit system and national energy policy. The move from an auto assembly line to a MagLev line is considerably easier on everyone than the move to a C++ programmer. The kinds of jobs created in America during the 90s were not a necessary result of a liberalizing Far East etc but a result of 80s gov't policies. Capital was created and liberated to move and was guided in certain directions by tax and fiscal policy.

Europe has the social welfare state it has in part because of the gov't jobs the welfare state creates, and the restrictions on movement of money its high tax policies create.

Posted by: bob mcmanus | Oct 23, 2006 4:48:23 PM

Lowenstein's comments about the Dow show him to be a liar for two reasons: first, the real increase in the Dow is minimal; it's the nominal increase that looks so good.

Second, most people don't have sh*t for stock investements; their prosperity depends on steady work far, far more than what the stock market does. A rise in the stock market only helps most Americans through more, better and higher-paying jobs, which this administration is notoriously lacking.

Posted by: Barry | Oct 24, 2006 3:27:00 PM

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