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The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer

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Dean Baker a PhD. Economist and co-director of the Center for Economic Policy and Research (CEPR) provides a brilliant, evidence-based, iconoclastic deconstruction of the myth that liberals like "Big Government" and conservatives favor the "Free Market". He documents the importance of government intervention on behalf of the rich and powerful in most of the important sectors of the economy. Covering such diverse areas as immigration policy, patient (monopoly) law, "Free" trade agreements, bankruptcy law, and Federal Reserve policy, Baker clearly demonstrates how these policies operate in the background (below the radar of public perception) to decidedly advance the class interests of the already powerful.

If you carefully examine his arguments you will be less likely to fall into the trap of believing the only way to advance a progressive agenda is through major government spending (not that he is opposed to this in principle). Several market-based solutions which powerfully elucidate the current bias against working class people are thoughtfully juxtaposed to policies which would be class neutral or enhance the well-being of the more vulnerable segments of society if they were to be implemented.

Finally, Dr. Baker walks the walk and has made his complete book available as a free download which can be found at the following web address: [...]. Given the economical cost of buying the book in paperback, you should strongly consider purchasing on line as it represents a valuable addition to the expanding body of literature to assail the growing economic divide. The practical solutions advanced in this book make it an important read for both activists and scholars willing to take an honest look at current economic policy.

It is a myth that the rich, or market conservatives in the author's lexicon, unremittingly favor the operation of free markets with absolutely no government intervention. In fact, quite the opposite is the case. The author examines several key areas that show the lie of the idea that the rich favor free market outcomes. What they favor is governmental protection of their status and privileges. For example:

1. Both the gov and professional organizations limit the numbers of doctors, lawyers, and other professionals including the entry of foreigners. At the same time, rampant and/or illegal immigration floods lower-wage employment markets and some technical jobs. On the one hand, wages are artificially high, but suppressed on the other to the detriment of the greater good.

2. The Federal Reserve uses monetary policy to increase unemployment and thereby lower wages of the lesser skilled, while limiting the inflation detested by bankers.

3. Corporations are entirely government creations, yet conservatives obscure that point which permits unchecked CEO pay. In actuality the government could mandate governance rules that would likely curtail CEO pay excesses.

4. Copyright and patent laws in essence grant monopolies to the detriment of the free flow of goods and services, which can in fact be harmful as in the case of restricting the availability of needed medicines.

5. Conservatives support legislation to restrict the ability of individuals to seek redress in courts for harm under the name of tort reform. In actuality law suits are a market form of regulation in lieu of government intervention. Obviously, protecting the rich trumps market principles.

6. Free market advocates supposedly advocate choice. So why is there such fear on the part of private enterprise of people choosing Social Security and/or signing up with Medicare for both health care and prescription drugs? The fact is that private business is highly inefficient compared to those programs and can't really compete. Therefore they look to government to limit choice.

7. True conservatives have always had low regard for gambling and certainly insist on its being heavily taxed. But when it comes to Wall St speculation, which is what day-trading is all about, they turn a blind eye to taxing and thus limiting the undisputed harmful impact of speculative transactions.

There are a few more examples by the author, none of which can be seriously disputed. The book has the tone that things could be different: just point out the hypocrisy of the rich and reform will follow. Really?

The author can hardly be unaware that we live in a class society in which the major institutions with the task of inculcating the idea that markets are neutral and work for us all, namely educational and media institutions, are basically owned or financed by the rich. A few dissenting, fringe views are permitted here and there, but basically major dissent concerning the justness of our society is dealt with swiftly: removal or exclusion from school or job, or flagrant suppression.

The situation is more than just setting forth the facts before the public. Probably never before in our history has market ideology so permeated our society and given the rich so many effective tools to disseminate information favorable to their class interests. As far as any effective forces opposing this situation, can anyone honestly say that the Democrats at this point are willing or even want to reverse any of what the author points out any more than do the Republicans. The answer is "No".

You'd have to be the proverbial ostrich not to know that in i-pod America, the rich are getting richer, the poor poorer, while the middle class qualifies as an endangered species. What is not so well known is how redistribution is aided and abetted by government policy. Conservatives, as Baker notes, have been very successful in dressing up their windfall as the unbiased workings of the marketplace. Thus the citizenry accepts unfavorable results as the outcome of the glorified market god, in whose name things ultimately turn out for the best. Baker's slim volume (100 pps.) aims at showing how despite the smoke and mirrors, the god actually resides in Washington DC, in enumerated programs and policies directed toward funneling wealth upward. These measures and their rationale are kept in place by governmental machinery he dubs the "conservative nanny state" (cns).

Far from opposing government intervention in the economy, the cns uses intervention effectively in behalf of established wealth. The quarrel between liberals and conservatives is usually framed in terms of a liberal welfare state vs. a conservative free market. But, as Baker points out, these terms are seriously misleading. Both sides favor government intervention. Where they differ is over who gets the benefits, while the success of the cns lies in their ability to deflect public awareness from govn't actions that benefit the rich at the expense of the rest of us.

Baker examines a number of these biased policies showing how they funnel wealth upward. These prove to be enlightening discussions. However, what's unusual about the sections is his proposed remedy, which is essentially to let the markets operate free of the cns. For example, crippling health care costs have been sky-rocketing. They can be reduced, he points out, by allowing a greater supply of foreign physicians to immigrate. Or, consider long-depressed wage hikes. These can be resurrected, he argues, by curtailing the Federal Reserve's power to pump up depressing interest rates in the name of fighting inflation. Similar market-based solution are recommended for other cns biases.

It would be easy to assume that the author is a libertarian insisting on free market principles. But he's not, at least from my reading. For he proposes letting the govn't compete in the marketplace with private business, a definite anathema to classic libertarians. Hence, in his view, govn't should offer medical insurance to compete with private insurers for the consumer's buck. How well all this would work out is up to the reader to decide. Still, it's educational to examine how far cns policies depart from the hallowed conservative principle of non-intervention, and how effectively these measures are masked from public awareness.

One important arena not examined is the defense industry. It's a multi-billion dollar complex, the proceeds from which largely funnel upwards and, it would appear, a mother lode the cns regularly taps into. Why Baker doesn't examine cns activity in this highly significant sector is unclear to me. Perhaps, it's because solutions are not as amenable to market operations, or maybe because the topic is simply too big to be included with the others. Anyway, don't expect an expose of Lockheed-Martin et. al. and the cns in these pages. Nonetheless, the book is well worth the read, particularly for Chapter Five on bankruptcy and the cns's little-known role as both national and international debt-collector.

In "The Conservative Nanny State: How The Wealthy Use The Government To Stay Rich And Get Richer", Dan Baker (a macroeconomist and Co-Director for Economic and Policy Research in Washington D.C.) has written a revealing expose on how conservatives favor government intervention to regulate the market to their own advantage. Baker documents and illustrates a number of `nanny state' policies that advantage the wealthy while penalizing the poor, expand the economic well being of those at the top, while diminishing the middle-class and expanding the ranks of the impoverished. The fault does not lay with the market which is simply an economic tool. The fault lays with those who manipulate that tool to unfairly favor those that have to have more, and those who have little, to have even less. Deftly written so as to be fully accessible to scholars and non-specialist general readers alike, "The Conservative Nanny State" is a 199-page treatise that needs to be read by every economics student, every free market capitalist, every elected politician, every corporate manager, and every working citizen in the country.

"The Conservative Nanny State" by Dean Baker is a concise, 108-page book that seeks to change the popular debate about economy policy in the U.S. Mr. Baker's principle argument is that conservatives use market rhetoric to conceal the fact that the wealthy frequently depend upon government intervention to help protect and preserve class privilege. The author suggests that liberals should stop trapping themselves in the conservative play book and instead loudly promote alternative policies that use market mechanisms to distribute wealth in a more socially equitable manner. While not wholly convincing on all points, overall the book succeeds in demonstrating that progressives should not be intimidated into accepting conservative heterodoxy when a sane and just socio-economic future for all may be possible.

Mr. Baker makes three major proposals that effectively turns the table on conservative free-market ideologues. The first pertains to eliminating protections that are currently afforded to professionals; he believes that this would drive down medical and legal costs and, by extension, increase the purchasing power of the working class. The second is to democratize the Federal Reserve so that its bias towards creating excess unemployment in order to protect the profits of the banking industry is curbed. The third is to reduce health care costs by opening the industry to government competition, allowing individuals and businesses to purchase coverage through Medicare. In all three cases, the author suggests that free marketeers would have nothing to fear in these proposals if they truly believed their narratives about the supposed superiority of the markets and the private sector to government-run programs.

One only wishes that some of the author's arguments were laid out in greater length. While Mr. Baker occasionally cites the experiences of other nations as points of comparison -- such as when comparing health care costs in the U.S. with other countries -- he does not go into any detail about the trade-offs or unintended consequences that might emerge as a result of pursuing these policies. For example, one might imagine that many of the private insurance companies that currently provide health care coverage could fail if they had to suddenly compete with more efficient, government-managed entities. The disastrous Town Hall meetings of 2009 which became a platfom for those defending the status quo makes the point that the author could have done much more to prepare us to anticipate and address at least some of the most obvious objections and counterarguments to his proposals.

Still, Mr. Baker has performed a great service by showing how we might pursue policies that can begin to restore economic justice in the U.S. I recommend this thought-provoking book to everyone.

This is a neat little book. Dean Baker is an economist at the Center for Economic and Policy Research - a think tank with tons of fresh ideas - and he knows his stuff. He offers his take on issues such as trade agreements, monetary policy, CEO compensation, intellectual property, etc. and with each of these demonstrates how the interests of the rich dominate. For example, proponents of NAFTA support "free trade" for manufacturing goods produced by low skilled workers but oppose free trade in high skill occupations (law, medicine, accountancy, etc.) which leads to a great divergence in the income distribution. In each of the chapters Dean Baker argues clearly and persuasively. Do you want to know what share of private R&D spending in pharmaceuticals goes to unnecessary copycat drugs? Do you want to know why a corporation cannot exist in a truly free market? Do you want to hear why marginal productivity does not determine CEO pay? Get this book.

This book gives a great introduction to how a variety of industries get breaks from the system, so for example, how drug companies take tax money (through the NIH) and then after succesfully creating a new drug, patent it to create a monopoly. It's a wonderful introduction to what's wrong in our mixed market economy.

The author has made a case.However,the case he brings and successfully argues would not apply at all to conservatives like Adam Smith,Edmund Burke,Alexander Hamilton,George Washington,Abraham Lincoln,Theodore Roosevelt,Dwight D Eisenhower,Douglas MacArthur,Richard Nixon,Pat Buchanan,Lou Dobbs or Ross Perot.It applies to the type of thinker coming out of the economics department-business school of the University of Chicago. Arthur Laffer and Milton Friedman would be excellent examples.Friedman is a libertarian.His goal was to deregulate and privatize every aspect of the economy based on his Benthamite Utilitarian views that all citizens are able to accurately figure out all of the outcomes and measure the odds of their occurrences .All citizens are able to make fully informed , probabilistically accurate assessments of all decisions impacting their future.This approach regards financial decisions and decisions to invest in future durable capital goods to be identical to the decision to purchase bananas from a market in the present.

This theoretical perspective is very valuable to the Wall Street speculators(investment banks,hedge funds,private equity firms,etc.).Such an approach leads to the view that speculation in financial assets helps to create real goods and services over time because arbitrage by speculators leads to equilibrium positions.Unfortunately,such an argument applies only to commodities.It does not apply to financial products because financial products are subject to uncertainty. The Friedman and Laffer approach is based on the Benthamite Utilitarian gospel that there is no uncertainty about the future.The future is only risky .This means that there doesn't need to be any regulation because one can use the normal probability distribution(log Normal)to figure out all of the risks.Economists trained by the economics department of the University of Chicago and/or economists taught by economists from the University of Chicago were hired by the 1000's to serve in the Minerals Management Service, FRS,SEC,Fannie Mae,Freddie Mac,Office of Thrift Supervision,FTC,Justice Department,etc.The deregulated agencies then allowed the large Wall Street corporations to loot and pillage the economy with their speculative policies.In conclusion,it is " How Wall Street used the government to stay rich and get richer " that should have been the subtitle.All of the individuals mentioned earlier in my review were wealthy.None of them would support the looting of American that has taken place under the University of Chicago's libertarian,not conservative, approach to public policy.

Baker's analysis, while interesting, reads like it was done quickly and without the kind of depth that the subject deserves. I've heard him speak a number of times and always find him thoughtful, incisive, and fearless in his critique of the nanny state conservatives.

The book has too few subject areas that are examined, particularly when it comes to the military and its ties to the corporate welfare system.

The book's available as a PDF download from Baker's web site, and a synopsis of the book is in the 15-page introduction as a chapter-by-chapter explication of what he intends to cover. The introduction is, unfortunately, all you need to read in order to understand his arguments.

Dean Baker has become a prominent progressive economist. He is a prolific writer, his work ranges from very good to very sloppy. This book tends toward the low end. His main point is a good one, that conservatives don't really want free markets, they want all sorts of help from the government. That is why they want to control the government. However his examples and proposals include some questionable ideas: e.g., (Ch 1) favoring open immigration of professionals to lower professional wages (why not allow more Americans into the professions? The exodus of medical professionals is a huge problem for many poor countries.) (Ch 2) simplistically blaming the Fed alone for high unemployment (Fed ease enabled two huge speculations in the last 15 years); (Ch 4) proposing to eliminate patents and copyrights (a bit extreme); (Ch 7) details the advantages small businesses enjoy but fails to make any coherent proposals for reform. Other chapters fail to make their cases clearly.

He leaves out some very important violations of free markets. E.g., he doesn't get into the very great direct purchases and subsidies of governments at all levels (Defense Dept. and Halliburton come to mind), or the work of the 14,000 or so lobbyists in DC. There is no mention of the dozens of US interventions in foreign countries to support right wing dictators and protect American businesses. Dean does not examine how the transportation and land use policies have been designed to benefit industry. There is no section on serious environmental damages by corporations that have been allowed by government. Nothing about agriculture subsidies Etc. And nothing about the very large tax cuts by Reagan and Bush II. The roles of state and local governments (e.g., economic development incentives) are largely ignored.
There is no general discussion of what a mixed economy should look like - healthy competition and free markets plus a legitimate government role. We desperately need better ideas and criteria about this. This book does nothing to provide that. It appears to have been thrown together in a hurry. No editor is mentioned in the Preface, a good editor would have told Dean to start over.

A related book worth looking at is The Sixteen-Trillion-Dollar Mistake (Paperback) by Bruce S. Jansson