Contemporary American society has the look of a split-level structure. Its political and social institutions distribute rights and privileges universally and proclaim the equality of all citizens. Yet economic institutions, with efficiency as their guiding principle, create disparities among citizens in living standards and material welfare. This mixture of equal rights and unequal economic status breeds tensions between the political principles of democracy and the economic principles of capitalism. Whenever the wealthy try for extra helpings of supposedly equal rights, and whenever the workings of the market deny anyone a minimum standard of living, " dollars transgress on rights" --in the author's phrase. In this revised and expanded version of the Godkin Lectures presented at the John F. Kennedy School at Harvard University in April 1974, Arthur M. Okun explores the conflicts that arise when society's desire to reduce inequality would impair economic efficiency, confronting policymakers with " the big tradeoff." Other economic systems have attempted to solve this problem; but the best of socialist experiments have achieved a greater degree of equality than our mixed capitalist democracy only at heavy costs in efficiency, and dictatorial governments have reached heights of efficiency only by rigidly repressing their citizenry. In contrast, our basic system emerges as a viable, if uneasy, compromise in which the market has its place and democratic institutions keep it in check. But within the existing system there are ways to gain more of one good thing at a lower cost in terms of the other. In Okun's view, society's concern for human dignity can be directed atreducing the economic deprivation that stains the record of American democracy--through progressive taxation, transfer payments, job programs, broadening equality of opportunity, eliminating racial and sexual discrimination, and lowering barriers to access to capital.
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Most Helpful Customer Reviews
30 of 30 people found the following review helpful
By A Customer
Format:Paperback
This short book is nearing its thirtieth birthday, and in spots it shows its age. Its many references to U.S. income levels, for example, have to be (roughly) quadrupled to reflect current patterns.
Nonetheless, this is an extremely clear introduction to one of the central political and economic issues of the past century: To what extent should government (and more broadly, society) pursue economic equality? Okun is at his best in pointing out the tradeoffs that both liberals and conservatives must face. Okun argues that with some exceptions, pursuing a great deal of equality will cost society a great deal of efficiency for four reasons: there are fewer incentives for the working rich, fewer incentives for the working poor, less capital investment by the rich, and more administrative costs. On the other hand, singlemindedly pursuing efficiency will cost society a great deal of equality, with the rich getting richer and the poor poorer. Okun clarifies why the tradeoff exists through clever uses of metaphors, most notably his famous "leaks in the (transfer) bucket." Okun ultimately chooses a relatively liberal tradeoff that favors equality, but he always acknowledges the other side's arguments because, like most economists, he respects the powerful efficiency of well-working markets.
Just as interestingly, Okun also discusses cases when we all-- liberal and conservative alike-- may agree to emphasize equality. Voting, trials, and other forms of political life, for example, are areas where we all might wish that government (and its propensity for equality, treating all of us as equal) would prevail over the market (and its propensity for inequality, giving some individuals much more influence than others). Yet often the market prevails in such political areas as well, as we see high-priced lawyers gain advantages in trials, and rich campaign contributors gain advantages in voting and lobbying. In such cases, says Okun, the necessarily unequal market has colonized an area--government-- where equality should be the norm.
One doesn't have to agree with all of Okun's conclusions to find this a thought-provoking and insightful book.
Nonetheless, this is an extremely clear introduction to one of the central political and economic issues of the past century: To what extent should government (and more broadly, society) pursue economic equality? Okun is at his best in pointing out the tradeoffs that both liberals and conservatives must face. Okun argues that with some exceptions, pursuing a great deal of equality will cost society a great deal of efficiency for four reasons: there are fewer incentives for the working rich, fewer incentives for the working poor, less capital investment by the rich, and more administrative costs. On the other hand, singlemindedly pursuing efficiency will cost society a great deal of equality, with the rich getting richer and the poor poorer. Okun clarifies why the tradeoff exists through clever uses of metaphors, most notably his famous "leaks in the (transfer) bucket." Okun ultimately chooses a relatively liberal tradeoff that favors equality, but he always acknowledges the other side's arguments because, like most economists, he respects the powerful efficiency of well-working markets.
Just as interestingly, Okun also discusses cases when we all-- liberal and conservative alike-- may agree to emphasize equality. Voting, trials, and other forms of political life, for example, are areas where we all might wish that government (and its propensity for equality, treating all of us as equal) would prevail over the market (and its propensity for inequality, giving some individuals much more influence than others). Yet often the market prevails in such political areas as well, as we see high-priced lawyers gain advantages in trials, and rich campaign contributors gain advantages in voting and lobbying. In such cases, says Okun, the necessarily unequal market has colonized an area--government-- where equality should be the norm.
One doesn't have to agree with all of Okun's conclusions to find this a thought-provoking and insightful book.
10 of 13 people found the following review helpful
By Ware Wendell
Format:Paperback|Amazon Verified Purchase
It really is a shame that one apathetic student is dragging the rating of this important book down.
The ideas expressed by Okun here have withstood the test of time and are especially relevant in light of current government policies.
Highly recommended for those who want to deepen their thoughts and broaden their perspectives about the role of markets, government, and how the two relate to one another.
The ideas expressed by Okun here have withstood the test of time and are especially relevant in light of current government policies.
Highly recommended for those who want to deepen their thoughts and broaden their perspectives about the role of markets, government, and how the two relate to one another.
14 of 19 people found the following review helpful
Format:Paperback
I'm writing this review horrified that this book currently has only 3 stars (hopefully my vote will change that). I care because it is a VERY good book, extremeley and interesting and extremely relevant to the functionality of our society.
I cannot think of many things that are more important to how our society functions than the issues surrounding equality. This is a very readable way to get thinking about this subject or find others writing clearly summarized.
Thinking has developed slightly since this books was written, but the overall ideas still hold. Highly recommended.
Don't be dissuaded from reading this book by someone who read it because they had to. Bad teachers can make anything a miserable experience.
Most Recent Customer Reviews
3.0 out of 5 stars
This book probably needs to be longer...
I like this book, and I like Okun, however there are so many areas where I felt like he could have gone into a lot more explanation, and clarified his ideas better. Read more
Published 5 months ago by Marguerite Abaddonais
5.0 out of 5 stars
One of my favorite academic reads!
I love this short book and re-read it every 5 years or so. I would recommend any one interested in the social sciences to have a copy of this book in their library. Read more
Published 8 months ago by Ojan Karimi
4.0 out of 5 stars
Good but Not Great
This is an interesting book, and has proven to be a classic in the field, but it's nothing too exciting. Read more
Published 13 months ago by David
3.0 out of 5 stars
An academic examination
Okun clarifies the issues surrounding the tradeoff between equality and efficiency, rather than taking a firm position on the issue of how much society should exchange one for the... Read more
Published 17 months ago by Sagar Jethani
5.0 out of 5 stars
Personally influential to the present day
Although I read this book almost fifteen years ago (as part of an economics course), it still influences my thinking to this day. Read more
Published on March 7, 2010 by Paul
5.0 out of 5 stars
Excellent 20th Century Political Economy Summary
In "Equality and Efficiency: The Big Tradeoff" Arthur Okun explains why both the state and the market is needed for an equitable and efficient society. Read more
Published on February 18, 2010 by Rufus Burgess
5.0 out of 5 stars
Most remembered from my MBA studies
I'm surprised that this book was a "forced read" at Reed College, according to another reviewer. It's not exactly conservative, but I didn't think it merited a part of a Reed... Read more
Published on July 9, 2009 by Michael Coglan
5.0 out of 5 stars
One of the most politically influential books you'll ever read
These days everybody thinks that to spark deep thought, you need to write a fat tome.
Arthur Okun is more like Thomas Payne. Read more
Arthur Okun is more like Thomas Payne. Read more
Published on October 23, 2007 by Stephanie Dray
5.0 out of 5 stars
Concise good book for economist, policy maker, and general audience
A great short book on the topic of equality and efficiency. I think it is a must read in any college economics, sociology, policy class, and maybe even in advanced high school... Read more
Published on February 20, 2006 by Nestor Rodriguez
2.0 out of 5 stars
It was a forced-read, so I wasn't too keen on it to start...
When I attended Reed College, my economics professor assigned this book as a "quick read." Unfortunately, the book is rather dry, and I didn't pull much out of it. Read more
Published on February 11, 2001 by Olaf the Bear
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