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81 of 92 people found the following review helpful
4.0 out of 5 stars Thought Provoking, Well Written Leftist Economics, September 17, 2003
This review is from: The Affluent Society (Paperback)
Galbraith's book is certainly thought-provoking & worth reading. His arguments are well thought out, and his writing is wryly witty. Even if you disagree with his views, as many have, it's worth a read.
Galbraith starts the book off by reviewing how many early economic ideas were created in periods of scarcity, and that the notion of scarcity may not appropriate for today's age of mass affluence. Those with vested interests in production (i.e. large businesses) still cling to the "conventional wisdom" that increased production equals progress, even though goods are now abundant and our basic material needs have been satisfied. To stimulate further demand, corporations must resort to salesmanship and advertising. If advertising stopped, demand would fall, production would drop, and unemployment would rise; thus, business continue to focus on increasing production to ensure their own survival.
There are other threats to production. Economic cycles may result in a depression. Poorly managed firms may have to lay off workers. As a result, people -- and especially politicians --focus on economic growth to avoid these insecurities. Growth is something that both the rich and poor will vote for, since they both want to keep their jobs and acquire more goods. Growing out of a recession also seems promising. The net result is that society as a whole focuses on increasing production by private industry.
Next, Galbraith shifts his view from private industry to the public sector. He does this by introducing the idea of social balance, which asserts that as private spending increases, public spending should increase to match. For example, if factories build more cars, more money needs to be invested in public roads. Unfortunately, private goods are sold via advertising by companies that can react quickly to changes in demand. In contrast, public investment by governments reacts much more slowly, and typically lags private spending and investment, due to regulations, bureaucracy, and voter's general aversion to new taxes. The result is a world rich in private goods but poor in public ones: beautiful cars driving on poor roads, well-dressed kids in the crumbling public school, neighborhoods with beautiful homes but polluted parks.
So what to do? Galbraith's proposed solution is that we should invest in our economic infrastructure: our parks, our roads, our educational system, long-term scientific research, police, and the like. To fund this, he emphasizes sales taxes, which reduce consumption, and make those who consume a lot pay for it. To alleviate poverty and inequality, Galbraith also proposes to expand unemployment insurance so that one could choose not to work, yet still be able to get by. In his view, this would allow more people to reduce their work week, or not work at all, or to be able to focus on work they really enjoy.
Although this is certainly a liberal view & may not be feasible, his views certainly were eye-opening and thought provoking. For that reason, I recommend the book.
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Initial post: Jul 11, 2010 4:16:09 AM PDT
B. Fuller says:
Just a point of contention. Such a socioeconomic reality is feasible and has existed and does exist to varying degrees, particularly throughout Europe and North America. Galbraith was not speaking from a pie-in-the-sky perspective as you seem to intimate. Though, as my French friends, similar to Galbraith, have hammered into my head: The French have a slightly lower per capita income than Americans yet consume considerably more social products (public transport, free daycare, an array of other social welare benefits) that more than make up for the fewer private consumer goods they can purchase.

Galbraith was certainly not speaking from an infeasible worldview. But certain tradeoffs have to be made for that worldview to be brought about. Unfortunately, in America today we don't even have serious discussions about what those tradeoffs could be. During the healthcare debate, for example, one would hear fleeting mention of single payer plans but no real discussion of what one would look like. The Canadian healthcare system, which is virtually single payer, is just a drive to our north, yet I don't recall even fleeting explanations in major media outlets of how their system works.

What Galbraith wrote is becoming less and less the American reality not because it's infeasible, but because those wealthy people who largely control the flows of information and attitudes usually make their money from consumer goods not public ones. It seems so infeasible because Fox News and CNN and, indeed, the NY Times are for-profit organizations that could very well find their owners and top executives with less after-tax income if society were to become more egalitarian. It stands to reason that they will not lavish liberal or socialist options upon you.
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