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2.0 out of 5 stars Backward Rather than Forward Looking Policies for Liberals, February 18, 2009
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This review is from: The Case for Big Government (The Public Square) (Hardcover)
Well, conservatism is in retreat in the United States and `liberal' is no longer a term of abuse. So, what are liberals going to do about long term social policy? I don't mean how should we deal with the current crisis, but rather how should we set and meet social goals to make a better society in the long run? I say "we" advisedly because I am neither a liberal nor a conservative. Rather I am more of a social planner-type who just wants to get the job done. This tends to make me critical of, and exasperated by, traditional political ideologies, which often substitute political correctness for solid ideas. This is why I read Madrick's book. Madrick is a true liberal of Michael Dukakis vintage, so his ideas will be in the running for such a vision in the next several years, provided we emerge healthy from the current financial meltdown.

If you want a well documented exposition of the thesis that the size of the government sector is not a problem, this is your book. I know that this finding will come as a shock to many, especially younger, readers who have been lectured to all their lives about the sins of drug abuse and big government, but Madrick is quite correct. It is not the size of government that affects social welfare, but rather the content of its taxation, expenditure¸ and regulatory policies. The simple fact is that there is no advanced economy without a large state sector, and traditional economic theory tells us exactly why: market failures and unintended outcome must be corrected by social intervention, in the absence of which a high level of wealth cannot be sustained.

If you want innovative ideas about new ways that government can serve the people, Madrick is not your man. His recipe list for social policy is basically, "let's go back to where Michael Dukakis left off, and finish the job." What this approach forgets is that there is a reason why conservatism took over, and if liberals make the same mistakes that they did in incurring voter wrath, the same thing will happen all over again. The idea, for instance, that trade unionism should be a considerable part of a progressive coalition is simply the kiss of death. In a global economy, unions cannot thrive in a competitive sector, because there is no monopoly surplus generated by firms that can be shared with the workers---profits fall to their competitive levels. This is why unions only do well in the state sector. This, by the way, is true the world over, not just the United States (e.g., the level of unionization in France is only 8%). Of course, one can also oppose globalization, but Madrick is not obtuse enough to suggest an anti-globalization policy (indeed, he tends to say that globalization is not a serious problem---p. 76).

Madrick also does not understand that the public's rejection of liberal social policy was not on grounds of economic efficiency and growth, but rather moral legitimacy. People believed the government wasted money, funneled perks to cronies, and administered a welfare state that rewarded sloth and anti-social behavior. The brilliance of Clinton as president was his clear recognition of this fact, and his support for policies that restored the appearance of legitimacy to the welfare system. Nowhere does Madrick recognize or affirm this point. All he says, over and over, is "big government does not lead to a low rate of economic growth."

Central to Madrick's vision of social policy in a redistribution of wealth to the lower middle class (non-college working class) through severe taxation of the rich and some vague transfer to wage earners (e.g., through unions, lower payroll taxes, and the like). I believe this is just a non-starter. The whole idea that the income distribution is "too unequal" and that voters are dissatisfied with the distribution of income is almost certainly incorrect. Only the liberal-left fringe care about the income distribution. Most voters care about the legitimacy of the private economy and the capacity of government to improve this legitimacy. For instance, the public is now pissed at the financial elite because they are feathering their nests while everyone else suffers, and their misdeeds are the cause of the crisis. This is a legitimacy issue, not one of abstract notions of inequality.

A progressive social policy must be based on the notion that attractive social programs are both efficiency enhancing and can be legitimated on general moral grounds. The so called "Employee Free Choice Act," which in fact severely reduces workers' democratic participation in union affairs, is a case in point. There is zero chance the public will not see right through the hypocrisy of abolishing the secret ballot in union elections. Similarly, liberal hostility to voucher and charter schools will be clearly seen as a payoff to the venal teachers' unions, the major enemies of better schooling, especially for the poor.

Rather than taxing and subsidizing, or strengthening unions, expanding day care for working parents and voucher/charter educational systems that transfer power to parents and communities will be heartily supported by voters, as will a heightened American leadership in the development of alternative energies sources and creating sustainable environments. We need more policies of this sort in the liberal reform dossier.

I hope that my alternative vision comes about, but I would not be surprised if the Democrats are no less pigs than the Republicans they have replaced, and avidly feed at the public trough just as Republicans did when their turn at the helm came to pass. What happens depends not on the politicians, but rather the progressive culture that develops on the local level around pressing social problems that we face.
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Showing 1-10 of 10 posts in this discussion
Initial post: Mar 21, 2009 9:00:23 AM PDT
"In a global economy, unions cannot thrive in a competitive sector, because there is no monopoly surplus generated by firms that can be shared with the workers---profits fall to their competitive levels." How do you know this?

"The so called "Employee Free Choice Act," which in fact severely reduces workers' democratic participation in union affairs, is a case in point." How does it reduce participation? Where in the act does it say secret ballots should be eliminated? Do you believe a card check system is prone to union abuse? Here in Ontario we maintained a card check system for many years (at least five decades worth) without a single case of an employer complaining of union intimidation, according to Harry Arthurs.

What is your source for your statement decrying the teachers' unions as "the major enemies of better schooling?" How do you know this?

In reply to an earlier post on Mar 24, 2009 12:51:55 AM PDT
I maintain that in a global economy, unions cannot thrive in a competitive sector, because there is no monopoly surplus generated by firms that can be shared with the workers---profits fall to their competitive levels. I have argued this for years on the basis of my observation of the American economy. In the US, precisely the sectors that had monopoly positions (internationally: steel, auto) had strong unions. Unions have argued for protection and against globalization precisely because they need a monopoly position to prosper. Domestically, unions have been powerful only in the state sector, including teachers' unions, because there is no competition in the state sector.

I maintain that teachers the major enemies of better schooling, because (a) their main political project is to prevent charter and voucher systems as much as possible; (b) they oppose merit incentive systems and protect bad teachers from being fired.

In reply to an earlier post on Mar 24, 2009 5:17:38 PM PDT
B. Handshue says:
I usually agree with your postings, Prof. Gintis. However, I find characterization that teachers a bit misleding. It is because parents are lazy and just want to whine. If parents had a problem with a teacher they could to the school board. They might not get them fired right away. My major problem witch the voucher system is that parents would have too much power and constrict what the teachers taught. Parents may not know what is best for students. Parents might want to have the students learn holocaust denying, and creationism. While I agree the bad teachers are problem, I think there is more than just blaming the teachers union.

In reply to an earlier post on Apr 8, 2009 2:30:56 AM PDT
Is there nothing beyond monopoly surplus that can be shared with workers? What are profits' competitive levels and doesn't this presuppose some sort of near-perfect competition?

That strong unions principally exist in the state sector, or in sectors having monopoly positions, isn't necessarily proof that they cannot survive in competitive sectors. Wouldn't you concede the possibility that unions argue for protection and against globalization not necessarily because they need a monopoly position to prosper, only that they're more likely to under such circumstances? What would you propose for bettering the conditions of unskilled or semi-skilled labourers?

How do teachers prevent charter and voucher systems? What are the principal differences between "merit incentive systems" and what exists today? How do you know that teachers' unions protect bad teachers?

In reply to an earlier post on Apr 8, 2009 3:55:56 AM PDT
Good questions.
Competition is close to perfect in most competitive industries in the sense that if the return to capital falls in an industry or firm , investment will shift away from the industry or firm to other industries and firms. When whole industries are involved, if the price elasticity of the good they produce is high, a wage increase can be transferred to buyers of the good, so workers can get higher wages at the expense of consumers. At the firm level, there is no such constraint. A firms with below-normal profits will go bankrupt. This is why in the era of industrial unionism in the US, unions had a united front against ALL firms in the industry (e.g., steel, mining, automobiles, trucking). With globalization, industrial unionism is impossible, because unions are not effective across national boundaries.

That strong unions principally exist in the state sector, or in sectors having monopoly positions, and that they have never been strong in competitive sectors is pretty good evidence that they cannot survive in competitive sectors.

I propose, for bettering the conditions of unskilled or semi-skilled labourers: (a) a higher minimum wage; (b) universal heath insurance, organized on the state, not federal level, but financed federally; (c) better day-care and parental leave conditions; (d) government financed life-long apprenticeship programs, carried out by private firms; (e) decriminalization of drugs and higher taxes on alcohol consumption.

Teachers prevent charter and voucher systems by their unions fighting relentlessly, tooth and nail, against them. The principal differences between "merit incentive systems" and what exists today, is that in a merit system, ineffective teachers are fired and effective ones given wage increases. Also important is tha abilitity of the school to kick disruptive students out of the classroom with students who want to lear.

How do I know that teachers' unions protect bad teachers? Please, just read up on the subject. In most systems, teachers can only be fired for the most extreme reasons. Poor teachers are sent to the inner city where they can't hurt middle-class students.

In reply to an earlier post on Apr 8, 2009 9:39:36 AM PDT
"How do I know that teachers' unions protect bad teachers? Please, just read up on the subject." Thoughts on where to begin?

"Poor teachers are sent to the inner city where they can't hurt middle-class students." Wouldn't surprise me.

But how do they fight against them? Why can't charter and voucher systems be instituted in spite of their opposition? Does this opposition extend beyond simple lobbying? Why adopt charter and voucher systems instead of simply reforming the current public school systems? Also, how do we measure the effectiveness of a teacher?

My last question on the topic of unions: what difference is there between a higher minimum wage and unionism for unskilled labourers, beyond simply a conceptual one? If an industry or firm cannot stay afloat paying higher wage rates incurred through its workers' unionization, why would it be any less susceptible to bankruptcy having to pay mandated minimum wages?

In reply to an earlier post on Apr 9, 2009 12:54:58 PM PDT
Google "american education, vouchers, teachers unions" and read a bunch of stuff. Also, read Terry Moe, Schools Vouchers and the American Public.
"Reforming" the schools is what competition would do. The teachers' unions fight competition because it undemines their power and makes teachers' pay meritocratic.
A higher minimum wage affects all workers, whereas unions only affect a few industries where they are powerful.
You seem interested in these issues, but not at all knowledgeable. I suggest you read 50 books or so on political economy and economics, including textbook economics.

In reply to an earlier post on May 19, 2009 11:49:15 AM PDT
"I propose, for bettering the conditions of unskilled or semi-skilled labourers: (a) a higher minimum wage; (b) universal heath insurance, organized on the state, not federal level, but financed federally; (c) better day-care and parental leave conditions; (d) government financed life-long apprenticeship programs, carried out by private firms; (e) decriminalization of drugs and higher taxes on alcohol consumption."

-- The first one doesn't help; the second and third way too expensive. The fourth and fifth, however, are interesting and worth consideration.

Posted on Aug 12, 2009 4:57:21 PM PDT
"It is not the size of government that affects social welfare, but rather the content of its taxation, expenditure¸ and regulatory policies."

This is utter nonsense. If we consider that government is the overhead costs of running a nation, then the size and efficiency of government does indeed matter. Every dollar that big government sucks from the physically productive side; the people and their means of production, is overhead that can't be used to improve their welfare. Let's remember that government is not the means of production, and that the government is not a creator of wealth, the private sector is. The more that is taken from the private sector, the less that can be invested in the creation of jobs.

In reply to an earlier post on Aug 14, 2009 7:18:00 AM PDT
Did anyone ever teach you how to discuss issues without taunting and degrading those you disagree with? Do you understand that most serious students of these matters won't read beyond "This is utter nonsense"?
If the government runs a hospital, or runs a state-owned automobile company, why is that not just as much a creator of wealth as the private sector? Of course, the government may be less efficient at doing these things (I think in general the government should stay out of production), but that is a different matter.
Most of the money paid in taxes are redistributed to others (defense and other government employees, which are direct government consumption, are the exceptions). It is not "sucked up"---it reappears in the form of Social Security, Medicare and Medicaid, and social infrastructure (roads and bridges).
My assessment of the size of the government sector are from studies that show that the size of government does correlate with per capita consumption.
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