Timothy Taylor, one of the nation’s most influential teachers of economics (e.g., through his Teaching Company lectures), offered an interesting high-level perspective (in an interview) on how Americans currently think about economics:
“… when people talk about growth, the first thing they talk about is not the role of the private sector or firms. They talk about how the government can give us growth, through tax cuts or spending increases or the Federal Reserve. When they talk about fairness and justice, they don’t talk about the government doing that. They talk about how companies ought to provide fairness and justice in wages and health care and benefits and all sorts of things.”
Readers: Is he basically right?
Evidence for: here in Massachusetts, the state government preaches to businesses about how they should provide better benefits but meanwhile tries to hire as many as possible of its new workers as consultants so as to avoid having to pay for health insurance, pension, etc., and so as to avoid providing a lifetime employment guarantee. Instead of the government building houses to allocate to people whom the government selects, commercial property developers are required to give away a percentage of what they build (though the actual identification and selection of the recipients of the newly built apartments, etc., is done by a government worker). “The Eviction Epidemic” (New Yorker):
When tenants have legal representation, their chances of keeping their homes increase dramatically. A program that ran in the South Bronx from 2005 to 2008, for example, provided legal assistance to more than thirteen hundred families and prevented eviction in more than eighty-five per cent of the cases, saving New York City hundreds of thousands of dollars in estimated shelter costs.
Having a greater percentage of the GDP devoted to lawyers representing people who aren’t paying commercial landlords is considered by the writer as a way to “save” costs and there is no discussion of the fact that costs for providing free housing have to some extent simply been shifted from the government to commercial landlords (it might be true that a commercial landlord can provide a free house at a lower cost than a government-run “shelter”).
Evidence against: people who say that they’re interested in “social justice” spend a lot of time advocating for more taxpayer-funded government hand-outs, either by making benefits more generous or available to a broader group of residents.
Right now I’m enamored with the ideas of Hyman Minsky disciple Steve Keen. In short, Keen says that for the U.S. to avoid multigenerational stagnation, a la Japan, the govt should do a helicopter drop (my term, borrowed from “the bernanke”– Keen uses the more historical “jubilee”) thus reducing the oppressive burden of debt and giving the people a new economic life. Keen says that everyone should get a bundle of cash, but debtors should be required to use their bundle to pay down debt.
Timothy Taylor seems to be complaining that the good people of the US are rational. Unless J random American votes for the board of a company, JRA does not have any ability to affect the company’s decision to invest in the US or in JRA’s state or hometown. JRA can, on the other hand, vote for the government and use that vote as a means to influence business decisions from private actors.
In addition, JRA (you too, dear reader) is affected by many decisions made by private actors in the business sector. Let’s now assume that a private business actor objectively discriminates against you because you happen to be Jewish. This discrimination is illegal and can probably redressed by appealing to the government. This redress activity is a massive PITA for the person whose rights have been violated, and so it makes sense to demand that private actors respect the principles of equality and fairness that they should already comply with, without the need to use the government as a third party adjudicator and go through all the bother.
Finally, if the taxpayer at large has a number of legal obligations, it makes sense to discharge them as cheaply as possible. Thus the rational way to judge the South Bronx legal support for tenants is to ask: was the overall outcome cheaper than the alternatives? If the answer is yes, the only rational complaint is to complain that legal support was needed in the first place.
The two earlier commentators make good points, and Keen’s idea addresses one concern I had with debt relief, which is needed, and that is most schemes including the ZIRP currently in place are black eye to savers. Giving everyone cash, with it used to pay down debt but pocketed if there is no debt, addresses that.
The current US economic system, as described in this post, is corporatism, most associated with Mussolini. It is capitalist, but hasn’t been a free market system for some time except maybe on the retail level.
Ed: “corporatism most associated with Mussolini”
Let’s not forget that it was underwritten by fascism, a political system that relies on intimidation of, and brute physical force against whoever dares to be opposed to it. The USA became an industrial giant using similar worker unrest suppression methods, and, were it not for the stock market crash of 1929 (in itself a synthetic bubble), and the ensuing New Deal and WWII, could well have become a full face fascist country. Instead of present near Orwellian one, but slowly getting there just in time to stave off real hunger riot games” by the eternally dispossessed.
He was great on Tool Time.