Renegotiating the Social Contract
The good folks at the journal Democracy and the Hamilton Project asked me to speak at a recent forum on the concept of a social contract. Here’s my chin music…see if it resonates.
I’ve been asked to address the question: “What Happened to the Old Social Contract?”
It’s a challenge to say what happened to the old social contract, because I fear if I asked each one of us what it was, I’d get that many different answers. Many of us talk about this idea in the context of the social and economic programs first implemented after the Depression and in the decades following WWII, but those were very unique times. As are these times. As is every other time period.
So allow me to stipulate the following: a social contract, new or old, is, like any other contract, an agreement, a quid-pro-quo. You agree to do something for me and I agree to provide something to you. Or, in the case of a social contract, you agree to act in society’s interest, and society will provide you with something you want and need.
Often, this comes in the form of fair opportunities for you and your kids. Or, it could come as enhanced economic security, such as protection from market failures, unforeseen negative shocks to jobs or incomes, illness, retirement, and unscrupulous members of the society who do not act in accordance with the contract.
How—through which mechanisms—do societies meet this contractual obligation?
In earlier periods in this country, and today in many other advanced economies across the globe, government plays a key role in fulfilling its side of the deal. Social Security, for example, is an elegant, albeit partial, solution to the problem of maintaining living standards after retirement.
In social contract terms, the idea behind Social Security is that today’s workers create the capital, the technology, and the wealth that will support tomorrow’s generation. Embedded in its formulas is the notion that those of us who came before, whether they were teachers, accountants, homemakers, mail carriers, barbers, cashiers, or lawyers, have built up the productive capacity of our nation.
When the children of these workers come of age (along with new immigrants), they will earn their living from this infrastructure while also making their own contributions. As they do so, we will peel off some portion of their earnings to provide pensions for their forebears, just as those forebears did for their own predecessors. If this were a Disney movie, music about the “Circle of Life” would swell up here, but suffice it to say, Social Security is an elegant collaborative solution to a universal challenge.
I could make similarly spirited arguments for a robust system of public education, public health coverage, labor standards, and so on.
But I’m getting ahead of myself. Before I elaborate solutions, we need a better grasp of the problem.
And there’s even another step before that: before we can agree on the problem, we have to be clear about our expectations. We have to define what’s fair. This summer, my seven year old appears to have decided that school-year bedtimes no longer apply. So for her, staying up to all hours is not a problem.
Similarly, though their numbers are dwindling, there are those for whom current levels of income inequality or wage stagnation are not problematic. For me and for more and more people I encounter—outside of my rants on the Larry Kudlow show—they are.
Who’s right?
I’d like to offer three principles against which we can judge the nature and scope of the economic problems we face; three concepts that I suspect most of us would agree must be present in a viable social contract (and I’m borrowing here in part from the work of Fred Block): reciprocity, fair competition, and fair opportunities.
I’ve talked about reciprocity, and, in the context of our discussion today, I consider it the most important of the three. The best statistical shorthand for demonstrating its absence in today’s economy is the split between strong productivity growth and the stagnant real wages and incomes of the typical or median family.
Equally important in this regard is the share of income accruing to those at the top of the scale, and the fact that poverty rates, by any measure, have not responded at all to growth in the current recovery.
Fair competition means enforcing rules of the road that grease the skids of capitalism. Economists since Adam (Smith) have recognized that left to their own devices, unfettered markets will not provide the discipline needed to prevent serious cheating, damaging externalities, monopolies, and power imbalances that violate key market principles and lead to terribly wasteful inefficiencies.
Unfortunately, we are relearning this lesson daily as excessive deregulation has undermined fair competition. There are far too many examples, from the current tax code, to energy deregulation, Enron, environmental degradation, and most recently, concern about the quality of imports and the subprime fiasco. Our trade deficit is partly driven by competitors who peg their currency to ours, and amazingly, I hear legislators seriously consider trade deals with a country like Columbia, where over 2,000 trade unionists have been murdered since 1991.
Finally, fair opportunities are key to any social contract in a democracy. Two principles to be mindful of here are the extent of economic mobility and access to quality education. Both of these principles are in trouble in our economy. Surprisingly, intergenerational income correlations, say, the correlation between fathers and sons incomes, are higher here (implying less economic mobility) than in Europe or Scandinavia, and there’s fairly convincingly evidence that these correlations have grown, implying less mobility over time.
There’s also strong evidence that income constraints prevent children who should be finishing college from doing so. For example, we find that about the same share—about 30%—of the highest scoring poor children complete college as do the lowest scoring rich children.
In sum, the three core principles that comprise the social contract are currently being violated. Prosperity is not being broadly shared, violating the principle of reciprocity. Lack of oversight has led to unfair competition that violates key efficiency principles of free markets. And the excessive concentration of wealth and political power is undermining fair opportunity.
How did we get here and what to do about it?
Actually, those two questions yield the same answer: no more YOYO economics.
This idea that “you’re on your own” (YOYO) has been the underlying theme of much public policy for the past few decades. It’s the notion that no matter what ails us, the market solution is the right solution. Here’s a tax cut, a private account, and a gentle, or not so gentle, nudge into the marketplace. YOYO’s fingerprints are on the failed efforts to privatize Social Security and Medicare. YOYO arguments are mustered in favor of regressive tax cuts, every trade deal under the sun, and in opposition to market interventions like increased union power or the minimum wage.
The advocates of YOYO relentlessly argue that their path unleashes market forces with great macroeconomic outcomes that will then be fairly distributed as per our meritocracy. Never mind that YOYO outcomes are macro-economically unimpressive and distributionally terribly skewed.
What’s disturbing is that too much of what passes for liberal social policy accepts the market arguments of the YOYOs but adds the wrinkle of redistribution through taxes and transfers. “We’ll let the market rip, but we’ll sprinkle some benefits on the losers.”
There are two problems with that. First, you can’t renegotiate the social contract—you can’t reinvigorate reciprocity, fair competition, and opportunity—if you ignore the power dynamics that determine the primary distribution of incomes and wealth, otherwise known as market outcomes. Unions, minimum wages, fair trade deals, interventions in fx markets, active full employment policy, return to progressive taxation, universal health and pension reform, re-regulating financial markets, renewed labor standards and oversight, family friendly work policy—all of these are not just fair game…they are THE game. They’re at the heart of a comprehensive solution that’s at the scale of the problem.
Second, unless we address the fundamentals undermining the social contract, we will constantly have to ratchet up the redistribution machine, beseeching Congress year in and out to offset ever rising market-driven inequality. I, for one, don’t want to sign up for that job.
But there is, I believe, a change in the air. YOYO economics is increasingly viewed by the median voter as congenitally unable to meet the challenges we face. From globalization to health care, the debate is not so subtlety shifting, and what the media often calls “populist economics” is ascendant. Where this leads is of course yet to be seen, but listen to the economic agendas of the Democratic front runners, one of whom I suspect will be our next president, and you will hear these themes writ large. Each one of them has at least a few big ideas about renegotiating the social contract in the spirit of my remarks.
Thus, I urge those of us here who are advising campaigns, or crafting policies to get their attention, to think big and bold about economic policy. This will take more than small bore tweaks through the fisc. Along with progressive reform of the tax code, our prosperity agenda should include policies that are up to the task of reconnecting living standards and growth, repairing and expanding the safety net, regulating fair competition, using the breadth and scope of government to craft an efficient health care system, re-build workers’ bargaining power, and ensure full employment.
That, I believe, is how we renegotiate the social contract and in so doing, rekindle faith in an economy that works for all comers, not just the chosen few.
Abrogation of the social contract by the government is not only unfair but it is unconstitutional. The government is required by law to promote the general welfare. It's one of the main reasons that we have a government, and not to promote corporate welfare as is too often the case.
July 27, 2007 1:35 PM | Reply | Permalink
A poetic response to the idea of a "new social contract" here.
July 27, 2007 2:38 PM | Reply | Permalink
The lowest point for the number of foreign born in the United States, and the low point for share of population, came during the 1970s. The number and share had been dropping since the Depression. Reagan marked a significant change of course in American policy. The PAATCO strike was the signal. More or less opening the doors to immigration was a major mechanism for destroying the strength of unions. We are now at the largest number of immigrants ever, and the share of population matches the turn of the century. I am not saying immigrants are evil or applying any kind of xenophobic stereotype. I am saying that opening the doors was part of a deliberate strategy to shift the balance of power toward corporations, and we are seeing the effects today. Restoring the Social Contract will require first specifying who is part of the bargain. The post war SC rested on a clear notion of who belonged, thus who owed the obligations, and who should reap the benefits of which our author speaks.
Jared's analysis of the intergenerational compact underpinning Social Security is right on point. A similar argument is that it was Americans who built this incredible infrastructure, presumably for Americans. When an illegal immigrant crosses the border, willing to work for exploitive wages, taking jobs that once were union jobs, he or she benefits from the infrastructure Americans created. That immigrant instantly becomes a more productive worker, but not by dint of the efforts of his or her own people. The de facto policy of allowing one million undocumented workers into the country per year violates the Social Contract every bit as much as trying to privatize the Social Security Trust Fund.
Anyway, great article. A keeper.
July 27, 2007 3:20 PM | Reply | Permalink
Fascinating and thought provoking, thanks Jared!
I really like what you're saying here and I could not agree more with the importance of reciprocity. But my question is - is there really a place in Capitalism for it?
I've got a personal love-hate relationship with the repercussions of Capitalism. Or perhaps to be more accurate modern Capitalism and what it's evolved into. With profitability codified into law where does that leave reciprocity? There is only so much growth and only so many markets before the curve flattens isn't there? And at that point you need to start tightening belts and skipping every other screw (or employee) in order to continue to show the kinds of profits and growth that are expected/demanded in today's markets. As I've said in the past, I'm no economist and I probably gauge things too often with the old "well when I was a kid that cost a quarter" so maybe I'm being overly simplistic. Or maybe I've completely lost my mind but how does the kind of balance that the social contract approach suggests square with our current economic build (Greed 4.0)?
Will something not have to be sacrificed? I would think that it would. And the only area with anything TO sacrifice would seem to be profits/growth right? Heaven knows the worker has never been on the favorable side of this battle and has virtually nothing left to give. They fought for many bloody years after eons of exploitation for the few rights they have. And now many of those are evaporating before our eyes or are simply not expanding with new markets and emerging industrial nations. It would seem that workers won a few battles and went home elated but ultimately lost the war. And I think that it is the workers (with the vast number the profession) that represent the backbone of a nation. But with the revolving door between corporate executive and politician/political appointee, altering things would appear to be a very difficult challenge. I would think that they would certainly not be too happy with a more modest and family friendly version of Capitalism.
I'm excited at the prospect that we may be collectively ready to reevaluate this relationship though and I hope we can all arrive at a mutually beneficial solution! (insert old song ...Happy days are here again...)
July 27, 2007 3:53 PM | Reply | Permalink
Social Security -- generational income redistribution or return on capital investment?
1. Transfer of a portion of non-retired workers' labor product (wage earnings) to non-productive retirees; or
2. Payment by non-retired workers to retirees constituting satisfaction of their debt to the earlier generation for having invested in current workers' productivity (principally, education expenses); or
3. Recoupment of the earlier investment in public capital goods which generates a portion of current labor product.
Or to say it simply, the retired generation paid for the education of current workers (personal capital) and paid for the public infrastructure and much of the R&D which current workers employ and upon which their labor productivity is based.
Social Security is not "redistribution"; it's "repayment."
Quaere: When the Fed invites J.P.Morgan to back its sixteen wheeler up to the door of the bank and take as much money out at 1% interest as it wants, who says that's "capitalism" and why should JPM execs get the benefit of the windfall?
July 27, 2007 6:18 PM | Reply | Permalink
I hear you mcboo and feel your ambivalence. But the way I see it, in every society, social/economic policy locate somewhere on a continuum, with pure market, extreme YOYO capitalism at one end and I-don't-know-what--maybe command and control, five-year planners, at the other.
Yes, we're closer to the capitalism end of that continuum right now--too close in both my and your views, I think. But, historically, at times like this corrective mechanisms have existed to move things back toward more of a hybrid economy, with a better, more binding, social contract.
A big problem we face is that the forces of darkness have jammed those mechanisms. The Roves and Norquists have had a stranglehold on the debate and convinced majorities that any move away from YOYO is going to bankrupt you and the nation (the Bush admins fear mongering re terror has helped here too).
My point is that I think/hope that's changing, as I stress in the post.
One eg: Bush, Rove, and the R's are attacking expanded child health care (S-CHIP) as socialized medicine. It's pure YOYO, and it doesn't seem to be sticking at all. Again, I could be wrong, but no one seems to be taking that attack seriously. Same thing happened the other day when Mitt said Hillary was a Marxist for touting the types of ideas I note above. I believe such attacks sound silly to people right now.
But that's just my take--no evidence yet other than the '06 elections, which bore a lot of this stuff out, and the fact that many pols are running with these ideas, and that tells you something.
July 27, 2007 7:50 PM | Reply | Permalink
I think there is perhaps a way to put the issue in a simpler fashion...
All freedoms begin with economic opportunity (note I said opportunity not condition). Without the opportunity to achieve economic independence or, if you will, freedom one has no freedom. Any social contact that does not recognize and provide for that opportunity is not worth a picture of warm spit and ought be voided by any means availed.
July 27, 2007 9:45 PM | Reply | Permalink
This kind of reasoning buys into the Republican fantasy that taxation is a zero-sum game. Republicans have this fantasy that dollars that go to Washington are burned in basement incinerators by a Democratic conspiracy entrenched deeply in every bureaucracy.
But that's not true. Taxation is simply another transaction in an economy. Everyone understands that a dollar spent at Wal-Mart is not a dollar lost to the economy, that Bentonville recycles that dollar. Yet few people comprehend that a dollar spent in Washington gets recycled the same way (and actually faster because it doesn't go through China).
The question for the health of the economy is straight-foward, does the economy fare better when that dollar is spent at Wal-Mart, or when it is spent in Washington? It depends on how Bentonville and Washington invest the dollar. I tend to believe that if teachers had been paid doctors salaries the last 20 years we'd have flying cars by now, powered by a renewable energy source. Taxation could have given us that, Walmart did not!
July 28, 2007 12:21 AM | Reply | Permalink
BVZ betrays his non-sequitur with the circular assertion that if one does not have freedom (if you will) then one has no freedom. No argument is offered to show that my freedom of speech, for instance, depends on the Walton family's right to sit around collecting dividend checks (thus achieving "economic independence").
July 28, 2007 6:48 AM | Reply | Permalink
Note that the first listed Power of Congress in Article I uses more direct language "...provide for the common Defence and general Welfare of the United States..."
July 28, 2007 7:02 AM | Reply | Permalink
I'd like to say something about intergenerational economics. Currently the wealthy are creating a campaign designed to turn the young against the old (how will be pay for the longer lives and higher health care costs of all those useless geezers?)
Instead of looking at the way social services are financed as a pay-as-you-go system look at is a pay-it-forward system. When my children are young I pay for their health care, schooling and other needs. When they grow up they pay me back.
This is an intergenerational social contract. In many societies there was no possibility that such a question could even be considered. Veneration and care for the elders was ingrained in the culture. YOYO not only extends to the less fortunate, but is being extended across generations.
--- Policies not Politics
Daily Landscape
July 28, 2007 7:20 AM | Reply | Permalink
A root issue needs clarifying---the significance of wealth or achievement is solely relative, not absolute. It's not how many toys you have but whether you have more than [some other guy].
We don't have to resort to observing apes to support this---look at the price structure of quality goods. As we near the top of a field (elegant wristwatches, Stradivari violins) the price differential goes geometrically up, as the opportunities to move up narrow to a few choices. If wealth were a rational reflection of value, a Rolex would cost more than a Timex, but not a whole lot more.
I don't recall any businessmen or high-level investors throwing in the towel and saying "It ain't worth it" back in the days of 90% marginal rates. They could still top the others, the competition was still exciting and rewarding.
So limiting the "dynamic range" of wealth won't stop competition and the struggle for success, but will it help? Absolutely. Simply imagine whether you could ever hope to compete with Bill Gates. Yeah, right. See what I mean?
To the extent that the successful are not astronomically beyond our comprehension we have some hope of meeting them at their level. But when one party has ascended to the Empyrean heights we in fact do give up. And we no longer consider that person one of us, either. This is not a prescription for healthy civil society.
How can I measure myself against a person that could buy several countries? How can his personal talent and efforts possibly be worth ten thousand times what I could achieve in a lifetime? How can this ever be viewed as natural, rational, and healthy?
It is an utter falsehood that wealth-leveling taxation would reduce incentives for economic competition and achievement; the folks on top will not walk away from their "jobs". But there is a real risk of everybody else losing interest in the community as a whole, when it seems to be owned by a few gods on Olympus.
July 28, 2007 7:23 AM | Reply | Permalink
Dare I broaden this a bit? I guess I do. First, I agree wholeheartedly with Jared Bernstein's approach in the essay. He, along with Maggie Mahar are always "must reads" for me. Her most recent offering, "You, Me, We" has a lot of Social Contract ideas embedded in this. What I'd like to contribute to this discussion was sparked by these lines in Bernstein's essay.
YOYO isn't just an economic issue. "You're on your own" negates the very idea of community itself. The idea of community can be traced back to Aristotle, (at least)--though I don't want to bore anyone by going back that far. But certainly the concept as framed by Thomas Hobbes is worth mentioning here. Hobbes argues we contract with each other to give up our right to do whatever we please according to our strength (Where does the 800 pound gorilla sleep? Anywhere it wants to) in order to be protected from assault by others exercising their right to do whatever they please (except in the bed of the 900 pound gorilla). We cede this right to government, a neutral arbiter, in Hobbes view.
Out of that comes The Commons. I'm working my way through Thom Hartmann's book, Unequal Protection, which brought new insights on the way corporate personalization has assaulted the democratic commons, but the idea of the Common Good or General Welfare goes back to John Locke and beyond. Locke on Property is often used to defend the propertied interests, but there are two important qualifiers Locke adds which the right neglects:
But our own John Winthrop goes farther. Locke provides no obligation for a person to give back to the commons property rightly taken from it; Winthrop does. "We must be willing to abridge ourselves of our superfluities, for the supply of others’ necessities." He goes further: "...when there is no other means whereby our Christian brother may be relieved in his distress, we must help him beyond our ability rather than tempt God in putting him upon help by miraculous or extraordinary means. This duty of mercy is exercised in the kinds: giving, lending and forgiving (of a debt)." The religious language is alien to a lot of us, but the thought secularized is useful, and part of our general national heritage. I rather wish Winthrop had been around to testify when the bankruptcy bill passed. If your neighbor borrows and cannot repay? Send him to bankruptcy court and counseling? Nope: "Whether thou didst lend by way of commerce or in mercy, if he hath nothing to pay thee, thou must forgive..."
But all this remains economics of a sort. But the peroration takes it further:
I think that all the general welfare idea is an extension of this, whether we speak of common schools, social security, or universal health care.
Without this the fabric of society unravels, and appeals to patriotism ring more and more hollow. The best work on this nowadays is being done by sociologists and social historians. For those interested in reading further, I can recommend,
aMike
July 28, 2007 11:22 AM | Reply | Permalink
Great article
Perhaps a way to restate the 3 themes you cover is as 3 types of inclusion.
A nation after all, is a joining together of the many under one system, so inclusion matters as far as smooth and effective functioning of the nation.
Inclusion in the wealth of the nation (reciprocity)
As the tide rises, all boats should rise
For effective participation and team work to occur, wealth or decent status must be well distributed
Inclusion in the activity of the nation (fair opportunities)
As new depths and variety of opportunities for activity are discovered, all individuals should have access to them
For effective innovation to occur, opportunity for activity must be well distributed
Inclusion in the power of the nation (fair competition)
As new sorts of system-affecting power arise, all individuals should participate in them
For effective competition to occur, system-affecting power must be reasonably well distributed
The opposite of these would be various types of exclusion: exclusion from the power, wealth and activity of the nation
One can argue these are wrong because the individual suffers, or because capitalism itself suffers
If these principles guide and guarantee a healthy capitalism, then they don't negate capitalism, but they refer to some larger reality which we must be conscious of in order for capitalism to flourish.
A 'capitalist' mentality should not be applied to this larger reality, you get something self-defeating.
We need to be able to consider things on two levels at once in order for it all to work best.
So we should embrace a sane metacapitalism in order to uncover, unleash and sustain the most dynamic capitalism.
Capitalism achieves its highest potential and greatest dynamism, when a metacapitalism of widespread inclusion of individuals in market-defining power, market-participation-enabling wealth and market-innovation/optimization-enabling activity is upheld by wise stewards of the nation.
July 28, 2007 12:01 PM | Reply | Permalink
"YOYO Economics" resonates. That should've been the title.
July 28, 2007 2:52 PM | Reply | Permalink
Thank you. I liked the way you grounded it in three principles, that seem to be bedrock ones for a social contract. I think a lot about these things. And it all made perfect sense to me!
July 28, 2007 6:10 PM | Reply | Permalink
I agree Tom--economists and vested interests wildly exaggerate the response to changes in marginal tax rates. By far, the biggest changes I've seen is investors moving money around to take advantage of the timing of tax changes.
I often like to remember Paul O'Neil's confirmation hearing as Bush's first Tres Sec'y. The R's were trying to get him to gush about the importance of cutting taxes for business, and he said something like, "I got news for you. When I ran Alcoa, we never made investment decisions based on tax changes..."
A beautiful moment and probably the beginning of the end for him.
July 28, 2007 8:39 PM | Reply | Permalink
Damn, aMike, those are some mellifluous words. Preach on, and stretch the bounds of economics as far as you can.
July 28, 2007 8:45 PM | Reply | Permalink
"Inclusion" is precisely the right unifying concept...thnx.
July 28, 2007 8:50 PM | Reply | Permalink
If I seem circular it's only because I’m hoping to create some friction around the silly strawman built here in hopes of burning them up.
I'll put it simpler, without the opportunity to earn an independent living a man is a slave, if he can survive.
The Walton family remark is of course the inane strawman johnuw93 offers up and not useful, just as freedom of speach is of little use to a slave. literal or wage.
I suppose basics are lost on grandiose thinkers.
July 28, 2007 8:51 PM | Reply | Permalink
How about a bumper sticker: NoMoYOYOs!
Perhaps a bit too obscure...
July 28, 2007 8:51 PM | Reply | Permalink
I would ask for whose economy?
A City, County, State can have a balance of payments problem just like a county.
Look around at you city and ask where is the money going after your transaction.
Today not much of it stays in the community.
Not only does the profit go out of the area, but the payments for most physical
items and most services and loan payments and interest is not kept locally
or even used for local expansion.
I would say very little of your income and savings stay in your geographic area.
This is a major part of the problems today.
The Market Fair is more a vacuum cleaner verses
an attractant for cash and capital to the local economy.
Follow the money any find out where it goes from your community!
-----------------------------------------------
Today, are we searching for I deals or Ideals?
-Thinking
July 29, 2007 1:35 PM | Reply | Permalink
A very well thought out argument, but for me it's one that only half resonates.
But here's the problem. If I as an individual am capable of taking care of myself and providing all my own wants and needs through my labor and ability, then why would I agree to this? What do I get out of it except a set of obligations and demands that I conform to behavioral norms set by whoever happens to be in control of society?
People will, of course, but they do so out of some sense of morality or altruism not because it's a quid pro quo. Or of course, should liberals gain enough power, they will do it because you will force them on the grounds that those who don't agree to your contract are immorial and selfish.
The American social contract is based on individual liberty, its protection and protection of the fruits of individual labor from those who would take it.
Your three principals of social contract actually seem to be consistent with this despite your earlier formulation, which in my view is not, but as is so typical of my fellow liberals you insist on putting it in communal rather than individual terms -- apparently because you view individualism as the enemy of community, which isn't necessarily the case.
It would resonate more with me and I think a lot of Americans if you put it in terms such as you want to protect the ability of individuals to gain a fair deal from honest labor instead of this communal concept of reciprocity. The other two concepts can be stated in individualist terms even more clearly.
The problem with the communal formulation is that it doesn't work on a large scale. This is what Madison's Federalist #10 is all about. This is why so much of the most basic kind of social law and policing was left to the states under our constitution. Real social contracts can only exist between a small number of people -- at the local level. The larger the group becomes the more corruption, the more the distribution of society's benefits becomes a battle between different factions of that society, which in turn creates more factions.
One of the things constantly missing from the liberal discussion of community is the concern about community dissolution. America has only been around for 200 years and only 150 years ago it nearly broke apart as the result of civil war, but people of both the left and right are quite willing to push and stretch the communal agreement that formed this nation because nobody seems to recognize that yes, it can break.
July 29, 2007 9:47 PM | Reply | Permalink
With hard core Capitalism its always about enriching the shareholders, not the citizenry. Promote the general welfare doesnt mean helping someones 401K grow larger.
July 29, 2007 11:32 PM | Reply | Permalink
The completely self-reliant individual is not a reality.
July 30, 2007 5:54 AM | Reply | Permalink
Tom is Wright, and CD creates a largely false dichotomy, at least to my thinking.
As I noted above in a comment, a better (from my perspective) social contract is not a five-year plan which abandons capitalism or individualism. This stuff all occurs on a continuum and the recent policy thrust towards individualism--private accounts, 'it's your money', us against the world in foreign policy--has gone too far in the opinion of a very broad majority, I'd say.
In fact, in the formulation of many--see, for eg, some of the papers on the Hamilton Project's web site--the individual operates most successfully when she operates in a context where personal responsibility and shared risk are far more balanced than is the case today.
CD can wax all s/he wants about individualist utopias, but a) ain't no such thing, and b) individuals simply cannot realize their potential if the game is stacked against them such that they do not fairly gain from their contribution to economic growth.
July 30, 2007 6:43 AM | Reply | Permalink
The rest of the world has assumed community as the norm since history began. Only Americans, because of their recent experience of the frontier, have fallen into the illusion of the solitary.
It was not the presence of British government that was unpopular, it was the misuse of authority. While colonists were unhappy with unrestricted searches, they were equally unhappy with the absence of government power after Britain removed its soldiers from the trans-Appalachian territories. They were upset less by the Tea Tax than by the exception extended to East India, exempting it from said tax.
The romantic illusion of the self-made man, bringing civilization to the frontier, should be balanced by the knowledge that the rancher and the prospector were making their living by selling to the folks in the cities. Also easily forgotten is the desire, on the part of pretty much all folks, in town or out in the wilderness, for the presence of US Marshalls. A town sheriff mgiht be OK, or he might be a tyrant, as in Wyatt Earp's uncertain reputation, but the US Marshall was trusted by all. What a concept.
July 30, 2007 7:10 AM | Reply | Permalink
"If I as an individual am capable of taking care of myself and providing all my own wants and needs through my labor and ability, then why would I agree to this?" You can opt out of the system, by saving money for retirement, by sending your children to private schools, or (in a universal health care system) by paying for additional services. But don't expect a lot of sympathy if you try to dissolve the system, by eliminating social security, by telling us school vouchers are the solution to failing public schools, or by telling us our health care system isn't a disaster compared to others. At some point, your idea of your self-interest collides with the reality for most everyone else, and most likely for you as well.
John
http://www.haberarts.com/
July 30, 2007 7:15 AM | Reply | Permalink
Hmmm... I agree with all of your economic arguments but I also think that the social contract needs to exist beyond economics. I'd like to see an integrated economy where we pool enough resources to alleviate suffering but, along with that, a completely libertarian "social" structure where all consensual crimes are made legal and the right to privacy is absolute.
I'd put it this way, "You shouldn't care what your neighbor is up to unless your neighbor is sick ro starving, in which case you should help them out."
thosethingswesay.blogspot.com
July 30, 2007 2:16 PM | Reply | Permalink
Hi, BVZ. Hope you are having a good day. As for me, I am glad to hear that the Braves have acquired an All Star first baseman in Tiexeria, but I think the left handed relief pitcher they also got might be as important to the run for a playoff birth. Sad to see a great prospect like Saltalamacchia go, but where was he going to play with McCann already at catcher?
Anyway, I think you have given us a definition but not much analysis. A slave is a person who does not have the opportunity to earn an independent living. Okay. But some of us gain an independent living from a job, and some of us do so by collecting dividend checks. The difference is crucial. It seems all you are saying is that the liberties one finds in a capitalist society cannot exist without capitalism, or something to that effect.
If you find references to the ultra-rich or the idle rich (Paris Hilton, eg) unhelpful, well, then let's put it in general terms.
I fail to see how my right to free speech depends on the right of the rich to collect dividend checks. This requires more than simple assertion.
Go Braves!
July 30, 2007 6:04 PM | Reply | Permalink
Once again I find that you are much more effective at clearly stating things than I am!
I agree with the pendulum perspective as it's proven it's existence in various applications throughout history. And I also agree that there are forces jamming up the mechanisms which usually kick in like gravity and force the pendulum to swing in the other direction. I guess I just don't know how to un-jam them. I think that my impatience becomes very apparent at this point! It simply "feels" like there are so many variables playing into those force's hands and it's that which feeds my ambivalent demons.
I think that one of those variables is a general ignorance in even an accurate vocabulary let alone the underlying concepts (as you said Rove/Norquist controlling the debate). And it's perfectly illustrated by the example you point out with Mitt and Hillary. For example the minute you utter social program you're labeled Red, called a Marxist and someone paints WOLVERINES on the side of your car. Now I have nothing against Patrick Swayze personally but I feel that it's all a bit extreme and shuts down any meaningful debate or progress through fear and intimidation. It's precisely the type of fear mongering you reference with Rove/Norquist and the like.
I do hope you're right and that such tactics really are beginning to sound silly to people. But the fact that Republican voters have by and large been electing candidates who directly attack their quality of life for years and they don't even seem to realize it has me slightly skeptical. I suppose I need to put a little more faith in the masses to begin ignoring these self-serving fear mongers in the upcoming elections. I suppose it's that or they'll start knocking off local hunting supply stores before they head for the hills and begin painting WOLVERINES on everything!
July 30, 2007 7:05 PM | Reply | Permalink
I think that one of those variables is a general ignorance in even an accurate vocabulary let alone the underlying concepts.
???
July 30, 2007 7:23 PM | Reply | Permalink
Social Contract?
How many tpmcafe members support expanding SCHIP and funding that expansion by increasing the cigarette tax -- a tax which is paid, disproportionately, by the lowest income quintile?
Pay the cost of providing health care to the poor out of income tax revenues drawn disproportionately from the wealthy? Un-unh. Make the poor pay for their benefits themselves.
Nice!
July 30, 2007 9:58 PM | Reply | Permalink
... which strikes me as an odd way to express it, since the balance of the benefit goes not to the illegal entrant, but to the illegal employer. When illegal employment is widely tolerated by government, it can be used by employers to appropriate the lion's share of the benefits from the infrastructure all Americans created.
July 31, 2007 3:31 AM | Reply | Permalink
That's only so for a given technological channel. However, when the opportunities for intensive(*) growth in a given technological channel are exhausted, and if a reasonable job is done of maintaining fair competition, then the stockpile of invention off the current track will be mined until a new technological channel is established, offering new opportunities for intensive(*) growth.
(* intensive growth ... more stuff output from the same amount input / extensive growth ... more stuff output from more stuff input. Extensive growth may be placed under some threat from problems like peak oil, but if fair competition can be maintained, that will act in part to channel efforts toward intensive growth.)
July 31, 2007 3:39 AM | Reply | Permalink
Count me as not among the cigarette-tax crowd, even though I quit. If one desired goal--reduced consumption of tobacco, is reached, the other goal--supporting some other program, is hurt. On top of which, it's just unsporting to take advantage of addicts.
July 31, 2007 5:28 AM | Reply | Permalink
Long long ago in my more libertarian days I felt that using a tax to discourage admittedly unhealthful behavior was not a good thing to do. But I also believed that a person who behaved in a life-threatening way knowing it was a life threatening way, should bear the risk of that behavior him/herself. Bunches of years ago there were great rallies of motorcyclists around the State House in Boston demanding the repeal of laws requiring the wearing of helmets. I thought, o.k., just absolve the emergency rooms from treating head injuries to helmet-less riders, and insurance companies from picking up the tab for long-term rehabilitation. I was perhaps over impressed by J. S. Mill's On Liberty. But I've mellowed considerably in the interval.
On the other hand, when I see the kids at my university lighting up (and these aren't poor kids) I waffle on raising the tax. Maybe raise it high enough, and really enforce laws against providing ciggies to minors, and there will be fewer long term addicts and health care costs will decline, again in the long term.
Full disclosure: I started smoking when I was 24 and in graduate school. This was probably the dumbest thing I did up to that date, and I can't blame it on teenage peer pressure. I quit in 1984, which was one of the smarter things I did, and, of course, as an ex-smoker I allow wee amounts of self-righteousness. But only wee amounts.
aMike
July 31, 2007 6:23 AM | Reply | Permalink
Since so much that is spent at Wal-Mart is headed overseas, and so much that is spent by Washington is spent across the country, the odds may be on money spent by Washington ... though with reckless foreign entanglements, the current government seems to be doing its best to ensuring that they have equally weak impact on the standard of living for most American working families.
Perhaps Wal-Mart is not the most apt choice for the question.
July 31, 2007 6:27 AM | Reply | Permalink
Maybe there needs to be a version of First, Do No Harm, injected into the capitalist world from the left, rather than from the right. More and more, a variety of specialties are incorporating this into their procedures. Ecologists find this approach useful.
There's a fascinating piece up on Free Market Anti-Capitalism, which would at first glance seem self-contradictory. But I find any piece which Praises Denmark and calls Steve Forbes "wrong, wrong, wrong" worth a read. I'm hoping that some one more attune to economic thinking than I am (hint, hint, his initials are JB) might take a look at this and tell us what he thinks.
aMike
July 31, 2007 7:00 AM | Reply | Permalink
Yeah, it's at cross-purposes. The revenues roll in but if it works, people quit smoking the the revenues trail off. Just too easy to tax a segement of the population that it's become okay to judge.
thosethingswesay.blogspot.com
July 31, 2007 9:19 AM | Reply | Permalink
I suppose. But then one could argue that treatment costs for asthma, laryngitis, bronchitis, lung cancer, heart disease, and stroke would go down in the long run, because either less people would contract the diseases or would have their conditions exacerbated by smoke, first or second hand. But then, unless something is also done to discourage the use of cigars (lip cancer, throat cancer--that got Ulysses Grant--) pipes (lip cancer, tongue cancer) and smokeless tobacco products, (various oral cavity cancers) the incidents of those will all go up, and so will the costs for treating them.
I'm conflicted about all of this. One thing I do know, it is criminal, MHO, for states to divert their shares of the tobacco settlement into the general revenue funds. States who don't live up to their bargain should have the money taken and used to support SCHIP, perhaps.
Let me put in a plug for the website behind the link above. There are lots of goodies there for people who like to prowl around.
aMike
July 31, 2007 9:35 AM | Reply | Permalink
I'm just hypersensitive because I'm trying to quit.
thosethingswesay.blogspot.com
July 31, 2007 10:04 AM | Reply | Permalink
<cheerleading and channeling Bob Dylan mode>
</cheerleading and channeling Bob Dylan mode>
aMike
July 31, 2007 1:01 PM | Reply | Permalink
Thanks, pal!
thosethingswesay.blogspot.com
July 31, 2007 2:48 PM | Reply | Permalink
Good essay, Jared. I like what you say in All Together Now and have recommended it to denizens here, among others. (Rick Kahlenberg's book by the same name also has very important things to say that bear on equitable economic opportunity.)
You allude to economic security and several of its keys aspects (in paragraph 4 where you refer to "protection from market failures, unforeseen negative shocks to jobs or incomes, illness, retirement")
But I don't see it reflected in the three principles. Am I missing something, or was this deliberate?
I know you are well familiar with the dynamics, as written up in your work, in the work of Jacob Hacker's The Great Risk Shift, and other places. Basically, the pace of economic change means more people are being knocked down, and harder, with no obvious letup in sight at anything resembling current, let alone rising, US living standards. And more and more people in our country are affected by it and worried about it.
As I see it, this could lead to the next great wave of enlightened social and economic policies in our country. Or it might lead to a political/policy response that on balance does more harm than good. Does a much-enhanced safety net, coming sooner rather than later, reduce the chances for counter-productive trade wars?
I am coming at this from the perspective of someone who is not at all doctrinaire pro "free trade" but who thinks trade policies which could make things worse are also a possible outcome of the building backlash.
August 1, 2007 1:12 AM | Reply | Permalink