Got Freedom?
The thesis of my book, in my mind, is this sentence from the introduction: “When it comes to the distribution of wealth, you’re freer when it’s flatter.”
Despite the claims of Dana and Scott that the glass is half-full, I don’t think anyone—including them—would say people don’t face more pressure in choosing a non-corporate career when the pay differentials have gone through the roof, healthcare is less attainable, tuitions have spiked, and rents in major cities have gone up (in 1984, housing costs in San Francisco were 63% higher than in the typical American city; now they’re 300% higher than the typical city). Do people still squeeze by? Yes. And I’m totally up-front about that. Many of these people are profiled in my book. But anyone who wants to argue people aren’t more squeezed today than a generation ago has their head in the sand, not in reality (and not in the data, for that matter).
I mean, Dana’s arguing people who want to pursue bona fide professions that used to buy a comfortable middle-class life like journalism should only have one kid. It’s as if we were living through the Depression! We’re not. There’s plenty of economic growth we could tap as other growing economies have to give people more control over their lives by guaranteeing certain social rights—like the right to healthcare and quality public education. But we’ve made the political choice not to. Ironically, this decision was sold by conservatives as the “freedom” to spend your tax money as you please. But as everyone here acknowledges, these policies have increased economic compulsion (though we disagree on the degree) rather than increasing freedom.
Economist and humanist Amartya Sen says freedom and development should go hand-in-hand. We accept that in an underdeveloped society, nearly everyone will toil away in jobs they don’t care about simply to pay the bills and feed themselves. What else can they do? There’s really not enough to go around. But the point of development is that it allows more and more people to be freed from these necessities so they can, as the ancient Greeks thought, fully flower as human beings, or, in the American conception, “pursue happiness.”
The relationship between freedom and development is still intact in many other nations. Take two recent examples: when South Korea’s economy boomed, they enacted a universal healthcare system; in Ireland, they made college free. These social rights allow people to focus less on hand-to-mouth obsessions and more on pursuing happiness however they conceive of that. If that conception involves being a management consultant they can still do that—but if that conception involves family or service or creativity or entrepreneurship they can do that too (there’s a big discussion in the book about how our lack of a healthcare system stifles the very entrepreneurship conservatives pay so much lip-service to).
In contrast to South Korea and Ireland, something very strange happened here in the past few decades. We severed the natural relationship between freedom and development. Our country gets richer, but people’s lives are more dominated not less dominated by simply figuring out how to get by. The Declaration of Independence says governments exist to secure people’s unalienable right to the pursuit of happiness, but our government is falling down on the job.
So what am I calling for? First, that we take inequality seriously again and enact policies that push up the bottom (raising the minimum wage, bolstering the right to organize) and hold down the top (progressive taxation). And second, that we render the new inequality less important when it comes to necessities by enacting universal healthcare and childcare programs and re-thinking education finance.
I feel like Scott is treating my book as a “cop-out” just because it’s not a policy brief from a think tank with 10-point plan. When it comes to revamping education finance, I’d support any and all of these reforms:
1) Changing loan forgiveness from a flat dollar amount to a fixed percentage of income so it has less impact on career choice. (They do this in Australia).
2) Making public higher education free as it was intended when created by Thomas Jefferson.
3) Using a voucher system to pay for private higher education. (They do this in Britain and that’s why Oxford and Cambridge are affordable to all.)
Any of these would be progress. So would any universal healthcare program (even though I’m partial to a single-payer, multiple-provider system). But the main point of the book is to describe a problem that no one is talking about. Once we know that we need change, there’s no shortage of policy wonks to crunch the numbers. Now that there’s consensus on a need for universal healthcare, for example, there are dozens of think-tankers hard at work comparing a Massachusetts-style solution to single-payer.
My hope is that my book might prompt some of these people to get to work deciding where the “sweet spot” is for top tax rates that reduce inequality without doing serious economic harm (the experience of this country in the 1950s and 60s would suggest it’s quite high) or precisely where the minimum wage should be set.
But the point of my book is not to divine the ideal minimum wage down to the last cent. The point of my book is that the new inequality is an even bigger problem than we’d realized and we have to wake up.
Everyone has a utopian fantasy of what a great society should look like. What Daniel needs to do is put some real numbers behind his ideas to see what we're talking about. I would remind him that we already have a universal health care system for seniors that is going broke, because we haven't made the tough political choices along the way to ajust for modern reality. How can we even think of adding another massively expensive entitlement, until we get that one fixed?
The Irish economic model succeeded, because they had some of the lowest tax rates in Europe, and they gave American pharmaceuticals sweetheart deals to set up shop there. Ireland also has tight control of their immigration policy and a large trade surplus -- two things we don't have. A nation that takes in more income through trade exports can afford more generous social programs. Daniel ignores these realities, as if comparing a small island nation to a country of 300 million is a good analogy.
October 18, 2007 1:50 AM | Reply | Permalink
Good points, Daniel, if not a bit out of date. My feeling is that if one recognizes the huge gap in "pursuit of happiness" and upward mobility issues, it is probably too late to do anything substantial about changing it.
Since Reaganomics, Bush I, Clintonomics, Junior-nomics and (assumed) Hill'n'Bill'o'nomics the class system has been reconstructed to create unrequited want and continual fear in the mid and lower classes in order to disenfranchise their active participation in the system. It works.
And now that our politicos are in the financial upper tier and court rich contributors, the well-to-do will prevail.
The first step to resolving the whole mess is public funding of elections, which will once again vest all of us in the process, and the reforms you suggest will interest our government in serving all the people. Now politicians are not motivated.
October 18, 2007 2:14 AM | Reply | Permalink
“When it comes to the distribution of wealth, you’re freer when it’s flatter.”
I think you're freer when you're like Alan Watts and can ask: Does It Matter? From the Amazon.Com Review: The basic theme [of the book] is that civilized man confuses symbol with reality
and isn't that what made Jesus famous since he said "I came to fulfil the law, not abolish it." i.e. the Old Testament Law was good but it was a symbol-- a euphemism, but not reality.
Part of the American myth is that our philanthropy is more powerful than explicitly stated economic rights since it's a spontaneous form of socialism that's based on free will.
So, I'm wondering if you're confusing the symbol of money and law with the human diversity that actually enables progress along with current American policy which is trying to give that diversity enough economic power to express itself?
These social rights allow people to focus less on hand-to-mouth obsessions and more on pursuing happiness however they conceive of that.
As I've posted in the the past, I think that this is a misplaced ideal since people don't have the right to pursue happyness any way they choose.
it's not clear that "health care," as a right, is any better than the free market which has to invent products that the environment and the market can afford.
The point of my book is that the new inequality is an even bigger problem than we’d realized and we have to wake up.
is it a "big problem" or are people psychologically overwelmed? when I see the mexicans living one family per room, I realize how much wealth I squander! when I mention this fact to americans, they can't even imagine living like that and would never make that sacrifice to get out of debt or "be kind to the environment."
My hope is that my book might prompt some of these people to get to work deciding where the “sweet spot” is for top tax rates that reduce inequality without doing serious economic harm...
America spends the most on health care and 20 other nations do better with life expectancy.
A lower tax rate might actually improve health care by forcing the next generation to create their own wealth (read efficient ways of doing health care) rather than depending on the wealth of the last generation. i.e. It's "age old wisdom" that throwing money at a problem doesn't solve it....
To boldly go...
October 18, 2007 2:43 AM | Reply | Permalink
I am bit puzzled about how you are going to accomplish your goals? Not renewing the Bush tax cuts would certainly help reduce the inequality they exacerbated. However, where is the money for free higher education going to come from? Also who says that everyone should get a college degree unless you want to devalue it as just a piece of paper
everyone needs.
I know that studies show that raising the minimum wage does not necessarily reduce employment. Can the minimum wage be raised enough to really level incomes without throwing lots of people out of work?
You mentioned Ireland but Ireland received a fair amount of subsidies from the EU. The U.S. might consider such subsidies for Mexico and other Latin American countries as a way to improve their economies and thus their importing goods and reducing their exporting workers.
Those who insist on promoting greater equality never focus on the risk taking involved in job creation. If the incentive is taken away who will create new jobs? With capital easily able to relocate how will you prevent capital flight? What liberties are you willing to sacrifice to prevent those who take greater risks from reaping greater rewards?
Daniel A. Greenbaum
October 18, 2007 3:46 AM | Reply | Permalink
If big private money is outlawed and public funds are established to fund the election process, all are heard, not just the elite who can afford an audience.
October 18, 2007 3:46 AM | Reply | Permalink
"...the idea that society owes you a job...is just self-indulgent" or variations on same is, I think, a Reagen era mind-set. It seems to follow that if that is true, then I don't owe society anything. (That belief is echoed in today's idea of fiduciary responsibility, the CEO is responsible to his board members. Pre-Reagan, the CEO was responsible to his board members, his employees, his community and society in general.)
It's no wonder that today's America operates pretty much from 'you're on your own' when it comes to higher-education, health-care, child-care...Until we change the 'nobody-owes-anybody-anything' premise, we cannot or will not even consider a society which holds shared responsibilities as necessary to each individual's right to the pursuit of happiness.
October 18, 2007 4:30 AM | Reply | Permalink
I think your tentative redistributive policy suggestions are on the right track, Daniel, and I think you should go further with them. But I would take issue with the idea that there is a "natural" connection between development and freedom. And this is important. If we have mistaken conceptions of the natural tendencies of weakly governed and weakly regulated economies such as the economy of the United States, we are going to underestimate the amount of governmental effort that must be put in to get the economic outcomes we want.
The natural tendency in capitalist economies is for inequality to increase as wealth flows into more and more concentrated pockets, and those who possess that wealth use their market power and consequent political power to direct even greater shares of that wealth their way. The reason that some of the European countries you mention have done better at spreading the wealth around is that the people in those economies have long since adopted social democratic mores, and have deliberately enacted laws and regulations aimed at accomplishing frankly redistributive goals.
They have also worked to build and strengthen labor institutions. For example, last I heard 80% of the entire Swedish work force is unionized. Those 80% use their collective power to prevent owners and top managers of firms from paying themselves and keeping exorbitant salaries and rents, and work to steer more of that wealth downward. There is nothing "natural" about it. This is a hard-won achievement of politics and social organization. It is a question of power. Since power varies directly with wealth, a large political supermajority must establish and maintain solidarity in order to achieve egalitarian social choices. They must make up in sheer numbers and aggregate wealth-power for what they lack in per capita wealth-power.
The connection between development and freedom is even more tenuous that the connection between development and equality. The perception that one lacks freedom comes the feeling of a large gap between the things one classifies as "desires" and the things one classifies as "necessities." But these classifications are quite variable over time and strongly subject to social influence.
People have a tendency to indenture themselves to social expectations and their own desires, no matter how much wealth is available. As people's material expectations rise, along with the expectations of one's class, what was once a luxury comes to be seen as a necessity, and one will choose to take on great debts and labor away at work one finds unpleasant in order to fulfill these expectations. Being able to support one's family in a certain lifestyle, including putting all one's children through college, dressing them in a way one's community finds acceptable, laying the financial foundation for an affluent retirement and purchasing the requisite amount of cars, toys and miscellaneous gadgetry come to be seen as responsibilities, not choices. The idea that people can achieve freedom by growing their way out of their burdens is illusory, because the bar of what is acceptable and responsible continues to move higher along with a society's level of affluence.
Hardly anyone in any society manages to achieve a career and way of life devoted mainly to the pursuit of their "passions". The economy of human needs and wants determines the kinds of work for which people receive monetary compensation. Unless your passion is productive of something that substantial numbers of other people are willing to pay handsomely for in the pursuit of their passions, it is going to be a challenge to earn a living at it.
It could be that there are few people who are interested in what you have to offer. Or it could be that there are fair numbers of people who are interested in what you have to offer, but they can't pay much. It is not surprising that in a society in which wealth is distributed so unequally, and in which the pursuit of happiness conceived as self-interest is a veritable religion, those who possess wealth are much more interested in shelling out for their own legal defenses and the education of their own children than the legal and educational needs of the poor and ordinary. If we want to increase the demand and compensation levels associated with legal services for the bottom 30%, and thus allow those who have a passion for that work to make a better living at it, then we need to put more money in the hands of those who seek those services. And doing that requires taking that money from some of the people who have it now.
But as long as there are rich and poor, it is always going to be more lucrative to serve the rich than to serve the poor. If your dream is to be rich but to serve the poor, you are probably doomed to frustration.
As for artists of various kinds, their prospects are driven by whether or not they produce the kind of art others want to purchase. No matter how society is organized, there is no way to guarantee that the artistic forms one is passionate about, and that one has a genuine talent for producing, will be très recherché, and that it will thus be economically viable to pursue those forms.
I have a hard-working colleague whose passion consists in taking a long weekend, driving up to his cottage with a case of liquor, getting hammered and watching football. So what economic demands are generated by his activities? Cottage-building, car manufacture, distillation of spirits, televised football. If your passion lies in one of those fields you are well-positioned to make a living satisfying his desires.
October 18, 2007 4:59 AM | Reply | Permalink
Newt Gingrich once said that if there were a couple thousand Bill Gates in the ghetto then poverty could be solved. Yesterday on NPR, I heard a rightie saying how Google didn't exist 15 years ago and punishing those who work hard to succeed to pay for those who don't is well, unamerican or something. I had stopped listening. Let us all worship and praise the billionaires because this is now their country, their government, their media, their elections, their everything. Ford was a good example, in his attitude towards the Jews and how he forced his workers to adhere to strict "morality codes" of where we are headed. Benevolent despotism, the banality of evil, and fascist corporatism. As soon as the veneer is stripped away, the US will be revealed to a third world nation deep in debt, overwhelmingly poor, but with very very very rich overlords living up on the hill with Blackwater private "contractors" on patrol. Dissenters will be treated to free room and board at the many re-education camps run by Bechtel and KBR.
October 18, 2007 5:08 AM | Reply | Permalink
Why the assumption that you, or anyone, need someone to provide you a good paying job in the career you want to work in? If you want control of your life, career, monetary fortunes, etc., then work toward starting your own business. If you want to make an argument about how income inequality and corporate structures make THAT much more difficult than it used to be, I would be more sympathetic.
But the idea that society owes you a job in something that not only feeds you, but that provides you spiritual, intellectual and emotional fulfillment, is just self-indulgent.
In even a developed society, there are any number of jobs that must be done that nobody likes doing. (Watch "Dirty Jobs" on Discovery)
The people who should be paid more are THOSE people, not the people who are doing the job because they love it.
If you ask me, one of the craziest things about income inequality in our society is that the people who make the most are sports heroes, movie stars, investment bankers, PR people and other assorted players whose "work" contributes value to our society but isn't really that important to its survival or overall physical health and well-being.
October 18, 2007 8:53 AM | Reply | Permalink
"The first step to resolving the whole mess is public funding of elections"
why do you expect money to solve that mess? i've heard that the primaries were moved up so fewer people would go to them-- can you imagine going to a primary on january 3rd? it looks to me like simpler things, like 2 week long primaries, would help more than money.
To boldly go...
October 18, 2007 10:41 AM | Reply | Permalink
RogerGathman
This is not true: "we already have a universal health care system for seniors"
and by implication, the thing that we don't have isn't going broke. Neither is medicare or medicaid, which we do have - what is happening is that it will have to cover more members, and have to have more money in the future. There is nothing different about this than any other service. There is no private insurance company in the world that will guarantee that it won't raise your rates 30 years down the road. So even taking a limited view of your statement, you are simply wrong.
Furthermore, you are using an analysis of Brooks work that pits the private guarantee of social welfare against the state's guarantee - but Brook's point is different. It is that diminishment of public expenditure for social welfare has deleterious effects on the innovative and entrepreneurial functions of the private sphere. If you have an economic system, for example, that is dependent on knowledge or human capital for growth, but that does not have the state guaranteed support to allow people to take risks in the course of their careers, you are essentially condemning your economy to a division between a small number of haves, who not only have an increasing share of the wealth but also monopolize opportunity, and a lagging, majority sector of 'have nots', who are forced to retain positions in the economy that are not on the frontier of their abilities. In other words, ability doesn't match opportunity - which is a symptom of a decaying system.
As for the idea that Ireland is somehow richer than the U.S., or that its tax system explains its system of education - I think that is bogus, since it is a diversion from the question. Are you saying that it would be too expensive for the U.S. to host public universities that charge less tuition - or are even free? Why? Ireland is not charging less for tuition out of some heedless economic spree, but because the companies that its tax policy brings in could just as easily find another tax haven over the course of the next couple of decades - but they might not find one with the educational advantages Ireland offers. Taxes are only one dimension of the question of economic advantage - although they are the only one that monocular American conservatives pay any attention to, which is why our public spending is both insufficient to meet our social needs and dedicated to certain absurd expenditures, such as the money used by the Defense Department.
The U.S. still has the best system of higher education in the world, and that is so because the states, early on, were involved in creating colleges and universities, seeing that the state has a valid interest in education. There is no reason not to take suggestions about extending this system and deepening it so that more people can go through college level education, and at varying stages of their lives, without bearing an unnecessary financial burden. Similarly, health care has become another burden holding back innovation and creating, by way of a system that systematically favors monopolistic practices favoring wealthy groups - doctors, dentists, etc. - and wealthy corporations - pharmaceutical companies, hospital companies at the same time it resists universal healthcare. Simultaneously releasing competition in the healthcare labor market and creating a universal healthcare system is a much better way to dedicate our resources to the problem of sickness and health.
October 18, 2007 12:39 PM | Reply | Permalink
(in 1984, housing costs in San Francisco were 63% higher than in the typical American city; now they’re 300% higher than the typical city).
And why is that? Because so many people are crowding onto a peninsula-- that has RENT CONTROL!
Meanwhile, here in Chicago where we never heard of rent control, there's always a new neighborhood being discovered and reclaimed.
October 18, 2007 4:37 PM | Reply | Permalink
Christ, what a hysterical ninny.
Henry Ford did more to help the working man and create a prosperous middle class in this country than all the reformers and socialist agitators ever born or ever to be born.
October 18, 2007 4:38 PM | Reply | Permalink
Many good thoughts there, Dan K, like
Just an aside on that, or maybe not an aside. It keeps striking me, when you come down to it, isn't the topic of this book club really a repeat of a very old story? Wikipedia version:
BTW, I think many misinterpret that story more towards the rich = evil meaning, when, in fact, it may be more a simple recognition that creation of wealth, and maintenance of wealth, takes time and labor with which one could do other things.
Actually, I think the general topic is one that Wetern literature and cinema and other arts deal with so much better than political pundits....ya know, hopes and dreams and realities and such.
October 18, 2007 5:52 PM | Reply | Permalink
Chicago is cheap because it's not a peninsula and rich people don't want to retire there (which is odd, cause it's a rockin' good town if a tad too cold). If you think the SF experience is about rent control, look at the Boston/Cambridge experience where rents skyrocketed when the Commonwealth of MA banned rent control in the 1990s.
It's not about rent control. It's about the concentration of wealth.
October 18, 2007 8:55 PM | Reply | Permalink
Respectfully Roger, you don't seem to have a firm grasp on the Medicare statistics. The plan started with 40 workers for every beneficiary. We're at approximately 4 or 5 to 1 and that will be cut in half over the next 20 years to 2 to 1. Link this with an ever-increasing life expectancy, and you simply will not be able to pass on this massive obiligation to working Americans. Given this reality, I'm curious where you believe we're going to get the money to fund Medicare and Universal Health Care at the same time and what is the price tag going to be?
The idea that the lack of universal health care is preventing entrepreneurs from succeeding is frankly rubbish. These types of individuals have always thrived in this country historically, and today's crop has far more advantages than their ancestors.
My point re: Brooks is that there are other factors at work in countries like Ireland that account for their success and trade is a huge compononent. Ditto for Canada which has a massive surplus with us. Would Canada be able to afford their health care system without that surplus? It's a fair question.
If we could somehow flip our trade deficit to a surplus with the global economy -- guess what -- we would have a lot more tax dollars to work with generated by foreign dollars like Ireland, Canada, etc.... We're nto going to be able to afford another entitlement, until this happens.
October 18, 2007 10:38 PM | Reply | Permalink
You can be sure that Gene McCarthy would not have been able to make his run against Johnson.
Public financing is a method to ensure that only elites with big name recognition need apply.
The sons of the prophet are noble and bold,
and quite unaccustomed to fear.
But the bravest by far in the ranks of the Shah
was Abdul Abulbul Amir
October 19, 2007 1:12 AM | Reply | Permalink
So your point seems to be that restrictions on building new housing do not effect the price of housing. How novel.
The sons of the prophet are noble and bold,
and quite unaccustomed to fear.
But the bravest by far in the ranks of the Shah
was Abdul Abulbul Amir
October 19, 2007 1:17 AM | Reply | Permalink
It is not practical for all to be heard equally, so some pubic official or committee is going to have to decide who is worth hearing. Do you think there may be some unintended consequences in that system?
October 19, 2007 2:54 AM | Reply | Permalink
Deleted
October 19, 2007 4:17 AM | Reply | Permalink
Moscow is not on an island. Political restictions like zoning and price controls definitely drive prices. With SF prices at 300% of national average, the reason that someone has not built a 100 story apartment building is political, not geographic.
The sons of the prophet are noble and bold,
and quite unaccustomed to fear.
But the bravest by far in the ranks of the Shah
was Abdul Abulbul Amir
October 19, 2007 4:55 AM | Reply | Permalink
I figure you're joking. I'm just saying that the restriction on the construction of new housing constituted by geography is far more significant than any rent control law. And the prices the market will bear are the biggest factor. How else to explain the fact that Moscow has the most expensive housing in the world? The most plutocratic cities have the most expensive housing.
October 19, 2007 11:05 AM | Reply | Permalink
Re: With SF prices at 300% of national average, the reason that someone has not built a 100 story apartment building is political, not geographic.
In regards to San Francisco we do need to bear in mind that earthquake-derived building codes do add to the cost of housing. Ditto for hurricane standards in Florida.
October 19, 2007 1:58 PM | Reply | Permalink