Power to the People

by Russ Roberts on January 4, 2006

in Politics

Harold Meyerson (rr) creates a new theory of democracy:

In retrospect the year’s biggest mystery is how George W. Bush thought he could privatize Social Security. Essentially Bush assumed the role of the national CEO who tells his workers he’s dumping their defined-benefit pensions for some ill-defined 401(k) investment schemes. And essentially the American people responded with the same anger and anxiety that airline and auto employees have shown when their bosses reneged on their commitments of a secure retirement. The difference, of course, is that the American people have a lot more power as voters than they do as workers.

The American people have a lot more power as voters than they do as workers?  What does that mean exactly?  I assume he means that voters get to vote but workers don’t.  He seems to ignore the difference in the other direction, that voters are usually stuck making a choice between two candidates who differ only in degree and whose decisions we are stuck with until the next election cycle.  As a worker I can quit and join another firm.  Numerous firms compete for my services.  This explains why the federal minimum wage is irrelevant to 98% of the work force.  Most of us make more than the minimum because we are empowered by competition between firms for our services.

Private social security failed because the average voter is remarkably unaware of what is coming down the road—either drastically lower benefits or drastically higher taxes.  When this choice becomes clearer, even collusive Republicans and Democrats will find it in their self-interest to substitute private savings for government promises.

Meyerson then offers his assessment of capitalism:

In today’s America, where business has largely abandoned the guarantees of security it used to provide its employees, a similar abdication by government was clearly not what the public sought.

For the pervasive insecurity that is inextricably part of today’s capitalism has become the dominant fact of modern life.

I don’t think business ever guaranteed security the way Meyerson suggests.  If it did, it was a bad idea and even Japan has abandoned this model after years of stagnation.  But my real disagreement is with his claim that pervasive insecurity is the dominant fact of modern life.

Pervasive insecurity?  How does one begin to evaluate the truthfulness of this claim?  A survey might help.  I know there are surveys that ask people whether they are afraid to lose their job.  And presumably people who read Harold Meyerson’s columns are more worried than others.  The media seems to delight in writing about the cruelty of capitalism and no doubt this adds to people’s feelings of insecurity.  But even if survey results find that people are very worried, is it true?  Should people be worried about losing their job?

One measure of insecurity would be the monthly unemployment rate which over the last five years has been no higher than 6.3%.  Yes, people lose their jobs.  But they find new ones, sometimes paying more, sometimes paying less.  How bad is it out there?

I don’t know.  And yes, I have tenure.  And I spent many years in academic life without it.  If it were revoked today or if George Mason disappeared, I would find another job.  And yes, I have a lot of education.  It helps.  But is pervasive insecurity really the dominant fact of life for the average American living in perhaps the richest society in human history where creativity and fluid capital markets are constantly creating new business opportunity?


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