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Posted By Russ Roberts On December 16, 2010 @ 2:37 pm In Standard of Living,Uncategorized | Comments Disabled
David Leonhardt on the philosophical debate over ObamaCare:
The opposition stems from the tension between two competing traditions in the American economy. One is the laissez-faire tradition that celebrates individuality and risk-taking. The other is the progressive tradition that says people have a right to a minimum standard of living — time off from work, education and the like.
Both traditions have been crucial to creating the most prosperous economy and the largest middle class the world has ever known. Laissez-faire conservatism has helped make the United States a nation of entrepreneurs, while progressivism has helped make prosperity a mass-market phenomenon.
What is the evidence that progressivism made prosperity a mass-market phenomenon? A minimum standard of living? The social safety net in the US is modest. For most of the 20th century, there was a minimum standard for single women with children but not for men. Welfare programs didn’t create mass prosperity. The minimum wage, passed in 1938, has never been set very high and affects very few people. It also discourages employing the lowest skilled workers. That works against mass prosperity. Time off from work? Mostly a market phenomenon, I think. To the extent it has been imposed in opposition to market forces, it has worked against measured mass prosperity. Education? It would be useful to know the impact of mandatory schooling and child labor restrictions. How much impact did they have beyond what would have happened voluntarily? And any impact of mandatory education would have to be offset by the quality loss of public provision. I’d be curious to know what else Leonhardt has in mind. I do think his view is a staple of some folks in their world view. I’ve just never seen a serious attempt at making the case. It’s just asserted as a truth. It could be a truth. But my suspicion is that it’s a myth.
Mass-market prosperity has been driven by innovation combined with competition forcing producers to share productivity increases with consumers. This is the story I tell in The Price of Everything . Some innovation was created by the government, though perhaps not cost-effectively. but most innovations have been driven by the potential for profit combined with a love of creating. Happy to hear facts to the contrary or a book that makes the case for progressive policy as an important force in creating the middle class or mass prosperity.
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