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Freeman Essay #57: A Review of Joel Blau’s ‘Illusions of Prosperity’

In the November 2000 Freeman I reviewed Joel Blau’s 1999 book, Illusions of Prosperity.  My review – which is below the fold – is not flattering.  (Also below the fold is another review of this book that I wrote and posted on Amazon.com in August 2000.)

When Joel Blau looks at the United States today, he sees a population of mostly poor, confused, frightened people helplessly in the grip of greedy corporations who extract profits from the hides of workers, welfare recipients, women, and minorities. He sees an environment rendered toxic, communities made lifeless, and a federal government suffering “perpetual deprivation.” He also sees big business monolithically dictating government policy: selfishly pressing for free trade, low taxes, privatization, and deregulation.

When I read the dust jacket of this book I anticipated that Blau would present challenging arguments against the free market. I hardly expected to be persuaded by such arguments, but I wanted to sharpen my thinking about the nature of capitalism and of state intervention. My hope was to write a positive review that, while critical of the author’s faith in government intervention, reported how those of us who are less enthusiastic about the state can nevertheless benefit from reading Blau’s work.

I regret to say that I cannot write such a review. In almost every way this book is appalling. Not only is Blau’s factual analysis unsalvageable, his arguments are confused and often internally contradictory, and his Marxist perspective is childish. Also, his writing style is horrid, with the organization of the material even worse. The book reads as though Blau (professor of social work at SUNY-Stony Brook) just started writing one day, energized by his hatred of the market, and kept on writing down anything that popped to mind until he’d filled a sufficient number of pages for Oxford University Press to consider the result a book.

Blau’s principal problem is his fantasies about the facts. An incomparably better book on the current state of the American economy is W. Michael Cox’s and Richard Alm’s Myths of Rich and Poor (1999). Cox and Alm show beyond any doubt that Americans of all income levels enjoy standards of living today that far exceed those of Blau’s imagined golden age of the early 1970s. Cox and Alm also demolish many of the other myths that motivate Blau’s written rampage. For example, material inequality is not increasing in America (it’s decreasing); Americans are not working harder and longer (they’re working easier and less); and job stability has not declined. (See my review of Myths of Rich and Poor in the January 2000 issue of Ideas on Liberty.)

It’s impossible to take Blau seriously given his outlandishly backward portrait of current economic conditions.

Equally outlandish is the poor quality of Blau’s arguments. For instance, he argues for greater government interference in the labor market (higher minimum wages; legislative efforts to enforce a maximum wage; higher employment taxes; enforced worker participation in corporate decision-making). He rightly anticipates that an objection to his scheme is the fact that European unemployment is much higher than in America and that economists explain this fact by pointing to European governments’ greater interference in their labor markets.

Blau rejects economists’ explanation, offering instead his own theory that European unemployment is higher than American unemployment in large part because the 1992 Maastricht treaty obliged European governments to reduce their budget deficits and to pursue tighter monetary policies. But if smaller budget deficits and tighter monetary policy were the principal causes of unemployment (as Blau implies), then the rate of U.S. unemployment should now be at least as high as those in European countries. Of course, it is substantially lower.

Blau also entertains the naïve assumption that business interests are monolithic—that there is “a” business interest and that all business people pursue that interest in unison. Not once does Blau show a whiff of awareness that businesses compete against each other. It is Blau’s hero, the state, that is the only proven entity capable of enabling businesses to join forces and gang up on workers and consumers.

If the quality of all arguments against the free market were no higher than Blau’s book, I would confidently predict that overwhelming intellectual victory for capitalism is on the horizon. But this is not the case. Blau is hardly representative of the best scholars who argue against liberty and for the state. And that’s the tragedy of this book: had Blau presented seriously challenging arguments, he would have assisted friends of freedom in honing their own thoughts and arguments. He would have advanced scholarship and understanding. Instead, he’s only given us a cause to snicker.


And here’s my review at Amazon:

First an admission: my politics are free-market libertarian — quite the opposite of Joel Blau’s collectivism.

Nevertheless, I opened this book — published by a distinguished press — with an open mind, sincerely hoping to learn as well as to be challenged. Neither happened.

Essential to Blau’s case for greater government intervention and more “economic democracy” is his factual claim that recent prosperity is an illusion, save for all but the richest Americans. He cites familiar statistics and studies purporting to prove that the average American household reached its peak of earning power in 1973 — and that it’s been downhill ever since. (At one point Blau actually says that prosperity of the sort that Americans knew during the first 30 years following WWII has “disappeared without a trace.” Is he serious?)

From time to time, Blau seems to recognize the many problems that have been pointed out with the data he relies upon, but his efforts to meet those objections are weak. More importantly, Blau totally ignores the important research done by economists showing that the average American worker’s ability to consume almost all goods and services available on the market is greater today than it was at any time in the past — including 1973.

If you’re looking for well-researched, well-written books that offer clear pictures of the change in American living standards over the years, Blau’s book isn’t one. Instead, read W. Michael Cox and Richard Alm, MYTHS OF RICH & POOR (Basic Books, 1999), and Stanley Lebergott, PURSUING HAPPINESS (Princeton University Press, 1993). These books are written by economists who know how to use, evaluate, and report empirical data.

In short, no serious person who evaluates the evidence objectively can conclude that the average American worker hasn’t enjoyed substantial improvements in living standards over the past quarter century. Indeed, even those tiny handful of Americans (about 5%) who never move out of the lowest income-earning quintile have enjoyed significant increases in their ability to purchase almost all goods and services available on the market.

In addition to painting a woefully distorted picture of reality, Blau’s theoretical arguments display a grave failure to grasp the most basic economic principles. For example, in arguing against free trade, he naively assumes that “business” is a great monolith — monolithically in favor of free trade because free trade gives it access to cheap labor.

But on trade issues there is no monolithic business interest. Some businesses favor free trade because it promises them greater profits, while other businesses oppose free trade because it will subject them to greater competition. Ask USX if it supports free trade in steel. The answer you’ll get is a resounding “no!” Ask American sugar farmers if they support freer trade in sugar. Again, “no!” Ask U.S. airlines if they’re willing to let foreign air carriers transport passengers on domestic U.S. routes. “Not a chance!”

In truth, business people have been among the greatest and most successful opponents of free trade throughout history. To assume, as Blau does, that free trade helps business at the expense of workers and consumers is among the most tired and well-refuted objections to free trade.

Countless other flaws mar this book. I cannot in good conscience recommend that anyone read it.