If you want to understand how the liberal brain trust is thinking about politics and the economy today, a good place to start would be a new book by two widely read political scientists on the left, Jacob Hacker of Yale University and Paul Pierson of the University of California, Berkeley.
Americans now tend to think about our government as a constraint on our freedom, or, at best, as a kind of necessary evil that is occasionally useful for correcting the free market's excesses. Even those on the left sometimes narrowly view the government primarily as a way of redistributing income from the wealthy to those in need, according to Hacker and Pierson.
In Hacker and Pierson's expansive account of the history of U.S. politics, by contrast, the government isn't just a means for redistribution or even an economic handicap. Rather, they argue, the government is a crucial source of economic growth.
Specifically, they write, one of the main reasons that we're so much better off than previous generations of Americans is that the government can make people do things for society's benefit that they wouldn't ordinarily do, such as pasteurize their milk and vaccinate their kids. Also, the government can make people pay taxes to fund lucrative investments in education, scientific research and the construction of roads and rails -- to name a few of the main reasons for material progress in the past century.
The authors argue that these limitations on freedom are how the United States became a rich country, and why there are relatively few rich nations in the world with a small government. "Government works because it can force people to do things," they write on the first page, opening the book with a challenge to the conventional wisdom on both sides of the aisle about the relationship among economic freedom, economic growth and well being in general.
Wonkblog interviewed Hacker and Pierson by phone last week, and an edited transcript is below.
The interview started with a comparison of average heights in different countries. For most of the history of the United States, Americans were the tallest people in the world. Recently, though, northern Europeans became the world's tallest people. The Scandinavians have a reputation for stature, but it turns out it is the the Dutch who are the tallest -- eight inches taller, on average, than they were two centuries ago.
Hacker and Pierson argue the shift occurred because, these days, active government has made Europeans healthier than we are. In particular, according to the authors, they have healthier childhoods, because their governments offer more material help to pregnant women and infants than does the U.S. government.
Wonkblog: This is my favorite sentence in the book: "The Dutch have had to rewrite their building codes so men don't routinely smash their heads into door frames." Can you talk about why that fact is important?
Hacker: The United States has gone from being the country with the tallest people in the world by a pretty significant margin -- during the Second World War, Americans were a couple inches taller than the Germans they were fighting -- to a country in which heights are pretty middling compared with other rich democracies. We mention Dutch men running into the tops of doorways because we and the people who study height think it’s a very good marker of population health. It tells you about nutrition in the womb and socioeconomic cohesion and the degree to which a society is good at encouraging a sort of healthy flourishing, particularly in early life.
The fact that we have gone from being the tallest to among the smallest dovetails with all the other evidence in the book. While we're continuing to improve in areas -- like education, life expectancy and the rest -- we're improving much more slowly than in the past, and we're improving much more slowly than other rich democracies are today.
Pierson: It's not that Americans are getting shorter. It's that the rate of improvement has slowed down dramatically, which has not been true in a lot of other countries. We're not waxing nostalgic for the idea that life was so much better in some earlier time. We're really trying to celebrate the incredible progress that the United States and other rich democracies made over the course of the 20th century. What’s alarming is the way in which -- in relative terms, either compared with our own past, or compared with the performance of other countries -- the rate of progress has slowed down. That’s something to be concerned about.
Hacker: We have grown bigger in one way, of course. We've gotten significantly heavier. The average male in the 1960s weighs the same amount as the average woman weighs today.
One of the other really interesting parts of the book was where you talk about creativity. Economists have long hypothesized that the reason economic growth happens in the modern world is that people are creative. They come up with new ways of doing things. They invent things, they engineer things, they have new ideas and they discover things, and that makes us all better off. Today, creativity is generally seen as a product of individual genius. Previously, Americans understood the process as a collective one. Could you just talk a little bit about how that changed?
Pierson: That is an absolutely fundamental point. Drawing on a lot of economic research, the idea that it's a handful of superhumans who generate these breakthroughs -- I just don't think that idea can survive close scrutiny. The contributions of those individuals are obviously extraordinary and important, but you need an infrastructure. You need high levels of education, you need universities, you need the incentives for people to carry out basic research that other people can build on. Obviously, this casts doubt on any language of "job creators" that suggests that either by just their brilliance or the amount of money that they’re putting up, it's just a handful of people that are creating prosperity.
That leads to the question of why has the way that we've talked about it changed so dramatically over the past 50 years.
In his review last week, The Washington Post's Steven Pearlstein basically said that you folks don't have a good explanation for how this happened. Do you want to say anything about that review?
Hacker: I think we do have an explanation. The argument we make is about the changing economy and the way that it in turn shapes business on the one hand, and the changing party system in the United States. The Republican Party -- the party that's always been closest to business -- gets away from support for the mixed economy, partly in response to this shift in business, and partly in response to the changing electoral and political incentives it sees.
We used to have a system in which people were willing to talk about government, and government projects, that showed up in peoples lives in a positive way. That in turn increased the sense of civic engagement on the part of Americans and also their trust in government. Today, we have much more of a vicious cycle in which Republicans have not just attacked government rhetorically -- just destroying our capacity to effectively collect taxes, particularly from the richest Americans. In attacking government both rhetorically and structurally they've also been able to gain politically. It's created this retreat from visible uses of government that are positive in people’s lives. It's contributed to the sense of rising distrust.
It’s been not just Republicans who have made this possible. Democrats have accommodated it and in some cases pushed it along, chasing some of the same business interests and responding to some of the same negative attacks on government as Republicans. That, I think, is a pretty straightforward argument about how two fundamental shifts in our economic world and our political world came together.
It wasn't that long ago that Bill Clinton declared, "The era of big government is over." How would you characterize the shift in thinking among policymakers, scholars of government and economists?
Pierson: When we talk about government, we tend to talk about it primarily as a vehicle of redistribution -- that it takes from some people and that it gives to other people. Obviously, we think the issue of inequality is extremely important --we wrote a whole book about it before we wrote this one. That sort of zero-sum view that most of what government does is about redistribution is dominant in the way that a lot of very serious thoughtful people approach government and policy. They reduce the state primarily about those dimensions. And if you bring it up, they do think it’s important -- "Oh yeah, they took lead out of gasoline and out of paint, and cleaned up the air and the water." I don't think it's prominent.
Hacker: We tend to focus on this zero-sum element, this point-in-time element of government's role, the transfers that go from one group to another. George W. Bush once said, "Make the pie higher." One of the mistakes is to think that making the pie "higher," making the economy larger, means deregulating the small circle who are putatively creating prosperity. If you start to understand prosperity as a social product, then you really start to see government's role as much broader and much less about redistribution.
Conservative readers will say that the free market has done quite a bit to improve people's standards of living, with free trade being the classic example. If you look at, say, local housing regulations, conservatively inclined folks have a very strong argument that government is getting in the way of prosperity as well as fairness. I'm just wondering if there is anything that you would add for conservatives who think you're only telling one side of the story here.
Hacker: We're not arguing that government always does the right thing. You mentioned land use policies, which are clearly responsive to concentrated interests. The conservative critique of crony capitalism carries a lot of weight. It's just misdirected. It's not the Export-Import bank that’s the problem. We can debate it, but it's a flea on an elephant. The problem is that government isn’t effectively regulating industry.
We also have the fact that we spend vastly more than other rich countries on health care because we have a set of policies that are far too solicitous of the private health-care industry. The same kind of story can be told about the financial industry, the degree to which it’s offloading large systemic risks on the rest of our economy. Climate change is a huge rent, as economists call it, that the fossil fuel industry enjoys. And so rent-seeking can take both forms, but the biggest forms of rent-seeking -- the ones I just mentioned in health care, energy, the fossil fuel industry and finance -- dwarf everything else.
At this point in our history, people do not understand the story we tell. The valuable contribution of the book is to excavate and surface the enormous positive contribution of government that transformed our society and all rich societies in the course of less than a century from places where health and income and education were all extremely low to enormously prospering, flourishing societies.
