I made a great many marginal and front-paper notes on my copy, and Book Review No. 22 is going to turn into a mini-dissertation. I'll make some observations about the book Mr Brill claimed he was writing, then elaborate on the usefulness of the book he actually wrote. After that I'll comment on the specific policy problems the Protected created (short form: one of these days Democrat court intellectuals will read and understand the Law of Unintended Consequences) and conclude with some policy possibilities that might work.
Tailspin's thesis is simple: the most talented, driven Americans won the American dream, and then pulled up the ladder. (Page Six.) That's really an old idea. Years ago, The Washington Monthly wrote of a phenomenon they called "Catch-85," referring, loosely, to a reality that at any time, only fifteen percent of the tasks to be done, whether in business, governing, reporting, or being an armchair pundit, are the really challenging, really rewarding, really visible tasks. The rest of the iceberg is the routine stuff, not to mention the scut-work. Mr Brill suggests that the first hands on the top of the ladder were the new people, including the younger Mr Brill, who got a shot at boarding school and an Ivy League college. By itself, that's probably a good thing. See page 37: to the extent that the U. S. News league-table schools reward working evenings in a Seven-Eleven rather than resume padding building houses in Central America, the meritocracy grows. At a simpler level, in a land that's known as freedom, can a Social Register with no Jews and no public school graduates (page 20) be fair? When the resulting credentialed elite gets too full of itself, no. Fortunately there aren't enough Ivy League graduates to fill all the skilled positions, and a lot of the Credentialed Stars mess things up badly, but I'm getting ahead of myself. Those newly-minted whiz kids used their skills to create new financial products, bring short-term thinking to the capital markets, develop and prosper by digital technologies that as of this writing still appear to be disrupting labor markets, engage in international trading relations, and lawyer up in such a way as to rig all the institutions in their favor. (Again, long-time readers of The Washington Monthly will nod.) He returns to that indictment at page 315. "As America became a knowledge-based, financialized economy that marginalized the working class, and as political money deployed by the winners in that transformation took over Washington and paralyzed the government's willingness or capacity to meet the country's challenges, America's impressive progress in ameliorating poverty stopped. And then it was reversed." Perhaps, dear reader, that progress in ameliorating poverty stemmed from the Victory Dividend, and perhaps there wasn't anything "Washington" (which is the seat of the national government, not the same thing as "the government," there being separated powers) could have done about it.
The value of the book might be in its defense of governmental efforts, whether local or national, to assist people who are adversely affected by Marshallian improvements, which, all of Mr Brill's complaints notwithstanding, include financial innovations, expanded overseas trade, and commercial and intellectual freedoms. At page 159, he quotes columnist Joseph Nocera, "[G]lobalization inflicts a great deal of suffering on millions of people, something the news media should do a better job of acknowledging and the government should do a better job of mitigating." On the next page, he invokes Joseph Stiglitz, "But we live here in the United States, and we have done nothing to take care of the people here who paid the price for all of that." "All of that" refers to what Our President calls "bad trade deals." Those quotes reinforce an assertion Mr Brill makes at page 7.
The unprotected need the government to provide good public schools so that their children have a chance to advance. They need the government to provide a level competitive playing field for their small businesses, a fair shake in consumer disputes, and a realistic shot at justice in the courts. They need the government to provide a safety net to assure that their families have access to good health care, that no one goes hungry when shifts in the economy or temporary setbacks take away their jobs, and that they get help to rebuild after a hurricane or other disaster. They need the government to keep the political system fair and protect it from domination by those who can give politicians the most money. They need the government to provide fair labor laws and to promote an economy and a tax code that tempers the extremes of income inequality.Yes, each of those claims is debatable, and there are substantive counter-arguments to each. And yet, if I were still teaching a survey of public policy class, I'd be hard-pressed to find the basic case for activist government expressed more succinctly than this. He returns to this theme, for example, at page 255, where he asserts "Americans have been divided into two groups: the vast majority who count on government to provide for the common good, and the minority who don't need the government for anything, and even view the government as something they need to be protected from." That's really more about insiders using the levers of government for their own benefit, something David Hapgood noticed, forty years ago, in The Screwing of the Average Man, and shortly thereafter, he had that average man fighting back. Here, again, there are opportunities to quibble, or to have a class discussion. High concept example: is there such a thing as "the" common good? People interact for all sorts of mutual gain. Is there some grand intersection of mutual gain, and is a one-size-fits-all policy the most effective way of attaining it. Slightly lower-concept example: is it that the Protected "don't need the government," or is it more accurate (and more in keeping with Mr Brill's notional thesis) to suggest that the Protected have used their control of the levers of power to provide for their own wishes?
Had Mr Brill developed that thesis, perhaps his book would have held together better (or not giving me the impression that it's simply an old debate, with newer examples). Consider, for instance the specific riggings of the rules that Tailspin catalogs. Start on Wall Street. The exotic financial products that came unglued late in 2007 created pools of what appeared to be safe investments, something that lowered interest rates and made capital available to turn renters into homeowners, page 67, as well as to provide Chinese investors with low-risk places to park their trade surpluses, page 157. They also came undone. But financial products that value risk, and divide risk, and transfer liquidity involve risk, also make possible ventures that might otherwise not be possible. Consider, also, Wall Street's short-termism, which might better be understood as misplaced confidence in an academic theory. Sometimes, as Mr Brill notes, the takeover artists free up dead cash in a stagnant company, and sometimes, page 59, they end up strip-mining it and killing it. He also discovers, from pages 84 to 87, that sometimes excessive focus on the next quarter leaves you dead in five years. Market tests have strict grading curves, and here he misses an opportunity to draw a connection between short-termism in the boardroom and bailout-seeking in the hearing room.
Trade policy, another part of the machinations of the Protected, morphs from a "chapter in the story of American progress," that is, the 1962 Kennedy Round of tariff reforms, page 133, to deterioration, as early as 1970, page 148. Perhaps it was those Japanese and German cars and that Korean steel, or perhaps that was the sell-by date on the victory dividend. But again, I read the chapter on trade searching in vain for that structure of institutions to protect the Protected. That "people paid the price" for the changes is most likely true.
One other manifestation of the protection of the Protected is in the inordinate amount of time Members of Congress have to spend on fund-raising. (Perhaps they're more aggressive than Chicago panhandlers?) That there is so much money in politics might be because there is so much activity by the federal government. But if there had been a mention of rent-seeking in Tailspin, I would have flagged it. Crickets.
That is, we could interpret Mr Brill's characterization of the Patient Protection and Affordable Care Act, page 170, where public money subsidizes people to be able to pay for even more overpriced insurance as a government failure, and rent-seeking writ large; we could see the proliferation of supposedly thoughtful policy papers that never become policy, page 195, as evidence of a misplaced faith in central government; we could see the credentialism that infects civil service in Washington as a new spoils system; we could see in the glacial pace of environmental approvals for simple projects process-worship run amok; we could devolve some governmental functions to the States, the counties and cities, the homeowners' associations, and the People. Perhaps, to put a different interpretation on a remark Philip Howard makes about the law, we ought consider making governance antifragile. Page 304, "The law should be a framework for directing people to act responsibly, not a precise rule book that gives them no discretion to act and no accountability, because they can always hide behind some rule." In the absence of any discretion, such a system of laws treats people like morons. In the presence of processes that anticipate (almost) any contingency, the rent seeking is codified.
Thus, the call to arms Mr Brill concludes with, at page 341, might really be a call for devolution and less reliance on Governance by Wise Experts, particularly those of the incela corridor.
Triggered by ever more stunning displays of the soaring fortunes and lifestyles of those at the top, at the same time that those in the middle continue to be pushed down, politicians and groups representing the poor and those in the middle could join to form a new advocacy group demanding the basic fairness -- not equality, but just a fair chance at the [American] Dream -- that accountability and responsibility will produce.If there are any TEA Party activists left, they are likely agreeing, for reasons that are subtle.
(Cross-posted to 50 Book Challenge.)