1/2 Beware of the Big-Government Right, by Richard A. Epstein via Defining Ideas, Hoover Institution. “Oren Cass’s new book contains a flawed game plan for America”

Dec 16, 2018, 05:06 AM

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Traditional conservatives and modern progressive intellectuals have had pointed, often bitter, debates in recent years over the future of American domestic policy. One of the major arenas in that struggle is the law of labor and employment. The left wants to toughen minimum wage and overtime laws, strengthen antidiscrimination laws, and promote diversity, affirmative action, and, increasingly, inclusive hiring. They also hope to restore unions to their pre-1970 glory days. The right opposes each of these initiatives by seeking to deregulate labor markets in order to let competitive forces increase overall productivity, indirectly benefitting workers through higher wages. My classical liberal credentials put me squarely on the conservative side of this debate. Oren Cass, a senior Fellow at the Manhattan Institute, has written a forceful and well-received book, The Once and Future Worker, which he hopes will change the terms of the debate. He has also summarized his position at length in an article in the American Interest, titled The Working Hypothesis, to which I also refer. Cass rejects the gospel of growth that is touted by traditional conservative economists, whom his book berates for insisting that things would be better “if only government had been smaller, with lower taxes and spending, and thus more room for economic dynamism.” It then chides progressives for wishing that government had been bigger, “with more infrastructure investment, more checks on the market, a more generous safety net, and thus a prosperity widely shared.” In contrast to both, his bottom line is that “we can provide a subsidy for low-wage work, funded with higher tax rates and reduced transfer payments”, and thereafter “we can repurpose unions to help workers and employers optimize workplace conditions.” Cass treats these as conservative arguments that “prize self-sufficiency, assign a central role to family and community and prefer the private ordering of markets to the centralized dictates of government.” But he refuses to go the whole way with libertarianism because of its blindness to other conditions that are needed for flourishing. As a classical liberal, I think that his thesis is wrong on both the broad and narrow points. I believe that insuperable obstacles stand in the path of this utopian vision. First, the ends of the system are underspecified. How much of a subsidy? How high the taxes? Who decides and when? And even if we could answer those questions, is there any way to reduce transfer payments that are made, for example, to the elderly and the disabled? And can we do better if growth becomes weaker? Next, the mechanics of transformation are underspecified as well. Cass makes frequent use of the dangerous royal “we.” Unions are large and powerful organizations. Just who will take the lead in their redesign, and who will be able to increase their membership from the under 7% today? These concrete questions lead to a larger inquiry. Why do we want to undertake this mission to be begin with, if its likely effect will be to reduce overall economic wealth? For Cass, the answer starts at a theoretical level as he claims that it is wrong for economists and political scientists to rely on “the insidious metaphor of the ‘economic pie,’ which measures success by the amount of gross domestic product available to every American for consumption.” I confess that I am completely baffled why he rejects this traditional mode of analysis. The point of the pie metaphor is to help political and social institutions work to create positive-sum games from which everyone benefits. As Cass acknowledges, no one should complain that U.S. GDP is today three times what it was in 1975. Some portion of that GDP derives from scientific research, public education, and charitable activities, all of whi...