November 5, 2007


A Shell Game: a review of The Big Con: The True Story of How Washington Got Hoodwinked and Hijacked by Crackpot Economics by Jonathan Chait (JAMES P. LUCIER JR., November 5, 2007, NY Sun)

From the title alone, the canny reader will deduce that a conspiracy theory is coming, and sure enough, on page one, Mr. Chait says that, although he personally does not like conspiracy theories, in this case he feels compelled to offer one. Surely the public will understand, he suggests.

Mr. Chait's beef is with Washington. These days, he writes, no one in the capital city seems ready to support tax increases, income redistribution, and new government programs, even though Mr. Chait asserts the American public wants and needs these things. Indeed, Mr. Chait asserts, the American public knows it needs them and wants to pay. Something must be wrong with today's politics, Mr. Chait believes, if it fails to deliver the policies the public demands. In a better, purer time, back in his father's day when Mr. Chait was still a very young man, enthusiasm for big government ran high and tax increases were always matter-of-factly on the table, if not outright automatic. This was, Mr. Chait believes, a halcyon age.

Mr. Chait hankers, it seems, for the economic policies of Lyndon Johnson's Great Society, produced by a moment of unquestioned dominance for American liberalism. Then, liberals saw their views as the social consensus from which all rational policy discussions had to start. A serious book would honestly and objectively ask what went wrong since Johnson, and why.

If the signal failure of the modern Right is the refusal to accept that the great majority of their fellow citizens genuinely do desire a government-guaranteed social safety net, that of the Left is the refusal to acknowledge that those same folks have little interest in paying its actual costs even for themselves and none in funding it for others (which is why the one entitlement that was easily reformed was Welfare, where liberals made the mistake of joining the Right in arguing that the primary target was poor blacks). in essence, the Right is engaged in a futile quarrel with that aspect of human nature which makes Man value security, while the Left objects to the opposing impulse towards freedom. Thus, the genius of the Third Way is that it accepts these two competing desires and seeks to satisfy both. It does so by providing a skein of economic services and protections, indeed one more generous than the statists can provide, but at costs that are hugely lower, especially as regards the general contribution towards the poorest members of society.

Posted by Orrin Judd at November 5, 2007 8:41 AM

Saw Mr. Chait interviewed by Grover Norquist last night on CSPAN's After Words. When asked how it was that each time in the past 50 years that marginal tax rates were reduced, government revenues increased, Mr. Chait replied: 1) It was not true of Bush's 2001 tax cuts (ignoring the slowdown inherited from Clinton and 9-11 with its effects on the economy), and 2) the economy did well in the 50's when the top marginal rate was ~70% and also when Clinton raised the rates in 93. From these examples, he concludes that marginal tax rates have little effect unless they are totally confiscatory (i.e., 100%). Such are the economic reasoning powers of the modern left, but then what can one expect from an editor of the New Republic these days?

Posted by: jd watson at November 5, 2007 3:45 PM