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fine post


As you well know the fundamental shift towards market thinking has led to a shift of risk from the top down. The crucial thing that is needed going forward, is some pressure in the opposite direction for programs that I would call universal -- programs that we as a rich society believe everyone should have, including security, education, health care and a guarantee of reasonable retirement. The universal nature of the programs makes them a bad fit for the purely market solutions (although market components are still crucial).
My theory is that as prodcutivity increases, we will expand the programs that we as a society consider universal -- think transportation.


Mark, this is a *great* post--enormously helpful. Thanks.



Lucid as always!

The final point you make: that much of the realignment going on in fiscal-social policy, has to do with issues of risk and its allocation or distribution, seems absolutely vital to me.

It's heartening, therefore, that "risk" is becoming (slowly) a common meme, because that suggests that at least for people who follow these debates, future proposals will not be able to blithely shift risk as the current round (key example: Bushes SocSec 'reform') have done.

Likewise, middle-class types more sensitized to the allocation of risk might make much more noise, or vote much more quickly with their feet, when employers try to shift risk too far or too rapidly onto their shoulders. This won't immediately help the situation of those who don't have many choices (those who work at Wal-Mart have little bargaining power about the company's systematic loading of risk onto them), but even there, greater awareness can't hurt.

James Kroeger

Excellent job of pointing out the ultimate insincerity of Republican "market" solutions, Mark. Another great example of this is their celebrated use of tax policy to "create incentives" in the marketplace for private entrepreneurs to work their private sector magic.

"When do firms need special incentives to motivate them to invest in new ideas? The answer is NEVER. In modern market economies, COMPETITION provides firm managers with the most powerful motivation to continually invest that they will ever need: FEAR. They ultimately face both the fear of bankruptcy and the fear of LOST OPPORTUNITY. If your competition lowers its costs by investing in new equipment, or improves the appeal of its products by incorporating new innovations, then you’d better do the same or you will soon find yourself driven out of business. With only a few exceptions, additional government-provided financial incentives like tax cuts are nothing more than an unnecessary waste of tax dollars."

"Some marginal firms may have the desire to invest in their new ideas, but are nevertheless unable to obtain the funds they need because their investment plans seem too risky to banks, venture capitalists, and angel investors. One option for Congress in facing this would be to do NOTHING and simply allow the marketplace to reward firms-that-make-wise-investments with the market share of firms-that-do-not. The other option for lawmakers would be to help marginal firms obtain the funding they need for investments in the hope that they might then be competitive with better established firms. The only rational way to do this would be to provide these marginal firms with targeted investment tax credits or perhaps with guarantees on private loans."

"Risk takers do not need special additional incentives from the government to encourage them to take a chance on creating a viable business. True risk takers believe that their ideas will succeed in the market and have so much of their identities invested in them, they really don’t care if they receive any return at all on their invested time and money, sometimes for several years, as long as they have hope of eventual success. The only question for these individuals is IF they can get financing."

When Congressional Republicans say that the government should give special tax breaks to the oil industry to improve their incentive to do what they would do anyway, it is an outrageous and indefensible anti-market waste of taxpayer dollars.

spaghetti happens

First of all, the New Deal was a realization of the notion--not well understood in this country, unfortunately--that taxes are the means through which the population funds government to take care of the needs of the population. We pay money in, we get services and benefits out; it's pretty simple when you think about it.

Second, we need to take note of the elephant in the living room, which is the half-trillion dollar defense budget that does nothing for the vast majority of the people of this nation. Cut that back to a reasonable level--probably twenty percent of what it is now--and we wouldn't be having this conversation because there would be plenty of discretionary income to be returned to the people in forms that benefit us.

California Health Insurance

Universal health care can be a great impact on health care system. It is unfortunate to hear so many lack health insurance. We really need to improve our health care system. Health insurance is a major aspect to many and we should help everyone get covered.


nice title. shout out to Huey Long and the others whose names we don't know who pressured FDR to make the New Deal a lot more progressive than it would have been. shout out to the socialists like Upton Sinclair for proposing and pushing Social Security type programs into the public discourse before the Democrats touched it.

Bernard Kelly

hi All

from my studies of this field, my belief is that the best form of retirement savings accounts is that which operates for all workers in Singapore.

they have personal control of their own investments, and may withdraw to purchase a family home.

But otherwise their compulsory 20% savings are locked in until they retire

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