The Case For More Government

NYT:

Last month, four academics — Jeff Madrick from the Century Foundation, Jon Bakija of Williams College, Lane Kenworthy of the University of California, San Diego, and Peter Lindert of the University of California, Davis — published a manual of sorts. It is titled “How Big Should Our Government Be?” (University of California Press).

“A national instinct that small government is always better than large government is grounded not in facts but rather in ideology and politics,” they write. The evidence throughout the history of modern capitalism “shows that more government can lead to greater security, enhanced opportunity and a fairer sharing of national wealth.”

The scholars laid out four important tasks: improving the economy’s productivity, bolstering workers’ economic security, investing in education to close the opportunity deficit of low-income families, and ensuring that Middle America reaps a larger share of the spoils of growth.

Their strategy includes more investment in the nation’s buckling infrastructure and expanding unemployment and health insurance. It calls for paid sick leave, parental leave and wage insurance for workers who suffer a pay cut when changing jobs. And they argue for more resources for poor families with children and for universal early childhood education.

This agenda won’t come cheap. They propose raising government spending by 10 percentage points of the nation’s gross domestic product ($1.8 trillion in today’s dollars), to bring it to some 48 percent of G.D.P. by 2065.

That might sound like a lot of money. But it is roughly where Germany, Norway and Britain are today. And it is well below government spending in countries like France, Sweden and Denmark.

To me, this seems like common sense.  But I've yet to be able to convince any of my neighbors that that is the case.  I think the article hits on an important note: that people are fine with programs that benefit them, but they are sure the "lazy blacks" or whoever are unfairly benefiting from their tax dollars.

Personally, I think the biggest job creation plan of all would be a national healthcare plan that took the burden of the provision of health insurance from employers and put the government in charge of cost-control.  For-profit health insurance makes zero sense whatsoever, and higher income tax rates on the truly wealthy might convince doctors they don't need so much income to keep up with the hedge fund assholes and overpaid attorneys (not to say anything about entertainers, athletes and untalented reality stars like Donald Trump and Paris Hilton).

Sure, a lot of unique ingredients contributed to the egalitarianism and shared prosperity (amongst white folks) of the post-war years, but I feel confident that a progressive income tax and government investment and transfers contributed significantly.  I don't think it is a coincidence that income inequality increased as top marginal tax rates and government programs for the poor decreased.  But, hey, what do I know?  I'm just a stupid farmer (who gets plenty of help from the government, in spite of being pretty well off.)