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Do We Deserve Our Government?

J. Bradford DeLong

Eugene Steuerle et al. (1999), The Government We Deserve: Responsive Democracy and Changing Expectations (Washington: Urban Institute Press: 0877666768).

This is an excellent book--if you want to know what the conventional wisdom is among the policy analysts in Washington who work hard to try to figure out how to get us all a better government. It is not the conventional wisdom among the policy advocates--who are much more interested in what happens to their own particular issue (and care little about the bigger picture). It is not the conventional wisdom among the high politicians--who are much more interested in the popularity and the electability of their candidates (and thus in spin). But I think that the opinions of the policy analysts are by far the most worth listening to of the three. And Eugene Steuerle et al. do a good job of laying them out.

The first substantive point that Steuerle et al. make is that we have a growing economy--probably an economy that is not growing as fast as it used to back before 1973 (output per worker grew at 1.3% per year from 1900 to 1947, at 2.2% per year from 1947 to 1973, and at 1.1% per year since 1973), but still a growing economy. But the second substantive point that Steuerle et al. make is that since the mid-1970s our growing economy has been accompanied by a mammoth upward leap in the spread of incomes and wealth: since 1979 the share of national income received by the top half a percent of tax returns has nearly doubled, from 6 to 11 percent of total reported income. Thus those at or below the middle of the income distribution find themselves today with little if any edge in incomes and living standards over their counterparts back in 1973.

Steuerle et al. believe that Americans do not greatly worry about the degree of income and wealth inequality in the United States, but that they worry greatly about inequality of opportunity. I am not sure that is correct. American whites worried little about the inequality of opportunity offered to African-Americans for most of the century after the Civil War. American men worried little abou the inequality of opportunity offered to American women until at least the 1970s. Americans like to tell themselves that they believe in equality of opportunity. But I think that the degree to which Americans worry about inequality of opportunity is overstated by Steuerle et al. And I also believe that Americans are more concerned with the widening of income inequality than Steuerle edt al. do. So Steuerle et al.'s focus on increasing the size of the pie and removing blockages to opportunity--which is the conventional wisdom among policy analysts--may not prove to be sufficient, or to be the best policy.

After the economy Steuerle et al. turn to the family, and lament the penalties that the government imposes on relatively poor individuals who marry. Here Steuerle et al. seem to me to be exactly on point as the detail the bad incentives built into the way the government treats relatively poor couples who marry. But they do not discuss the rhetorical politics: these bad policies persist because of the way that the issues are framed, and will continue to exist until social welfare policy is made by those more willing to let some of the money spent leak into supporting the standard of living of young married fathers with little attachment to the labor force.

I find myself less impressed by Steuerle et al.'s strong belief that we as a society are spending too much on social insurance for the elderly and too little on children. In an aside they admit that high social-insurance spending on the elderly is in large part due to rising medical care costs (which are, of course, associated with steeply rising medical care values). I would agree that we are spending too little on poor children--largely because we do not recognize the work that their mothers' do raising them as socially valuable. With the elimination of the old AFDC welfare program, mothers of very small children are now expected to work outside the home. The government stands in the place of the job search assistant rather than of the absent breadwinner. And the consequences for the economic welfare of poor children will, I think, be bad: by trying to save money now, we will end up paying money later.

I also find myself puzzled by Steuerle et al.'s assessments of the source of the deficit crisis of the 1980s and 1990s. It is certainly true that we had (and have!) a social insurance system geared to pre-1973 growth rates, and that we need to adapt growth of spending programs to our slower-growing post-productivity-slowdown economy. But these are problems for the 2020s and 2030s (although we surely should start planning for them now). The deficit problems of the 1980s and 1990s had another source: the Reagan tax cuts coupled with the Reagan defense-spending increases, and the rosy-scenario and supply-side forecasts that underpinned the policies. As the title of the book suggests, we got the government we deserved--elected--in the 1980s, but this reflects not the interaction of the productivity slowdown with the aging of the baby boom but instead bad policies made by bad policy makers.

And so it is on public political education--rather than the economics of an aging America--that I think the focus should rest. And to their credit that is where Steuerle et al. do focus their argument after page 93.

They share the policy analysts' disdain for and distrust of the "adversarial, well-organized, permanent maze of advocacy groups" who yell at the government to do what they want while yelling at their constituents that the world will come to an end and the government destroy their lives unless they give more financial support to the Washington lobbyists, and give it now. I agree with them: I share the policy analysts' disdain. I think things would go better if government were quieter, and if the well-informed benevolent policy analysts were left to thrash out issues and sort out policies.

The problem, of course, is that a quieting-down of public discourse does not leave control over government in the hands of the well-meaning policy analysts. It leaves it in the hands of lobbyists and advocates for narrower groups, usually at the beck and call of richer constituents. I think that Steuerle et al.'s diagnosis of what is wrong with our communications media and with how they cover government--as a cross between a gossip fest and a series of horse races. Nevertheless I cannot help but think that our system today is less imperfect than it has ever been before, so that some of their gloomdoggling is uncalled for.

Yet on the other hand they have much to say that is worth listening to. Perhaps the best parts of the book come at its very end, in the pages after 157, in which the authors discuss how to build the media that America's citizens deserve, how to build a public opinion worth listening to, and how to ground public talk in civic education.

Conclusions of Steuerle et al.:

  1. Free our fiscal future: create some fiscal slack in our budgets by constraining automatic growth in programs and reducing the competitive disadvantage that new and discretionary programs now face in the legislative process.
  2. Give social insurance a modern face: pay more attention to the responsibilities of those who reap the benefits of social insurance, and make a comprehensive assessment of the relative priority of different programs for Americans collectively.
  3. Make a government for all ages: not just for the newly-retired elderly.
  4. Increase everyone's chances to build financial security: look to the twenty-first century as a time to move beyond simple redistributive policy toward "cumulative" policy that strikes a new balance beween security and opportunity.
  5. Stress learning over a lifetime: to better create and adapt human capital to changing circumstances.
  6. Occupy our children more fully in settings with adult or parental supervision, guidance, and mentoring: as a result of the decline of the two-parent one-earner household.
  7. Support the modern family: remove the marriage penalty both in income taxes and in social security benefits.
  8. Foster a new democratic citizenship: improving media communication, nourishing deliberate and thoughtful public opinion, and promoting civic education.

Professor of Economics J. Bradford DeLong, 601 Evans Hall, #3880
University of California at Berkeley
Berkeley, CA 94720-3880
(510) 643-4027 phone (510) 642-6615 fax

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