May 9, 2008
Glaeser on Galbraith
As Greg Mankiw wittily observes, a young fogey reviews an old turk:
The excesses of the 1960s are forgotten and once again, the government is seen as society’s savior. For people of all political stripes, it is worthwhile returning to “The Affluent Society,” and pondering what Galbraith got right and what he got wrong.
While I am a staunch supporter of free markets, I agree with Galbraith that there is much the public sector needs to do. Private firms do not automatically provide safe streets, good roads, and clean water. Even more important, Galbraith was dead right in arguing that we need more effective schools. Human capital is our best tool against poverty and economic stagnation.
Galbraith’s great failure was that he never really understood how much society is strengthened by a free and competitive private sector. “The Affluent Society” argues that a lack of regulation made American homes inferior to those in European social democracies. That view was wrong in 1958 and is completely untenable today.
The whole review is here, and there is more of interest beyond the left-wing right-wing stuff I quote. My sympathies lie with Glaeser, who was a big influence on two chapters of “The Logic of Life“.
“The Affluent Society” was always an exasperating book. What got to me about it was that Galbriath never picks up the point that the failures it centred on were in large part failures to provde the conditions that business collectively would choose for its long term environment if it had the political means to impose those conditions. There is to my knowledge only one entity in which a good deal of the medieval institional political power of business still persists, the City of London; and it is therefore the only persisting experiment in what business would choose to tax itself for. The City of London chooses to tax itself to pay for schools, parks, social housing and more inside and outside its boundaries, as well as policing, good roads etc. within its boundaries. These payments are in addition to the tax burdens imposed from outside the city, and represent topping up of state provision.
I never could quite figure out why Galbraith did not ask himself what conditions were really best for business and how means might be set up for business to tax itself to pay for them.
Posted by: David Heigham | May 9th, 2008 at 4:22 pm | Report this commentSurely what the ‘City of London’ chooses in tax terms is special conditions for ‘non-doms’ and a tolerance of tax havens?
It is the schools and hospitals within London that are creaking the most under rapidly growing demand and costs of living rises that affect staffing.
The idea of ‘imposing’ further ‘burdens’ from ‘outside’ is usually met by threats of the City taking its ball and leaving in a huff…
Do football players referee themselves?
Posted by: David | May 14th, 2008 at 11:54 am | Report this comment