I don't know many economists who respect John Kenneth Galbraith's professional work; he tended to substitute wit for rigor, and the major economic model he proposed1, the theory of countervailing force, isn't looking so hot. On the other hand, almost all economists wish, to the extent of heartsickness, that they could write that well. And while the theory behind his economic history is often not quite right, the storytelling is absolutely first rate. You can't get a better popular overview of 1929 than The Great Crash, even though A Monetary History of the United States is probably a better way to understand the thing.
In the New York Sun this week, Ed Glaeser, the leading light of real-estate economics, had a lovely piece on the 50th anniversary of The Affluent Society:
Galbraith's advocacy of public spending aimed at reducing inequality and improving infrastructure helped usher in the 1960s. Lyndon Johnson's war on poverty was decidedly Galbraithian. While the New Deal social programs were born of economic desperation, Johnson's social spending reflected the confidence of prosperity, just as Galbraith had foreseen. But after 1969, the American public gradually turned against Galbraithian social policy. By 1980, Galbraith's arch-nemesis, Milton Friedman, had found an intellectual home in the White House. In the 1990s, even Democrats embraced private wealth over public spending. But in 2008, "The Affluent Society" seems relevant once more. As the political pendulum swings left, candidates once again call for a more vibrant state to right social wrongs. 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. American housing is the best in the world, and the weaknesses of the housing market reflect too much, not too little, regulation, especially those rules that stymie construction and make housing unaffordable. While Galbraith was right that some social problems do need a stronger public sector, his analysis would read better today if he had also appreciated the tremendous vitality that comes with economic freedom.
1rather than what you might call "conspiracy sociology"
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Here is a little challenge.
If you can get through the next five years without writing, even once, a sentence of the form "American [x] is the best in the world," without immediately backing that claim up with two paragraphs of rigorous, skeptical argumentation and evidence, then you will be allowed to continue writing.
If not, you will be required to sit on the Thinking Chair until you can explain why your behavior is wrong.
Posted by brooksfoe | March 28, 2008 12:58 PM