30 October 2006

Risk, inequality, policy

If you're a social democrat like me, and think about political economy blah blah blah, then you may have heard about Yale professor Jacob Hacker's new book, The Great Risk Shift: The Assault on American Jobs, Families, Health Care, and Retirement—And How You Can Fight Back . If not, the book's thesis is basically that in the last few decades the American economy has changed such that individuals are facing a lot more risk. Maybe you'll get laid off, maybe your entire industry will dry up, maybe your 401(k) will crash on you, et cetera. As with risk in many arenas, this greater risk also comes with better rewards for the winners ... but most folks would like more stability in their economic life, even if it means more modest rewards.

It's an interesting thesis, and certainly fundamentally in agreement with what I see looking out at the American scene.

Over at The American Prospect Online, two of my favourite policy wonk bloggers, Matthew Yglasias and Ezra Klein, are doing a roundtable discussion with Hacker about the ideas in the book. It's full of great social values and political economy stuff like this from Klien:

Jacob blames the country’s ills on risk and Matt argues for a stronger focus on inequality. Neither is wrong, but neither is right enough
by crafting a compelling narrative that universalizes economic hardship, he plays into a pernicious political instinct among Democrats to drop the specific problems of poor people for the more broadly palatable concerns of the middle class ...
Good stuff, and these days delicious just for presuming that talking about economic policy is talking about what kind of society we want to have.

1 comment:

Anonymous said...

I've talked a lot with my grandparents about economy, its changes, etc. And the thing that strikes them most about the way things are comparativly to when they grew up is that people today take way more risks.

People today are much more comfortable taking 30,000 dollars in high interest credit card debt or literally "betting the farm" by getting a mortgage on their family home than they ever were.
Grandma says "It used to be that you only bought something you had the money for". Now people go deep into debt, which exposes them to the more adverse effects of losing a job, or crop failure, or sudden medical problems, or whatever.

People used to save everything they had, and mend their own socks to buffer themselves against unforseen circumstances. Compare that to a generation of people who live off of credit cards and are a paycheck away from disaster.