Time to Grow the Government

The Case for Big Government
By Jeff Madrick
Princeton, 224 pages, $22.95

Brother, have you heard the news? Big government is back in fashion. Decades of deregulation and cuts to social programs have left a sour taste in people’s mouths; the credit crunch has made pragmatists out of even the staunchest ideologues. The idea that “government is the problem”—ascendant since Ronald Reagan decided the best way to captain a ship was to sink it—has been bankrupted by the greed of corporate kleptocrats who created a Crisis of capital-letter proportions

That’s why there couldn’t be a better time for Jeff Madrick’s new book, The Case for Big Government. Notwithstanding the fact that consumers aren’t lining up to buy this slim tome—or anything else, besides half-price flat screens—the thought of spending public money for the public good is once again gaining currency. Already, President-elect Obama has begun to lay out his agenda: On Dec. 11, he declared the time has come to “finally provide affordable, accessible health care for every American.” Even conservative columnist David Brooks has called for a “National Mobility Project” to make long-term investments in the country’s transportation infrastructure.

 

FOR THOSE SAME reasons, this is also a terrible time for a book like Mr. Madrick’s. The Case for Big Government is a polemic, and people read polemics because they’re provocative. (Why else read Christopher Hitchens?) But Mr. Madrick’s problem is that the case for big government doesn’t really need to be made. The pendulum is swinging from Friedman to Keynes; conservatives are in retreat; and the Republican Party is in ideological disarray. To come out for big government is as controversial as coming out in favor of democracy. The world has seen the consequences of unchecked capitalism run amok. Has Mr. Madrick arrived too late?

Perhaps not. “It is conventional wisdom in America today,” he writes, “that high levels of taxes and government spending diminish America’s prosperity.” Even Democrats have learned reflexively to apologize for tax increases and justify public spending in terms of its return on investment. And even though the Democrats are now in charge, they long ago ceded the psychological high ground to fiscal conservatives whose models had the aura of mathematical certainty. Democrats have been reinvigorated by Hope, but to overcome their intellectual inferiority complex, they need hard numbers. That’s where Jeff Madrick comes in.

 

THE DIRECTOR OF POLICY research at the New School’s Schwartz Center for Economic Policy Analysis and a former New York Times economics columnist, Mr. Madrick speaks the ploddingly precise language of the social sciences (be warned, there’s barely a metaphor or simile in the whole book, and near the end bulleted lists take over). He can challenge conservatives on their own terms. If the case against big government really is “open and shut,” he argues, then “the evidence supporting it should be as close to unambiguous as such economic evidence can possibly be.

It certainly isn’t. Higher taxes do not necessarily impede growth. When Bill Clinton raised taxes on high-income Americans in 1993, conservatives clung to the fact that incomes fell the next year as proof that taxes hurt productivity and innovation. But what they ignored, Mr. Madrick notes, is that incomes went up the following year. The decrease was just the result of taxpayers shifting income to their 1992 returns.

So if taxes aren’t corrosive, what then? Mr. Madrick dodges the question slightly. “The purpose of this book is not to propose a concrete detailed plan,” he writes. Don’t expect anything new or radical. His prescriptions are familiar: a living wage, day care, health care, research money, roads, university subsidies. Mr. Madrick estimates that $700 billion (everybody’s magic number) would be enough to make this all happen

If the government can afford to bail out Wall Street, it can afford to invest in America. Indeed, it wouldn’t be hard to create a National Mobility Project along Brooks’ lines. For a mere $75 billion a year, the Federal Highway Administration could create 3.5 million jobs and stimulate $464 billion in “additional nationwide sales.” That’s equivalent to the estimated cost of being in Iraq for three months.

Everything Mr. Madrick proposes here sounds reasonable. That’s the point—there should be nothing stopping us from doing it. Even so, it makes you wonder whether his optimism is obsolete. The book is based on lectures he gave at CUNY, and it went to press during the election, before the stock market fell to a 10-year low of 7,552 points and 500,000 jobs were shed in a single month. His prescriptions will either become a playbook for the Democrats, or an artifact from a bygone era of prosperity

Adam Rose is a writer living in New York. He can be reached at books@observer.com.

Time to Grow the Government