Policy Does Matter

Policy Does Matter

Daniel Greenwood: Policy Does Matter

In yesterday?s New York Times, David Brooks wrote that policy doesn’t matter, because Swedes in Sweden have a longer life expectancy than Americans and so do Americans of Swedish descent, and because Native Americans in South Dakota have shockingly low life expectancy. Actually, the implication is the opposite. It isn’t fate that makes our results so appalling.

As Marmot (Status Syndrome) and Wilkinson (Mind The Gap; Spirit Level) have demonstrated, we have powerful evidence that among the rich countries, egalitarian societies such as Sweden have better health than inegalitarian ones such as the United States (and in the inegalitarian ones, the bottom does dramatically worse than the top). Our results are not in spite of our policies; they are the predictable consequences of them.

Over the last couple of decades, we have made many policy decisions with the explicit or less explicit goal of shifting income and wealth from the middle to the very top while squeezing the bottom. This has come in the form of straightforward changes such as the tax code replacing capital gains and estate taxes with higher payroll taxes, the strong dollar (and the consequent destruction of the U.S. manufacturing base), corporate governance rules that reallocated corporate income from ordinary employees to investors and top managers, the legal changes that destroyed the private sector unions, and the failure to provide ordinary government services routine in the rest of the advanced world. But this also includes those that are somewhat arcane but perhaps even more important promotion of asset bubbles (which shift income and wealth upwards to those already invested) and a Federal guarantee that high-flying gamblers will be allowed to keep their profits and have their losses covered by the taxpayers.

The goal–to use government power to shift income and wealth upward–has been achieved. Virtually all the economic growth of the last generation has gone to the very top while the middle has stagnated and the bottom quarter of the population has suffered reduced standards of living. The consequences of the policies set forth that has created this reality matter a great deal. Not only are we a more unfair society, but economic growth is slower, health is poorer (and health care more expensive), and virtually every other measure of social wellbeing is lower than it could be.

If life expectancy is our measure, than the United States is behind every one of our democratic peers and next to Cuba. Cuba! Policy matters. A great deal. If we can’t beat Cuba, we’ve been following the wrong policies.