The Moral Consequences of Economic Growth

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The Moral Consequences of Economic Growth by Benjamin M. Friedman Alfred A. Knopf * 2005 * 570 pages * $35.00

Benjamin Friedman is a professor of political economy and a former chairman of the economics department at Harvard University. He is also an unswerving advocate of the interventionist welfare state. His recent book, The Moral Consequences of Economic Growth, is meant to demonstrate what is necessary to assure that the majority of the people will continue to support economic regulation and coerced redistribution.

Friedman's starting point is the idea that when people experience rising incomes and economic improvement, they tend to be both more generous and more benevolent toward their fellow men. On the other hand, when they view their present and future economic prospects as either stagnant or regressive, they tend to be stingier and less sensitive to others.

Friedman then translates this into a policy prescription for government to foster increasing economic growth, without which, he contends, many in society will be less open to "tolerance," "fairness," and "democracy." To demonstrate this, he takes the reader through a lengthy, and often disjointed and meandering, account of American and European history during the last 300 years.

Long periods of sustained economic growth, Friedman argues, provide people with a psychology of economic security and confidence that makes them less fearful that continuing social change may undermine their material status. In other words, high economic growth makes people view change as a "positive-sum" game in which everyone can be better off at the same time. Low or no economic growth makes people feel that change is a "zero-sum" game in which others must be getting ahead at their or somebody else's expense. Low growth, therefore, creates a culture and politics of mean-spiritedness.

He tries to show that it has been during periods of sustained economic growth that people have been less racist and sexist, more willing to pay taxes for the social "safety-nets" of the welfare state, and supportive of "activist" government steering society toward desirable "social ends." During periods of prolonged slow growth, people become "anti-government," wanting to hold on to what they have and not "share" with those who are less well off.

To prove this Friedman must perform a variety of interesting intellectual contortions. For instance, the expansion of government during FDR's New Deal in the "bad times" of the 1930s becomes, supposedly, the "exception" that proves the rule. He also contends that people turned against Keynesian economics in the 1970s because they felt worse off during the decade's inflation. The unstated presumption, therefore, is that Milton Friedman must not have received sufficient raises from the University of Chicago in the 1960s and 1970s. Why else would he have been so "negative" about society that he devised the monetarist case against discretionary macroeconomic policy?

And we have an internationally known Harvard economist bemoan the fact that during the "uncaring" and clearly "cruel" years of the Reagan administration, the national minimum wage was not increased. One can only conclude that the laws of supply and demand, and the harm from pricing people out of the market by mandating a wage above where the market would have set it, are fundamental truths that have been forgotten by at least some of the members of the Harvard economics department.

Benjamin Friedman rationalizes government intervention to foster continuing economic growth by arguing that such growth is a "public good" that would be "undersupplied" if left to private decision-making. …