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Tuesday, February 21, 2006

The Government's Role in Wealth Creation and Redistribution

Should Democrats focus less on government as an agent of wealth redistribution and more on government's role in creating the means for individuals, particularly the disadvantaged, to create and accumulate wealth?:

Creating Wealth for the Poor, by E. J. Dionne Jr., Commentary, Washington Post: Ron Sims, the county executive in Washington state's King County, believes government's job is "to help create wealth more efficiently." That view comes naturally to a leader of the entrepreneurial Seattle region, which has improved the nation's experience of everything from technology to coffee. ... Meeting Sims ... provided a bracing reminder that there is an authentic search going on outside of conventional politics for the new ideas to animate a new political era -- precisely what Democrats are supposed to be seeking.

Sims is a ... Democrat... Sims's ... idea [is] that government, far from being a drain on the nation's wealth, ought to "provide the social infrastructure and the physical infrastructure to help wealth be created." He said during lunch here the other day that Democrats should run under the slogan: "Rebuild America."

Sims notes that after World War II, the federal government helped unleash an era of exceptional growth through investments in schools, interstate highways and higher education. Both India and China are "making intelligent moves for economic growth" and the United States cannot stand by and watch. "You need people and brains to create an economy," he says. "You need transportation to move an economy. And you need an environmental policy to create clean air and clean water."

Sims's idea reminds Democrats that a commitment to active government is not simply about redistributing wealth. ... effective government has always been essential to robust economic growth. Government, in the Sims formulation, should be a dynamic player in our nation's economic life. ... Democrats ... find themselves attacked for being too concerned about redistributing money, yet they are far too timid in committing themselves to lifting up the very poorest Americans. ...

The decline of manufacturing employment means the economy is producing fewer well-paying jobs for the less-skilled. These disconnected young men tend to go to the poorest schools, grow up amid concentrated poverty and in families that often lack fathers, and face persistent employment discrimination. Face it: The one expensive social program we have for this group is incarceration.

Can't we do better?  [For example] ... reform education and training programs and work with employers and other intermediaries to connect these young men to the labor market. ... expand programs such as the Job Corps that have "proven track records," ... do far more to integrate ex-offenders into the world of work. ... [and] create much stronger work incentives through income supplements, higher minimum wages and changes in the child support system. ... Sims's practical focus on government's role in wealth creation ... is good public policy. My hunch is that it could also be good politics.

I'm reminded of this by Brad DeLong:

Social Justice, by Brad DeLong, TPM Cafe: ... Could it be that in America today framing one's issues in terms of "social justice" loses more votes than it wins in important political backgrounds?... That we are much better off talking about "social insurance" and "safety nets" and "equal opportunity" and "personal liberty" than "social justice"? Could it be that there are many more people in America who have a knee-jerk approval of equal opportunity and personal liberty ... than have a knee-jerk approval of social justice? Whew. It's over. I'm back to my real self again. It won't happen again--at least not for another month or so. Yours in struggle and solidarity, Brad DeLong

    Posted by on Tuesday, February 21, 2006 at 01:23 AM in Economics, Income Distribution, Politics | Permalink  TrackBack (0)  Comments (21)

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