"No Wonder We're Falling Behind"

Jonathan Chait looks at the transformation of AEI magazine into a new publication that is "less dewy-eyed about the virtues of democracy and far more dewy-eyed about the virtues of the bottom line":

American Pie, by Jonathan Chait, TNR (free): ...[A] column by American Enterprise Institute (AEI) economist Kevin Hassett ... points out that, over the last decade and a half, free-market dictatorships had faster economic growth than free-market democracies. The obvious explanation would be that dictatorships tend to be poorer countries (e.g., China) that can grow more quickly by catching up with modern technology. But Hassett offers up a different interpretation: Unlike democracies, dictatorships "are not hamstrung by the preferences of voters for, say, a pervasive welfare state." In other words, while Western democracies are held back by voters--with their pesky demands that citizens get health care and old people not be left to starve in the streets--autocracies march nobly toward a free-market paradise.

I suppose it's good that, in the wake of Iraq, AEI is rethinking its zealous commitment to forcibly exporting democracy... But perhaps the think tank is now veering a bit too far in the opposite direction. ... AEI's magazine has ... relaunched itself with a new name (The American) and a new mission ("a magazine of ideas for business leaders"). ... The American now seems less dewy-eyed about the virtues of democracy and far more dewy-eyed about the virtues of the bottom line. ...

In addition to Hassett's odd defense of dictatorships, the current issue defends CEO pay, expresses skepticism about global warming, and denounces corporate democracy. University of Chicago economists Gary Becker ... and Kevin Murphy contribute an essay titled "The Upside of Income Inequality." ... Becker and Murphy ... argue inequality has grown because "the labor market is placing a greater emphasis on education." Education makes people more productive; ergo, inequality is good. ...

But the big rise in inequality is ... between the top 1 percent and everybody else. Wouldn't raising taxes a bit on the top 1 percent help alleviate inequality? Becker and Murphy reply that, while a fairer tax code ... would amount to "a tax on going to college." So, if we raise the top tax rate, then 18-year-olds will choose to become convenience store clerks rather than go to college and run the small risk that they'll one day get so rich that they could face a slightly higher marginal tax rate?

But the issue's pièce de résistance is a cover story pleading for more lenient treatment of white-collar criminals. In the "good old days," author Luke Mullins reports, white-collar prisons allowed convicts to order takeout from fancy restaurants, sneak away for golf, and enjoy other trappings appropriate for men of their class. Alas, embarrassed by the "Club Fed" reputation, prison officials cracked down. Today, as Mullins's sympathetic subject tells us, white-collar prison is "a hellish place." ..."You've been giving orders your whole life," explains one advocate of more lenient conditions, "and now there's this buffoon with an IQ of twenty telling you to clean the toilet." Actually, ... as Mullins reveals two pages later, wealthy prisoners typically hire fellow cons to do such jobs for them. ...

Why would The American develop such a strong sympathy for the suffering of white-collar criminals...? One might suspect this sudden concern was inspired by the potential wave of coming Bush administration indictments. But the real answer seems to be that The American sees the idea of rich criminals having an unpleasant time in prison as yet another sign of egalitarianism run amok. "As the widening gap between high- and low-income Americans has become a focus for politicians and journalists," laments Mullins, "arguments [for more lenient treatment] are unlikely to find much support."

Ah, those irrational voters, hamstringing the government again. In China, rich crooks can just buy their way out of trouble. No wonder we're falling behind.