Larissa MacFarquhar’s Profile of Paul Krugman suggests that the economists with whom Krugman does battle could use a little history of political philosophy mixed in with their economic prophesying (“The Deflationist,” March 1st). The main political issue of our time isn’t whether markets are always right but whether they are always good. Adam Smith, in “The Wealth of Nations,” advocated free trade based on his theory that the market’s invisible hand would provide for the greater wealth of nations across the social spectrum. This moral vision was long ago abandoned by free marketeers in favor of another theory from the founding era: the inviolability of property rights. But we know that capitalism has historically followed a pattern of boom and bust, a cycle whose impact has been mitigated—in the spirit of Smith’s moral philosophy, and for economic conditions he could not have foreseen—by civic intervention, otherwise called government regulation and progressive taxation. This is the fundamental difference between Democrats and Republicans. Democrats tend to believe that, in the light of our long experience with boom and bust, fiscal policy should provide social and economic equity for the American people. Republicans seem to believe that fiscal policy should protect the acquisition of wealth, however skewed the distribution of wealth may become and however small the number of citizens protected. The difference is abundantly apparent in California today, where the Democratic legacy of equitable distribution of wealth, through public education especially, but also in many other areas, was long ago sacrificed on the altar of property rights in Proposition 13.
Dee E. Andrews
Professor of History
California State University, East Bay
San Francisco, Calif.
Race and gender are important issues in America, but class and power are often much more important, and the key dynamic underneath other struggles. As Warren Buffet once stated, "There’s class warfare, all right - but it’s my class, the rich class, that’s making war, and we’re winning.” Paul Krugman's great 2006 article "The Great Wealth Transfer" explains much more, and this study gives an important look at how lopsided wealth is in America:
The country as a whole does better when prosperity is more shared and less concentrated; "trickle up" works much better than "trickle down" has ever done (to the degree "trickle down" has ever done any good). Unfortunately, we have one party dedicated to transfering more money and power to those who already have the most - and too many in the other party have decided to pursue a piece of that action. The health care reform bill, while flawed, is an important step in the right direction, but now it's time to take on Wall Street, and also make our tax system much more progressive again.