Garfinkle Says It All in American Dream vs. Gospel of Wealth

Norton Garfinkle may have written the most important book on American economic policy of the decade. His newly published The American Dream vs. Gospel of Wealth: The Fight for a Productive Middle-Class Economy says what most Americans feel in their bones but cannot articulate. Specifically, he traces US economic history since de Tocqueville and Lincoln illustrating that there are two dominant visions of American economic life and then shows, using economic data rather than curves drawn on napkins, that one is superior to the other. Best of all, he does it in 200 pages accessible to non-economists.

On the one hand, there is what he dubs “The American Dream,” typified by the life of Abraham Lincoln. The narrative here is a poor man works hard, saves money, improves his lot and rises to the highest office in the land. The role of government in this is, as Honest Abe himself wrote in 1854, “to do for the people what needs to be done, but which they can not, by individual effort, do at all, or do so well, for themselves.” In other words, government should make sure the ladder to success is kept in good repair.

On the other hand, there is “The Gospel of Wealth,” typified by the Robber Barons of the 19th century, men who made vast fortunes ruthlessly. Adherents to this approach maintain that the market is a Darwinian beast and that to allow for anything but maximum gains to the winners is pointless. Their wealth must eventually be invested and spent, and thus, the rest of society gains. Government purpose, in this view, has no economic purpose.

This matters because economics is ultimately about politics. Professor Norton notes as Aristotle noted, the most stable societies are those in which most people are not stinking rich (although one can’t recall how that translates into the original Greek) nor desperately poor. Societies that have a large underclass tend to suffer revolutions, civil wars and other counter-productive events. Stabile societies have, historically, provided a better quality of life for their citizens than unstable societies.

Where Professor Norton shines is in debunking the supply-side lies. Most importantly, he illustrates using statistics from 1951-2004 that the growth that allegedly stemmed from supply side tax cuts in the US really didn't. Even Martin Feldstein (one of the founders of the supply-side argument) said, “The rapid expansion of a nominal GNP [during the Reagan-era expansion of the 1980s] can be explained by monetary policy without any reference to changes in fiscal and tax policy.” Or as the current president’s father dubbed it, supply-side economics is “voodoo economics.”

If the book has a flaw, it is in its failure to address globalization, which dooms the belief that very rich Americans will do things with their money that boost the US economy. Thanks to globalization, they can get better returns abroad – meaning if there were anything trickling down, it would trickle down in Shanghai not Chicago, Bangalore not Buffalo. For four years, this journal has tried to explain just what is going wrong with US economic policy, and this book is far more eloquent in make the points necessary.

© Copyright 2006 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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