The Great Risk Shift - Road to the Middle Class

ACCORDING TO political science professor Jacob Hacker in his book The Great Risk Shift the United States has seen a big increase in risk for its ordinary citizens in recent decades. According to Brink Lindsey, Hacker argues that the culprit is

America's sweeping transformation away from an all-in-the-same-boat philosophy of shared risk toward a go-it-alone vision of personal responsibility...

Over the last generation... we have witnessed a massive transfer of economic risk from broad structures of insurance, including those sponsored by the corporate sector as well as by government, onto the fragile balance sheets of American families.

Let�s accept his statement. There has been a reassignment of risk from corporate and government structures to individuals and families. you can tell that for Hacker it goes without saying that this is a loss. But is it?

After all, we now know that the reason that the transfer has taken place is because the promises made by corporations and government were empty, and made reckless assumptions about the future. Once proud corporations with magisterial defined-benefit programs are now broke and cannot perform their promises. The same is true of government. Social Security has a $10 trillion unfunded liability and Medicare has a $60 trillion unfunded liability.

Hacker�s solution is to move to an �‘insurance and opportunity society,� that would safeguard economic security and expand economic opportunity, ensuring that all Americans have the basic financial security they need to reach for and achieve the American Dream.�

Sorry to butt in, Jacob, old chap, but wasn�t the welfare state supposed to do all that? Isn�t it supposed to be doing that at this very moment? So why do we need to butt in with a whole new program?

Tenured college professors like Hacker often don�t understand how risk operates. For instance, for an individual or a family is it better to trust to a corporate pension plan and a government program for their security, which means in effect giving some of their wage income to a corporation or government in exchange for promises? Or is it better to keep the money and send it off to Vanguard or Fidelity to be invested in stock and bond funds? In which scenario are you �putting all your eggs in one basket?�

Anyway, given that the corporate pension funds are all tapped out and the government�s entitlement programs will need huge tax increases to make good their promises, where is the money going to come from to provide the �insurance� that Hacker is calling for?

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Christopher Chantrill blogs at www.roadtothemiddleclass.com. His Road to the Middle Class is forthcoming.

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Action

The incentive that impels a man to act is always some uneasiness... But to make a man act [he must have] the expectation that purposeful behavior has the power to remove or at least to alleviate the felt uneasiness.
Ludwig von Mises, Human Action

Chappies

“But I saw a man yesterday who knows a fellow who had it from a chappie that said that Urquhart had been dipping himself a bit recklessly off the deep end.” —Freddy Arbuthnot
Dorothy L. Sayers, Strong Poison

China and Christianity

At first, we thought [the power of the West] was because you had more powerful guns than we had. Then we thought it was because you had the best political system. Next we focused on your economic system. But in the past twenty years, we have realized that the heart of your culture is your religion: Christianity.
David Aikman, Jesus in Beijing

Churches

[In the] higher Christian churches� they saunter through the liturgy like Mohawks along a string of scaffolding who have long since forgotten their danger. If God were to blast such a service to bits, the congregation would be, I believe, genuinely shocked. But in the low churches you expect it every minute.
Annie Dillard, Holy the Firm

Civil Society

“Civil Society”—a complex welter of intermediate institutions, including businesses, voluntary associations, educational institutions, clubs, unions, media, charities, and churches—builds, in turn, on the family, the primary instrument by which people are socialized into their culture and given the skills that allow them to live in broader society and through which the values and knowledge of that society are transmitted across the generations.
Francis Fukuyama, Trust

Class War

In England there were always two sharply opposed middle classes, the academic middle class and the commercial middle class. In the nineteenth century, the academic middle class won the battle for power and status... Then came the triumph of Margaret Thatcher... The academics lost their power and prestige and... have been gloomy ever since.
Freeman Dyson, “The Scientist as Rebel”

Conservatism

Conservatism is the philosophy of society. Its ethic is fraternity and its characteristic is authority — the non-coercive social persuasion which operates in a family or a community. It says ‘we should...’.
Danny Kruger, On Fraternity

Conservatism's Holy Grail

What distinguishes true Conservatism from the rest, and from the Blair project, is the belief in more personal freedom and more market freedom, along with less state intervention... The true Third Way is the Holy Grail of Tory politics today - compassion and community without compulsion.
Minette Marrin, The Daily Telegraph

Conversion

“When we received Christ,” Phil added, “all of a sudden we now had a rule book to go by, and when we had problems the preacher was right there to give us the answers.”
James M. Ault, Jr., Spirit and Flesh

Democratic Capitalism

I mean three systems in one: a predominantly market economy; a polity respectful of the rights of the individual to life, liberty, and the pursuit of happiness; and a system of cultural institutions moved by ideals of liberty and justice for all. In short, three dynamic and converging systems functioning as one: a democratic polity, an economy based on markets and incentives, and a moral-cultural system which is plural and, in the largest sense, liberal.
Michael Novak, The Spirit of Democratic Capitalism

Drang nach Osten

There was nothing new about the Frankish drive to the east... [let] us recall that the continuance of their rule depended upon regular, successful, predatory warfare.
Richard Fletcher, The Barbarian Conversion

Education

“We have met with families in which for weeks together, not an article of sustenance but potatoes had been used; yet for every child the hard-earned sum was provided to send them to school.”
E. G. West, Education and the State

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