Speaking about the current political climate in “The Populism Problem”, James Surowiecki, New Yorker columnist, cites our contradictions:
• Solve unemployment but cut the deficit
• Implement health care reform but limit government
• Help your society but protect yourself
Surowiecki’s comments reminded me of Arthur Okun’s Equality and Efficiency: The Big Tradeoff (Brookings, 1975). Always, we have demonstrated a tension between our democratic heritage and our economic aspirations. Equality implies a smaller economic pie. With efficiency we get the bigger pie but also greater individual wealth and power.
The Economic Life
The Okun tradeoff is reminiscent of the debate between Alexander Hamilton and Thomas Jefferson. Willing to accept the cost, Hamilton’s priority was stimulating business and industry. Indeed, we could call Hamilton the father of our economy. Jefferson, by contrast worried more about democracy and the virtue of the “yeoman” farmer.