It is an economic truism that incentives matter, but people are often highly resistant to government programs waving carrots and sticks. Witness America’s appalling household savings—briefly: we don’t save—despite all the marvelous opportunities the government has afforded us to sock away cash for retirement. Compounding the problem, politicians are often attracted by things that sound like they work, rather than those that actually do, which is why we get job training programs instead of radical education reform.
Even things that we theoretically know how to do and are sure would improve economic performance—say, boosting basic reading and math skills—have proved devilishly hard to implement. Programs like Success for All, a highly structured reading curriculum, are showing that it is possible to teach disadvantaged children the skills they need. But putting those programs in place in a world full of intransigent teachers unions, inert administrations, and children whose homes and neighborhoods are scenes of indescribable chaos is very difficult.
But this book’s lackluster discussion of policy does not undermine its importance. The recovery from the 2001 recession has been disappointing in many ways; labor markets remain softer than we would expect at this point, and middle-class income growth has been stagnant. With all this economic anxiety, it seems likely that the 2008 election will feature more economic protectionism, more attacks on immigration, and probably more proposals for aggressive social programs that will have negative effects on economic growth. Whether or not he intended to do it, Friedman has provided powerful empirical evidence against any program aimed not at increasing the country’s wealth but at cutting wealth down to size.
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