I’m a big Dean Baker fan. Have been for years. In a town full of people who claim to be fresh, independent thinkers but who mainly repeat the same ideas over and over again, Baker actually does look at things differently, and come up with completely new ideas, on a pretty much continuous basis.
So I’m happy to recommend his latest e-book, “The End of Loser Liberalism,” which is available for free download — yes, you read that right — at the Web site of the Center for Economic and Policy Research. The basic point Baker makes is that too much attention is being focused on the wrong thing: Politics, he says, focuses on “the narrow realm of tax and transfer policy while largely ignoring far more important policies that determine the distribution of before-tax income.”
That’s a mistake, Baker argues. “The arithmetic on this story is straightforward. Federal government spending averages roughly 20 percent of GDP. Adding in state and local government spending gets us a bit over 30 percent. This means that all levels of government spending account for less than one-third of the economy. If this is the exclusive realm for political debate, and we ignore the way in which the government structures the larger economy, then we have given up two-thirds of the game.”
The natural objection to this is that if the government gets involved in the market, it will just screw it up. But much of Baker’s book is about the pernicious belief that the market is some sort of independent entity operating outside of political space and time. Currency policy, Federal Reserve policy, patent policy and much else govern what we think of as “the market” and decide who makes the profits and who shoulders the losses, and many free-market attacks on government intervention are really a defense of the particular forms of intervention that are producing a particular set of winners right now. But they’re not called out as such, because people routinely mistake the status quo for “the free market.”
Baker’s book calls a lot of them out, and focuses on questions of enormous economic import that go almost entirely ignored in the daily political discourse. It’s an unusually fresh contribution to an increasingly stale debate. And, as I mentioned above, it’s free.