All Commentary
Wednesday, January 1, 1997

Book Review: The Good Life and Its Discontents: The American Dream in the Age of Entitlement by Robert J. Samuelson

A Well-Written Exposition of Failures of Interventionist Economic Policy

Times Books • 1995 • 293 pages • $25.00

Dr. DiLorenzo is professor of economics at Loyola College in Maryland.

The Good Life and Its Discontents, by journalist Robert J. Samuelson (no relation to the economist Paul Samuelson), is a well-written exposition of some of the failures of interventionist economic policy over the past 50 years. He roundly condemns this age of entitlement, defined not just in terms of the taxpayers’ incomes that special interest groups believe they are entitled to, but as the conviction that we could completely control our economic, social, and political surroundings with interventionist economic policies.

His thesis, in other words, is similar to F. A. Hayek’s fatal conceit, the idea that planners could somehow plan an economy better than the free market. As interesting as Samuelson’s book is, it does not come close to matching the depth of Hayek or of many other writers familiar to Freeman readers who have analyzed these same topics for the past several decades. Samuelson’s book is important not so much for its content, but for the fact that the author is a respected mainstream journalist (who writes for the Washington Post!) who has concluded that the welfare state has indeed been a monstrous debacle.

Samuelson asserts that Americans are an extremely unhappy lot not because their lives haven’t materially improved over the past several decades —he shows that they have —but because they have been misled, mostly by government propagandists and their intellectual supporters, into believing that they can achieve a more or less perfect world —if only government is given sufficient power. We supposedly suffer from what economists call the Nirvana Fallacy —comparing the real world with a utopian ideal will always make the world appear to have failed.

Samuelson smashes the huge conceit of the Keynesian economists of the 1960s (especially James Tobin and Paul Samuelson), who arrogantly believed that under their expert guidance the economy could be manipulated for the larger social good. The biggest disappointment of the book, however, is that Samuelson then endorses the misguided Keynesian view that the sole cause of the Great Depression was the desire by governments to stay on the gold standard. He ignores the Fed’s 30 percent drop in the money supply from 1929 to 1932; the fact that President Hoover increased government spending by 65 percent in just four years and raised the top marginal tax rate from 24 percent to 63 percent; Roosevelt’s massive 1933 tax increase and his economic planning program known as the New Deal; and the Smoot-Hawley tariff, which precipitated a worldwide trade war that reduced the volume of world trade by a third in just three years (1929-32). Samuelson is also unaware of the Austrian School’s boom and bust theory of the business cycle, which provides the best explanation of the Great Depression as an inevitable consequence of the Fed’s monetary expansion during the 1920s.

Samuelson makes a strong case that Americans need to return to an ethic of individual responsibility. People ought to do more for themselves and expect government to do less. Amen. But then he soft pedals on this, his strongest point, by noting the shortcomings of individual responsibility (i.e., some people can’t or won’t be more responsible). This is an odd feature of Samuelson’s writing: He seems to believe that economic truth can be gleaned by consensus. The free market has its virtues, but so does government intervention, so that the truth must lie somewhere in between. This might be a good strategy for selling books —appealing to virtually everyone’s biases —but is an annoying distraction in an otherwise useful and welcomed critique of the failures of social engineering schemes over the past half century.