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Wednesday, November 1, 2000

Illusions of Prosperity: America’s Working Families in an Age of Economic Insecurity

A Book of Unsalvageable Factual Analysis and Confused Arguments

When Joel Blau looks at the United States today, he sees a population of mostly poor, confused, frightened people helplessly in the grip of greedy corporations who extract profits from the hides of workers, welfare recipients, women, and minorities. He sees an environment rendered toxic, communities made lifeless, and a federal government suffering “perpetual deprivation.” He also sees big business monolithically dictating government policy: selfishly pressing for free trade, low taxes, privatization, and deregulation.

When I read the dust jacket of this book I anticipated that Blau would present challenging arguments against the free market. I hardly expected to be persuaded by such arguments, but I wanted to sharpen my thinking about the nature of capitalism and of state intervention. My hope was to write a positive review that, while critical of the author’s faith in government intervention, reported how those of us who are less enthusiastic about the state can nevertheless benefit from reading Blau’s work.

I regret to say that I cannot write such a review. In almost every way this book is appalling. Not only is Blau’s factual analysis unsalvageable, his arguments are confused and often internally contradictory, and his Marxist perspective is childish. Also, his writing style is horrid, with the organization of the material even worse. The book reads as though Blau (professor of social work at SUNY-Stony Brook) just started writing one day, energized by his hatred of the market, and kept on writing down anything that popped to mind until he’d filled a sufficient number of pages for Oxford University Press to consider the result a book.

Blau’s principal problem is his fantasies about the facts. An incomparably better book on the current state of the American economy is W. Michael Cox’s and Richard Alm’s Myths of Rich and Poor (1999). Cox and Alm show beyond any doubt that Americans of all income levels enjoy standards of living today that far exceed those of Blau’s imagined golden age of the early 1970s. Cox and Alm also demolish many of the other myths that motivate Blau’s written rampage. For example, material inequality is not increasing in America (it’s decreasing); Americans are not working harder and longer (they’re working easier and less); and job stability has not declined. (See my review of Myths of Rich and Poor in the January 2000 issue of Ideas on Liberty.)

It’s impossible to take Blau seriously given his outlandishly backward portrait of current economic conditions.

Equally outlandish is the poor quality of Blau’s arguments. For instance, he argues for greater government interference in the labor market (higher minimum wages; legislative efforts to enforce a maximum wage; higher employment taxes; enforced worker participation in corporate decision-making). He rightly anticipates that an objection to his scheme is the fact that European unemployment is much higher than in America and that economists explain this fact by pointing to European governments’ greater interference in their labor markets.

Blau rejects economists’ explanation, offering instead his own theory that European unemployment is higher than American unemployment in large part because the 1992 Maastricht treaty obliged European governments to reduce their budget deficits and to pursue tighter monetary policies. But if smaller budget deficits and tighter monetary policy were the principal causes of unemployment (as Blau implies), then the rate of U.S. unemployment should now be at least as high as those in European countries. Of course, it is substantially lower.

Blau also entertains the naïve assumption that business interests are monolithic—that there is “a” business interest and that all business people pursue that interest in unison. Not once does Blau show a whiff of awareness that businesses compete against each other. It is Blau’s hero, the state, that is the only proven entity capable of enabling businesses to join forces and gang up on workers and consumers.

If the quality of all arguments against the free market were no higher than Blau’s book, I would confidently predict that overwhelming intellectual victory for capitalism is on the horizon. But this is not the case. Blau is hardly representative of the best scholars who argue against liberty and for the state. And that’s the tragedy of this book: had Blau presented seriously challenging arguments, he would have assisted friends of freedom in honing their own thoughts and arguments. He would have advanced scholarship and understanding. Instead, he’s only given us a cause to snicker.

  • Donald J. Boudreaux is a senior fellow with the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University, a Mercatus Center Board Member, and a professor of economics and former economics-department chair at George Mason University.