The Great Risk Shift
By Jacob S. Hacker
Oxford University Press, 2006
256 pages, $26 hardcover, ISBN 0195179501
Jacob Hacker is a young and prolific professor of political science at Yale University whose latest book, The Great Risk Shift, is being touted by the left-leaning “Campaign for America’s Future” as the policy book with all the answers.
The subtitle of the book–“The assault on American jobs, families, health care, and retirement, and how you can fight back”–explains Hacker’s premises. He criticizes the free market for creating economic insecurities, and he spices up his commentary with anecdotes of American workers and families who have come on hard times.
Hacker explains he wrote the book to “show how more and more economic risk has been offloaded by government and corporations onto the increasingly fragile balance sheets of workers and their families.”
Americans, he writes, are increasingly angry and insecure, suffering from high anxiety about health care bills, job and retirement insecurity, and insecurity over their family’s financial survival.
Argues for Paternalism
Hacker argues for the return of a paternalistic, but in his view not too intrusive, comprehensive social insurance system, covering all sources of anxiety and insecurity.
The book outlines the problems of job insecurity and income disparity; dissects the personal responsibility movement, which Hacker says is destructive to the social fabric; documents concerns about job market volatility and insecurity; outlines family troubles; discusses retirement and Social Security; and considers the problems of health care insurance and costs.
In the book’s conclusion, Hacker proposes personal, family, and public strategies to reduce insecurity and its accompanying anxiety. He advises Americans to “get wise, get mad and get even.”
Get wise, he says, means to be prudent in financial planning. Make good financial decisions, don’t overextend, have a rainy day fund, buy insurance wisely, and spend wisely. Don’t overextend in buying a house, and think about the future needs of the family. Pretty good.
By “get mad” he means Americans should demand the government and big business provide security and remove anxiety. “Economic security is a cornerstone of economic opportunity,” Hacker writes.
Economic security and insulation from risk are Hacker’s presumed prerequisites for personal and entrepreneurial risk taking. But he fails to explain why anyone in their right mind would take risks to start a new business and grow the economy when (1) their personal income is already guaranteed and (2) the government imposes confiscatory taxes and stifling regulations on business.
Welfare for All
The last advice is “get even,” based on Hacker’s theory that any social policy changes should be tested by the question, “Do they substantially increase the risk on Americans’ already burdened shoulders?”
He goes on to condemn the tendency of social welfare programs to focus on the helpless and old, pointing out that everyone needs security and should be protected. He argues, “we should not let massive social risks be borne by institutions incapable of effectively carrying them.”
Hacker argues expanded leave policies and unlimited disability and unemployment insurance are essential to the grand solution, along with fine-tuning programs such as a “right to request,” which allows changes in work schedules for personal and family needs. He points to Britain as an example of success in this area.
Hacker also favors a single Universal Savings Account like a 401k to be supplemented as needed by the government through capital gains taxes, a more confiscatory estate tax, and an expansion of Social Security funding.
These 401ks would retain the look of work-based investment retirement funds, with more “encouragement to employers” to contribute and rules to prevent too much investment in the employee’s company.
The result would be a lifetime annuity (like Social Security?), guaranteed by the government, that would avoid the harsh climate of the investment market or any risk. But how the value of such accounts could truly increase without investing in the real economy is left unexplained.
Similarly, health care would be handled in this new system by an expanded and improved Medicare system that somehow avoids the mediocrity and outlandish costliness of government-paid health care.
According to Hacker, expanding Medicare to all age groups would, in a single stroke, solve the three problems of Medicare: quality control, unequal commitments to various age groups, and “frightening” future costs. Why that hasn’t worked in any other country is left unexplained.
Hacker provides a breathtaking example of the old Texas saying, “Often wrong, but never in doubt.”
Dr. John Dunn, M.D., J.D. ([email protected]) is a member of the American Council on Science and Health’s Scientific and Policy Advisory Board and an emergency physician in Fort Hood, Texas.