Glaeser on Galbraith (updated)

In this article, The Age of Abundance: Reconsiderations, Ed Glaeser reflects on the fifty years since the publication of John Kenneth Galbraith's "The Affluent Society". Glaeser notes

"The Affluent Society" reflects both the economy and the culture of 1958. The book's main observation was that America has become unbelievably prosperous. In the 1930s, America wasn't so rich, and by the 1970s, America's wealth wasn't so remarkable anymore. Galbraith beautifully captured that moment in the late 1950s when rising prosperity freed the median American from having real fears about basic necessities.

He goes on to point out that

The book's tone also reflects the style of the well-educated liberal outsiders of the 1950s, who were themselves the intellectual heirs of pre-war social critics. When Galbraith wittily mocks the conventional wisdom, he has put on Mencken's mantle. Just as the Sage of Baltimore attracted readers in the 1920s by letting them feel superior to boobs in Tennessee, Galbraith invites readers to look down on the conservatives of his day. He was one of the cadre of public intellectuals of the 1950s, like Richard Hofstadter, and intellectual politicians, like Adlai Stevenson, who offered a seemingly sophisticated alternative to Ike's military mien and prayer breakfasts.

But Glaeser also points to one reason why Galbraith was never accepted by economists,

But while "The Affluent Society" reflects American society in the 1950s, it was quite detached from postwar trends in economics, which is why Galbraith has rarely been embraced by economists. In the 1940s, cutting-edge economists turned to mathematical models and statistics. Galbraith did not. His books are essentially number-free. Even an otherwise glowing review in the New York Times pointed out Galbraith's tendency to favor witty ripostes over economic rigor.

In many ways Galbraith wasn't an economist, he seemed to be more of a public intellectual and advisor to the great and powerful than a true economist's economist, in the tradition of, say, Samuelson, Tobin or Friedman. Lord Desai once described Galbraith as "the Geoffrey Archer of economics".

Glaeser goes on to say,

While I am a staunch supporter of free markets, I agree with Galbraith that there is much the public sector needs to do. Private firms do not automatically provide safe streets, good roads, and clean water. Even more important, Galbraith was dead right in arguing that we need more effective schools. Human capital is our best tool against poverty and economic stagnation.

I think one difference between Glaeser and Galbraith would be that Glaeser would use the market to achieve the aims that the government has. As Andrei Shleifer has written,

The benefits of private delivery-regulated or not-of many goods and services are only beginning to be realized. Health, education, some incarceration, some military and police activities, and some of what now is presumed to be "social" insurance like Social Security, can probably be provided more cheaply and attractively by private firms. It is plausible that 50 years from now, today's support for public provision of these services will appear as dirigiste as the 1940s arguments for state ownership of industry appear now. A good government that wants to further "social goals" would rarely own producers to meet its objectives.

What is called contracting out is a means to get the advantages of private provision while having the government meet the costs of those activities that public sector needs to do. This is something Galbraith would never have accepted.

Glaeser closes his article by noting,

Galbraith's great failure was that he never really understood how much society is strengthened by a free and competitive private sector. "The Affluent Society" argues that a lack of regulation made American homes inferior to those in European social democracies. That view was wrong in 1958 and is completely untenable today. American housing is the best in the world, and the weaknesses of the housing market reflect too much, not too little, regulation, especially those rules that stymie construction and make housing unaffordable.

The last sentence could just as well be about New Zealand today.

(HT: Greg Maniw)

Update: Megan McArdle writes

I don't know many economists who respect John Kenneth Galbraith's professional work; he tended to substitute wit for rigor, and the major economic model he proposed1, the theory of countervailing force, isn't looking so hot. On the other hand, almost all economists wish, to the extent of heartsickness, that they could write that well. And while the theory behind his economic history is often not quite right, the storytelling is absolutely first rate. You can't get a better popular overview of 1929 than The Great Crash, even though A Monetary History of the United States is probably a better way to understand the thing.