Benjamin I. Page,
James R. Simmons, and Scott Greer
Abstract
It is sometimes argued that economic globalization
has made it difficult or impossible for governments to do anything
about poverty and inequality, because egalitarian taxes and regulations
would discourage work, drive up the cost of goods produced, hobble
exports, invite low-wage imports, and provoke capital to flee
abroad seeking higher profits. This is said to produce a "race
to the bottom" of governments abandoning egalitarian programs.
Our look at the comparative evidence indicates that this race
has not, to any great extent, materialized. Welfare states in
the social democracies of Northern Europe and other advanced countries
have undergone some marginal retrenchment but remain largely intact.
And there remains room to augment the much skimpier U.S. welfare
state without serious competitive disadvantage.
Our examination of a wide range of U.S. government
programs indicates that some are relatively vulnerable to global
competitive pressures — i.e., social insurance programs like
Social Security, Medicare, and Medicaid or the corporate income
tax — though considerably less so than anti-government rhetoric
often suggests. Others are much less or not vulnerable at all.
Among this group are programs involving investment in the human
capital of disadvantaged individuals — i.e., in infant and
child health and nutrition, or pre-schooling — that can actually
reduce poverty and inequality while helping, rather than hurting,
the economy. Several programs designed to provide abundant jobs
at good wages — i.e., low-income wage subsidies like the
EITC — produce net economic benefits or only small costs,
and therefore have little or no vulnerability to global competitive
pressures.
Benjamin I. Page, Department
of Political Science, Northwestern University
James R. Simmons, Department of Political Science,
University of Wisconsin, Oshkosh
Scott Greer, Graduate student, Department of
poliical Science, Northwestern University
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