What is "Economic Insecurity" and Why Should We Care?

In his new book, The Great Risk Shift, and on the Political Animal blog at The Washington Monthly website a couple weeks back, Yale political science Jacob Hacker has been selling his line that “economic insecurity” is on the rise, and the state needs to do something about it.
Hacker seems to me to get a lot of mileage out of equivocating systematically between a psychological and objective sense of the word 'insecurity'. Hacker may be right that there has been an increase in income volatility (though, I'm told, it is not clear how much this has to do with systemic economic changes, as opposed to details of Hacker's model and the changing composition of the “households” tracked by the data), and this no doubt causes people some anxiety. But anxiety is not actual insecurity. The Bush administration, in its constant efforts to shore up political support for its so-called “global war on terror” does its best to needle Americans into feeling sufficiently anxious about the constant threat of terrorist attacks. But our anxiety and our national security are two completely separate things. We can feel anxious yet be secure, and we can feel perfectly safe at the same moment a deadly missile bears down upon us from the sky. What matters most is whether we are secure, not how we feel. Likewise with economy security.

It strikes me that Hacker's strategy is quite like the Bush administration's in this regard, doing his best to encourage people to feel insecure, in order to sell his favored policy remedy. But all but a very few don't need a remedy for economic insecurity. We are economically secure. And we don't need a remedy for volatility, either. We certainly do get anxious about it, but that's fine. There are lots of things that make us anxious–from public speaking to finding a mate–and the right thing for the government to do about it is nothing at all.
Hacker constantly attempts to connect his proposals to the spirit of New Deal-era “economic security” policy. But this is a stretch at best, dishonest at worst. In 1937, economic security meant something clear. It meant material sufficiency–having enough to put bread on the table, a roof over your family's head, and clothes on their backs. Hacker simply is not talking about material sufficiency, which is the basis for any notion of economic security worth caring about. He's talking about the middle and upper middle class, about the anxiety of trading in a Volvo for a Honda. That's not economic insecurity. That's just a bummer.
It would be extremely difficult to satirize Hacker's attempt to arouse our indignation, since he actually begins it with what he intends to be a sympathetic tale about a highly privileged woman with a graduate degree from Harvard worrying whether to withdraw her son from a Montessori school when her husband took a lower-paying job after the tech bubble burst. “It was as if their old life had been swept away by a hurricane,” Hacker says, not even joking. (I imagine that if Hacker ever has his car egged by ne'er-do-well kids, it will be as if a falling meteor had demolished everything he had ever known and ever loved.)
The point is not that this family did not undergo a great deal of anxiety, or have to make wrenching trade-offs in order to fit into their new budget. The point is that their real anxiety is likely less serious, and more easily fixed, than that of a balding, overweight thirty-something who fears he will never find love. The point is that their new, lower post-hurricane budget is large–leaps and bounds beyond the point of objective economic security. It is likely even large in relative terms, compared to the American median (which is itself absolutely large). And a Harvard grad degree is a more tightly-knit safety net than the U.S. government could ever devise. So why are we, qua voting citizens, supposed to be worried about her private anxieties? She is among the most economically secure cohort in the history of the known universe. Why does Hacker think this has any coherent intellectual relationship with the welfare-liberal tradition of making sure its citizens have enough to live a decent life? If the teacup travails of the bourgeoisie is supposed to raise our moral hackles and provide a legitimate basis for liberal politics, then what about our lonely balding bachelor? What can his country do for him.
If that sounds like a joke, it's not. As Reihan Salam likes to argue, changing norms of marriage and family may play a large role in producing Hackeresque volatility. So if the anxieties based in volatile earnings are a proper matter for liberal policy, why not the anxieties about finding a wife? It's not obvious that they are entirely separate things.
The main debate between welfare liberals and market liberals largely centers on economic security, understood properly as the odds of achieving economic sufficiency. What system of institutions is most likely to provide everyone with the resources needed to express their autonomy, realize their potential, and pursue their goals? That's the question. Hacker doesn't seem to me to even seriously approach it. His case for increased initiatives of state-controlled social insurance largely turns on equivocating on the traditional meaning of economic security and scandalously mischaracterizing the classical liberal ideals of private ownership, voluntary mutual aid, and personal responsibility, about which more later.
[Cross posted from Cato@Liberty]

Author: Will Wilkinson

Vice President for Research at the Niskanen Center