In his book The Politically Incorrect Guide to Socialism, economics professor and National Review editor Kevin Williamson gives the reader an easily understood yet highly informative disquisition on the nature of socialism, its inherent flaws, and the reasons it continues to spread. In connection with that last point, two of Williamson’s chapters cover the political infatuation with “energy independence,” which he argues is socialist in essence, and the push to saddle Americans with the politicized medical care system known as Obamacare.

Williamson’s arguments are sharp and his examples illuminating. His book is like a wrecking ball going to work on the already feeble edifice of socialism.

“Hold on a minute,” some will say. “You can’t compare the bad things that happen in a totalitarian state like North Korea with our well-intended and generally popular public school system in America.” Williamson shows, however, that the crucial element of socialism is present in both, namely governmental control over the provision of goods and services that would otherwise be done by private enterprise. That invariably leads to waste and inefficiency—or even worse.

Williamson does a first-rate job of explaining why those arrangements stifle productivity, depress quality, and hinder innovation. It is because government officials (and the type of government is immaterial) do not know what consumers want. That information only comes from the market’s price system, which socialism prevents from working. It is also because government officials have no incentive to satisfy consumer wants since their money is not given by buyers but taken from taxpayers. Starving peasants in Korea and illiterate students in the United States—the roots are the same.

The poverty of India has been compared to the remarkable wealth enjoyed by the people of Hong Kong and Singapore before, most famously by Milton Friedman, but that is no reason not to emphasize it again. Following World War II, Williamson observes, India was seemingly poised for great economic expansion, having suffered little from the war and benefiting from infrastructure built by the British. India’s economy, however, remained stagnant due to the naive socialism of Nehru, the first prime minister, who admired Soviet central planning. Grinding poverty gripped most of the country.

Singapore and Hong Kong, in contrast, had suffered considerable war damage. Nevertheless both enjoyed rapidly rising incomes for all income classes. The fact that prosperity was widespread is important in heading off the common objection that capitalism only helps a few. Those two city-states were able to escape from poverty by rejecting socialism and adopting laissez faire: prices were free, investors could seek profitable opportunities without government interference and keep their earnings (or swallow their losses) and taxes and regulations were minimal.

Williamson also points out that in recent years India has begun rapid economic development, but only because new leaders have lightened the heavy yoke of socialism.

Defenders of socialism almost always point to Sweden and say that its experience proves that socialism can work. Williamson’s chapter “Why Sweden Stinks” refutes that notion. Sweden seemed to have the best of all possible worlds—a high standard of living combined with an expansive “safety net” and generous government benefits. The trouble is that socialism is unsustainable because it erodes the human qualities that built up the wealth that the socialist state consumes. Williamson writes that Sweden “is rapidly transforming itself into the sort of society that will not be able to support the relatively successful welfare-state arrangements that characterized it throughout most of the twentieth century.” As Hayek observed, socialism changes the character of the people gradually, undermining habits of work, thrift, and self-reliance. We are seeing that in Sweden.

Speaking of Hayek, another of his famous insights regarding socialism was that under it, the worst people usually rise to the top. I wish that Williamson had included a chapter on that point. We hear so often from socialism’s advocates that their system would work beautifully if it were controlled by good people rather than murderous dictators like Stalin. It would have been worth several pages to attack the idea that there is some magic formula to keep vicious, power-mad people from scheming their way to the top of a system that gives them what they crave.

Finally, although I applaud Williamson’s effort, he has bundled together under the label “socialism” several policies better labeled “corporatist” or “collectivist” since they don’t entail government ownership or abolition of the market economy—only interventions that hamper it. Ethanol subsidies are bad, but we don’t have a federally owned energy sector and “public education” doesn’t prevent (though it surely hampers) home and private schooling. Such distinctions are important.

10. Ross Clark — The Road to Big Brother: One Man’s Struggle Against the Surveillance Society

9. Walter Block — The Privatization of Roads and Highways

8. Ben Rogge (Dwight R. Lee, ed,) — A Maverick’s Defense of Freedom

7. James L. Payne — Six Political Illusions

6. Kevin Dowd and Martin Hutchinson — Alchemists of Loss: How Modern Finance and Government Intervention Crashed the Financial System

5. Robert Murphy — The Politically Incorrect Guide to the Great Depression and the New Deal

4. John Samples — The Struggle to Limit Government: A Modern Political History

3. Tom G. Palmer — Realizing Freedom

2. Thomas E. Woods, Jr. — Nullification: How to Resist Tyranny in the 21st Century

and the top book of the year (drumroll) . . .

1. Jacob Huebert — Libertarianism Today

The great battle is to persuade those people that our ills are rooted in statism—that is, reliance on government to do things that should be left to voluntary action. Back in the 1930s most Americans also thought the country was on the wrong track, but unfortunately they blundered into the wrong conclusion—that a great expansion of government power was what we needed. The challenge today is to convince them that government is the problem, not the solution.

Among the most stalwart opponents of big government and its apologists is historian Thomas Woods. His 2009 book Meltdown explained why the housing bubble and its aftermath were caused entirely by politics, not the free market. With this book he and his essayists indict statism generally and argue strongly in favor of radical depoliticization. In his introduction Woods identifies a key element in our national malaise: “The more functions the state usurps from civil society, the more the institutions of civil society atrophy. Once supplanted by coercive government, the tasks the people used to perform on a voluntary basis come to be viewed as impossible for society to manage in the absence of government. . . . The spiritless population comes in turn to look for political solutions even to the most trivial problems.”

The book consists of ten essays. In the first, Brian Domitrovic gives a useful history of the growth of the American State over the last two centuries. Carey Roberts follows it with an essay showing the continuing damage we suffer due to the statist thinking of Alexander Hamilton. Swedish economist Per Bylund then demolishes the notion, so often uttered by advocates of the welfare state, that Sweden proves how effective the “third way” (a welfare state neither capitalist nor socialist) can be.

Those three essays establish a solid framework for thinking about the impact of government interference with society’s spontaneous order. Woods next places Anthony Mueller’s essay exploring the true causes of the recent financial crisis, offering a corrective to the desperate scapegoating we’ve gotten from the politicians responsible for it. Mueller’s essay is followed by one by Mark Brandly, who reasserts the case for free trade and the international division of labor, which is under attack by statists who would have us believe that free trade hurts workers in poor countries. Dane Stangler next shows how entrepreneurship is threatened by the ever-encroaching power of government and how foolish it is to think that the State can perform the entrepreneurial function.

Journalist Tim Carney contributes the next essay, eviscerating one of the great myths of modern life: that big business is opposed to big government. The truth, Carney shows, is that big business is extremely cozy with both “liberal” and conservative politicians. As a result America’s economy is steadily drifting toward a syndicalist system dominated by politically favored firms.

Two essays deal with the interface between religion and the politicized society. Gerard Casey examines the traditional hostility many Christian clerics have toward capitalism and finds that it is without any foundation in the Bible. John Larrivee also evaluates the religious arguments against the free market. In his view those arguments are not only naive but ultimately undermine both faith and civil society.

In the book’s final essay Paul Cantor shows how government intervention in culture, specifically television, substitutes bureaucratic directives for the spontaneous origins of true culture. If you ever wondered why the boat on the series Gilligan’s Island was named “Minnow” you’ll find out by reading Cantor’s essay.

These are all splendid pieces, but I am especially drawn to Per Bylund’s. In it he demonstrates the truth of Hayek’s argument that socialism destroys the foundation for prosperity by gradually changing the character of the people. Bylund observes that young Swedish adults today are far different in their outlook from their grandparents. Whereas Swedes had once been known for their solid work ethic, after many years of the welfare state and its numerous entitlements, it is largely gone. Young Swedes are known for taking as much time off as they can while collecting as much as possible in government benefits. The nation’s standard of living is falling and must continue to do so.

I have just one tiny quibble with the book’s title. When were we ever off the road to serfdom?

That has defenders of the mega-state worried. For them it would be catastrophic if people began thinking that they’d be better off with a minimal state. In recent months they’ve written several vicious, intellectually dishonest attacks on libertarianism. Those are desperate rearguard actions, however. The case for libertarianism has always been overwhelming, and in Libertarianism Today, Jacob Huebert advances it in a remarkably effective way.

Huebert, a lawyer and former FEE intern, understands that the libertarian philosophy will only spread through persuasion, and every page of the book is written with that in mind. He wants readers who are uncertain about libertarianism (or hostile to it) to see that it is nothing more than the consistent application of rules for living that nearly all of us accept in our relationships with others. “In everyday life,” he writes, “people understand and follow this basic libertarian rule. If you want something and it belongs to someone else, you have to persuade him or her to give or sell it to you—you cannot steal it or threaten to hit the other person over the head if they refuse to part with it. If you do not like the books your neighbor is reading, or the religion he is practicing, or most anything else he is doing in the privacy of his own home, too bad—you cannot go force others to do what you want them to do.”

Exactly. FEE’s founder Leonard E. Read stated it clearly in the title of one of his books, Anything That’s Peaceful. Huebert gives much credit to Read for helping to keep the libertarian philosophy alive during the period of government idolatry after World War II.

Most of the book is devoted to specific issues in which people are (or at least ought to be) fed up with the mega-state and receptive to libertarian alternatives. But before getting into those issues, Huebert clears up some serious misunderstandings. Political writers often convey the notion that libertarianism is “an extreme form of conservatism,” and Huebert takes pains to show that libertarians are not conservatives of any sort. Nor are they liberals, as that term is now used. Both conservatives and liberals eagerly turn to government coercion on a wide array of policies. As a matter of principle, libertarians insist on keeping the Pandora’s Box of aggression locked.

Another source of confusion is the common idea that libertarian thinking is unworkable. We often hear something like: “Capitalism sounds good in theory, but in practice it leads to all kinds of trouble.” Libertarians do indeed favor free-market capitalism, but Huebert argues that our economy is far, far from that unknown ideal. “The U.S. economy is hampered by countless interventions: trade barriers, corporate welfare, wage controls, regulation, occupational licensure, antitrust laws, compulsory unionism, taxes, and much else.” It makes no sense to blame libertarianism for problems created by a host of government blunders that it opposes.

Now let’s look at some of those sore spots where Americans should be receptive—where they should be demanding libertarianism today.

One of them is war. Americans are finally getting sick of military escapades around the globe. Democrats and Republicans, liberals and conservatives—all are eager to send troops into foreign countries and involve them in conflicts under euphemisms like “nation building” or “humanitarian intervention.” The only consistent opposition to these bloody, costly, endless wars comes from libertarians, Huebert notes.

What about the ridiculous mania for security? The Republicrats have fastened the dictatorial Transportation Security Administration (TSA) on us. Almost everyone loathes the bossy, harassing attitude of the TSA’s “public servants” but, Huebert writes, “Despite all these intrusions, there is little evidence that the TSA has made anyone safer by scanning shoes or confiscating fingernail clippers, shampoo, and the like.” He then takes the libertarian analysis further than the unpleasantness of airport checkpoints: “Libertarians find the TSA disturbing in part because it accustoms Americans to obeying orders from uniformed agents without question and submitting to gross violations of privacy and dignity.”

The book covers many other current sore spots with Americans and shows how the problems would either disappear or be greatly diminished if we adopted libertarian thinking: the mess that statism has made of the economy, the terrible prospect of politicized health care, the woefully ineffective education system, and more.

If you want to undermine statist beliefs, pass this book around.

History professor Ralph Raico is a dedicated opponent of the court historians’ cant and deception. Great Wars and Great Leaders is a collection of his essays challenging the conventional wisdom, ranging from the beginning of World War I to just after World War II.

As Robert Higgs notes in his introduction, “Raico’s historical essays are not for the faint of heart or for those whose loyalty to the U.S. or British state outweighs their devotion to truth and humanity.” Raico is usually called a “revisionist” historian, but a more fitting term would be “correctionist” because his work corrects false ideas that glorify wars and political leaders who deserve the sharpest condemnation.

The book’s opening essay is about World War I. What most Americans think they know about that war is roughly this: Militaristic Germany was itching for a reason to launch an expansionist war, and the outbreak of fighting in the Balkans gave it an excuse to attack the peaceful democracies France and Britain. Eventually the United States was compelled by German belligerence to enter the war and “make the world safe for democracy.”

The victors get to write the history, and Raico shows that it’s mostly wrong. The Germans and their Austrian allies were not as devilish as they’ve been portrayed, and the Allies were far from angelic. Most important, President Woodrow Wilson was an authoritarian eager to engage in military interventions to advance his fevered notions of “good government.” Raico points out that Wilson had sent U.S. troops into Mexico in 1914. Some of them died—utterly in vain.

Throughout 1915, 1916, and early 1917 Wilson pursued a provocative policy meant to serve British interests. He was glad to trample on international law with respect to the rights of neutrals and declined to pursue diplomatic efforts at restoring peace. Nevertheless, most historians grade Wilson a “near-great” president. Raico shows how undeserved that accolade is.

Winston Churchill’s lustrous reputation also takes a beating in the book. Most people think of Churchill as a rock-ribbed defender of Western traditions. After all, he was a Conservative prime minister who abhorred communism and fascism. Raico makes it plain, however, that he had no real principles when it came to the economic order. At one point in his career Churchill advocated free trade, but he later abandoned that position when it became a political liability. Nor was Churchill an opponent of the advancing British welfare state. He supported the Trades Union Act that gave legal privileges to unions and advocated “a sort of Germanized network of state intervention and regulation” over the labor market. That made him popular with the socialists. Beatrice Webb applauded him for his support of “constructive state action.”

There are hordes of politicians who will get on popular crusades even though they carry the seeds of long-run social ruin. What puts Churchill in a different class is his willingness to sacrifice innocent lives. Raico gives several particulars. Against the advice of his officers Churchill ordered the British fleet to fire on the French Navy, harbored at Mers-el-Kebir in Algeria after the Germans had defeated France in 1940. The French commander had said that he would neither surrender his ships to Britain nor permit them to fall into German hands. Nevertheless, the British shelled the ships, killing more than 1,500 sailors. Raico comments that this was a war crime and Germans at Nuremberg were sentenced to death for less. Worse still was the continuing bombing campaign against German cities long after it was evident that Hitler was on the verge of defeat. The bombing of Dresden, a city with no military importance, killed some 30,000 civilians in February 1945.

Another “great leader” Raico demolishes is Harry Truman. Truman is often praised these days for his supposed common sense, but the truth is that he was a statist demagogue whose instincts were to escalate the New Deal’s attacks on liberty and property. Americans are fortunate that most of his efforts were parried by Congress or the courts. The same cannot be said, unfortunately, about his decision to use atomic bombs to destroy Hiroshima and Nagasaki. Raico eviscerates the excuse that Truman “had to” use the bomb because the Japanese would otherwise have fought on and killed half a million Americans.

This book defines “iconoclastic.” I strongly recommend it.

To find answers to those questions, I strongly recommend Neoconservatism: An Obituary for an Idea. In it, authors C. Bradley Thompson of Clemson University and Yaron Brook of the Ayn Rand Institute dig through the words of neocon politicians like John McCain, the writings of neocon strategists like Irving Kristol, William Kristol, and David Brooks, and ultimately to the wellspring of the neoconservative movement, University of Chicago professor Leo Strauss. What readers discover is that neoconservatism is a strikingly authoritarian movement with scant regard for individual rights. Neoconservatives aren’t concerned with individuals, the authors contend, but want to build cohesion—even if it requires great Machiavellian deception of the people—in pursuit of “national greatness.” Life, liberty, and property are all at the mercy of whatever politicians the neocon intelligentsia manages to elect.

“The neocons,” the authors write, “might be best described as cautious or pragmatic liberals in that they think reform should be modest, slow, and experimental, and that it should be devised in such a way that it relies more on traditional social values . . . than on bureaucratic authority and ideological dogmas.” But while neocons are thus tactically at odds with the headlong statism that dominates the Democratic Party, they are strategically at odds with Americans who want to downsize the State. In one of the book’s most memorable phrases, we learn that neocons believe that “leave us alone is not a governing philosophy.” That is, they want to use governmental power, not dismantle it. They abhor the idea of people telling government officials, “You have no moral or constitutional right to dictate my life.” Neocons, Thompson and Brook contend, are sharply opposed to the philosophy of the American founding, a fact they obscure behind rhetorical smokescreens.

So if the neocons are against Obama-style statism but also against libertarianism, what are these supposedly pragmatic people for? And why? Much of the book is devoted to teasing out those surprisingly difficult answers. The authors trace the movement back to Strauss, a political philosopher who was captivated by the ancient Greek idea that individuals fulfill their purpose by working and sacrificing for the good of the city-state. Strauss took Plato to heart, arguing that the people should be subservient to the greater collective, and while the connections to Strauss aren’t always perfectly clear, present-day neocons adopt that same belief. Instead of worrying about governmental intrusions against individual liberty, neocons are animated by a desire to grasp power for malleable, big-government Republicans such as McCain, then use the levers of power for what they think are “good” national goals.

What kinds of goals? That is left vague because, lacking true principles, neoconservatism leaves it up to political leaders under the sway of neocon thinkers to decide what our national goals should be. “Nation building” in places like Iraq and Afghanistan certainly qualifies. The neocons realized that the 9/11 attacks provided the ideal excuse to tear Americans away from their petty personal lives and dragoon them into a crusade against international terrorism. In that, the neocons show their allegiance to expansionist presidents of the past, like Teddy Roosevelt and Woodrow Wilson, who gloried in the use of military power abroad.

Since they lack a core philosophy, however, how can the neocons argue with those who wish to use government power for different kinds of “national greatness” projects? They can’t have any principled objection to a party that pledges national greatness through deep environmentalism, for example. (The neocons have so far opposed the wild-eyed environmentalists but it’s not clear why “green” central planning is necessarily inconsistent with their belief system.) They might scheme to keep such a party out of power, but what if they fail? It seems not to worry the neocons that the power they covet and seek to expand will certainly fall into “bad” hands at some point.

All in all, neoconservatism turns out to be another of those foolish movements that seek to commandeer the liberty, property, and even the lives of ordinary people so that “great men” might use them in pursuit of their dreams. Obviously it doesn’t bother the neocons that when they exert their will over the rest of us, millions of individual, peaceful plans and projects are wiped out. When the State sucks in resources for “national greatness,” less is left for business growth, charitable operations, and other voluntary activities. The neocons seem to care about that just as much as, oh, Napoleon did.

Let’s hope that this book really is neoconservatism’s obituary.

Once I happened to criticize high tax rates to a friend, a “liberal” with decidedly egalitarian beliefs. His reply was that he didn’t mind high taxes because, he said, “The public receives needed government services in return.” That is the sentiment politicians and interest group leaders know how to exploit. All they have to do is to cloak their programs in rhetoric about “the public good” and most opposition to their schemes will evaporate.

In his latest book Manhattan Institute scholar Steven Malanga explores the venal game of separating people from their money through conspiracies between politicians and special-interest groups. Taxpayers are systematically robbed by those conspiracies—Malanga uses precisely the right word—to fund a plethora of high-cost, low-benefit (sometimes no-benefit) government boondoggles like public education, urban renewal, safety from terrorists, mass transit, and alternative energy. Naturally the people and organizations that receive the cash invest some of it in propaganda (excuse me, “public relations”) and political campaigns to ensure that their money never stops flowing.

This plague is far worse in some states than others. Malanga devotes entire chapters to the fiscal wreckage done to California and New Jersey by public-sector unions. California has a prodigious budget deficit that is sure to increase due to the high salaries and lavish retirement benefits promised to government employees. Prison guards, for example, earn six-figure salaries owing to the political support their union gave to former governor Gray Davis and key legislators.

The union’s endorsement enabled them to posture as “tough on crime” when they really meant to be tough on taxpayers.

Teachers’ unions are virtuoso performers in the shakedown. They tirelessly promote the notion that more spending on education is a panacea that cures poverty, inequality, economic woes, environmental degradation, and so on. Anyone who dissents will be pilloried as “anti-education” in heavily funded attack ads. In New Jersey the government until recently was essentially a vassal of the New Jersey Education Association, squeezing more and more out of taxpayers. That rising tax burdens have long-term adverse economic effects apparently never occurs to the union leaders.

Or perhaps they simply don’t care. In any event New Jersey underscores just how steep a price we pay for having turned education, which should be a matter of choice and contract, into a coercive near-monopoly by government.

The most expensive shakedown ever has been our housing debacle, to which Malanga devotes an illuminating chapter. He begins with the forgotten history of governmental meddling in the housing market, which goes back to that early advocate of government economic intervention, Herbert Hoover. As Warren Harding’s secretary of commerce in 1922 Hoover launched the Own Your Own Home campaign, the beginning of a long series of futile, costly federal programs to encourage Americans to buy rather than rent their housing. Just as with education, housing is none of the government’s business, but the notion that rising ownership percentages show progress has become an article of faith with many politicians. From Hoover through Barack Obama, taxpayers have had to pick up the costs of mortgage defaults—mortgages that would never have been written but for the idiotic political mania. The huge tab for the lending binge by the two government mortgage giants, Fannie Mae and Freddie Mac, falls not on the politicians and advocacy groups that inflated the housing bubble, but on the suffering taxpayers.

What makes these and many other shakedowns possible (and arguably inevitable) is what Malanga calls “the culture of entitlement.” Rapidly eroding are the old virtues of thrift and self-reliance. They have been replaced by feelings that everyone is entitled to whatever he wants and the purpose of government is to ensure that it is provided. Thus there is nothing morally wrong in pushing the government to give you whatever you want. If others aren’t happy, they can play the political game, too. As long as the process of expropriation takes place under the cover of “democracy,” no one can complain.

Well, people should complain, and Shakedown will undoubtedly provide the fuel for the building rebellion against the conspiracy Malanga has ably exposed.

Magic is harmless fun, but the government is not. It squanders vast amounts of money while simultaneously whittling away at people’s freedom. Instead of solving problems, it makes them worse, often creating brand new problems. Why don’t more of us rebel or at least denounce the State? In his latest book, political scientist and Freeman contributing editor James Payne explains why not: Most Americans have fallen for six political illusions. Although opinion polls show that a large majority of the population is fed up with the government, most think we must continue to rely on it for a wide array of “services.” They just want better politicians in charge. Those people aren’t stupid; they’re under the spell of the following illusions:

• The Philanthropic Illusion: the idea that government has money of its own.

• The Voluntary Illusion: the impulse to want to believe that government action is not based on force.

• The Illusion of the Frictionless State: the idea that the State can transfer resources with negligible overhead cost.

• The Materialistic Illusion: that money alone buys public-policy results.

• The Watchful Eye Illusion: the idea that the government has greater knowledge and wisdom than the public.

• The Illusion of Government Preeminence: the belief that the government is the only problem-solving institution in society.

In short, Payne admonishes people to start examining government as it really is, not the way children see magic. The book’s cover, a reproduction of an 1842 painting by Thomas Cole, gives a visual analogy to its thesis. In the painting a lad in a boat on a river is entranced by an apparition in the sky—a gleaming temple. Unfortunately, he is oblivious to the reality that his boat will soon go over a waterfall unless he gives up on the apparition and grasps the truth confronting him. That’s an excellent depiction of modern America.

Payne does a superb job of explaining and illustrating each of his illusions. I will focus my comments on the last two of them, as they are particularly critical at this juncture.

In the wake of the financial meltdown following the collapse of the housing bubble, politicians have been trying to capitalize on Payne’s “watchful eye” illusion by telling voters that the debacle was all due to inadequate powers of supervision by the government. What we needed, they cry, was more federal oversight to prevent short-sighted and greedy decisions. Give us more regulatory authority and nothing like that will ever happen again!

Payne shows that there were in fact regulators whose job was to blow the whistle on excessive risk-taking by the federal housing giants, Fannie Mae and Freddie Mac, but politicians paid no heed to their warnings. Payne then takes the analysis a step deeper, arguing that people should never put faith in government officials to foresee danger and protect them. That is because government officials don’t suffer the losses when they’re wrong. Instead of expecting a watchful eye from the government, it’s far more intelligent to rely on individuals and private institutions to detect and avoid undue risks because they will suffer adverse consequences if they are wrong.

Payne’s sixth illusion encompasses the others. It is the erroneous view that we must look first (and perhaps exclusively) to government for the solutions to problems. Politicians encourage that illusion since they want citizens to regard themselves as impotent while the State possesses almost limitless capabilities. When a social problem arises, politicians almost never say, “The government should do nothing about that; it’s a problem that should be dealt with by the voluntary sector.” Saying that would be almost suicidal in a nation caught in the grip of the illusion of government preeminence. Instead, politicians seldom miss an opportunity to show their great “concern” by introducing new legislation they claim will take care of everything, from the harm supposedly done by incandescent light bulbs to the drug trade.

Wise individuals, Payne contends, will look at the merits of the voluntary sector rather than leaping on the bandwagon for government activism. Currently, for example, many people are concerned about the possibility of catastrophic climate change and automatically assume that the only way of responding is to give government officials tremendous new regulatory powers. Anyone who reads Payne will contemplate both the possibility that voluntary responses might work better and that government will botch the job.

Proponents of the megastate like Krugman simply cannot acknowledge that the coercive, redistributive policies they love have adverse consequences. As we will see, his proposed “shared prosperity” will further undermine the prosperity we still have, reduce incentives for individual effort, and create new opportunities for political rent-seeking. If you would like to see America become more like Greece, Krugman’s ideas are a perfect recipe.

Let’s look first at what Krugman gets right, though.

One of the greatest conceits of modern liberalism is that more education (formal education, especially of the sort run and funded by government) is always good because it gives people “higher skills,” thus making the United States “more competitive.” To his credit Krugman joins a growing number of critics who argue that such education doesn’t necessarily produce good results. President Obama keeps saying the nation must make more “investments” in education to increase employment and keep up with other countries. Not so, says Krugman.

But why has Krugman broken ranks? In the last few months evidence has strengthened the contrarian case by showing that a large and increasing percentage of college degree holders end up having to take jobs that don’t call for any advanced academic preparation and that many college students coast through with little or no gain in human capital. Those are among the reasons why I long ago concluded that America has oversold higher education, principally by heavily subsidizing it.

Krugman, however, points to a different reason for his turn. He contends that technology and “globalization” are eliminating the middle-class jobs college-educated people used to take, thus “hollowing out” the middle class. As a result, he argues, we can’t rely on education for social mobility.

Exhibit A is Krugman’s discovery that technology is having an impact on the legal profession. Computers, he reports, are increasingly used in legal research, scanning cases and documents for possible relevance much faster than people can. He says that this shows how technology “is actually reducing the demand for highly educated workers.”

It’s perfectly true that technology is changing the legal profession. Decades ago, lawyers had to manually hunt for relevant cases and other documents, then read them. Beginning more than 20 years ago, that laborious work was made easier with the advent of computerized research engines that would almost instantly compile lists of cases. Now computers can apparently even do some of the preliminary analysis.

Krugman’s conclusion that this is reducing the demand for educated workers does not follow, however. Just because technology has made a part of lawyers’ work faster does not mean there will be fewer lawyers—any more than the technological improvements that have made writing and editing easier and faster than in the days of typewriters and erasers has reduced the number of writers and editors.

America already has a surplus of lawyers, but that isn’t because of technology. It is because government subsidizes students who want to go to law school, and some law schools practice deception with regard to the employment and earnings prospects for their graduates.

Technological improvements certainly can lead to the elimination of some jobs in the legal profession (and others), but they simultaneously open up new jobs for educated workers elsewhere.

Krugman’s other argument is that globalization is going to wipe out some middle-class jobs because it is now possible to offshore work formerly done by American workers. He gives no examples or evidence of the magnitude of this phenomenon, but let’s assume that he is correct. Do we need to worry and insist on government action?

No, we don’t. The number of middle-class jobs is not fixed, dictating that if some are done by robots or foreigners or computers, the number remaining must be lower. You might think an economics professor and international trade specialist with a Nobel Prize to his name would know that people have been wringing their hands over the supposed harms of free trade in goods and services for centuries, but despite the apocalyptic predictions, the dynamism of the economy always produces new jobs to replace those that are lost.

In sum there is very little support for Krugman’s claim that the middle class is being hollowed out, but that doesn’t keep him from leaping to the conclusion that we need more government intervention.

He first declares that labor needs more “bargaining power.” That’s vague language, but what Krugman undoubtedly means is that the government should enact pro-union legislation. Make that more pro-union legislation, since existing law (unchanged since 1959) is already highly pro-union. Bargaining power has not been taken from unions over the last 30 years. Rather, many old, unionized companies have had to face increasing competition. They have shed workers and some have gone out of existence. Simultaneously, many new firms have come into existence, and their workers have often shown so little interest in unionization that union organizers have given up.

Furthermore, can Krugman believe that unions automatically and costlessly raise worker earnings? They can’t. As economist W. H. Hutt showed in his book The Strike-Threat System, even if unions can temporarily exploit invested capital (as was the case in the auto industry), in the long run investors will put their money elsewhere.

Finally, Krugman writes that government must “guarantee the essentials, above all health care, to every citizen.” Even if it were true that technology and global competition were hollowing out the middle class, why should government assume this role? Back in the 1960s the federal government began a “War on Poverty” that entailed giving “the essentials” to the poor. Rather than conquering poverty, the policies exacerbated it, as recipients of government benefits reduced their own efforts at improving their circumstances and interest groups learned how to game the system. Krugman’s coercively shared prosperity ideas would give America more of that.

Instead of resorting to federal handouts and union threats to increase the middle class, I suggest we abolish the many governmental barriers to entrepreneurship and entry into occupations so that more Americans can succeed on their own.

Few of us, however, think of Wall Street in a similar vein. Why, Wall Street consists of rich, Republican-leaning firms that make their money by financing business—right? Wall Street is interested in minimizing government because its business clients are harmed by the expansion of government—right?

Those notions could not be more mistaken, as veteran financial journalist Charles Gasparino demonstrates in his latest book, Bought and Paid For: The Unholy Alliance Between Barack Obama and Wall Street. Far from advocating a minimal, night-watchman State (or at least shrinking somewhat the bloated leviathan we now have), the big Wall Street firms earn such enormous profits from financing federal deficits that a shrinking State is the last thing they would ever want. On the contrary, expanding government that borrows heavily guarantees buckets of money in their coffers—far more than the big firms make from the difficult work of business finance.

If that isn’t enough of a shock to people who accept the conventional wisdom about politics, Gasparino has many others in store. Most people would assume that wealthy Wall Streeters would have been scared silly of a candidate like Barack Obama, what with his Progressive/radical/community-organizer past and redistributionist rhetoric. The truth is just the opposite. Obama was the candidate preferred by the top Wall Street CEOs, who regarded him as more amenable to their interests than Hillary Clinton and far more inclined to expand federal borrowing than any Republican in the 2008 field. It’s true that in 2009, as president, Obama gave Wall Street a tongue-lashing for its gigantic bonuses (bonuses made possible by Obama administration policies), but that was pure political theater, Gasparino argues. There was and still is a symbiotic relationship between Obama and Wall Street. Obama expects and will probably get the same high level of campaign support from it in 2012 that he received in 2008.

Among the many enlightening revelations in the book is that the Wall Streeters factored into their support for Obama his pledge to raise income taxes on the wealthy. They concluded that paying somewhat higher taxes would be greatly outweighed by their profit gains. Other Americans might feel the sting of higher taxes, but Wall Street knew that it would be way ahead even with higher rates.

Compared with the likes of Wall Street giants like Goldman Sachs, other American special-interest groups seem puny. The advantages of being a government pet deemed “too big to fail” are immense. “Goldman,” Gasparino writes, “more than any other firm, was able to use its status as a government-protected business to gain access to billions of dollars of borrowed money at rock-bottom rates and then use the funds to buy bonds—many of which were the same as those that had helped cause the financial crisis, but were now trading at just pennies on the dollar.” Gasparino acknowledges that the men who run the big Wall Street firms are brilliant, but unfortunately they employ their brilliance in manipulating Washington.

It’s not just Washington, though. Wall Street has also been earning great fees by helping states and localities borrow and spend beyond their means. Gasparino gives an illuminating history of the relationship between Merrill Lynch and supposedly prudent Orange County, California. Thanks to financial advice from a Wall Street consortium headed by Merrill, Orange County’s government went on a spending binge that seemed affordable. Unfortunately, the investments that initially performed so well and lulled people into a false sense of security later crashed, leaving the county facing huge deficits. But Merrill had made its money. The same is true regarding bankrupt Greece. Wall Street was happy to sell the Greek government advice on how to continue borrowing and hiding its looming fiscal crisis, as long as firms got their fees up front.

We often hear politicians and big-business leaders cooing about how they will work together to solve the nation’s problems. Gasparino says that idea is pure hokum. Teamwork between the federal government and Wall Street means “The big firms underwrite the massive amounts of debt being sold to keep the welfare state afloat, and the welfare state bails out the big firms from some of their most disastrous forays into risk.”

The huge cost of that partnership is paid for by the rest of America in higher taxes and a sluggish economy.

If this book doesn’t make you angry over our crony-capitalist economy, I can’t imagine what would.