Here is an interesting little book that can act as a starting point for a conversation about economics. Watson explains how the free-market system has largely been responsible for the dramatic rise in living standards throughout much of the world. His main concern is that over-taxation of the wealthy will negate the system's overall net benefits. That is because Watson believes those who earn the most also make the greatest contribution to society's well-being.
Granted that Watson cites enough statistical evidence to support his broad generalizations. But he tends to view the free-market system through rose-colored glasses. My difference of opinion with Watson can best be illustrated by his take on the 2008 crash. He writes, "Rapid innovation in the mortgage securities markets, combined with a flawed understanding of its possible downsides, remains the most plausible explanation for the crash of 2008." A "flawed understanding"? I don't think so. Rather, there was deliberate misrepresentation by the banks of the real risks of their financial instruments. I agree with Watson when he says capitalism has been good for society, on balance. But when he preaches supply side economics; that no amount of deregulation is too good, or that no degree of competition is too harmful, that's a road I can not follow. I think excessive, over-the-top competition between banks was one of the main reasons for the 2008 crash. Canada was largely spared. Why? Because Canadian banks form an oligarchy. They are more cautious, and intentionally less competitive.
Watson is strangely silent about the public debt. These days our governments are expected to take point providing a wide range of services, including health, education, infrastructure development, law enforcement and myriad others. Year after year, however, at all levels of government debt loads are increasing at alarming rates. This represents a shortfall between tax revenues and government expenditures. As Watson is very clear about tax ceilings, we must assume much of our standard of living has been purchased with borrowed money. Perhaps we should lower our level of expectations? This is a message that fails to be acknowledged as much by the left, as by the right.
Another of my bones of contention with capitalism is that a person's wage becomes synonymous with a person's social worth. Feminism, too, relies heavily on the wage gauge. Feminists assert only when the gender wage gap is eliminated will men and women be equal. And then Watson goes on to justify exorbitant salaries by saying the greater a person is paid, the greater is his or her contribution to society. The inevitable conclusion is that the poor and the middle classes really don't have much social value in a capitalist society.
Watson's optimism about capitalism is driven by his global perspective. He shows that the growth of the middle class is a worldwide phenomenon, if you look at number totals. But the Heckscher-Ohlin model, on the other hand, dictates that low-skilled workers in rich countries will not prosper in a globalist trade environment. Hence, the stagnation or decline of middle class purchasing power in the West (and raison d'etre for Trump's tariffs). While Watson insists we focus our attention on the eradication of poverty, he sort of glosses over some other key problem areas, i.e. the environment, the plight of millennials, and the high shelter costs facing city-dwellers. Ergo, there's plenty of potential for disenchantment. It is not the poor only who may feel the system is not working to their advantage. Watson's insistence that workers retain a high degree of mobility to take advantage of job opportunities may also be interpreted as hostile to indigenous, land-based communities. The right tends to treat society as a collection of individuals. They downplay the self-consciousness of groups.
Watson has expressed his ideas in a straight-forward and uncomplicated manner. He can be understood by anyone with a general knowledge of economics. And I think he's right to emphasize the dangers of excessive taxation. As for the merits of an unregulated free-market capitalist system, his argument is less than convincing.
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![The Inequality Trap: Fighting Capitalism Instead of Poverty (UTP Insights) by [William Watson]](https://m.media-amazon.com/images/I/41QTYFE2i-L._SY346_.jpg)
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A major point is that any policy that undermines the beneficial effects of free markets will hurt the poor worse than it will hu
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