The Great Risk Shift The New Economic Insecurity and the Decline of the American Dream

America’s leaders say the economy is strong and getting stronger. But the safety net that once protected us is fast unraveling. With retirement plans in growing jeopardy while health coverage erodes, more and more economic risk is shifting from government and business onto the fragile shoulders of the American family.
In The Great Risk Shift, Jacob S. Hacker lays bare this unsettling new economic climate, showing how it has come about, what it is doing to our families, and how we can fight back. Behind this shift, he contends, is the Personal Responsibility Crusade, eagerly embraced by corporate leaders and Republican politicians who speak of a nirvana of economic empowerment, an “ownership society” in which Americans are free to choose. But as Hacker reveals, the result has been quite different: a harsh new world of economic insecurity, in which far too many Americans are free to lose.
The book documents how two great pillars of economic security–the family and the workplace–guarantee far less financial stability than they once did. The final leg of economic support–the public and private benefits that workers and families get when economic disaster strikes–has dangerously eroded as political leaders and corporations increasingly cut back protections of our health care, our income security, and our retirement pensions.
Blending powerful human stories, big-picture analysis, and compelling ideas for reform, this remarkable volume will hit a nerve, serving as a rallying point in the vital struggle for economic security in an increasingly uncertain world.

User Ratings and Reviews

3 Stars Dangerously Prophetic with a Missing Conclusion
Hacker is being touted as a prophet with the recent bail outs and Wall street woes with Lehman, AIG and the subprime fiasco: individuals CANT manage their own money after all, Hacker was right, yes? Hannah Arendt is turning over in her grave at two subtle miscues: reaction and received opinion.

Personal responsibility vs. totalitarian control comes down to one simple bad assumption: that government is any less corrupt or any more smart than Wall Steet. The Soviet economy collapsed (the first time) over a tripart deadly combination of excess military spending (with no related revenue stream), a central command economy with no price signals (the free market’s central value in a global economy: no human “team” on earth can keep up with the speed or complexity) and, of course: corruption. Does anyone really believe that a roomful of bureaucrats in DC can manage any better than a roomful of traders on Wall Street?

Are they less stupid or less corrupt? The lynchpin is ethics in making any balance between individual responsibility for investment and government control and regulation work, and it’s sadly lacking, and there are not enough resources in law enforcement or at OMB to police individual ethics, they have to come from within. Neither party has really talked in detail about interfacing risk sharing and safety nets with global trading and ethics, they, and Hacker, miss all three points of ethics, price signals, and excessive defense spending.

Reaction is the mother of all screw ups, whether in a marriage, or a social contract. Reaction to terrorism creates crazed defense spending. Reaction to simple markdowns to market creates trillion dollar bailouts. Reaction to bad individual investment choices creates huge new regulatory bureaucracies. This creates the insane pendulum that can’t find the moderate balance, and the divisive conflicts between partisan policies.

Hacker, as a Clinton insider, has to take a position, and is being touted as “prophetic” with the 2008 corrections. Give him his due, but watch for the next catastrophe when the overreaction creates multi trillion dollar offices filled with government bureaucrats trying to play Wall Street gurus. A whole new generation of GS 11’s is what will save us! Then, we will dig up the death-by-regulation Caterpillar Tractor quote from 1970 “When small men cast long shadows, it is a sure sign the sun is setting.” The bad assumption in the coming reaction is that the GS crew will be any more ethical or competent than the greedy Streeters! Does anyone really believe that? BTW, who underwrites Hackers “Insured Society” — Lloyd’s, GE Reinsurance, or AIG? Sorry, Jacob, risk is there, and every solution involves shifting! You can’t afford war, a welfare state AND a huge dept of govt. risk managers– quality, service, price– pick two. Sure, it’s easy to say forget war: until Israel and Iran go at it, and the ancient dream of the Russian czars of a warm water port becomes a reality. If God were playing a chess game intended to relegate the U.S. to history, this latest pendulum swing would be a brilliant move.

Is this worth reading? Yes. Does it provide a balanced view? No. Does it miss a key conclusion? Absolutely: the assumptions of competence and ethics in big government are glaring, and the economic effects of regulation on businesses and resulting job creation are skimmed over. Look at the relationship of Siemens and the German government: shared assignments and interlocking jobs. Success? No, the global economy will have its way. What about Japanese companies with access to M1 creation and their own government banks? Nope, the global economy trumps them again. Look up the word PARASTATAL on Wikipedia. It is VERY well known in Europe and Japan, but very novel and unstudied here in the U.S. Both German and Japanese economic literature have a lot more reservations, and a lot more research, on the parastatal structure than we do in the US, but will that stop DC from launching right into it? Oh, wait, we just did…

5 Stars A cautious analysis of the present and a red flag warning of what needs to be done
Now in a newly revised and expanded edition, The Great Risk Shift: The New Economic Insecurity and the American Dream is a no-nonsense deconstruction of how current American policy has been systematically shifting economic risk from government and businesses onto the backs of individual people. Health coverage has become increasingly expensive and difficult to obtain; social security is relentlessly under attack; job security is a thing of the past; and some of the greatest risks and investments - such as years of expensive college training to prepare for a specific career - can be thoroughly upended with a shift in the labor market. The overused mantra of ‘personal responsibility’ is all too easily twisted into ‘tough cookies for you if your child gets sick and needs expensive hospitalization.’ Personal anecdotes are sprinkled throughout, yet the core of The Great Risk Shift is a big-picture analysis supported by the latest statistical trends. From the need to return insurance to its original purpose - protecting the individuals who most need it against catastrophic loss - to the pitfalls of a so-called ‘ownership society’, The Great Risk Shift is both a cautious analysis of the present and a red flag warning of what needs to be done in the immediate future to fight back against specific policies that are demonstrably harmful to society as a whole. Highly recommended.

1 Star The Great Tax Shift
Proof that anyone can publish a book! Mr. Hacker’s Logic is far out of touch with the today’s global economy and in my opinion against the principles that America was founded upon.

A quick summary: You are not responsible enough to manage your money so let the federal Government take more of your money and give you less back so that you become DEPENDENT on them and their social programs. This way you will vote for democrats who will PROMISE to give you better social programs because the inefficient and poorly managed programs(that they created) do not work for you now that you are dependent upon on them.

While we are at it lets forget the capitalistic system that does horrible things like “encourage entrepreneurship, individual responsibility and accountability” (pg 67) and all become socialists!

4 Stars A bit too “academic”, but well-done overall
This is not the easiest book to read, but the subject should hit home for a number of Americans and it’s well-done.

Hacker shows how over time, government and corporate actions have led us to a point where just about every risk imaginable is being borne by individuals. Once upon a time, the government and corporations shared in the risk, but we’re getting towards a point where that is not the case. With the stories he shares and the points he makes, one can see that it’s no accident that stories abound of people who have lost just about everything - be it their retirement funds, their homes and any other savings they have. Oftentimes, something as simple as job loss due to a layoff or an injury/illness (not necessarily to the person, either, as a sick or injured child can do this as well) is what triggers it, and Hacker spends a good deal of time talking about health care since that’s about as broken as anything in America.

None of this, of course, has been talked about as much as the “prosperity” of the past few years in the American economy, one that was a house of cards and is now in loads of trouble that anyone with common sense could have foreseen.

At the end, Hacker shares some ideas well worth considering. Cynic that I am, I don’t expect our elected leaders to do that, especially as they’ve been bought by corporations left and right.

The book is not always easy to follow, as Hacker makes extensive use of statistics and at times puts several together, and it at times has the feel of an academic paper being presented at a conference of some sort. But that’s a relatively small knock, and it’s a book every politician needs to read and probably won’t (or they will just dismiss it because they’re out of touch and don’t have to live the lives ordinary Americans do).

1 Star Ignores that USA is broke and $110 Trillion in debt
As a political scientist, Author Jacob Hacker makes a terrible economist. For that matter, most economists make terrible economists.

Hacker starts out by detailing the 30 year growth of financial insecurity in this country caused by a joint decline in public welfare benefits, and companies scaling back both benefits and jobs.

According to Hacker, part of the reason for the government decline in public welfare benefits (unemployment insurance, Social Security, Medicare, healthcare, etc.,) is a so called movement by the Personal Responsibility Crusade that shifts the management, control, and risk to individuals. Throughout his book, Hacker attacks Personal Responsibility as a Vice, not a Virture. According to his reasoning, pride should be taken in how much you submit to the safety and security of a greater “risk pool,” managed by the government. As such, individuals should surrender control of their lives to the government, who will act in their “best interests” to save them from themselves.

Therefore, in Hacker’s utopia, those who lack personal responsibility are freed from the consequences of their actions. With the state sheltering them, they are free to declare bankruptcy as often as possible, give birth to as many as babies as they want under Medicare, receive welfare checks and food stamps, and generally consume much more than they produce.

Another theme in his book is an old socialist favorite, attack the rich who have succeeded, and bemoan income inequality. Great. While we are at it, let’s make all the beautiful people in this country wear masks to hide their faces - so we are equal. Let’s give lobotomies to all the smart people - so we are all equal. Let’s put a ball and chain on all the sports people so they can’t run fast. Let’s make everyone wear a fat costume so there are no more skinny people. (see Kurt Vonnegut’s short story, Harrison Bergeron, which is being made into a movie: 2081)

IN his conclusion, Hacker proposes, what else, more big government and more expenditures, especially for Medicare. Medicare must be grown and nourished until it dwarfs all other programs.

But being of the leftist, Socialist persuasion, Hacker’s book TOTALLY IGNORES some non-partisan, non-disputed facts about our American Financial picture. (The Neo-Cons conveniently forget it as well). The quote I am about to give you is neither Republican or Democrat, It’s non-partisan and not disputed much by either political party.

In the words of Dallas Federal Reserve President, (our Central Bank), …”Medicare liabilities are added in with those for Social Security, the unfunded liabilities grow to $99.2 trillion. After adding in the direct debt obligations from its borrowings, the total government debt is $110 trillion, which is twice the amount reported in the government’s annual consolidated accounts.”

What are they talking about? Simply, when the 75 million baby boomers retire, the Federal Government (Tax Payers) will have to pay Social Security, Medicare and Medicaid benefits of $99.2 Trillion. Add to that current $11 Trillion debt, and that figure goes to $110 Trillion. Plus, if you add in the $2 Trillion that was REMOVED from the Social Security fund (to fund other garbage, and replaced with…this is pathetic… IOU’s), we actually owe $112 Trillion.

That both Republicans and Democrats choose to ignore and jeopardize all citizens by pretending this debt does not exist - is a crime to all Americans. As he calls for more Medicare spending, Mr. Hacker’s willful neglect of these figures is a disservice to the reader, who he should be more loyal to for shelling out $15.95 to buy his book.

That number, $110 Trillion (plus $2 Trillion in IOUs) is not going to go away on it’s own. With a $11 Trillion a year economy, it would take 100 percent taxes, with zero government expenditures, for 10 years to pay it off.

There is a non-partisan movie and book coming out which details this problem in greater depth, called I.O.U.S.A by former Comptroller General of the USA, David Walker and financial writer, Addison Wiggin. Until you reconcile this problem, all other proposals, like Hacker’s, are irrelevant.

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