Chapter 11 Government and the People: Labor, Education, and Health

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Chapter 11

Government and the People: Labor, Education, and Health

Sumner J. La Croix

Among the inputs to economic growth, the labor force and population are unique. Not only is labor a central input into the production process but the population is the key beneficiary of the fruits of economic development. The U.S. governments have played a limited role in determining the overall size of the population and the labor force. For example, federal policies toward birth control largely adopted after World War II contributed to reductions in the birth rate, the building of public works at the local level and expansions in government sponsored medical research have contributed to longer lives. Meanwhile, restrictions on immigration, originally targeted at specific ethnic groups in the 1880s through the early 1920s, have shaped the growth of the population. State and local governments, and more recently the federal government, have played central roles in the development of general human capital with the introduction of public schools in the 1800s and the establishment of compulsory minimums for education. The expansion in public health, water treatment, and sewage control facilities contributed to better health in the workforce, as have social insurance and tax policies designed to subsidize health care. Ultimately, governments shaped the organization of labor markets through regulations and changes in the treatment of collective bargaining during the Great Depression and afterward.

Government intervention in the areas of population growth, labor force participation, education, job training, and the operation of labor markets has increased dramatically. Some intervention has been complementary to market institutions, i.e., the interventions have supported the market mechanism and increased economic growth, while other interventions have been designed to transfer income to specific interest groups with the transfer costs varying widely by intervention. The ratchet mechanism, so clearly set forth by Robert Higgs in Crisis and Leviathan, in which individual liberties to participate in markets disappear in a two-steps-backward, one-step-forward process, should be discernable in many aspects of this chapter.

However, in a few central areas, individuals have reaped large gains in freedom from government interventions in labor markets over the last 200 years. Slavery has been abolished. African-Americans have received full voting rights throughout the country, albeit more than 100 years after they had been promised. Women have gained a constitutional right—discovered in the penumbra of the constitution—to control their fertility and have gained more legal control over their lives while they are married. And while the employment of disabled Americans has fallen substantially since the passage of the Americans with Disabilities Act (ADA), the ADA has arguably brought millions of disabled Americans out from the shadows of American life.

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