The first chapter deals with the most basic issue, how the nanny state ensures that doctors and other highly educated professionals are in short supply, and that the supply of less-skilled workers is relatively plentiful. A big part of this story is trade. The conservative nanny state makes it easy to import goods as a way to replace much of the work done by workers in manufacturing, such as autoworkers, steel workers, and textile workers. Twenty-five years ago, manufacturing was an important source of middle class jobs for workers without college degrees, typically offering health care and pension benefits, in addition to a middle class wage. If goods produced by workers in developing countries (who typically earn only a small fraction of the wages of U.S. workers) can be imported, then the demand for the manufacturing workers in the United States will be reduced, placing downward pressure on the wages and compensation not only of manufacturing workers, but of workers without college degrees in general.
Immigration is another part of the story. The conservative nanny state allows many less-skilled workers into the country to fill jobs at lower wages than employers would be forced to pay the native born population. While allowing immigrant workers into the country can be seen as part of the free market, like allowing imported goods into the country, this is only half of the picture. The conservative nanny state puts on strict controls to limit the extent to which doctors, lawyers, economists, journalists, and other highly paid professionals must face foreign competition. These restrictions take a variety of forms, which will be discussed more thoroughly in Chapter 1, but the key point is that not everyone’s labor is placed in international competition. Those at the top of the wage ladder get to enjoy protected labor markets. This both raises their wages and means that everyone else must pay more money for their services.
The conservative nanny state also involves itself in other ways to ensure that highly skilled workers are paid well, and the rest of us pay the taxes in the form of higher prices for the goods and services they produce. For example, licensing requirements, like admission to the bar for lawyers, often are designed more to restrict supply than to ensure quality for consumers.
