Jewish Economic Theory and Practice: Why the Distaste for Economic Liberalism?

Milton Himmelfarb, one of the most well-known sociographers of the American Jewish community, definitively summed up the American Jewish political paradox with his famous aphorism, Jews earn like Episcopalians and vote like Puerto Ricans. American Jews, it seems, tenaciously refuse to be part of any empirical regularity that links higher income levels with more conservative, or economically liberal (in the European sense), political positions. So why is it that American Jews suffer from (or perhaps enjoy) a particularly acute case of champagne socialism? The most popular answer to this difficult question involves the impact of Judaism on the belief system of American Jews, and Judaism's emphasis on aggressively pursuing social justice (Fuchs (1956)). The conventional wisdom is that Judaism motivates Jews to be highly educated and succeed professionally but to also fervently support collectivist social policies and other forms of aggressive government intervention for shaping an ideal society.

In this paper, we will attempt to cast serious doubt on the plausibility of this theory. In our view, the fundamental problem with the standard answer is that it is not at all true that Judaism is a set of principles that endorses income redistribution and other progressive social programs. In fact, we will try to show the exact opposite, that Judaism is a system of thought that more naturally aligns itself with the basic principles of economic liberalism. Jewish economic theory does not explain the widespread distaste amongst Jews for a free market political agenda.