July 2008

Don Boudreaux once again displays his weirdly rare ability to describe things correctly:

The national minimum-wage rises today from $5.85 per hour to $6.55 per hour.  In other words, Uncle Sam today arbitrarily increases the cost of employing low-skilled workers by 12 percent.

If your labor is worth less the $6.55 per hour, life is probably not easy for you. It’s a travesty that politicians can posture like they’re helping that guy by making it illegal for anyone to profit from hiring him. Thankfully, $6.55 still isn’t very much.

From this New Yorker article Tyler excerpts:

stimulants, like caffeine, Adderall, and Ritalin … may actually make insights less likely, by sharpening the spotlight of attention and discouraging mental rambles.  Concentration, it seems, comes with the hidden cost of diminished creativity.

I agree with one of Tyler’s commenters. I am prone to near constant free associative reverie and find it very difficult to do anything else. What I need is to identify my best ideas, pull myself out of the infinite pool of combinatorial possibility, dry myself off, take a seat and buckle down on embodying my best ideas in some medium intelligble to someone other than me. Which is why I would be screwed without stimulants. Or blogs. If uppers keep me from going off on creative tangents while I’m trying to work, that’s a feature, not a bug, because then I might possibly get something done.

When I was a teenager, I had a fanstasy that I could get paid or famous simply from having interesting ideas. It turns out people won’t pay you for interesting ideas unless you show up at a certain place and at a certain time to express them verbally in an entertaining format, or unless you write them down. It’s hard for me and not at all as nice as doing the backstroke through Platonic heaven.

In the Los Angeles Times, Peter Gosselin offers a “news analysis” on the theme that “Americans may be losing faith in free markets.”

For a generation, most people accepted the idea that the core of what makes America tick was an economy governed by free markets. And whatever combination of goods, services and jobs the market cooked up was presumed to be fine for the nation and for its citizens — certainly better than government meddling.

No longer.

This kind of crisis of confidence occurs every time the economy temporarily heads south — which it inevitably does from time to time. What does this tell us? It tells us that people do not understand the economy very well. And what do stories like Gosselin’s tell us? That most journalists don’t either.

But economic downturns do offer the motivated reporter an opportunity to speculate on the possible political consequences of unflagging public and media ignorance. The causes for our current economic troubles are evidently too complex to fathom, so instead of writing intelligibly about what is actually happening and why, we are asked to wonder (hope? fear?) whether voters can be made to demand a “New Deal Lite,” before the economy regains steam and we become too satisfied to regulate ourselves into oblivion.

It would be useful if journalists could find a way to report on the actual nature of the American economy. This would be a real public service. The American economy is in fact a byzantine amalgam of market and state institutions enmeshed in a thicket of regulation. Gosselin maintains that “most people” in the U.S. think there is something out there called “the free market” that operates without “government meddling.” I’m not really sure that most people think that, but it seems Gosselin does, because he goes on to structure his “news analysis” as if the story is that dissatisfaction with a kind of laissez faire we do not have may be generating demand for basically the kind of dirigisme we’ve already got. But since economic systems we haven’t got can’t cause our economic problems, the result is confusion.

Consider the fact that the Federal Reserve is a central planning committee. We are lucky, I think, to have intelligent, highly professional planners, but there are in-principle limits to what they can do with limited information, and so there is no way they are not going to get it wrong sometimes, or a lot of times. The housing “bubble,” which has turned out very badly for a lot of people, and the historically high price of gas, which is to a large extent a function of the low value of the American dollar, probably has had a lot to do with the policies chosen by our monetary central planners. Failures of government planning don’t discredit free markets. Rather, they suggest free markets might be worth trying some time.

Did the ratings agencies and investment banks screw up royally in their assessment of the risk of certain classes of mortgage-backed securities? Yes they did. Did assurances of bailouts, implicit and explicit, from the government to the financial industry encourage dangerous risk-seeking? Yes they did. Many market institutions, like our advanced financial markets, are very far from being self-organizing outgrowths of unregulated market exchange. Instead they are, by and large, creatures of the vast body of law and government regulation that defines the rules of market exchange — that determine what may be bought and sold, and how — and are tightly integrated with more or less freestanding government institutions like the Fed. When these markets stumble, it’s just a rookie mistake of political economy to see that as problem with markets, per se, rather than as a problem with the way regulation and government institutions happen to have structured those markets and thereby structured the incentives of the individuals and firms that act within them.

Here’s another example of the mixed economy. Food is expensive these days, which hits poorer Americans especially hard. Part of the price hike is due to normal market forces; supply has yet to catch up with the increased demand from the rising middle class in China and India and elsewhere. But a large part of it comes from our own government’s frankly idiotic policy of subsidizing corn ethanol, which pushes up the price of all sorts of foods, from wheat to milk to meat. So the conclusion we should draw from this is what? Damn you free market!?

Gosselin winds down on what to many must be a hopeful note:

Historians watching the nation’s current economic and financial troubles say that just because Americans don’t throw up their hands about markets and rush to an opposite pole, such as socialism, it doesn’t mean that change isn’t underway.

As UC Davis’ Rauchway pointed out, the devastating panics and depressions of the late 19th century eventually resulted in the progressive reforms of the early 20th century and, later, the New Deal of the 1930s.

Before we get too excited about “progressive reforms” once again saving capitalism from itself, perhaps we should try a little harder to comprehend the way the actually-existing economy works (journalists might think about helping with this!), so that we can pinpoint the most likely institutional causes of the recent gloom and effectively focus our reforming zeal. Were the media willing or able to explain how our mixed economy actually functions, this downturn might just as well inspire a loss of faith in the government meddling we’ve already got. But what would be the point of writing an article like that?

[Cross-posted from Cato@Liberty]

James Pethokoukis of US News has a plausible conjecture:

Here’s puzzled economist and blogger Brad DeLong:

I still do not understand why the real side of the economy is doing so well in relative terms. The worst financial distress since the Great Depression ought to trigger the worst downturn in demand, production, and employment since the Great Depression. It hasn’t—at least not so far.

Me: My theory is that the amazing resilience of the American economy through this slowdown—as well as the lack of a bad recession in a generation—is indirect proof that the 25-year economic expansion that started in 1982 made us far richer as a nation than the economic numbers suggest. I have continually offered that the inflation numbers used by the government have for years overstated how much prices have risen. Plus, the wage numbers put out by the government are currently being revised to better reflect the shift in jobs from “old economy” to “new economy.”

Have American living standards, as Democrats often suggest, really been stagnant since the 1970s? I doubt it.

I doubt it too.

In this week’s Free Will, I chat with Jim Holt about his new book Stop Me If You Heard This: A History and Philosophy of Jokes. Jim’s book was a lot of fun, and so was our talk. Here’s the not exactly stellar review in yesterday’s New York Times Book Review, but I liked this book because it made me laugh, think, and I read it in a half-hour.

From Tyler Cowen’s outstanding NYT column on means testing Medicare, sweet, sweet music to my ears:

[T]he argument for comprehensive and universal transfer programs does not meet the ideal of democratic transparency. If taking care of the poor is the real value in welfare programs, those programs should be sold as such to the electorate. We shouldn’t give wealthier people benefits just to “trick” them, for selfish reasons, into voting for greater benefits for everyone, the poor included.

I like the way the man thinks. As I noted in below, I get worried about means-tested programs for old people, due to the reality of gerontocracy. But Tyler points to a number of successes in other countries, and nothing could be worse than what we’re in for if we stick with the status quo. In any case, the intensity of opposition among purported liberals to programs finely focused on giving aid to those who need it is simply preposterous.

The continued discussion about kids and happines brings into focus the questions about the priority of happiness over other values and the reliability of happiness measurement. One of the hazards of blogging is to imagine that your audience has been following you all along, and so knows your positions on central topics so that your thoughts in short blog posts are interpreted in the context of your larger body of thought. Of course, that’s not how it works.

So, for those of you who insist that happiness isn’t the only thing that matters and that there are deep methodological problems in measuring happiness, let me say that I agree with you. Also, if I may so say myself, I believe I have written what is still one of the clearest and most sophisticated statement of these points in the paper on happiness Cato published last spring. So if philosophical and methodological questions surrounding the attempt to measure happiness interests you, let me direct you to pages 5-17 in my paper, starting at the section “The Limits of Happiness Research.’

Some people find my position confusing, since I am so critical of the methodology of happiness research, yet I also strongly support it. I don’t think this should be that confusing. It can be made better as I science, and I want to help. And it can be useful in assessing policy, as long as you don’t make a bunch of easily-avoidable mistakes, and I want to help with that as well. Here’s what I said about this in the paper:

Despite the foregoing criticisms, happiness research as it stands is far from useless. We can make the best use of it if we don’t naively assume that happiness is really the primary subject of measurement and research, as if the elusive nature of happiness has been pinned down at long last. Happiness research does tell us something about how we feel, and it tells us a lot about the conditions under which different kinds of people are inclined to say that they are satisfied or unsatisfied with life. Good feelings are important, and so are culture-laden judgments that life is going well, even if happiness is more and less than that. It would be pretty incredible if the disposition to say that we are happy on a survey didn’t correlate well with certain good feelings and other good things. And the evidence is clear that it does.

I have done my best to expose the weaknesses of the dominant survey methods in order to provide a much-needed counterweight to the often complacent confidence in their reliability and lack of care in the interpretation of their results. When intellectuals and politicians use putatively scientific data for political purposes, it is important to apply careful scrutiny to their methods and to the way their results are interpreted and used. If, however, we are very careful when comparing happiness survey results across different cultures or across long periods of time; or when looking at studies that make no note of individual personality differences, that do not follow the same individuals over time, or that sample an exceptionally diverse population, it is possible to glean solid information about things almost all of us care about that ought to have real weight—if not all the weight—in our public deliberation about our political and economic institutions and policies. In that regard, it is heartening that recent studies deploy more sophisticated research designs, better econometric techniques, better theoretical constructs, larger data sets, and integration with more objective and rigorous biological measurement techniques.

So, about the stuff with kids, I assume the studies tell us something real both about how kids affect the balance of day-to-day feelings and overall judgments of life satisfaction. I in fact think happiness is more than that and that there are values in competitions with happiness. The brute, intense, often overwhelming attachment to one’s own children may be the basis for one of those values. We are getting better and better at individuating the strands of sentiment and judgment that go into the various considerations that we take to count for an against our choices. If you believe that children make life more meaningful, then let’s try to verify that by clarifying what it is psychologically that constitutes meaning and see if we can find ways of measuring it. I understand that many people resist the attempt to measure everything — meaning, religious devotion, love for a child, the sense of authenticity, a feeling of purpose. But these things are part of the intelligible world, and part of us, and I happen to prefer knowledge over ignorance. New knowledge doesn’t always surprise us, but often it does, calling into question the weight and authority of our reasons. History is sufficient to predict with a high level of confidence that we will resist reevaluating the considerations that we take to count in favor of our lives as we live them. Some people think they know in advance that further knowledge, that deeper inquiry into the character of what we take to be good reasons for living the way we do, will leave us disenchanted and feeling diminished. But they don’t actually know that, because they never bothered to do the work necessary to really find that out.

My colleague John Samples, a distinguished political scientist and scholar of American politics, writes to me to pithily explain the discretionary/non-discretionary distinction:

Discretionary spending goes through the annual appropriations process. Such spending has to be approved each year, in form at least. Non-discretionary spending has permanent appropriations which are determined by demographics in tandem with specified entitlements. Non-discretionary spending can be changed but only by reopening the authorization for the program. Revising an authorization is quite difficult to do politically. This is not a principled distinction. It is just a political difference. Presumably constituencies of non-discretionary spending are more powerful than those supporting discretionary spending.

So the real distinction has to do with the political ease of exercising discretion, and not the legal possibility of exercising discretion.

What, then, would be a descriptively accurate way of making the distinction? Suppose a responsible journalist wanted to convey the facts as they actually stand rather than reinforce the political choice to make the distinction in this confusing way? Spending that is “annually appropriated” versus spending that is “authorized until revised”? That would be accurate, wouldn’t it? (Please come up with something better!) But “authorized until revised” leads you to think immediately of the possibility of revising it. “Non-discretionary” or “mandatory” leads you to think that that the spending is somehow legislatively off-limits, which is of course false and so misleading.

This is one of those cases where I think language must have political effects. So here’s one for you, George Lakoff. The labeling of Social Security and Medicare spending as “non-discretionary” encourages the sense that the programs are part of what Cass Sunstein calls “the second Bill of Rights” — that they are underwritten by some kind of legal guarantee that goes beyond the will of the current congressional majority, when in fact reopening authorization, though politically difficult, could in principle happen at any time. Strangely enough, I think the “non-discretionary” frame is partly what led Social Security reformers to attempt to motivate reform as necessary to avert a “crisis.” It’s non-discretionary! Like a barrelling train with the brakes out heading for a cliff! Here is out plan to use massive dirigibles to lift the train aloft! However, by successfully rebutting the “crisis” meme by pointing out how easily the benefit formulas can changed–the brakes work fine, thank you–defenders of the status quo loosened the sense of guarantee crucial to the social insurance frame. So what we saw were Democrats simultaneously arguing that we can just change the formulae whenever, so no worries, while at the same time fretting over how certain changes, like progressive indexing, would dislodge the sacred myth of universal social insurance.

By the way, I just glanced at Jason Furman’s short paper about progressive indexing. I really like progressive indexing.

I also like mandatory retirement accounts for paternalistic reasons that are also sort of libertarian. Means-tested benefits for old people is a better idea than our stupid current system, but would encourage too little retirement savings. Why? Old people are so politically powerful that these benefits will be too high to make saving rational. So forcing people to transfer their own money to their future selves prevents them from later forcing others to transfer them money when old.

The author of the Economics of Contempt has published a thoughtful and stimulating post about some of my views about inequality. He concludes this:

Wilkinson seems to be of the opinion that unless U.S. income inequality is benign unless it was produced by some inefficient or unfair mechanism. He also seems to think that absent evidence of an inefficient or unfair causal mechanism, no policies should dare attempt to reduce U.S. income inequality. This is also wrong, for the very same reason: if income inequality is high enough to permit government capture by the wealthy at the expense of the rest of society, the high level of income inequality is inefficient, regardless of the mechanism that produced the income inequality.

I’ve thought a lot about this. My conclusion so far is that questions about the justice of the mechanisms that lead to observed economic patterns really does exhaust the field of questions about distributive justice. There is no independent worry about patterns themselves having bad effects, because the bad effects Economics of Contempt and many others have in mind just are mechanisms or exploitation enabled by government capture. The argument on offer here is an argument for preemptive redistribution. We have to redistribute so that injustice doesn’t occur. But this kind of argument, like arguments for preemptive war, face a high bar. You need to be pretty convincing that in the absence of preemptive action, something bad will occur. I think egalitarians almost never get over that bar.

I emphatically agree that political predation is unjust. Indeed, it is a (perhaps the)  chief cause of inequality in many of the world’s most economically unequal countries. But, obviously, it doesn’t follow that because state capture and political predation generally cause high levels of income inequality that high levels of income inequality cause state capture and political predation. To make that inference requires a lot of supporting assumptions, most which strike me as false.

First of all, the level of income inequality in Denmark, which has the lowest Gini coefficient in the world, is high enough to permit government capture by the wealthy were the wealthy to effectively coordinate. The question is whether they want to. They don’t. Suppose Denmark cut taxes at the top, to unleash a little more entrepreneurial energy, and cut the generosity of some welfare benefits, in order to, say, keep some people from fraudulently collecting disability checks or staying in college forever, or whatever problem they may be facing in the design of their scheme of social benefits. And suppose these changes increase income inequality directly and also indirectly by increasing growth, the benefits of which disproportionately effect incomes at the top. Is the hypothesis that Denmark’s odds of government capture by the wealthy has just gone up?

Likewise, were we fiscally to lop off the heads of the tall poppies in the U.S., the Gini would drop, but it seems the effect of this on the odds of class-based government capture are basically nil. If all the now slightly less rich people wanted to band together and capture the government, they could still do it. The conspiracy would not be demoralized by a Gini of 30 instead of 40. What’s the evidence that preemptive redistribution would preempt anything? Why not suppose instead that when taxes on the wealthy rise, the wealthy become more interested in controlling the government?

None of this not to say that various individuals and corporate interests do not try their damndest to use the government to enrich themselves; they most certainly do. But rent-seeking is a largely a zero-sum game that puts some rich people at odds with other rich people (and the rest of us). The billionaires investing in green technology companies while lobbying madly for regulations to mandate their products are trying to put other billionaires out of business. Etc. The rich do not uniformly see their interests in terms of being rich, and the political preferences of the superrich are far from homogenous. Anyway, even if the rich do not act as a class, it’s true that rich individuals can do a lot more to rig government policy in their favor than can poor individuals. The straightforward implication is that the more power the government has to pick winners and losers, the more power rich people will have relative to poor people. The incentive to capture is a function of the value of the thing captured, not of the the means to do it.

EoC’s suggestion that the Bush tax cuts are evidence of government capture strikes me as silly. The tax cuts are evidence of the fact that Republicans like tax cuts — evidence of the fact that most Republican voters think tax cuts are morally required and are good for the economy, and that Republican politicians think tax cuts are good politics.

Of course, if the Bush tax cuts increased final income inequality, which they probably did, and income inequality gives the wealthy a firmer grip on government, then you’d expect this sort of thing to be a one-way ratchet. But Barack Obama is probably going to get elected and raise taxes considerably anyway. If it is possible for Obama and a Democratic Congress to become elected under historically high levels of income inequality, and to raise taxes and increase transfers, is this evidence for or against the imminence of a plutocracy that calls for preemptive redistributive action?

Daniel Larison writes:

Wilkinson would prefer instead morally bogus debates about whether caring for the poor means abolishing borders and swamping our country with millions of immigrants.  For my part, I get really tired of Wilkinson’s lectures about things and people he identifies as ”nationalist,” when he has made it quite clear over the years that he makes no distinction between nationalism and patriotism, lauds others who fail to make this distinction and in any case doesn’t understand what patriotism is.

It’s amusing how the defense of the human right to travel and associate freely is so often and so desperately cast as “abolishing borders.” But I don’t think I’ve ever defended “abolishing” borders. When Kerry I move to Iowa next month, we will cross the borders of Maryland, Pennsylvania, Ohio, Indiana, Illinois, and Iowa, and I have no problem whatsoever with any of them. Jurisdictions need to be bounded. I’m for borders. What I defend is making national borders more like state borders — making it easier to legally cross and to gain legal residency. I defend this on the grounds that the severity of the restrictions placed on freedom, the extent of the violation of rights to movement and association, and the amount of harm to human welfare, cannot be justified on moral grounds by any imagined compensating benefits. If Larison thinks such restrictions can be morally justified, then I am more than happy to have that debate, because I think I will win. Of course, if he thinks the need to justify coercion and harm is “morally bogus,” then we may share too little normative vocabulary to understand each other. But I think we do understand each other.

If Larison is right that I don’t even understand what patriotism is, then I’m probably right that he doesn’t even understand what morality or justice is, which would explain why he seems not even to grasp that he bears the burden of defending his moral chauvinism. But it might also be that we understand all these things fairly well and just disagree about them at a pretty fundamental level.

So, when Sullivan says I “tear into GNP,” I was in fact tearing into the whole genre of partisan political books, which is obviously a banging-head-against-wall sort of thing to do. The bit he quotes was a coda to a post that defended Grand New Party against the charge that it is irrelevant because the authors are too naive to see that the Republican Party is the sworn enemy of anyone without a yacht. Just so you know.

Criticisms from the partisan left, like Hayes’ and Yglesias’, I think lazily impute bad faith to the GOP. I’m obviously open to the charge that politicians act in bad faith, but I’d just like to see that argument made more credibly and with less transparent coalitional bias. In contrast, I’ve found Andrew’s conservative criticisms pretty effective. “[I]f this remoralization doesn’t work out, aren’t you just left with a vast redistributionist scheme?” is I think the right question to ask.

Of course, I think Kerry’s just killin’ it over at the TPMCafe Book Club. I think it’s pretty safe to say that Kerry’s criticisms are coming from “the left” of Ross and Reihan. Now, Kerry’s liberalism (pretty much my own) is obviously less immediately politically relevant, but is I think a more authentic and  powerful conception of liberalism than the semi-coherent, compromised creed of commited Democrats. So she is able to pitch the liberal critique of GNP with a force most Dems are unable to.

Oh! And now I see that Reihan has just replied to Kerry’s last post. Reihan is characteristically wide-ranging and ecumenical. I feel Reihan’s difficulty here is a failure to clearly separate the strategic from the moral. He seems to really want them to coincide, which is the desire that drives the chief fallacy of political strategy books. Yet he also seems to sense that they don’t really coincide, which leaves him in a position where he will neither endorse nor reject the nationalist assumptions of GNP. But either you’re morally in favor of a more cosmopolitan political order or you’re against it. If he’s for it, then he should be arguing for incremental steps that move us toward it. But he’s not arguing that. So either he thinks morally we shouldn’t be moving toward it, or that it is just unstrategic for Republicans to do so. If he actually believes in moral nationalism (and what else justifies analytical nationalism?), then it’s not so hard to cop to it. Larison does it all the time. If Reihan’s not really a moral nationalist, but simply thinks defending a more cosmopolitan politics is a near-term loser for Republicans, then he should go ahead and admit that the moral and the strategic clearly come apart, but that it’s worth arguing for strategy over morality in anyway. In that case, there better be some longer-run moral payoff from the success of the short term political strategy. But I’m not seeing what it is.

Judging from the comments, Marketplace listeners do not seem all that receptive to the standard explanation of growing wage inequality, nor to the idea that limits on H1-B visas constitute a subsidy to domestic skilled workers that exacerbates the wage gap. Anyway, that’s what I argued today. Here’s my conclusion:

These days, almost everybody but their beneficiaries think agricultural subsidies are a lousy idea. They benefit a few already relatively wealthy American farmers and agribusiness firms to the detriment of poor farmers around the world. But H-1B visa restrictions are subsidies that benefit relatively rich domestic workers over their poorer foreign peers, and so it turns out many of us liberal-minded college grads are enjoying our own protectionist boost.

In this case, it seems the moral outrage is… well, we seem to be keeping it to ourselves.

And not only are we keeping the moral outrage to ourselves, it is apparently morally outrageous to address inequality by actually addressing the mechanisms that cause it — the relation between the supply and demand of skill — if that involves making some foreigners a lot wealthier.

By the way, I do not endorse the headline, “U.S. should import more skilled workers,” which of course I did not choose. If you dammed up a river, then found you had too little water downstream, and so released a bit of water from the dam, you could think of it as “importing more water.” Or you could think of it, more accurately, as removing the artificial barrier to supply.

A great debate on the future of gun rights and gun control after the Washington D.C. v. Heller decision is shaping up over at Cato Unbound. Cato’s Bob Levy, who was co-counsel for Heller, leads off with his take on the decision and its implications. And today Dennis Henigan of the Brady Center contributes a sharp reply, arguing that though the decision was terrible jurisprudence, it’s actually good for gun control. He argues that by decisively forbidding outright bans, Heller has defused the argument that gun control regulation sets us on a slippery slope to total gun confiscation. And therein lies what Henigan calls the “Heller paradox”. By making Second Amendment rights clearer, the Court has made gun control easier. I actually find this argument pretty seductive. Am I wrong?

Dave Kopel pipes up on Friday, and on Monday we’ll have Duke Law’s Erwin Chemerinsky.

In the TPM Cafe Book Club discussion of Grand New Party the Nation’s Chris Hayes argues that Ross and Reihan are well-meaning guys, with well-meaning proposals for helping the working class, but their recommendations to Republicans are pointless since they forgot to notice that the guys in charge of the GOP are callous bastards who won’t listen unless there’s something in it for their corporate paymasters. Some oversight!

Frank’s point in What’s The Matter With Kansas is half about the false consciousness of white working class Republicans, and half about the nature and essence of the conservative coalition and the Republican party, which is to advance the interests of America’s corporate class. That is, whatever Republican politicians say, whatever ideas are floated in the National Review or Weekly Standard, what’s going on beneath the surface is a decades long project to gut, wreck or subvert the welfare state and redistribute income upwards.

Chris is an extremely smart guy, but I think this is just silly — sort of the left-wing equivalent of right-wing ravings about how liberals at bottom are moved by hate for the essential awesomeness of America and want to destroy it one abortion at time while taking away our guns so we can’t do anything about it. Yes, many Republicans have views on social and economic policy that they would like to enact, and these view are often in opposition to Democratic views on social and economic policy. And these differences do have to do with fiscal policy and the proper scope and shape of the welfare state. And so the natural interpretation of that is… plutocrat conspiracy?

Ross and Reihan completely wasted their efforts because, as Chris continues, “[T]he Republican party is run by very, very wealthy people and interests that aren’t particularly interested in the plight of the working class.”

Has Chris never heard George W. Bush deliver a Michael Gerson speech positively dripping with with urgent moral concern for the least among us? Why not think he believes it? Because he does believe it. He also has something to do with running the Republican party. I think he really believes that programs to promote traditional marriage are good for the poor and working classes, and so do lots of powerful Republican politicians. Unlike Ross & Reihan, I think this sort of thing is a pretty lame and won’t work. But simply dismissing the other team’s claims to moral conviction is way too convenient.

It turns out that the Democratic party is also run by very, very wealthy people and interests. It also strikes me as lazy to assume that because the GOP isn’t beholden to various interest groups that claim to represent the working classes in the way the Democrats are, then the people with real power in the Republican party ipso facto have no sincere moral interest in the welfare of the working class. Yes, politics is a game of interests and coalitions. But coalitions often form around moral values. And people, even politicians, are moral beings and generally conceive of their interests in moralized terms. Some of this is and some of this isn’t convenient self-deception. But Marx 101 class analysis just doesn’t get you far. The world is too complicated for it. To put Andrew Gelman’s findings crudely, rich people on the coasts are Democrats. Rich people in the South and in the heartland are Republicans. So is the idea that T. Boone Pickens is in it for himself but Steve Jobs really just wants to solve global warming? Or what?

I think Ross and Reihan’s book has plenty of problems, but the problem is not that the bigwigs of the Republican party are too irredeemably corrupt to be worth talking to.

Anyway… I can hardly stand “what our team needs to do” sorts of books. Pretty much all democratic partisan politics is irredeemably nationalist, and I really get tired of largely morally bogus debates about whether caring for poor people means we need to bribe people to get married or to move more money from really rich Americans to relatively rich but not-so-rich-for-Americans Americans, or both. America is a big, exclusive, mostly involuntary club. If you want to fight over which club members ought to get what benefits and pay what dues, then fine. Do that. But none of this really has much to do with caring about “the working class,” most members of which speak strange tongues and are not considered clubbable. Speaking of Marxism 101.

Excuse me while I stab myself with a flag pin.

How Have I Never Read this Paper? J.R. Lucas, “Against Equality, Again,” Philosophy 52, 1977, pp.255-280:

We can object to strictly hierarchical societies on the grounds that those on the bottom of the hierarchy—the serfs, the villeins, or the prison-camp slaves—are accorded no respect at all. But we should remedy this by having more than one hierarchy, and, in so far as any one ranking system is dominant and generally accepted as constituting the social order, demanding that those who are deferred to should make manifest their respect and consideration for those who render them services.

The argument can, in part, be transposed to a lower key. Two inequalities are better than one. It is better to have a society in which there are a number of different pecking orders, so that a person who comes low according to one order can nevertheless rate highly according to another. One advantage that English society used to have over American was that whereas in America wealth was the only criterion, in England social standing was largely independent of wealth, and could, therefore, act as a corrective. More generally, it is good that there should be an athletic hierarchy besides the academic one, so that boys who are not blessed with brains may nevertheless be, and feel themselves to be, the stars of the football field. A man may not be a great success economically but still can be a big noise in the Boy Scout Association or the pigeon fanciers’ club. So long as we have plenty of different inequalities, nobody need be absolutely inferior. It is only if, in the name of equality, we set about eliminating them all, that we shall succeed in eliminating many of them and thereby make those that remain far more burdensome.

Egalitarians are angered when the argument from Universal Humanity is called in aid of inegalitarian conclusions, and produce vehement counter-arguments against it. They will not accept that the college servant is really better off than the prosperous proletarian, however much happier he may subjectively suppose himself to be, because the mere fact that the society recognises a difference in status between the college servant and, say, the fellows is itself an affront to human dignity. If we differentiate at all between one man and another on account of the social functions they fulfil, then we are no longer regarding them as men but merely as performers of certain roles. The bathroom attendant may think that he is valued for himself alone, but he is wrong; he is valued merely as a cleaner of baths and lavatories, merely as a pair of hands, merely as a useful automaton and not at all as a person, a child of God, a human being, an immortal soul, the bearer of an eternal destiny. This argument has powerful emotional appeal, but it is confused. It confuses the minimal and the maximal respect we may pay to a human being. Whatever a man does, whatever contribution he makes to our well-being, whatever his achievements, he is more than merely a doer, a contributor, an achiever, and I do not respect him properly, if I respect him merely as a doer, a contributor, or an achiever. If I am to respect him fully, I must respect him for himself, rather than merely as someone who satisfies certain specifications, just as a girl feels that she is not really loved unless she is loved for herself alone, and not her yellow hair. But only God can do that. In an imperfect world limited mortals have only limited respect for most other people. The respect which affords a basis for political argument is not a maximal respect we can aspire to but seldom achieve; rather, it is a minimal respect which we all ought to pay to everybody else. It does not exhaust the whole of political argument, but simply provides an incontrovertible starting point. I respect another man’s humanity by observing a certain set of minimum conditions towards him—by not killing him, by not torturing him, by not leaving him to starve by not depriving him of civil rights—and it is important to see these conditions as minimum conditions which must be fulfilled rather than as maximum conditions to which we should aim but which we cannot be blamed if we fail to achieve. If we set our sights too high, we shall secure nothing.

Yup. The multiplication of inequalities through the multiplication of status dimensions is perhaps the chief way in which liberal market societies achieve rough equality of status. It’s counterintuitive but true: more ways of being unequal in status increases the chance of enjoying high status and reduces the chance of being humiliated by inescapably low status. That many egalitarians are so eager to sniff at this is, to my mind, an indication that many of them aren’t so much concerned with the inequalities that matter most to most people. The motivated thinking seems to go something like this: If the best means of bringing everyone up to a minimum of status or a minimum sense of self-respect needn’t involve a lot economic leveling, then pride in being the president of the local PTA must be self-deluded crap. But where’s the respect in that?

Of course, most egalitarians see the minimum equality of respect implied by an equality of rights as too little. I guess I do too. I demand a somewhat more substantive equality in the sense that each has the necessary means to exercise her rights in a worthwhile way. We don’t respect others in this minimal sense if we don’t care whether it seems pointless to them to dream up some relatively long-term plans, because they doubt whether they will be able to act effectively to enact them. But we don’t give people that respect by politically “guaranteeing” them these means, either, because there is nothing in the nature or history of government to cause us to believe it is specially competent to make good on them. We give people their due portion of respect by attempting to maximize the probability that they will have these means. That’s likely to require both private and public assistance, but there’s no way to honestly guarantee that people need it will get it. We can say anything we want. What matters is what people get. The closest we can get to a guarantee is by cultivating a system of institutions that maximizes the production of wealth.

And it happens that this kind of system is one of mind-boggling task specialization and spatial distribution–a system that gives almost everyone a way to make things better for others, a system that implicates almost everyone in the process of wealth-creation that is as close as we come to a guarantee. In a market system, when we do our jobs, we help to provide for others–we help make available to others the means for building a life–in the way that respect requires, and this in turn gives us reason to respect people who do their jobs. Respecting someone as “a doer, a contributor, or an achiever” is no small thing.

In addition to supplying meaningful work that allows each of us to contribute in some real way to the welfare of others, successful market cultures create a climate for proliferating communities of affinity, much like the Great Barrier Reef creates a climate for a teeming proliferation of exotic sea life. On the job and in our “scenes” is where most of us get our quota of status. Our jobs and our standing in our multiple elective communities provide us grounds to respect ourselves and grounds for others to respect us. When we pretend not to see a beggar making an appeal, we do not treat her as an equal in even this small way, perhaps because we suspect she has done too little to merit even a quantum of respect. It is not really so hard to look someone squarely in the eyes, in the way a person acknowledges another’s personhood, but it is easier when we are all part of a joint enterprise of cooperation, improving life infinitesimally but actually for one another. And it is easier to confidently to hold another’s gaze, to feel an equal, when you are in your own small community, in your own small way, somebody. Because it doesn’t seem small to you.

But that’s all sort of beside the point. Because our government’s actual respect for its subject’s “merely formal” political rights is so sorry that it seems that Lucas’ “minimal respect” is fairly demanding after all, and there’s really nothing morally unambitious in aiming at this kind of liberal equality.

This week, I talk with Bruce Caldwell, author of Hayek’s Challenge, a wonderfully lucid, comprehensive, and penetrating account of the development of Hayek’s economic and methodological ideas. Hayek is one of my enthusiasms, so I had a great time talking to Bruce, who knows as much about Hayek as anyone.

Also, maybe some of my Austrian-leaning readers can help out the BHTV commenters in their discussion of economic planning.

This essay by Kenan Malik is so damn right it almost hurts. Choice bits:

Modern multiculturalism seeks self-consciously to yoke people to their identity for their own good, the good of that culture and the good of society. A clear example is the attempt by the Quebecois authorities to protect French culture. The Quebec government has passed laws which forbid French speakers and immigrants to send their children to English-language schools; compel businesses with more than fifty employees to be run in French; and ban English commercial signs. So, if your ancestors were French you, too, must by government fiat speak French whatever your personal wishes may be. Charles Taylor regards this as acceptable because the flourishing and survival of French culture is a good. ‘It is not just a matter of having the French language available for those who might choose it’, he argues. Quebec is ‘making sure that there is a community of people here in the future that will want to avail itself of the opportunity to use the French language.’ Its policies ‘actively seek to create members of the community… assuring that future generations continue to identify as French-speakers.’

An identity has become a bit like a private club. Once you join up, you have to abide by the rules. But unlike the Groucho or the Garrick it’s a private club you must join. Being black or gay, the philosopher Kwame Anthony Appiah suggests, requires one to follow certain ‘life-scripts’ because ‘Demanding respect for people as blacks and gays can go along with notably rigid strictures as to how one is to be an African American or a person with same-sex desires.’ There will be ‘proper modes of being black and gay: there will be demands that are made; expectations to be met; battle lines to be drawn.’ It is at this point, Appiah suggests, that ‘someone who takes autonomy seriously may worry whether we have replaced one kind of tyranny with another.’ An identity is supposed to be an expression of an individual’s authentic self. But it can too often seem like the denial of individual agency in the name of cultural authenticity.

[...]

A century ago intellectuals worried about the degeneration of the race. Today we fear cultural decay. Is the notion of cultural decay any more coherent than that of racial degeneration? Cultures certainly change and develop. But what does it mean for a culture to decay? Or for an identity to be lost? Will Kymlicka draws a distinction between the ‘existence of a culture’ and ‘its “character” at any given moment’… So, in making the distinction between character and existence, Kymlicka seems to be suggesting that Jewish, Navajo or French culture is not defined by what Jewish, Navajo or French people are actually doing. For if Jewish culture is simply that which Jewish people do or French culture is simply that which French people do, then cultures could never decay or perish – they would always exist in the activities of people.

[...]

The logic of the preservationist argument is that every culture has a pristine form, its original state. It decays when it is not longer in that form. Like racial scientists with their idea of racial type, some modern multiculturalists appear to hold a belief in cultural type.

So the multicultural left and the racist right converge. If you get your head straight, you see what matters are certain values and institutions, and those are not trapped in particular essentialized cultures like flies in amber. If these values and institutions are really worthwhile, if they create conditions that are really appealing to human beings in a deep, more-than-accidental way, then it is possible to defend and preserve them as the cultures in which they originated inevitably recombine with others and evolve.

Newsweek has an excellent feature by Lorraine Ali on kids and happiness.

The most recent comprehensive study on the emotional state of those with kids shows us that the term “bundle of joy” may not be the most accurate way to describe our offspring. “Parents experience lower levels of emotional well-being, less frequent positive emotions and more frequent negative emotions than their childless peers,” says Florida State University’s Robin Simon, a sociology professor who’s conducted several recent parenting studies, the most thorough of which came out in 2005 and looked at data gathered from 13,000 Americans by the National Survey of Families and Households. “In fact, no group of parents—married, single, step or even empty nest—reported significantly greater emotional well-being than people who never had children. It’s such a counterintuitive finding because we have these cultural beliefs that children are the key to happiness and a healthy life, and they’re not.”

This is in fact the best piece of seen on this issue so far, touching on our culture’s intense romantization of parenthood. This is an excellent and accurate observation:

“If you admit that kids and parenthood aren’t making you happy, it’s basically blasphemy,” says Jen Singer, a stay-at-home mother of two from New Jersey who runs the popular parenting blog MommaSaid.net. “From baby-lotion commercials that make motherhood look happy and well rested, to commercials for Disney World where you’re supposed to feel like a kid because you’re there with your kids, we’ve made parenthood out to be one blissful moment after another, and it’s disappointing when you find out it’s not.”

Ali finishes on a hopeful note.

For the childless, all this research must certainly feel redeeming. As for those of us with kids, well, the news isn’t all bad. Parents still report feeling a greater sense of purpose and meaning in their lives than those who’ve never had kids. And there are other rewarding aspects of parenting that are impossible to quantify. For example, I never thought it possible to love someone as deeply as I love my son.

I think here we have the key to the intense resistance to the empirical results. There is no reason whatsoever to doubt the reports of parents like Ali who find that they love their children more than they thought possible. It’s really remarkable how often first time parents, especially men, seem almost startled by the profound depth of their love for and attachment to their child. I’ve heard any number of new parents say that they had heard others talk about this amazing bond, but never really expected to feel it themselves. The almost embarrassed earnestness of this admission is truly moving. And, if they won’t stop talking about it, also pretty annoying. (We are all surprised by the all-consuming intensity of our first teenage crush. But the point is, we all are.)  Anyway, the profundity of the experience of loving a child I think blinds many people to the very real costs of raising them. To accept that we have been made less happy in a real sense by our children threatens our sense of the profundity and the value of that bond. So people get upset when they hear this. But that’s not counter-evidence. Not all values move in one direction and it is a mark of maturity to be able to admit that some of the things we value most comes at a sometimes steep cost. We yearn to love our choices, and our lives, with whole hearts. But to do so is to lie to ourselves about ourselves, to close our eyes and cover our ears like children to the profundity of what we have given up. We cannot have everything. It does not diminish the life one has to face the truth about it. It enlarges it to see it for what it is, to know what it has cost, and to love it anyway.

Tell me again why Social Security, Medicare, and Medicaid are labeled as “non-discretionary” spending. As I understand it, Congress could shut them all down tomorrow if they wanted to. Or they could cut benefits massively. Or change eligibility requirements any way they like. Which makes it discretionary, doesn’t it? Isn’t it basically just a lie to make it out like the government might or might not spend money on highways, but just has to fork over checks for knee replacements? This has always confused me. Is there some principled basis for the discretionary/non-discretionary distinction that I’m obtusely missing?

Post inspired by this Perot Chart:

I can’t say what the point of this less than coherent video from Gallup was, other than to mention that Gallup is at the forefront of measuring things in interesting new ways, but I thought some of you might find it interesting anyway:

[Update... Oh, this one is a little better, sort of. They could use a copywriter who doesn't have to guess so much about what the point of all this is.]

You’ll be relieved to see that the guy from Singapore is interested in measuring life satisfaction in order to allow you (the ruling class of a country like, say, Singapore) to “harness the total capacity of your people.” The Australian is interested in “chomping down the policies so we can drive people the right way.” Huh?

From one of The Economist’s New York correspondents:

There seems to be a temptation lately to label anyone who even dares mention supply-side economics, without immediately deeming it the silliest idea born to a napkin, an economic heretic. That’s unfortunate. True, with the exception of very high marginal tax rates, a tax cut will generally not pay for itself. But there exists ample empirical evidence that cutting income taxes does increase growth. Thus, the long-run impact of a permanent tax cut is still up for debate. The effect of lower-income tax rates on labour supply is mixed. But it does seem, at the very least, lower tax rates decrease the amount of tax evasion. Writing off supply-side economics as a blatant fallacy is as much of a 1990s relic as wearing a goatee.

Nice.

I wonder how many drivers exceed the speed limit basically whenever they judge that it won’t cause anybody any problems. I’d guess, approximately, all of them. Also, there are very clear laws about, say, using turn signals, or using turn signals when parallel parking (do you do this?), or not taking a right hand turn on red lights when it is marked, not double parking, even if you’re just going to be one minute while you fetch your latte.  And so on. When’s the last time you jaywalked? Lunch? People are more or less rational and tend to respond to incentives, and therefore the roads are a zone of patterned lawlessness. We all know what infractions the cops care about—how much over the speed limit is too much over, etc.— and we tend to respond accordingly. We even tend to internalize and moralize the rules whose expected cost of violation is relatively high. It’s more efficient that way. And thus our huffing indignation is easily riled by those who face different incentives and so flout different rules than the ones we flout without reflection.

This morning on my ride to work I coasted through a stop sign in front of a police cruiser that was approaching from the road to my right. I gave a little embarrassed smile and a little wave. She made a little disapproving face and waved back. It’s anarchy I tell you. Anarchy! I got to work in four minutes.

Special thanks to commenter theomobiud who officially wins the thread with this dramatic illustration of justice:

Sometimes people just get what’s comin’ to ‘em, I guess. Now, that guy on the shoulder’s getting off scott free, but he’s pretty obviously a menace to people with engine trouble who might need to pull over. He’ll get his.

Time interviews Barbara Ehrenreich:

Some argue that today’s basic standards of living surpass anything the nation has enjoyed historically. What’s your response to that?

Well, I certainly wouldn’t want to live in the 18th century myself, or the 19th either, for that matter. I am operating on a slightly smaller time frame here and thinking that there has been a real increase in inequality since the 1970s. In recent years we have seen stagnation in average people’s wages and salaries and a decline in the benefits they get from their employers. So in recent years I don’t think we have been fulfilling that kind of potential that historically we have always felt was America’s.

What do you think are the primary causes of that?

I think it’s class war coming from the wealthy, from the top really squeezing workers, trying to get more and more out of them.

Not from from international competition and globalization?

I think that’s been an easy excuse for a long time. Anything you don’t like about this economy — declining wages and speed-ups at work — it’s because we have to be competitive. Yet I look at the top and see that American CEOs, for example, are paid much more relative to the average worker than CEOs in other countries.

I fear she has no idea what she is talking about.

What does a real increase in inequality mean? A real increase in income inequality? Sure. An increase in real material inequality? Maybe not. The interesting question has to do with the composition of typical consumption baskets at the top and bottom of the distribution. And then the question is how gains in welfare from new products and the improvements in the quality of existing products have been distributed. It’s not clear at all that there is any increase in real consumption inequality.

Also, if there has been a stagnation in wages and a decline in benefits, then total compensation has declined. But surely Ehrenreich has Google:

So total compensation hasn’t been stagnating. But supposed it had been. Why?

CLASS WAR!!! That’s just crazy. What does she mean?

The reason compensation goes up at all is because productivity has gone up. Which is to say, because we are “squeezing more out of workers.” Here’s the relationship between average productivity and average real compensation:

Pretty close! There is a gap opening up between productivity and real compensation, though I suspect “class war” is not the correct explanation.

She’s right that CEO’s in the U.S. get paid more. And they may even get paid too much, for various reasons. (I am agnostic on this.) But say CEO pay is cut in half. Does she think that firms would allocate the savings to wages and benefits? If they did, would it be enough to even make a difference?

And for the purposes of this class war, who are the wealthy. The household income in the Howley-Wilkinson household puts us securely in the top 10 percent. Richer than 9 out of 10 households in a rich country–that’s wealthy, right? Where are my spoils from the class war!? I can tell you, we’re in no position to squeeze any workers. I guess Ehrenreich means the owners of capital who profit from labor. You know, like everyone with a mutual fund. Maybe some of these people should be ticked about the overpaid managers of the companies they own.

Special bonus (just substitute “class” for “race”):

Interesting discussions at Megan’s and Matt’s. I think Matt does an exceptionally good job of illustrating the arbitrariness of subsidies to car owners simply by outlining an alternative scheme. I’ve always been a bit baffled by a lot of libertarian’s generally pro-car-centric view of transportation matters. Now, if cars, highways, roads, big parking lots, etc., really are the most efficient way to do things, all things considered, then sure. But I never get a clear sense from many libertarians that they grasp the extent of the subsidies, or the very significant crowding-out effects of our massively expensive state-supported auto-based transportation infrastucture.

Also, bikes. People complain about bikers breaking traffic laws. Well, I’m guilty, and I’m damn well going to keep doing it. A lot of traffic regulations make sense for cars, but just don’t for bikes. For example, I ride home almost every day the wrong way up a one way street, and nobody coming the other way gives a damn. Why should they? I honestly don’t give a fig about my carbon footprint (and anyway, since I’m not a breeder, I really should get carbon carte blanche). But I like biking because it’s faster than driving — because I blow through stop signs, go the wrong way on one-ways, etc. Were I suddenly to become fastidious about heeding traffic laws intended to regulate cars, one of the main advantages of biking over driving would evaporate. So I think people who do give figs about carbon really ought to encourage bikers to break traffic laws, or at least promote EXTRA traffic laws for drivers, in order to increase the relative benefit of biking. How about intersections where four-way purple means you’ve got to stop unless you’re on a bike? That would be pretty sweet.