Reihan Salam makes an excellent point:

As Ed Glaeser and Alberto Alesina have argued, it seems that ethnoracial fragmentation cuts against redistribution — taxpayers are reluctant to subsidize members of outgroups, a gut instinct that is easily characterized as racist. But perhaps this impulse is a useful corrective, and one of the virtues of diversity — i.e., perhaps greater homogeneity leads taxpayers to overinterpret a kind of nationalist sameness, thus leading to higher levels of redistribution than are in fact desirable. Now, I don’t think this is obviously true, but it’s no less plausible than the other story, namely that the interrelationship between extreme homogeneity and social democracy is an unambiguously good thing.

My take is that the kind of homogeneity and conformity necessary to generate the sense of solidarity that leads to popular, high levels of redistribution ought to be unattractive to liberals, who are either cosmopolitan pluralists or not really liberals at all. Add the fact that that there are superior feasible policy alternatives to lavish state-provided social services — deregulated labor markets, actual markets in insurance and health services, higher rates of growth, etc. — and American liberals really ought to stop trying to wish Nordic levels of solidarity and redistribution into existence, and instead just get with the program of promoting actually feasible market-based reforms.

One thing I wish decent liberals would get a handle on is this: the idea of the state as a benevolent scientific administrator of all aspects of the lives of its citizens is not a liberal idea. There is nothing about this conception of state power that tends, in principle, to promote liberal values. The values it will promote will be the values of the people who control it. Moreover, science isn’t partisan. Once we have created a infrastructure of technocratic control, if the science happens to say the economy will do marginally better if, say, more women spend more time in the kitchen, pregnant, rather than competing for social esteem on an equal footing with men, then the state is ready with its managerial tools to reshape our incentives, our lives, and our social structure. We need only wait for a faction to come to power that finds that this or that bit of science (or “science”) conveniently reinforces their prior impulses, and then those tools will be deployed.

These are the thoughts I had reading David Brooks’ play at writing John McCain’s domestic policy in his latest column. I don’t have time to pick through the trainwreck, but let me just note that Brooks is in favor of mandatory national service, no doubt to help shape young people’s conception of who they really belong to, and what their lives are really for. And he wants to send government agents into “chaotic” homes, so that the children there “have some authority in their lives.” Brooks is very keen to ensure that we all have a great deal of authority in our lives, it seems, and I’m afraid that John McCain is too.

I read Ross Douthat’s new Atlantic article on the electoral opportunity open to the Democrats as a chance to characterize the Democratic “threat” in a way that makes Douthat’s conservative “populist” alternative look like an attractive counter-strategy for ‘08 Republicans in the market for advisers.

The pressure of continued outsourcing may also increase the public’s appetite for a smart left populism, as even well-educated workers—in fields from financial services to health care—begin to face stiff competition from overseas. In this landscape, it’s easy to imagine the middle-class anxiety that the political scientist Jacob Hacker termed “office-park populism” defining the domestic debate over the next 20 years, and easy to imagine a Democratic majority that capitalizes on the opportunity.

The phrase “easy to imagine” has all the virtues of theft over honest toil. It is “easy to imagine” that the Kaiser won the Great War and that I’m writing in German (and a pith helmet). Likewise, it is easy to imagine Jacob Hacker’s now-largely-discredited thesis of income volatility and our current cyclical financial worries defining domestic politics in a generation, but why would we bother to imagine it? Let’s imagine instead the centrality of the coming “robot gap” in American politics.

There is good evidence that many Americans just now are worried about the economy and find it hard to pay off debt, as this Harris Poll shows. But, on the other hand, this doesn’t seem to be breeding the kind of discontent likely to push a populist to power. According to another very recent Harris Poll, the level of overall satisfaction is up since 2003, well over half of Americans say their life situation has improved over the last few years, and nearly 2/3 expect it to improve over the next five. Some of this pretty clearly has an economic component. When broken down according to generation, Gen X-ers, like me, (ages 31-42, according to Harris) were most likely to report improvement in their life situation over the past five years, and this is likely because we saw the largest wage gains in that period as many of us finished the 20s transition from entry-level to mid- and upper-level positions. By contrast the oldest cohort–either holding steady in late career, or retired–was least likely to report an gain in life satisfaction over the last half-decade. Sensibly enough, the young group Harris calls the “Echo Boomers” (aka “Gen Y” — ages 18-30), slightly edges out X-ers as most likely to expect improvement in their life situation. The level and trend of American life satisfaction looks so rosy and expectations for future improvement are so high, that it is hard for me to see how a populist politics is supposed to hit takeoff velocity, or how Democrats are supposed to capitalize on some kind of alleged trend of high anxiety that never seems to materialize in the numbers.

Economic anxiety is cyclical. Housing market aside, the current economic indicators look good. I’ll be surprised if the public isn’t pretty happy with its economic lot in a year or so–and especially when Bush is clearing brush full time. In any case, conservatives don’t need to think right-wing populism is just the thing to stave off left-wing populism, since left-wing populism built on some elusive but magically potent middle class economic anxiety is about as authentic a threat as Osama’s caliphate.

Following in my illustrious footsteps as an Economist.com guest blogger, Brookings senior fellow Jason Furman writes thusly of rising income inequality: 

According to the Congressional Budget Office’s income inequality data, the top 1 percent of households have seen their incomes go up by 7 percent and the bottom 80 percent have seen their income shares go down by 7 percent.  In total that is a $664 billion increase in inequality, representing $7,000 for each household in the bottom 80 percent and nearly $600,000 for each household in the top 1 percent.

That number motivates a Hamilton Project tax strategy paper co-authored by Larry Summers, Jason Bordoff and myself that is being released today.

It is far from obvious what has caused the change; in just the last month alone the National Bureau of Economic Research has released three working papers with divergent explanations:  a reduction in the bargaining power of workers, an increased reward for skills and worker productivity, and the destruction of good jobs by trade.

Regardless of the cause of rising inequality, lefties, utilitarians, Rawlsians and anyone with a deep-seated reverence for markets and the capitalist system should all be concerned.  As Alan Greenspan memorably stated, “income inequality is where the capitalist system is most vulnerable.  You can’t have the capitalist system if an increasing number of people think it is unjust.”

Well, I consider myself a sort of Rawlsian (a Rawlsekian!) with a deep-seated reverence for markets and the capitalist system. Should I be concerned? I agree with the sainted Greenspan that capitalism cannot survive a widespread conviction that it is unjust. And I agree that income inequality is one of those things that some thinkers like wheel out to try to convince us that capitalism is unjust, at least around the edges, in order to build popular support for such things as more steeply “progressive taxes combined with expanded benefits like health insurance,” like Furman wants. But I’m not so worried by rising income inequality as I am by Furman’s facile slide from income inequality numbers, which are meaningless by themselves, to the possibility of a crisis of legitimacy.

It is worth repeatedly and forcefully emphasizing that income inequality may or may not be symptomatic of injustice. The three hypotheses for rising inequality Furman mentions are perfectly consistent with advances in justice. And if they are generating income inequality, then it may vindicate capitalism. For example, the loss of jobs, a decrease in wages, or a decrease in bargaining power for some workers may be a consequence of lifting coercive restrictions on voluntary exchange across borders — restrictions that are themselves a form of injustice. Furman himself notes that protectionist policies could decrease inequality, though he advises against them, and rightly so, since they are unjust. But if protectionist policies are lifted, and inequality increases, that uptick in inequality is a side-effect of justice, not a symptom of injustice.

Inequality may reflect real injustice in our culture and institutions, and some portion of it probably does. But then our focus ought to be on rooting out those injustices, not papering them over with confiscatory redistribution which, in the absence of a reason to do it other than arbitrarily reducing measured inequality, is straightforwardly immoral.

Let’s set aside the matter of the intelligibility of “shares” of “national income” as a subject of justice for another time.

[Cross-posted from Cato@Liberty.]  

Over at National Review Online, I examine how French economic policy is giving French folk short shrift happiness-wise in light of the upcoming election. 

If we’re willing to see rates of reproduction as a kind of public good, then why not try to replicate the conditions or yore in which children redounded to their parents’ bottom line. Pass a law that gives parents a claim on some percentage of their children’s future earnings. This will not only increase the quantity of children produced, but will increase the quality of children as parents make targeted invetsments in their childrens’ human capital in order to maximize their take from their kids’ future production.

Doesn’t this make grown children slaves to their parents? Well, it’s not exactly clear how this differs in principle from the way taxes make us slaves to the state. If it turned out that the incentive for parents to produce kids and invest in their skills led to average after-parent-tax earnings greater than average earnings in our current system, and it produced a higher rates of economic growth through greater labor productivity, a stable level of population growth, cultural continuity, and non-collapsing pension systems, wouldn’t that be enough to justify it to the grown kids themselves? Shouldn’t we want the state to require that we pay the tax to parents, rather than to the state, if paying taxes to our parents produces all these externalities?

Maybe you’re uncomfortable about treating people as mere means even to the end of their own welfare. Then maybe you’re against taxation altogether, which is absurd.  

In his by-request post on safety nets, Tyler writes:

Most of all, the welfare state liberates the productive and the creative from their sometimes burdensome family ties. The welfare state is the Randian’s secret dream, and that is what clinches the case for a government safety net.

I don’t think I understand. How many productive and creative people take advantage of government assistance programs for the poor, or are liberated by them? It would seem that genuinely productive, creative people would need them least.

Probably Tyler means that Social Security and Medicare allow the productive and creative to foist their poor parents off on the state. True. But increasing incomes also allow the productive and creative to foist their not-so-poor parents off on “assisted living” facilities. Wealthier parents don’t need their kids’ money, and wealthier kids can afford to have somebody else worry about their parents. How much has the deadweight loss of our actually existing, almost entirely middle class to middle class “social insurance” tranfer system decreased economic growth over the last half-century? It is not obvious that the history of our real system compares favorably to even a slightly higher-growth counterfactual in terms of the kind of liberation from burdensome family ties Tyler is talking about.

If you’re a Sen-type positive liberty advocate like Tyler, and don’t so much care about the coercion implicit in transfers, your problem with safety nets ought to be the potentially psychologically debilitating effects of transfers on the recipients with respect to a sense of control, self-efficacy, motivation, etc. I do not doubt for a second that many, many people have been genuinely helped by public assistance. I do, however, have some doubt that the overall effect has been positive relative to some of the potentially feasible alternatives.

Behold the new Bloggingheads in which I defend Ezra’s honor, distinguish economic risk from economic anxiety, implore you to follow your dream, dilate on the virtues of gun ownership, and endorse Bill Richardson as my favorite 2008 Dem candidate. Naturally, Ezra says many things, too.

McMegan writes:

I’m sorry if my nom de blog fooled you, but I’m not that sort of libertarian. Children are a perennial problem for libertarians, but what it boils down to is this: children (and to my mind, the severely disabled), have positive rights. They have a right to be fed, educated, clothed, sheltered, and given medical care on someone else’s dime. And if their parents abdicate this responsibility, then it passes onto the community, including the state, even if none of us asked said parent to reproduce. So arguing that educating poor children is immoral . . . well, I hardly know what to say, except remind me not to get into a lifeboat with you.

I’m not that sort of libertarian either. But this is a problem. Children don’t sprout from cabbage patches, as you may be aware. Here is the sequence of events, glossed over in Megan’s argument, that must occur before a child becomes vested with a right to the property of other people.

(1) Coitus.
(2) Conception.
(3) The decision to carry the proto-child to term.
(4) Not putting the child up for adoption.
(5a) Abdication of parental responsibility.
(5b) Inability (for whatever reason) to meet parental responsibility.
(6) General positive right to be fed, educated, clothed, sheltered, and given medical care.

Does Megan propose the state confiscate children whose parents violate their special relationship-relative positive rights? If not, and such kids are simply subsidized, then doesn’t this create an incentive for parents to violate their childrens rights so as to transfer the responsibility and cost to the state? If not sufficiently feeding, educating, etc. is a rights violation, shouldn’t bad parents be fined, jailed or otherwise punished? If bad parenting imposes a cost on taxpayers, shouldn’t bad parenting itself be taxed. But bad parents often have a negative tax burden anyway. What to do?

As an old Contemporary Moral Issues 101 fave puts it, if you have to obtain a license to drive legally, shouldn’t you have to obtain a license to legally retain custody of a child after birth? What to do with the kids of parents unable to meet the requirements for a license. Shall we scatter them among wealthier homes like so much spice? Good idea! With an overburdened pension system, or scarcity of good labor generally, kids are a positive externality–but only if those kids are net taxpayers, not net tax consumers. So let’s sterilize poor people, just to be careful, place kids of non-poor negligent parents in government programs/homes that will cultivate their potential for high levels of economic production (so our entitlement programs remain demographically stable), and give huge lump sum payouts for each child of couples with IQs two standard deviations above the mean.

I don’t suppose that’s Megan’s kind of libertarianism either. Sam’s Club Republicanism, maybe.

But seriously… having a kid and not taking care of it automatically entitles the kid to be raised by the taxpayers? Hmm. What happened to the intermediary institutions of civil society? Do we skip them? The state COULD give parents vouchers for food, etc. In fact, it does! (But not schools… God no! Not for schools!) But if these are in fact positive rights violating parents, do we really want to give them the vouchers? What kind of libertarian are you? I want answers, Megan. Answers!

Economists Andrew Oswald and Andrew Branchflower begin a very interesting new NBER paper [$$$] on the relationship between levels of self-reported happiness and blood levels with this dubious claim:

For effective social and economic policies to be designed, it is necessary for policymakers to be able to measure human well-being.

They better hope they’re wrong, because if they’re right, then effective social and economic policy cannot be designed! Oh no! 

Why? Two reasons:

(1) Human well-being, as opposed to the several dimensions or components of well-being, is pretty much impossible to measure.

Why? Because the specific nature of human well-being is relative to the individual and the components of well-being are diverse and must often be traded against one another. 

What does this mean? Let’s start with the relativity of well-being. The achievement of valued aims (meaningful goals, important personal projects, whatever you’d like to call it) is a component of human well-being if anything is. However, the content of valued aims varies from person to person. It follows pretty straightforwardly that the specific requirements of well-being vary from person to person.

(For those of you on the lookout for the scourge of “post-modernist relativism,” please note that this kind of “relativism” is in fact a kind of relativism, and is also completely innocuous, entailed by the uncontroversial fact that different people have different personalities, different tastes, and different “callings.”)

Next, consider the diversity of the components of well-being and the potential conflicts between them. Health and longevity are components of well-being if anything is. But so is the individual achievement of valued aims. Some people’s perfectly reasonable aims  may be incompatible with maximizing their health and longevity. Imagine a cholesterol-saturated gourmand who would rather die than give up his foie gras, or an adventurer who draws profound meaning from facing down life-threatening challenges. So… how much weight do we give to one component of well-being —  health and longevity, say – relative to another — for example, the achievement of valued aims that conflict with maximal health and longevity? The answer is that there is no answer — no answer science and empirical evidence compels us all to agree on, at any rate.

The upshot, then, is that while we can measure various dimensions or components of well-being — whether it be health and longevity, the experience of pleasure, a sense of self-efficacy and control, the development of basic human capacities, or the achievement of valued aims — we cannot measure well-being as a whole because Mother Nature has nowhere posted a table of exchange rates between the various values that compose individual welfare. It’s simply not out there for the scientist to find.

Now, there may be a rough cultural consensus at any time and place about the relative weight to place on competing individual welfare-constituting values. But this consensus, to the extent that there is one, has to be discovered, and changes as time goes by. So, at this point, we’re not “measuring well-being” so much as attempting to find some bit of overlap if people’s conceptions of well-being. We can use the overlap to base a few general principles of mutually beneficial social interaction almost everyone will be willing to affirm. But the larger and more diverse the society, the smaller and more general the overlap. There are always broad swathes of often heated disagreement in pluralistic societies. And that’s what principles and institutions of liberal neutrality are for: to peacefully accommodate the inevitable lack of consensus about questions of value in open, cosmopolitan societies.

Would you say that a set of policies were “effective” if it peacefully and stably coordinated the behavior of millions of individuals in pursuit of their valued aims, and constantly increased their capacity to to realize them, despite the fact that there are as many conceptions of well-being as there are people?  Would you consider such a set of policies “effective” even if we didn’t know how to measure human well-being scientifically? 

(2) Policymakers have no incentive to accurately measure human well-being – even if it was accurately measurable — or to appoint, or take counsel from, those who do.

Lucky for them, Branchflower and Oswald begin their paper with a monumental falsehood. Their introductory proposition implies, among other things, that effective social and economic policy never has been designed! Their general idea, I take it, is that in order to design something effective, you have to be able to measure “effectiveness.” [Edited: Erased gibberish not meant to be publish. Added rest of para, which was meant to be published.] The problem is understanding “well-being maximizing” as equivalent to “effective.” The difference between aggregation-obsessed consequentialists and coordination-obsessed consequentialists lies in accepting or rejection that equivalence. 

I think my considerations (1) and (2) imply that not only does effective policy not require that policymakers are able to definitively measure well-being, but that effective policy is much more likely if we fully grasp the indisputable empirical facts that conceptions of well-being (and of “effective”) are plural (and this is so whether or not I am right on the philosophical point that the constitution of well-being for each individual requires trade-offs between different dimensions of well-being) and that policymakers are neither scientists nor reliable consumers of science. 

Maybe it is disappointing to social scientists — frustrating even! – to face up to the fact that no interest or competence in social science whatsoever is required for a hugely successful career as a policymaker, which is to say, as a politician or bureaucrat. This is even the case in places where social science flourishes most! Disappointing as that fact may be, social scientists may want to take it into account when  thinking about the design of effective policy.  

Despite my digs at Jacob Hacker’s new book, I don’t find it implausible that middle-class Americans do feel that their lives are economically precarious, even when they are, in objective terms, immensely economically secure. The question is whether attempting to ameliorate that feeling is a worthwhile aim for liberal policy. Let’s start with a comment Hacker made two weeks ago:

If you have trouble figuring out why risk makes people anxious and unhappy, consider this simple thought experiment: How much of your income would you be willing to put at risk to get a chance at twice your current income? If you’re like most Americans, the answer is “not much”—and for a simple reason: While you’d love to have more money, your life would be thrown into turmoil if your income dropped by, say, half.

Social psychologists have a name for this phenomenon: “loss aversion,” which means simply that we dislike losing things we have far more than we like gaining things we don’t have. No wonder: If your family income fell by half, you would risk losing your home, your health insurance, your retirement savings—in a word, your safety net. And with these vital assets would go your dreams for the future. Maybe it’s no surprise, then, that a recent poll found that even opportunity-loving Americans prefer, by a two-to-one margin, the security of having their current income protected to the chance to make more money.

Hacker’s right that loss aversion is a very real, very well-documented phenomenon. But he’s wrong to imply that the representation of turmoil upon which loss aversion is based accurately predicts the real turmoil that would be experienced in a personal economic downturn. The main point of psychologist Daniel Gilbert’s bestselling book Stumbling on Happiness is that we make systematic errors in forecasting our future feelings conditional on the occurrence of big (or even little) events, such as how we will feel upon losing half our income, to take Hacker’s example. We think it’s going to be a lot worse than it really will be. Famously, people predict that they would be deeply depressed or even suicidal if they lost a leg. Yet real amputees quickly readjust to their new reality, and recover most of their sense of well-being. (And some even report a boost in well-being, their tragedy awakening them to the importance of what they have not lost.) There is certainly a sense of turmoil before one adapts to new circumstances. Indeed, the sense of turmoil is part of the process of adaptation and the recalibration of expectations.

Obviously, whether losing half your family income will dash “your dreams for the future” depends on how big your income was, and what your dreams were. If I had a job that paid 100K, and now I’ve got a job that pays 50K, then I still have my 501K, my health insurance, and probably a lot more safety net than I need. If I can’t now afford the payments on the Mercedes, well, bummer. If the kids are going to have to go to State U, fine. It’s not the job of my taxpaying neighbors to ensure that I can indeed afford Yale once I set my heart on it.

Sure, loss-averse Americans might like the idea of a constantly rising safety net that ensures a short fall, no matter how far we rise. But it’s not what we need, or even ultimately want. The best explanation for human loss aversion is its utility under conditions of scarcity in our environment of evolutionary adaptedness, tens of thousands of years ago. If you’re on the edge, a loss can mean death. But when you’re further from the edge than people have ever been, like well-to-do Americans are now, anxiety about risk and loss can lock us into bad situations, like unsatisfying jobs or loveless relationships. Our overinflated anxieties about the downside of big changes can be one of our biggest enemies. Middle- and upper-class Americans with college degrees have built-in safety nets in the form of their education and skills, and in virtue of being already enmeshed in the most successful wealth-producing institutions in history. The net is already only two inches from our feet. Losses suck, and we hate them. But I find it hard to believe that this is seriously considered a liberal proposal, or a sufficient basis for massive government intervention into our economy and fantastically comfortable and secure lives.

As I said in the last Hacker post, the main bout in the intramural liberal fight is about which set of institutions will provide what we need to exercise our autonomy and realize our ends. I don’t think a lavish social insurance state is the ticket for the poor, and certainly not for the middle. Americans from the middle on up are a class of extremely privileged people whose satisfaction with life ultimately requires moving beyond a complacent sense of safety and facing and taking more risk. Hacker would argue that people will take more risks if the downside is softer. That’s may be true, though it is also possible that people will just readjust their sense of entitlement, finding ever-smaller objective risks equally subjectively intolerable. But we would very probably take more rational, life-enhancing risks if we realized, with the help of a little self-administered cognitive-behavioral therapy, that the downside is already softer than we think. Hacker’s attempt to goad the American middle class into becoming ever more freaked out by their Pleistocene fear of loss is like telling a spoiled child she should definitely wail with a sense of entitled injustice unless she is given yet another pretty pretty pony. It’s perverse, and it’s not helping anyone.

If you haven’t had enough Hacker, here’s Matt Yglesias criticizing Hacker from the left . Let me say something about one point Matt makes about a point he attributes to Hacker:

If the broader economy is getting riskier, this is something public policy should aim to mitigate, rather than exacerbate. The point was simple, useful, and utterly correct.

I don’t think this point is simple, correct, or useful for much other than confusion. Again, if the risk we’re talking about is just the risk of your income fluctuating a bit, a liberal concerned about economic security has little reason to care as long as the fluctuations occur above the threshold of economic suffciency. Furthermore, if those fluctuations don’t generally cause much real harm, but are a symptom of an increasingly dynamic economy that will tend to give people greater opportunity to express their autonomy and realize their ends over the course of their entire lifetimes, then this kind of “risk” may well be something public policy should aim to exacerbate. Progress is not generally something you want to mitigate.

[Cross-posted from Cato@Liberty]

In his new book, The Great Risk Shift, and on the Political Animal blog at The Washington Monthly website a couple weeks back, Yale political science Jacob Hacker has been selling his line that “economic insecurity” is on the rise, and the state needs to do something about it.

Hacker seems to me to get a lot of mileage out of equivocating systematically between a psychological and objective sense of the word ‘insecurity’. Hacker may be right that there has been an increase in income volatility (though, I’m told, it is not clear how much this has to do with systemic economic changes, as opposed to details of Hacker’s model and the changing composition of the “households” tracked by the data), and this no doubt causes people some anxiety. But anxiety is not actual insecurity. The Bush administration, in its constant efforts to shore up political support for its so-called “global war on terror” does its best to needle Americans into feeling sufficiently anxious about the constant threat of terrorist attacks. But our anxiety and our national security are two completely separate things. We can feel anxious yet be secure, and we can feel perfectly safe at the same moment a deadly missile bears down upon us from the sky. What matters most is whether we are secure, not how we feel. Likewise with economy security.

(more…)

Here’s what happens when you wait a day to publicize your new article in the Australian Centre for Independent Studies’ magazine Policy, “Out of Position: Against the Politics of Relative Standing“: David Friedman goes and writes an excellent blog post about the same subject:

It seems obvious that, if one’s concern is status rather than real income, we are in a zero sum game. If my status increases relative to yours, yours has decreased relative to mine. So this point of view seems to support the approach to politics that sees it mainly as a question of who gets to benefit at the expense of whom, of which side who is on.

Like many things that seem obvious, this one is false. It is true that my status is relative to yours. It does not, oddly enough, follow that if my status is higher than yours, yours must be lower than mine, or that if my status increases someone else’s must decrease. Status is not, in fact, a zero sum game.

This point was originally made clear to me when I was an undergraduate at Harvard and realized that Harvard had, in at least one interesting way, the perfect social system: Everyone at the top of his own ladder. The small minority of students passionately interested in drama knew perfectly well that they were the most important people at the university; everyone else was there to provide them with an audience. The small minority passionately interested in politics knew that they were the most important ones; their friends were there to be herded into meetings of the Young Republicans and Young Democrats in order to get them elected to positions in those organizations that were the stepping stones to further political success. The small minority….

Right on! Indeed, I talked with David about exactly this for about a half-hour in Vegas this April, though I claim no influence whatsoever. Nevertheless, I claim comprehensiveness! Here’s a taste of my 3600 words… (footnotes omitted)

Crucially, there is no limit to the possible forms of excellence. So, while the number of positions on any single dimension of status may be fixed, there is no reason why dimensions of status cannot be multiplied indefinitely. It does not in fact require a violation of mathematical law to produce more high-status positions, for it is possible to produce new status dimensions.

New dimensions of excellence and status often open up due to technological innovation. It was impossible to be a chart-topping pop star or a champion triathalete before there were radios and bikes. Liberal market societies not only create new technologies, they create proliferating forms of association, affiliation, expression, and identity at a sometimes alarming rate. Each musical genre, each hobby, each committee, each church, each club, each ideology, each lifestyle provides a new dimension—a new frame of reference—for positional competition. Environmental purists can compete with one another to conspicuously consume eco-friendly products (or conspicuously refuse to consume much at all), while punk rockers duke it out on grounds of anti-establishment authenticity, and economics professors knock themselves dead trying to get articles into esoteric journals no one else cares about.

The cultural fragmentation some critics lament is precisely what liberates us from unavoidable zero-sum positional conflict. Surfer dudes don’t compete with Star Trek geeks for status. Dynamic market liberal societies create higher-order positive-sum games (for example, the ‘create a new status dimension’ game, or the ‘find the status dimension on which you rank highest’ game) that have lower-order zero-sum games as parts.

Once we recognise the anarchic multi-dimensionality of status, the frequent supposition of Frank, Layard, Cassidy, and others that the distribution of income—whether within the office or within the nation—is the the main dimension of positional competition begins to look bizarre. Struggling artists do not doubt their superiority in the face of successful accountants. And it should not need pointing out that many of us simply don’t know how much our friends make, and don’t much care.

[...]

We are not destined to want fancier cars, bigger houses, and more upscale outfits, nor are we helpless to feel diminished by those who out-consume us. We can opt out by opting in to competing narratives about the composition of a good life. And we do it all the time. We can, like Gauguin, quit law and family to paint naked natives in Tahiti. Or, better, we can move the family to a quieter place where houses are cheap and schools are good. (‘Is this heaven?’ ‘No, Iowa.’) If we are aggrieved by the rigours of the rat race, the answer is not the clumsy guidance of a paternal state. The answer is simply to stop being a rat.

There is, of course, much more. Please check it out.

It is shocking to discover just how much of the debate over politics and policy rests on semi-arbitrary government standards for measuring things. For example, if you believe the Consumer Price Index speaks with absolute authority, then you will believe obviously absurd things, like the idea that real wages have stagnated. Virginia Postrel has a nice short essay in Forbes [free reg. req.] on this aspect of the mismeasurement of economic progress. If Bureau of Labor Statistics true-believers are right, then

… you have to wonder who’s buying all those flat-screen TVs, serving precooked rotisserie chicken for dinner or organizing their closets with Elfa systems. “Anybody who thinks things are getting worse should go to Best Buy and notice the type of people who go to Best Buy,” says economist Robert J. Gordon of Northwestern University.

Gordon is the author of a much-cited study showing that from 1966 to 2001 real income kept up with productivity gains for only the top 10% of earners. What the pessimists who tout his study don’t say is that, while Gordon does find that inequality is increasing, he’s convinced that the picture of middle-class stagnation is false.

“The median person has had steadily improving standards of living,” he says. But real incomes have been understated. The problem lies in how the U.S. Bureau of Labor Statistics calculates the cost of living.

Similarly, the American Enterprise Institute’s Nicolas Eberstadt has a terrific essay on the bizarre and inaccurate method by which the government calculates the poverty rate in the new Policy Review. Eberstadt shows that the official poverty statistics often get things backwards, indicating that poverty is getting worse when it is in fact getting better according to a number of other noncontroversial measures of economic well-being:

The official poverty rate is incapable of representing what it was devised to portray: namely, a constant level of absolute need in American society. The biases and flaws in the poverty rate are so severe that it has depicted a great period of general improvements in living standards — three decades from 1973 onward — as a time of increasing prevalence of absolute poverty. We would discard a statistical measure that claimed life expectancy was falling during a time of ever-increasing longevity, or one that asserted our national finances were balanced in a period of rising budget deficits.

Journalists unfortunately tend to take government numbers as gospel, and therefore end up communicating to the public a badly distorted picture of the state of our economy and society. And far too often intellectually savvy commentators who ought to know better repair to government statistics as if they are pure data, untainted by systematic methodological bias. However, far from a neutral picture of empirical economic reality, we get a funhouse mirror. I don’t think there is any intentional bias in these measurement methods. But there sure is ideological resistance to replacing them with more empirically adequate measures. Things really are getting better all the time, but “reality-based” economic measures might get in the way of some people’s pet policies. And we can’t have that! I think we’ll eventually get better official methods for measuring real income and poverty, but not without a fight.

[cross-posted from Cato@Liberty]

Ezra tries to explain to me why “liberal” economists are worried about inequality as opposed to some people’s not having enough to lead a good life. Maybe it’s a good sociological explanation. I don’t know. But I’m afraid Ezra’s explanation vexes me. Here’s Ezra:

What concerns liberal economists is the relative apportionment of income. Inequality is something of a proxy for this. Take the so-called Krugman calculation which, in the early ’90s, showed that 70 percent of the post-1973 rise in incomes had gone to the wealthiest 1 percent. As he put it, “when incomes at the top of the scale are rising faster than the average, incomes farther down must correspondingly grow less rapidly than the average. In an arithmetic sense, we can say that most of the growth in productivity was “siphoned off” to high-income brackets, leaving little room for income growth lower down. “

What we’re worried about is what’s called the “inequality wedge.” The gap in incomes is so vast and the pool of money at the top so great that growth, which once would have rushed all the way down the income ladder (rising tides, all boats), isn’t making it down the distribution, instead clogging up at the top percent or two (rising tide, only yachts).

Sadly, this makes almost zero sense to me, no doubt due to a Hayek-Buchanan-Nozick gestalt switch about “distribution” that I underwent years ago, forever crippling my ability to think like, well, the staff of the American Prospect.  Ezra’s picture seems mysterious to me. It looks as if, first, there is something called “the economy.” Then there is something called “growth,” which is the size of the economy getting bigger. And then there is a matter of how to divide or share this year’s slightly larger pool of wealth (a gigantic pile of doubloons in the basement of the Treasury?) through the ”apportionment” of income. I’m sorry, no.

What there is is an ongoing dynamic pattern of exchange, within and across national boundaries, that creates new wealth. For each exchange among the billions that create the overall pattern (labor for money, money for interest, money for capital goods, money for consumption goods, etc.) there is a surplus from exchange and a distribution of that surplus among the parties to the exchange. We can count what everybody within some semi-arbitrary geographic region gained or lost in money terms from all their exchanges between period one and period two. But there is no further question about distribution. That was all already settled when the exchanges were completed. If there was no worry for the interested parties about the distribution of the surplus of each exchange, then it is hard to see why there is a worry later about the aggregates. 

Here’s why I might worry about intra-national income inequality.

Nation-states aren’t completely arbitrary regions from an economic point of view because the policies of national jurisdictions change the relative price of various forms of exchange for the people living within those jurisdictions, and this partly (sometimes largely or completely) determines what particular exchanges will and won’t get made. If you see a lot more exchange, or a lot more complex exchanges, going on within a national jurisdiction, that probably has something to do with the rules that govern the jurisdiction. If certain jurisdictions include a lot of people involved in a lot of inter-jurisdiction exchanges, then that says something good about the rules there.

Now, the rules that help determine what exchanges will and won’t be made—policy, “institutions,” etc. — will have a definite effect on the relative size of incomes within the jurisdiction.

Let me say that I’m not going to say anything about the “distribution of income” here, because people too often equivocate between the statistical and disbursement senses of “distribution.”  Here’s how I think about it. Distribution is a matter between parties of an exchange, not between co-members of a political jurisdiction. Further, your money income in a period is the sum of your money distributional shares from all the exchanges closed in that period. It is a straightforward fallacy of composition to think of that sum as itself a distributional share. So, when we’re comparing incomes of co-members of a political jurisdiction I’ll say we’re talking about  the disposition, not the distribution, of incomes in that jurisdiction.  You are of course free to think about the distribution of income just as long as you promise to think of “distribution” in a strict statistical sense, and not as the “apportionment” of individual shares from some mysterious pooled ”national income,” since that is voodoo gibberish on par with “intelligent design.”

OK! A good example of how policy affects the disposition of incomes is the disemployment effect of a high minimum wage. People whose labor is worth less than the price floor will be excluded from exchanges of labor for money, and so will have very little money income at the end of the measured period. Or, to take another example, a big business-backed regulation or legal action that pushes smaller competitors out of the market, is generally meant to ensure that the big business will be party to a larger portion of the exchanges in that domain (and if they achieve monopoly-ish status, a larger take of the surplus), so that its owners and officers will have a bigger income than they would have had in a competitive environment.       

Now, it seems pretty likely that greater inequality in the rate of income growth (a different thing than income inequality per se) for people at the top and middle of the income scale might reflect a change in exchange opportunities and the distributional terms of those opportunities for people at different points of the scale. I am worried just in case this is a consequence of rules like price controls or anti-competitive regulation that create a pattern of exchange that is distorted compared to the pattern that would have emerged in the absence of such exchange-restricting rules.

Now, I don’t find it totally implausible that the decline of unions as an agent of political predation for a good chunk of the middle class has decreased the rents accruing to many middle class workers. But that’s good. And I don’t find it implausible that some corporations have become more efficient at gaming the regulatory and government contracting processes to increase their political rents. That’s bad. So a combination of that good thing and that bad thing could be part of the inequality story. But in that case, I’m not worried about the inequality per se; the justice or injustice of the rules generating that kind of inequality doesn’t flow from the inequality itself, but from interference or non-interference with the moral right to enter into voluntary exchanges with others on mutually acceptable terms.

If inequality in the rate of income growth is just a function of a change in the market value of capital, human or otherwise, then I can’t see the normative upshot. If the payoff to investment and education has gotten bigger, then that’s just a good incentive for people to get more education and save more. Now, if some people don’t have access to an adequate education (and the public school system ensures that many people—urban minorities especially—don’t), then they don’t have enough, and that worries me plenty. And if unwisely anticipated Social Security and Medicare benefits suppress savings, such that people are investing too little, and missing out on potential returns to capital, that would ensure that they have enough in retirement, then that’s a big problem with the jurisdictional rules of the game, and we ought to worry. But the issue just isn’t inequality.  

Well, that’s a mouthful.

Philosophical wrap up… My view is that materially egalitarian liberalism is not really a form of liberalism at all. It is a socialist corruption of liberalism. Liberal egalitarianism properly concerns the equality of political power—none has a natural right to rule, and unequal political power requires special justification and special limitation. In terms of the material resources we command, liberalism is concerned that we are equal in the sense that everyone’s liberties have genuine value—are not “merely formal”—and this is a matter of people having enough to develop their capacities and to realize their meaningful ends. Property, rule of law, civil society, and free exchange in a well-functioning price system—backed up if necessary by minimal means-tested welfare and educational assistance—is the best way to make sure everyone has enough.  

So, I still don’t understand why welfare economists should worry about inequality, much less liberals.      

[Note: By the way, the Krugman quote Ezra provides is extra-mysterious. Yes, if somebody is above average, then somebody is below. Logic! But I am not familiar with this "siphoning" in an "arithmetic sense." Suppose height is growing fastest in the top 5% of the height distribution. Are those tall people "siphoning off" height-growth lower down the distribution? What is Krugman even trying to say? I don't know, but I suspect he is managing to confound different senses of "distribution" without even using the word.]

I find most of the responses to Tyler’s provocative “libertarian vice” post very stimulating, but I find the prevailing defensiveness pretty disappointing. This is 1/2 Tyler’s fault for making it sound like the vice—assuming that government quality is fixed and low—is essential to libertarianism, which it isn’t. Indeed, a quite widespread understanding of Rand-Rothbard-Nozick rights libertarianism doesn’t even require the premise that voluntary price-coordinated action is generally more effective than state coercion. Rights are normatively binding deontic restrictions whose authority and force does not wait on the outcome of an empirical comparison of the consequences of alternative institutional arrangements. (I think this is view incorrect, both in fact, and as a reading of everyone but maybe Rothbard; the point is that this is the catechism of High Church axiom of non-coercion libertarianism.)  

It is, however, 1/2 the commentators fault for not directly conceding that the libertarian vice is indeed a widespread libertarian vice. Alex and Glen: You protest too much! It is exceedingly similar to, if not the same thing as, what I call the “fallacy of asymmetric idealization.” Libertarians are in fact very often guilty of assuming counterfactually ideal markets and counterfactually non-ideal governments. And faith-in-government liberals commit the opposite vice. To argue, correctly I think, that empirical comparative analysis shows us that actually existing market institutions tend to perform better than actually existing government institutions in achieving liberal aims does nothing to establish that libertarians aren’t often guilty of Tyler’s vice, or my fallacy. Indeed, as long as you don’t read Tyler uncharitably as making a silly definitional claim about libertarianism, I don’t see how what he is saying is even contrarian, as opposed to a perfectly good observation.

If nothing else, Tyler’s post is cagey piece of strategic rhetoric that signals to egalitarian liberals a good faith willingness to actually having a debate without pointlessly pulling out ideological trump cards and declaring victory, and a related commitment to non-utopian policy—to endorsing the best option in the politically feasible set. I read Tyler as saying that he considers it inappropriate to assume a priori that market alternatives to government will always be better than government, or to assume  a priori that a policy to improve the effectiveness of some government function will not be the best feasible alternative. If some politically infeasible market reform is “better” in the abstract, that is often simply irrelevant. I think this is certainly correct.

Of course, each policy decision alters what is politically possible in the future, which can present very complex choices. Suppose policies A and B are politically feasible. Policy C is not. A is “better government” and is best in the short run. But C is “legalizing a market in whatever it is A produces” which is best in the long run. A severely reduces the probability of getting to C. B significantly increases the probability of getting to C, but by no means guarantees it, and at the cost of short-term consequences worse than A. So, should we choose A or B? It depends on what you think the expected value of A and C conditional on B are.

If you think the value of C relative to A is huge, you’ll endorse B, even if it increases the probability of C only by a very small amount. I think the debate between statist liberals and market liberals is often a debate over the relative benefits of A and C. If you’re the sort of libertarian who endorses B no matter how big the gains from A, and no matter how small the probability of C, then you’re guilty of the vice. I’ve met more than a few libertarians who will not only endorse B for the purpose of very slightly increasing the the low probablity of C, but on the basis of a truly fantastic conception of a possible path from B all the way through the alphabet to N, libertarian nirvana. But by the time you get only a few steps into the future, the probability is basically zero, in which case supporting B on the prospect of its leading to N is surely a form of addlepated utopianism. If you deny that this happens, then we have been going to different libertarian conferences.

Of course, matters of feasibility are just stupefyingly complex. The infeasibility of certain market reforms are often in large part a function of the ignorance or dogmatism of statist liberals. The probability of getting from here to there is a matter of all sorts of endogenous variables. Indeed, it may be that by signaling good faith in the way you are intend to compare market and government institutions–by saying that you think better government can sometimes be the best feasible choice–you are more likely to get into a conversation that slightly lessens the ignorance and weakens the dogmatism of statist liberals, thereby making is slightly more likely that better government is not the best feasible choice. The strength of this signal is surely amplified by visibly aggravating your libertarian comrades. So, good job Tyler! Sorry I can’t help by scolding you!

The Chicago City Council has proved beyond doubt its aggressive hostility to the welfare of low-wage workers and low-income consumers by its approval of an ordinance that would forbid Chicagoans from legally entering into agreements to work for less than $10 an hour and $3 in benefits—even if they want to—with retailers with $1 billion in annual sales and stores of at least 90,000 square feet.

By prohibiting job-seekers from accepting terms of employment to the mutual benefit of aspiring workers and potential employers, the City Council has effectively requested that major employers like Wal-Mart and Target open fewer new stores in Chicago, and to make available fewer (and possibly no) new jobs. Additionally, the Council has asked Chicago’s low-income consumers, who would benefit most from more discount retail outlets, to forgo significant increases in their quality of life.

As NYU economist Jason Furman wrote in Slate by way of crushing Barbara Ehrenreich in a debate about the effect of Wal-Mart on America’s working class:

A range of studies has found that Wal-Mart’s prices are 8 percent to 39 percent below the prices of its competitors. The single most careful economic study, co-authored by the well-respected MIT economist Jerry Hausman, found that grocery sales by Wal-Mart and other big-box stores made consumers better off to the tune of 25 percent of food consumption. That doesn’t mean much for those of us in the top fifth of the income distribution—we spend only about 3.5 percent of our income on food at home and, at least in my case, most of that shopping is done at high-priced supermarkets like Whole Foods. But that’s a huge savings for households in the bottom quintile, which, on average, spend 26 percent of their income on food. In fact, it is equivalent to a 6.5 percent boost in household income—unless the family lives in New York City or one of the other places that have successfully kept Wal-Mart and its ilk away.

Why does the Chicago City Council insist on harming workers by denying them their moral right to enter into work agreements on terms they find acceptable? Why does the Chicago City Council want to keep things from getting better for its city’s poor?

[Cross-posted from Cato@Liberty]

Cato Chairman Bill Niskanen has forgotten more economics than Ezra Klein and I together will ever know, but I come to his defense anyway against Ezra’s curious argument against the law of demand.

One of the things I’ve learned in my study of the happiness literature is that people don’t take enough risks. The evidence seems to indicate that many people would be happier if they quit their job and either went into business for themselves, or found a new job that better matched their individual strengths—even if it is a job that pays significantly less. (You can take a quiz here, at psychologist Martin Seligman’s website, to find out what your signature strengths are.)

Because we are so risk-averse—so wary of experiencing losses—and because we tend to predict that the downside of a risky decision will be bigger than it actually will be, doing what is most likely to make us happy—taking the periodic entrepreneurial gamble—requires a kind of bravery. But that’s just the personal side of the matter. Culturally, we need a climate of opinion that values risk and rewards initiative with respect and praise, reinforcing and encouraging personal courage. Institutionally, we need a flexible labor market that allows us to easily enter and exit new jobs in search of a good match for our interests and strengths, and a system of laws that does not make it difficult and expensive for people to start their own businesses.

This interesting article from Sunday’s Boston Globe about Brett Zaccardi, who dropped out of college to start his own “alternative media and communications agency,” makes this point well, even drawing on psychologist Daniel Gilbert’s work on predicting our future feelings:

When it comes to career schemes, we do not have accurate imaginations about what life will be like for us in different situations, says Daniel Gilbert, professor of psychology and author of ”Stumbling on Happiness.” Our most accurate information about what will make us happy comes from snooping on other people to see if they are happy. And the best way to watch other people is to be in a variety of offices. Gilbert calls the informal process of judging other peoples’ happiness ‘’surrogation.” He says ‘’surrogation is the best way to predict if we’ll be happy. Observe how happy people are in different situations.”

. . .

So what do you need to know before you decide? Figure out what was bad about the jobs you’ve had so you don’t duplicate the problem. Then just start testing the waters — put a toe in the current to see how it feels. Then take a leap, and if you don’t like where you land, reframe your landing pad as just a steppingstone. And put your foot in the water again.

”We should have more trust in our own resilience and less confidence in our predictions about how we’ll feel,” Gilbert says. ”We should be a bit more humble and a bit more brave.”

Clearly, this kind of serial toe dipping and steppingstone strolling requires an institutional climate where labor market entry and exit is easy, and where starting a new business is not a huge hassle. The predictable consequence of this kind of openness and dynamism will be a bit of volatility in employment and earnings, but if that’s what it takes, that’s what it takes.

Now, compare this absolutely gob smacking exchange between writer James Traub and Ségolène Royal in Traub’s NYT Magazine profile of the French politician (via Virginia Postrel):

In fact, Royal seems innocent of any taint of economic liberalism. She regards Villepin’s peremptory imposition of the new law as a sign of a systematic failure to listen to ordinary people; but she does not view the national suspicion of market forces as a comparable source of paralysis. I was surprised, I said during our interview, that someone whose entire life constituted a triumph over adversity would join the campaign to insure against précarité….Royal countered my observation with a familiar refrain: “The problem is that everybody isn’t subject to insecurity. Do you see businessmen being fired for incompetence? The young see politicians, who also have a stable and secure job, being civil servants, lecturing others on insecurity. So the young graduate will say, ‘In the name of what am I going to sign an insecure contract?’ ”

Then the conversation took an odd turn. Royal asked me, with the air of someone pulling out a trump card, “Are you in an insecure situation?” Actually, I explained, as a contract writer for this magazine, I have little security.

Royal wasn’t going to be put off the scent that easily. “Yes, but how many years does your contract last?”

“I sign a new one every year.”

Now she was frankly incredulous. “You could be fired every year?” For all her own experience, Royal apparently viewed précarité as a kind of socioeconomic stigma rather than the price you might choose to pay for freedom. Or maybe you could say that for her, as for the left generally–and not only in France–market liberalism and globalization have the status merely of fact, which is categorically inferior to a right. This is no less so if the fact appears to obviate the right. “The global economy shouldn’t be supported by wage earners,” Royal insisted. “They have to be able to build a future, like any human being.”

This is amazing in part because many of us have never had anything but an “at-will” contract, according to which we can be fired any minute. And we should consider ourselves lucky. Societies obsessed with abolishing précarité—the so-called precariousness of dynamic markets—tend to implement rules that lock people into the first career track they set foot in, or lock people (immigrants especially) out of the labor market altogether. Regulatory insulation against employment and wage instability does provide a kind of stability—just not the kind that makes for satisfied lives. You get, on the one hand, stable sub-optimal matches between individual strengths and jobs, since it is difficult under those conditions to dip your toes in lots of different currents. In which case, careers are less likely to be seen as “callings” and work is less likely to be experienced as meaningful and intrinsically satisfying (causing demand for things like six hour work days and six weeks of vacation to go up.) On the other hand, you get stable levels of high unemployment. Studies show that long-term unemployment delivers a big hit to happiness only slightly less toxic than divorce. As it turns out, a little précarité is not simply, as Traub writes “the price you must choose to pay for freedom,” but the price you must pay for happiness.

[Cross-posted from Cato@Liberty.]

This New Yorker article by John Cassidy plumping for a move to a “relative deprivation” standard for the poverty line (the author wants poverty to be defined as 1/2 the median) is not only simply preposterous on its face (if the median goes up to $100,000, which it will in the next several decades, then $50,000 per annum, an astonishing sum in absolute terms, will count as the cusp of “poverty”), but also full ill-reasoned and researched ideas about the importance of relative position.

For instance, the Marmot British Civil Servant’s study. This is what the author says:

Relative deprivation is also bad for your health. In a famous study conducted between 1967 and 1977, a team of epidemiologists led by Sir Michael Marmot, of University College London, monitored the health of more than seventeen thousand members of Britain’s Civil Service, a highly stratified bureaucracy. Marmot and his colleagues found that people who had been promoted to the top ranks—those who worked directly for cabinet ministers—lived longer than their colleagues in lower-ranking jobs. Mid-level civil servants were more likely than their bosses to develop a range of potentially deadly conditions, including heart disease, high blood pressure, lung cancer, and gastrointestinal ailments.

This is in supposed to help justify the importance of relative income in order to get us to the author’s sophisticated policy prescription:

Therefore, the way to reduce relative poverty is to reduce income inequality—perhaps by increasing the minimum wage and raising taxes on the rich.

About which Ross Douthat notes:

The New Yorker is a very smart magazine in many ways, but whenever any of its writers talk about public policy, you get the sense that they were cryogenically frozen back in the Nixon era, and just finished getting de-iced.

So true! But back to the civil servants study. This is what Sally Satel and Nicholas Eberstadt say in the course of their rigorous debunking of the idea that inequality per se has a negative health effect:

S. Leonard Syme of Berkeley’s School of Public Health was one of the first to describe the control-of-destiny theory when he examined the landmark Whitehall studies performed by researchers at University College in London. The studies examined workers in the five grades of the British Civil Service, all of whom have access to nationalized health care. The researchers, led by Michael Marmot of the University of London, were not surprised that the civil servants in the lowest grade suffered heart disease at about three times the rate of administrators in the highest, or fifth, stratum, even after controlling for obvious health risks like smoking. They were puzzled, however, to find that even highly paid professionals in the fourth grade suffered twice as much cardiovascular disease as top-ranking administrators.

What appeared to explain this finding was the fact that these workers had little control of destiny; their jobs were fraught with responsibility, but they could exercise little authority. Marmot’s practical suggestion was that employers create ways for workers to have more latitude and to break the monotony of their tasks.

Another term for the “low control of destiny” phenomenon, developed independently by the psychologist Martin P. Seligman in his work with animals, is “learned helplessness”—that is, a posture of defeat and resignation, often accompanied by physical symptoms, that follows repeated failed attempts by the animal to change its environment. Eventually the animal “learns” to adopt a helpless, passive stance because there is little it can do to influence events. People, too, can become passive when they feel unable to control their lives.

So, which is it?! Simply having relatively less makes you sick? Or having too little control makes you sick? Of course, I’m persuaded of the latter. This is, in fact, one of the best explanations for the fact that wealthier people are generally happier. People who have a greater sense of autonomy and control over their enviroment are happier. A higher paying job is more likely to involve more autonomy and control than a lower paying job. So people with higher paying jobs are more likely to have a sense of autonomy and control. And people with higher paying jobs have, well, higher paying jobs. So people who earn more are likely to say they are happy. As Marmot’s study shows, jobs with lots of money but little control aren’t such a good deal. But then, why worry about the money at all?

(By the way, Cassidy quotes Eberstadt about the government determines the poverty line. I wonder if he also asked for Eberstadt’s analysis of health and income inequalities.)

Almost everywhere that the leftist sees some malady of the body or soul caused by low relative position on the income scale, the libertarian-minded intellectual will look at the same data and see too little autonomy and control, too much learned helplessness. That’s why Murray’s new book is called In Our Hands. There is little you can do to help people become more happy that is as effective as devolving to the individual, family, and community the locus of control.

Conceptually, the piece is just a mess. Check this out:

The conservative case against a relative-poverty line asserts that since some people will always earn less than others the relative-poverty rate will never go down. Fortunately, this isn’t necessarily true. If incomes were distributed more equally, fewer families would earn less than half the median income.

This directly precedes the sophomoric unfrozen Johnsonite policy punchline quoted above. Now, it’s true that there is some pattern of redistribution such that the percentage of families earning less than half the value of the median does not stay constant. (And there are also a bunch of “equalizing” patterns of redistribution that do nothing at all to change the proportion of families below half the median. Example: the shift from [10, 100, 1000] to [50, 110, 950].) But Cassidy has just gone to great lengths to convince us that it is relative position that matters oh so much. By his own lights the fact that proportion of the population making half the value of the median is not necessarily fixed is an irrelevant sideshow. There will always be the exact same percentage on either side of the median, or on either side of the median between the median and the bottom. And almost every example he gave us primarily supports the idea it is the order of positions that matters, not the distance between positions. In order to have an argument for compressing the income scale, you need to say more about the importance of the size of the gaps between positions. (And isn’t the bitterness of silver larger the smaller the gap