Hang the rich

17 06 2013

Economists should just butt the fuck out of politics. Jesus.

I know, I know: As a good social scientist I’m supposed to say nice things about econometrics and all of the EXCITING! PROVOCATIVE! insights they have to offer the study of politics, but, y’know, I’m not a particularly good social scientist so why not go with that?

Er. . . anyway. Gregory Mankiw, late of the Bush administration, has made publicly and freely available (good for him) a paper entitled ‘Defending the One Percent‘.

Yeah, I know. Still, inequality is a political issue and as such, may be debated on all sides. After a brief (worthless) fable about perfect equality and iPods and Harry Potter, Mankiw goes on to note that his following discussion of inequality is inescapably political:

At the outset, it is worth noting that addressing the issue of rising inequality necessarily involves not just economics but also a healthy dose of political philosophy. We economists must recognize not only the limits of what we know about inequality’s causes, but also the limits on the ability of our discipline to prescribe policy responses. Economists who discuss policy responses to increasing inequality are often playing the role of amateur political philosopher (and, admittedly, I will do so in this essay). Given the topic, that is perhaps inevitable. But it is useful to keep in mind when we are writing as economists and when we are venturing beyond the boundaries of our professional expertise. (pp. 2-3)

Yes, yes you should, Professor Mankiw. And yet you went ahead anyway.

So onward he goes, into familiar tales about efficiency and utility and disutility and productivity and consumption, and, unfortunately, into the increasingly-familiar tales about genetics and intelligence (and productivity, natch) and then, oops, he gets confused and in the end says it doesn’t much matter after all, so, okay.

And then we get the charming personal anecdote:

By contrast, the educational and career opportunities available to children of the top 1 percent are, I believe, not very different from those available to the middle class. My view here is shaped by personal experience. I was raised in a middle-class family; neither of my parents were college graduates. My own children are being raised by parents with both more money and more education. Yet I do not see my children as having significantly better opportunities than I had at their age. (pp. 8-9)

Yes, because everything was great back then and is exactly the same now.

Then Okun and Mirrlees and utilitarianism, a feint toward neuroscience, a jab at redistributionists (‘if you’re not willing to do it globally, you shouldn’t do it nationally’), and then a discussion of the role of factors such as height in compensation—tall folks earn more—but that totally doesn’t mean anything ha ha forget it.

Then he gets into the left critique of inequality. After noting that, “It is, I believe, hard to square the rhetoric of the left with the economist’s standard framework”, he suggests that

Someone favoring greater redistribution along the lines of Okun and Mirrlees would argue as follows. “The rich earn higher incomes because they contribute more to society than others do. However, because of diminishing marginal utility, they don’t get much value from their last few dollars of consumption. So we should take some of their income away and give it to less productive members of society. While this policy would cause the most productive members to work less, shrinking the size of the economic pie, that is a cost we should bear, to some degree, to increase utility for society’s less productive citizens.” (p. 15)

Mankiw then admits this would “surely not animate the Occupy crowd!”  But instead of dealing with the political arguments of ‘the Occupy crowd’, he detours into tax policy.

Now, tax policy is clearly political, and it clearly has economic effects, so you might think I should cut Mankiw a break and say, Hey, this is an area in which his economic expertise is relevant.

I will not so cut, because by detouring into tax policy he is eliding the central political claims of said Occupy crowd and sundry other leftists. They—we—are less concerned with tax policy per se than with basic claims of fairness and representation. Economics in general and tax experts in particular can offer useful models and information about how best to achieve this or that goal of fairness (not so much about representation), but in terms of adjudicating fairness itself, that is a political matter.

(n.b. I’m all hepped up on this stuff because I’ve been teaching Bernard Crick’s In Defence of Politics, wherein he notes, among other things, that treating citizens as if they were simply so many productive cogs in a socioeconomic machine is to erase politics altogether. Which is bad. Very bad.)

Where was I? Oh, yeah, another personal observation from Mankiw:

The key issue is the extent to which the high incomes of the top 1 percent reflect high productivity rather than some market imperfection. This question is one of positive economics, but unfortunately not one that is easily answered. My own reading of the evidence is that most of the very wealthy get that way by making substantial economic contributions, not by gaming the system or taking advantage of some market failure or the political process. (p. 17)

Uh huh, well that settles it then.

Then on to President Obama’s you-didn’t-make-it-on-your-own claim—again, one which could be taken as an economic claim but which, in context, is clearly political—and we’re off to a discussion on infrastructure and margins and transfer payments and ta da:

In the end, the left’s arguments for increased redistribution are valid in principle but dubious in practice. (p. 19)

Now, sorry for shouting, but: THIS IS A POLITICAL ARGUMENT MASQUERADING AS AN ECONOMIC ONE.

I happen not to groove to this particular political argument, but I accept that it is a political argument and thus may claim a role in the political arena. What I do not accept is that this is some kind of neutral economic argument which by nature of it neutral economic-ness ought trump in the political arena.

I’m going to spare all of us his discussion of the veil of ignorance and a market in kidneys (Christ!) and his notion of ‘just desserts’ fiscal policy (another political argument) to get to this beaut:

My disagreement with the left lies not in the nature of their arguments, but rather in the factual basis of their conclusions. (p. 21)

Well, I guess the first part of that statement is true, insofar as he didn’t truly engage those arguments.

And then he comes to a conclusion with which (cue angelic music) I can agree:

Economists can turn to empirical methods to estimate key parameters, but no amount of applied econometrics can bridge this philosophical divide. (p. 22)

That’s called politics, baby, and no amount of econometric hand-waving can wave away those basic disputes about fairness, representation, and the purpose and worth of government.

Economics has its place, even in politics, but it is no substitute for politics: If you want to make a political argument, then make the political argument, and don’t pretend otherwise.

h/t Mark Gongloff, HuffPo

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3 responses

18 06 2013
dmfant

if they would only stick to description (mindful that the map is not the terrain) and leave prescription to the soothsayers I mean pundits

18 06 2013
19 06 2013
dmfant

[audio src="http://ia801808.us.archive.org/32/items/Blythe/Blythe.mp3" /]

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