Pursuit of Truthiness

my gut tells me I know economics

Archive for the ‘political philosophy’ Category

Pope Francis and Economics: A Partial Reconciliation

leave a comment »

It is always easiest to evaluate the views of others by fitting them into pre-existing categories. When Pope Francis released his first encyclical, Evangelii Gaudium, many people pegged him as saying “left-wing economics good, free markets bad”. This lead to celebrations on the left and denunciations on the right. Some thought him to be showing ignorance of, or even Pope Paul V vs Galileo style hostility to, economic science.

https://www.nationalreview.com/sites/default/files/cover_overlay_20150907.jpg

After actually reading much of the encyclical, I found it much more nuanced. In particular, the Pope seems to be deeply ambivalent about the welfare state, warning of those who exploit the poor for their own political interest. He would much prefer that people earn a living through work:

“Welfare projects, which meet certain urgent needs, should be considered merely temporary responses”

“it is through free, creative, participatory and mutually supportive labour that human beings express and enhance the dignity of their lives”

Of course, he does want these workers to be earning a “just wage”. While many readers will assume this implies a government-mandated minimum wage, Francis doesn’t go there; one could just as well expect that he is encouraging just wages through increased human capital, tax credits, employer generosity, or something else.

He is generally supportive of private property and business:

“The private ownership of goods is justified by the need to protect and increase them, so that they can better serve the common good”

“Business is a vocation, and a noble vocation, provided that those engaged in it see themselves challenged by a greater meaning in life; this will enable them truly to serve the common good by striving to increase the goods of this world and to make them more accessible to all.”

Like many on the left, the Pope is worried about inequality. But his reason for worry isn’t really about the distribution of material goods, so much as the social distance that economic inequality can create:

“the worst discrimination which the poor suffer is the lack of
spiritual care”

“No one must say that they cannot be close to the poor because their own
lifestyle demands more attention to other areas. This is an excuse commonly heard
in academic, business or professional, and even ecclesial circles”

For those worried about his Argentine background:

“I am far from proposing an irresponsible populism.”

He concedes a role for science in figuring out how best to do all this, though it does sound like he wants to make economics oikonomia again:

“Economy, as the very word indicates, should be the art of achieving a fitting management of our common home, which is the world as a whole.”

In any hundred page document, it can be too easy to cherry-pick quotes. Indeed this is what I have done here, if only to balance the much larger number of pieces that cherry-picked the quotes that seem to be from another side. But real people are usually more complex than a one-dimensional political spectrum.

Advertisements

Written by James Bailey

April 15, 2016 at 4:56 pm

Taxation is Death

leave a comment »

Disclaimer- I hope this post does not get read widely, because it is a relatively controversial take on a peripheral part of what is mainly an open-and-shut case of police abuse. People of different political persuasions seem to actually be coming together on the main issue in this case- liberals seem furious about it even beyond the race angle, major conservatives are calling it a tragedy, and when was the last time Reason magazine celebrated the US Attorney General for prosecuting someone? But many others are saying those things well, so this was what remained on my mind unsaid.

Many anarcho-capitalists want to end all taxation because “taxation is theft”. I have always had a hard time getting worked up about this- sure, taxation does seem like a type of theft, but the practical benefits of a tax system seem to outweigh this abstract flaw.

Then they note that if you try to resist the theft by not paying, you could get thrown in prison, an even more serious violation of your rights. But in practice this happens so rarely; almost everyone just pays up, and never really even thinks about taxes as coercive measures backed by physical force. It seems like the tax system more or less works, and funds the government’s worthwhile endeavors. Sure, it has flaws, but consequentialists and economists like myself usually focus on flaws like how most taxes distort the incentives to save and invest- flaws that can be fixed without scrapping the idea of taxation.

But sometimes, events make the nature of the system hard to ignore. Government taxes and regulations really are backed by force- and sometimes, given a government staffed by imperfect humans, something as well-intentioned a tax on cigarettes can lead not only to people in jail, but to someone being killed.

The idea that taxation is theft, backed by force doesn’t mean we should eliminate all taxes. But it is one of many things worth keeping in mind when you propose a tax. It is something I should have been thinking of when I last taught microeconomics and enumerated to the class the benefits of Pigouvian taxes- I even used the example of a cigarette tax.

Written by James Bailey

December 4, 2014 at 7:26 pm

States Rights: Learning How to Lose

leave a comment »

I’ve been reading some of the Anti-federalst papers and was pretty quickly convinced that sticking with the Articles of Confederation would have led to better outcomes on most issues. Of course, it would probably have led to a worse outcome on one really big issue: slavery.

Race seems to have always been the bane of states rights in the US. Southern states seeking to protect slavery and Jim Crow ultimately led to major gains in federal power in general, and a major loss in credibility to “states rights”. Even if the Southern states weren’t willing to do the right thing on moral grounds, it seems they should have let this one pass simply on pragmatic grounds.

Look at how the power of the Supreme Court has grown over the past 226 years even as the power of states relative to the Federal government has faded. How has the Court accomplished this? Largely by learning when to lose. They have consistently preserved and enlarged their power over the long run by being willing to lose one today. This is how they established judicial review, fought off court-packing, and maintain a good deal of independence from Congress and the President today.’

Conversely, states fought to the death on slavery and lost much of their power, then fought hard to preserve Jim Crow and lost much remaining credibility. It will take a long time to restore the power of arguments for states rights. I hope that the recent history of state versus federal legislation on gay marriage, marijuana, and health insurance has begun to convince liberals that states rights are not so bad after all.

Is Paying Taxes Immoral?

with 6 comments

The US Government is a huge organization that performs many many actions. I think almost anyone could come up with something the government does that they don’t like. I think many people could come with something the government does that is downright evil: bomb Afghan farmers, imprison innocents, pass on money to even worse governments or groups.

Given this, I am surprised that I can’t recall a single person arguing that it is immoral to pay taxes. Sure, people will grumble about losing their money or about how the government will just waste it. But no one argues that you have a moral obligation to make sure that less of your money goes to evil purposes- whether by working so little (or giving away so much) you incur no tax obligation, finding every possible loophole, or simply illegally evading paying taxes. Why not? Do you not have blood on your hands for financing the government’s murders and other evil deeds?

I avoid the force of this argument by being (or aspiring to be) utilitarian. You have to average out all the effects of paying taxes to determine the morality of it. The government does many good things and very many morally neutral things to balance out the bad. Plus avoiding all taxes would be quite costly to me, and my utility counts too.

But many people don’t think this way. They refuse to flip the switch in the trolley problem. They boycott corporations for running sweatshops, or giving money to causes they don’t like, or various other perceived evils. Shouldn’t they think paying taxes is immoral, and do what they can to avoid it?

Written by James Bailey

September 17, 2012 at 3:13 pm

How to care about Equality

with 2 comments

Like many utilitarians and economists, I have a hard time caring about inequality for its own sake, even though many people seem to think it is very important.  Making poor people richer is good on standard utilitarian grounds, but it is hard to imagine wanting to make rich people poorer just to make everyone feel more equal.  How can utilitarians support wealth equality, and redistribution, without putting any value on equality itself?

One reason is as old as utilitarianism itself- the diminishing marginal utility of money.  If rich people don’t value $1000 as much as poor people, in theory we can increase total utility by taking from the rich and giving to the poor.  Wolfers’ finding that happiness rises with the natural log of income supports this.  Of course in practice this leads to incentive problems and an efficiency/equality tradeoff; this lowers the optimal amount of redistribution but gives us no reason to think it is zero.

Second is the fully general trump card against utilitarians (I hope a philosopher can tell me how to get out of this): other people say equality will increase their utility, and you say you want to increase utility, so you should support their desire for equality.

I think one version of this is influential in practice.  An economist like Greg Mankiw might not care about inequality himself, but everyone around him talks about it, so he thinks of more constructive things to say than “your values are silly”.

Another version is the “realpolitik” concern.  Bismark invented the welfare state not because he cared about equality or happiness but to stave off revolution.  Similarly, we might care only about happiness, but realize that voters may be more supportive of happiness-enhancing pro-market policies when inequality is small.  Look at the Economic Freedom of the World Index– Northern European countries like Denmark have high levels of redistribution but are otherwise very free markets.  Denmark is often rated the happiest country in the world.  I would like to see a poli-sci paper on this, or write one if none exists.  If you count the Republicans as the pro-market party (iffy), I have written a paper finding this for the US.  But one should look internationally, as well as looking at survey data on opinion in addition to actual outcomes.

There is one more utilitarian argument for redistribution that I don’t recall hearing, though I am sure it has been made.  Economists like to emphasize that the price system is an amazingly efficient mechanism for allocating resources to their highest valued use.  A common response to this point is that the system is inefficient and unfair, because a poor person who will get 10 utils from a good can be outbid by a rich person who makes 4 times as much money and gets 5 utils from the good.  Somewhere, a rich kid is ignoring or complaining about a toy that a poor kid would love to have but can’t afford.  What I have yet to hear is the obvious corollary of this criticism: the more equal incomes get, the more efficient, fair and utility-enhancing the price system becomes.  The price system more efficiently allocates resources in Denmark than in Mexico.  Perhaps Danish voters are more willing to let prices work because they actually work better in the more equal country of Denmark.

Written by James Bailey

September 19, 2011 at 2:34 pm

Returns to Like-Mindedness and Diversity

leave a comment »

I’m spending this week at a seminar put on by the Institute for Humane Studies, which involves people listening to lectures on lots of topics from a libertarian perspective and drinking free beer.  It is odd being in a place where most people around me also love to talk about economics and libertarianism, since the vast majority of Americans are not libertarians or economics majors.  But is this newfound consensus a good thing?

In some ways its great; conversations can flow at a much higher level when you can presume that most participants have taken the same classes and read the same books.  There aren’t many other places people laugh at my “how many Austrian economists does it take to screw in a light bulb?” jokes.

On the other hand, there is the potential for “groupthink”, the lack of imagination and the lazy arguments that are so easy to succumb to when there is no real live person to represent opposing views.  So a diversity of opinion can be good just to keep everyone on their intellectual best behavior.

But there can be a greater benefit to diversity than merely avoiding groupthink.  Sometimes the interplay between varying ideas allows great progress to be made; there can be an intellectual division of labor and specialization.  Richard Feynman said that other physicists thought him a math genius, but in reality he was not better at math than them, he just had a different approach; and though their approaches may be equally good on the whole, they would only come to him with problems to which their approach had failed.  There’s no reason this can’t apply in economics, or even to some extent in political philosophy.

Another way of thinking about this is the diminishing marginal returns of a political philosophy; perhaps a conservative could come here and argue libertarians out of the worst 10% of their ideas, or vice-versa in the real political world if a minority of libertarians can keep the worst 10% of the ruling party’s ideas from becoming policy.

Written by James Bailey

July 12, 2009 at 5:51 pm

Mini Biographies

with one comment

1) The Great Zucchini: How to make six figures while working two days a week with a high-school education. Plus: the dark side. Great reporting/writing.

2) A Profile of Andrew Sullivan: I knew from his blog that his life, both personally and intellectually, was interesting and a bit contradictory; but this story truly makes the reader wonder if it could all be describing a single person.

3) A Hagiography of Larry Summers: Definitely a puff piece, but it does make him sounds perfectly suited to his current job; and as Dr. Horn says, given who his parents and his uncles were he had no chance of living a gaffe-free life among ordinary people.  My favorite part of the piece is Summers’ quote about why he chose to be an economist:

During his senior year of college, Summers was considering graduate school in both theoretical physics and economics. For weeks, he anguished over whether to pursue his passion (physics) or the family business (in addition to his economist parents, Summers has two uncles–Paul Samuelson and Kenneth Arrow–who won Nobel prizes in the field). After he finally decided on the latter, he explained his thinking to Rollins: “What does a bad theoretical physicist do for a living? He walks into an office, sits at a desk, and stares at a plain white sheet of paper.” “But,” Summers added, “there’s a lot of work in the world for a bad economist.”

4) John Rawls: On My Religion gives insights into the mind of the most influential political philosopher of recent times.  Apparently Rawls was at one point quite religious and considered attending a seminary to study for the Episcopal priesthood.

Written by James Bailey

June 14, 2009 at 6:23 pm