I consider myself a liberal, but of the old-school variety; keep the government out of your business as much as possible so that you’re free to do whatever you like.
It was actually meant to be a very tangential point, HayekHeyst, to ensure we don’t end up at the point where “The free market meets people’s needs!” as some sort of rallying cry. No social choice function exists which satisfies those conditions, so whether it was a man-made voting system or something inherent in the way we set up our market is irrelevant: nothing can do it. That’s all. Just a quickie to make sure we didn’t wander off into Ayn Randian grounds.
You place a lot of stress on Pareto efficiency, but as you might guess I’m not strictly a fan. I am assuming, as you indicated I think one page ago, that all Pareto optimizing moves have already been made. But this could still leave us in a real dictatorship; after all, the shift from dictatorship to democracy is not a pareto efficient move since we make one person worse off (namely, the dictator).
Most societies seem to have gone the course of Kaldor-Hicks: trickle-down economics, anyone? Yeah, it trickles all right. 
But the same thing can be said of redistribution in terms of “trickle up”, that we (The less-affluent) get this money but, being on the flat side of existence, spend it all. Of course, who but the wealthy own the places where we spend our money anyway? Doesn’t it all end up there? (This is really a rhetorical question, I don’t care to investigate it.) In any case, we often make decisions in a political or economic sense that make people worse off. In fact, contrary to the “but the market isn’t a zero sum game!” crowd, most business decisions make some people worse off. The hope is simply that the overall benefit will be larger. Well, for someone, anyway.
Basic human needs aren’t determined by the State, unless you mean the state of biological science coupled with the current form of society (it is not difficult to picture many areas demanding a person have a car in order to work—but of course you need to work to afford a car…).
In any event, there is, or rather should be, no question that property is defined by the State, as the citizenry has yielded the application of force to the State and has yielded final authority to the state in matters of disputes. This is not to say that in absence of a state there is no private property, only that it sure as hell wouldn’t resemble what we have now…
So, just to save other people the trouble of looking things up, a change in (say) government policy is Kaldor-Hicks efficient if the aggregate willingness to pay (WTP) for the change exceeds the aggregate willingness to accept (WTA). WTA is the compensation that would leave the losers just as well off after the change as before it.
It’s been a long time since I’ve looked at KH seriously, but what’s the distinction between KH and Potentially Pareto Improving? PPI (as opposed to vanilla Pareto Improving) means that you could compensate the losers, at least given sufficiently efficient lump-sum redistribution.
Does KH have a change-bias and a distributive bias towards the person wanting the change? Suppose A would be willing to pay $2 for a smoking ban in bars. Suppose B needs $1 to compensate for smoking being banned.
KH would suggest that we institute the ban, giving A $2 of gain, imposing $1 of loss on B. But if A and B were to bargain over the smoking ban, we’d see them splitting the gain. Some solution like A gains $1-p, B gains p.
I suppose in the grand scheme of things, we might hope there are thousands of policies, and the odds are that any one of us will consistently end up on the uncompensated losing end are very low.
And, if the role of the state is limited to correction of market failures plus provisions for ‘basic human needs’, that might seem plausible.
But basic human needs, as you point out in your car example, are often viewed as a matter of keeping people out of relativistic poverty instead of just keeping them out of absolute poverty.
A state that has the mandate to keep people out of relative poverty is going to have to be a substantial wealth-transferring power. If some people are more talented or more driven to material success than others, I think it would be hard to argue that such a state is likely to be neutral between them and those who are less talented or less driven.
Agreed on property rights, at least around the edges, being legally/socially contextual rather than written in stone.
Then our terms are crossing. KH improvements, as I understand the term, are what you’re calling PPI, the idea being that in principle the recipients of the benefit could compensate the parties that lose in the deal, though there is never any question that they must (they don’t).
Yes, and this is where I would start to waffle, actually, and start adopting more conservative views. One “welfare” plan that always intrigued me was the reverse taxation-style, where a minimum income is guaranteed as a tax refund. This minimum income decreases by a proportion as one’s income increases, but it is never in a person’s fiscal interest to not earn an income: they will always have more after-tax money than if they had stayed at the level they are at, even though their “benefits” decrease (contrast this with small dollar amounts and guaranteed material goods like food and shelter and one can immediately see the difference). Depending on where we set the level, this could be a draconian policy on the wealthy or it could be a great thing to them (due to increased spending driving competition which they will profit from in the long term). I am not aware of the flaws of this plan, but I’m pretty sure someone is else we would have tried it. Still, it seems better to me than food stamps, government cheese, and the incredibly segregating and disgusting public housing situation.
As with all taxation policies, the matter is entirely unclear. The conservative clamor that higher taxes means less investment has not always held true. Post and during WWII taxes (if I remember my dates right) were huge on the wealthy, yet this was no hindrance to unprecidented growth. (Maybe it was deficit spending in a time of war? So many factors, it is hard to hold everything equal and say for certain…)
In general, the goal is to redistribute resources so that people who want to work but cannot strictly find work have the ability to do so. It is not strictly a matter of decreasing the wage gap which is pretty irrelevant (to me). I feel that we can structure this support in such a way that discourages slacking to the point that attempting to strictly root it out will cost more than it will save.
[rare, positive feedback, driveby post]
Great thread, all around.
The good guys even won, IMHO.
[/rare, positive feedback, driveby post]
I admire a person who admits they have their waffle-points. Shows they’re actually thinking, since few things are simple in life, instead of being totally doctrinaire.
The more common name for ‘reverse taxation style’ systems that you suggest are negative income tax systems. First imagined, I believe, by Uncle Milt Friedman himself. I think the main objection to them is that it’s hard to jigger the minimum income M and phase-out rate t to make it work nicely. You end up paying benefits to people (and not taxing them) whose incomes are as high as M/t. (Say $40,000 given minimum income of 10,000 and phase-out rate of 25% or M=20,000, t=50%).
You either end up making poor people face huge marginal tax rates or you end up paying benefits to a substantial number of people who aren’t poor. You may get weird anomalies like poor people paying a higher marginal tax rate than rich people.
From a ultraorthodox economist standpoint, of course, if people prefer junk food to healthy staples, so be it. Give them cash, not food stamps limiting their purchase types. But ‘normal’ people worry paternalistically that the money gets spent on ‘the wrong things’ like cigarettes, junk food, clothes rather than doctor’s appointments, healthy staples, etc.
Oddly, while I’m generally opposed to paternalism, I can see the point in this. Particularly as, to me, the primary purpose of aid to the poor is to insure that children born into poor families have a decent shot of not having their life-courses excessively determined by their parent’s economic choices/status. (How’s that for a waffly sentence?)
Agreed that higher taxes need not imply lower investment.
- Tax revenues may be used directly for investment, esp. public good investment
- It’s just a truism of GDP accounting, at least in a closed economy. Gov. Saving + Private Saving=Investment. In an open economy, a budget surplus (or smaller deficit) could just change the trade deficit though.
Yes indeed, the negative income tax. The term escaped me.
Well I think you’re right, but the problem here is one of motivation: what is driving our decisions? If it is fiscal sense, then paternalism is a rough path. If it is compassion then paternalism almost seems necessary.
If we are to have any sort of capitalism and democracy, the underlying assumption must be that people will attempt to do what is best for themselves. We would only intervene (ideally) when such self-interested action results in unacceptable aggregate losses. I would suggest, humbly, that this is the essential motivation in unemployment insurance and not stressing an anually balanced budget (by the government), both of which are extremely counter-cyclical (business cycle, that is) forces. I don’t know what sort of improvement this actually is because its effect takes place over a very extended period. Of course the problem with unemployment is the same as with welfare (at least in its current state): it is quite likely that there is no immediate motivation to find more work, even if you would in principle work, and even if work was actually available. Clearly this should be unacceptable, but the benefit of counter-cyclical forces, I think, outweighs the losses incurred here.
It is definitely the latter that we should wish to avoid. I think one problem of implimenting this on a federal level is that local markets drive the cost of living to different amounts. What might be a king’s ransom in backwoods Kentucky is a toss in the pot in San Fransisco. Right now, my understanding indicates that welfare might be federally funded but state mandated. Presumably this move was done because of just such an observation. The problem, then, is how the State chooses to dole out such benefits. I am not aware of the current mechanism because I don’t much want to know, but I assume the dictating authority is not the federal government.
We cannot leave welfare tax collection up to local (ie individual states and smaller) government because this will simply cause production shifts to avoid the taxes and we won’t have really improved much.
There are several back of the napkin ideas to address this that I think would work very well, but the problem here is that there is so much resistence to welfare programs in the first place that the best ideas usually turn into waste generators due to legislative compromise.
If there is a real solution that is also practical, I honestly don’t see it. But, just like Arrow’s Impossibility Theorem hasn’t precipitated tossing out all voting, neither should this deter us from seeking an imperfect solution. IMO the proper focus should always be on long-term GDP growth with an emphasis on infrastructure and investment in human capital (education, for example). The market will largely seek short-term goals on its own. The focus should not be on paternalism or compassion. Very few people are that compassionate or we wouldn’t need redistribution because charity would take care of everything.
I don’t mean to but in, and I am confused how the earlier conversation got so far off track. Let’s not do that again.
This is the dichotomy I thought we started with. But are these ideals exclusive? If we simply say that we want fiscally responsible paternalism, couldn’t we simply implement policies which help up to a certain point. That is we agree to help the poor up to 10 billion a year (or some other number which would certainly change from year to year).
Butt ins are certainly welcome, pervert. If erislover and I wanted to avoid other people participating, we’d take it to email, I’d think.
And thanks for the compliment, debaser.
I’ll hammer again at my earlier point. The distinction between relative (concern about the gap between rich and poor, as such, or ‘social justice’) and absolute (implementing policies that which would help up to a certain point, in pervert’s words) poverty.
I think pervert and I are on the same page in this regard, since we both are averse to poverty being measured relative to median/mean/top quintile income.
Erislover admits to some waffling (not meant as an put-down) on whether he(?) thinks objective need/absolute poverty (of the type that keeps people from working, which is his apparent chief concern) depends on social context or not. So, in some sense, erislover seems to propose a relative absolute poverty 
To get down to specific cases, in some cases, medical care could qualify as an objective need in the sense that if you don’t get it, you’ll die. Just like food. Would you then want government funded healthcare for all, erislover? Just emergency services (due to objective need being greater when life is immediately in danger), or total healthcare (to keep the indigent from inefficiently abusing the emergency as a doctor’s office)?
As far as ‘unacceptable aggregate losses’ and the business cycle goes, I’m not sure that the business cycle is such a good example. There’s a medium-sized body of economics literature contrasting the losses from the business cycle with the losses from a reduced long term growth rate. The typical finding is something like: if given a choice between a .1% decrease (due to blunting of incentives) in the average annual long term growth rate of the economy and the standard deviation of consumption going down by 1% (due to increased social insurance programs), we would be wise to not implement the program. The small change in the long run growth rate compounds to a large difference in Average consumption after several years, whereas the utility losses from business-cycles don’t compound and are second-order (since for every recession, there’s a boom) at any rate.
You yourself emphasize long run GDP growth in your post, so I suspect you’ll find that argument reasonable.
A truly subversive solution to the democracy/paternalism paradox would be that if you’re a net recipient of transfers, you can’t vote that year. Since you’ve not proved yourself someone who can competently manage your own affairs and a net asset to your community, you can’t be trusted to exercise sound judgement over others. 1850 and earlier, there were property requirements for voting in many places, which essentially was a crude way of implementing this.
I can understand the theoretical appeal of this, but it causes revulsion in my gut.
I am against fixing anything in stone, whether that stone is relative or absolute. The only question I have is, “How do we make sure that the labor pool is not lost when it is not being used without ruining the economy?” If we do not pay to keep it up then it is more than possible we will lose it.
Well the business cycle is dampened by unbalanced budgets and unemployment insurance. Even if we ignore the latter, balanced budgets are procyclical and will make the business cycle worse. It is not a matter of “non-interference”. The government’s existence itself is an interference. There is no economically neutral point.
I’ll have to think about that because you’re comparing two different numbers here.
We want to shoot for full employment and full production. These aren’t really possible in any practical sense, especially if supporting a labor pool just in case we could switch to full employment will require social welfare programs which create disincentives for the currently employed to enable full production via their own productivity, or will provide disincentives for new investment and hence real growth.
This is the result of full employement and full production. We shouldn’t be buying snake oil that achieves this by other undesirable means. My attention to the labor resource is so large because it is the only resource that simply disappears when it is misused (this cuts both ways since abuse of aggregate labor supply drives companies to seek other labor in, for example, other countries). Most capital going to waste is in the form of unused potential. When labor goes to waste, however, it can simply vanish. People will stop having children (in fact many western countries are only increasing population size because of immigration!) in the long term, and possible lose their economic base from which to acquire new work in the short term (and maybe long term). The studies I’ve seen show that the majority (note I didn’t say “overwhelming”, largely because I don’t recall) of social service recipients are off the public bank roll in about two years. This is really good. Why, if they’re such a burden?
First, it allows people to regroup. Dedicating one’s self to a certain task means that you could soon become obsolete. So as technology changes, it is natural that the work force is required to adjust. It cannot adjust if the fall from employment is always downward. Technology grows exponentially, as we see, which means that what might be a changing field in terms of decades fifty years ago could be shifting on a yearly basis now. New software is constantly coming out, responding more and more quickly to corporate demand. But this means workers need to keep up with technology, and this is not practical when they are forced to work or die (note there is no “go back to school”, even a trade school, option without a social service plan). So providing a base, in principle, ensures that our labor force is able to readjust to the category of labor demand.
Second, it keeps labor mobile in other ways. A floor lessens relocation risks for those who don’t own property. This means that when one city is hiring like mad it is possible (in principle) for labor to relocate to meet this demand. Unlike pervert, I am not particularly motivated to ignore the problem of poverty simply because there are some success stories of people moving across country with nothing but the clothes on their back and making it.
Third, it keeps competition based on merit rather than need (the same thing that keeps the cost of necessities down even though demand is very, very high). Point of fact, bartering with a person who needs your product is a lot easier than bartering with a person who merely desires your product, and the same is true of “selling” jobs. This ensures we are not taking advantage of necessity, and I feel this is very important. Otherwise it is in companies’ best interest in both the long and short term to give as little as possible to employees, knowing that need will drive the labor to accept almost anything just to work (note the companies relocating some jobs to other countries if anyone thinks I’m just assigning malicious intent to employers, which I’m not intending to; they do it, I see it, it is in this post, that’s the extent of it). This is sort of a natural oligarchy, like gas station prices, cigarette prices, and so on. We don’t want to encourage this behavior (traditional discouragement is in the form of tariffs for external labor).
This is an excellent solution and a horrible one. Excellent in that it discourages “voting ourselves rich”. Horrible in that the people who are using it as we intend have no voice to ensure it isn’t removed from them (and that, of course, political voice means more than just voting about receiving benefits). I’d be more inclined to accept this proposal in a direct democracy where we would forbid voting from certain issues rather than an outright loss of voting. Could this be a solution to free rider problems? Well, we’re nowhere near a direct democracy anyway so it is a moot point.
I believe so, but they aren’t meant to indicate a dichotomy. We begin with how we intend to analyze a problem, then see where that takes us. Overlaps of consequences are incidental (hence my disgust at being likened to communists) if their entire methodology of derivation and reasoning are antithetical. For the current discussion, it makes no difference whether I happen to agree with a communist on any particular end-goal when his entire theory of value (labor theory of value) is at complete odds with mine (subjectivism). Any comparison represents a category mistake. There’s more than one way to skin a cat, but who would agree that skinning it alive with a butterknife is comparable to putting it to sleep without inducing pain before making any cuts? Sure, the cat is skinned and dead in the end, but that’s a trivial comparison and really misses the point.
When we are motivated by paternalism as the beginning of reasoning, we begin with the assumption that human beings cannot determine what they want for themselves. However, we might observe that when humans do decide what they want for themselves they end up making choices that aggregately act against that. This is not to indicate that people were wrong to want what they did and we’re going to hold their hand and show them a better way; it is to indicate that short-term rational self-interested action simply does not accomplish the very things people want it to in all cases.
Why is this difference important if the end result is the same? Ask the cat.
My emphasis on Pareto Optimality seems to be interesting/mystifying to you, erislover.
Likewise, your interest in full employment/full production is interesting/mystifying to me. I can see how an unemployment rate greater than zero or a capacity utilization rate less than 100% seems like a pointless waste, something which * just can’t be* anything but a market failure.
I think you’d be hard pressed to find a negative correlation between unemployment and fertility. For instance, in the US, the higher someone’s educational attainment, the lower their fertility and their unemployment rate.
Resources that are unemployed are quicker to relocate to growing sectors. Creative destruction and all that. Therefore, I at least (and lots of economists, I suspect) think that there’s a tradeoff between smoothing out the business cycle (or trying for full employment) and the long run growth rate.
Certainly there’s no necessary link between full employment and long run economic growth. A rule of thumb is that every 1% increase in unemployment means a 3% decrease in GDP. We can imagine policies that entail a 1% permanent increase in the NAIRU (Non Inflation-Accelerating Rate of Unemployment), thus a one time drop of 3% in GDP, but in turn mean a higher long run growth rate. We would be growing faster from a smaller base. Miracles of compound interest and all that, a small increase in the long run growth rate would eventually trump the one-time decrease in GDP.
As far as the benefits of welfare-state in decreasing risks or providing subsistence while people retrain: anything that decreases risks also blunts incentives. As far as subsistence and retraining goes, I refer erislover to the legions of professional graduate students. Sometimes people need the edge of need to get them out of their rut.
Yes, I get that. Just like I am disgusted by being accused of “ignoring the problem of poverty”. The difference, of course is that I offered several reasons why your underlying philosophy (not merely the outcomes) had parrallels with communism (which I believe to be a form of moral subjectivism BTW). You seem to like to accuse me of killing poor people with little or no regard to what I have actually said.
“This is not to indicate that people were wrong to want what they did and we’re going to hold their hand and show them a better way; it is to indicate that short-term rational self-interested action simply does not accomplish the very things people want it to in all cases.”
I’m sory, again, but this seems like a contradiction. I may be reading too much into the context of our discussion, but we have been talking about government programs to help the poor. In this context, it seems like we are in fact “holding their hand”, at least in certain situations. It seems like for you (or the government) to decide that something “did not accomplish […what…] people want”, you have to be able to determine what people wanted.
IOW, the observation that self interest does not always work out in favor of the self interested is not germain to a discussion about welfare. Unless, of course you intend to suggest that this observation implies that paternalism is a good thing in these cases.
“Well the business cycle is dampened by unbalanced budgets and unemployment insurance. Even if we ignore the latter, balanced budgets are procyclical and will make the business cycle worse. It is not a matter of “non-interference”. The government’s existence itself is an interference. There is no economically neutral point.”
I’m not sure this is true. Why could a government not save money while balancing the budget? We could define a certain amount of tax revenue that goes toward welfare, and save whatever is not spent for years when the revenue falls short. We could even use the excess revenue in boom years to pay back loans from these bad years as well. The problem is in assigning entitlements to the poor which require money to be spent whether we have it or not. It practically forces us to engage in shady accounting.
All I am proposing is that we apply some good fiscal rules to these decisions. I’m not saying we have to put a limit in stone (I’m nto a all sure what a relative stone is). But we should at least give lip service to fiscal reality even with decisions of this weight.
Just as an aside, I don’t think the poor birth rate is due to poverty. As I recall, it is just the opposite. So, I’m not sure what you were implying by your mention of low population growth.
The interest may be in sheer child production, but I thought we agreed earlier that children should not be negatively affected by their parents in the discussion of handing out cold hard cash instead of goods to welfare recipients. This issue cuts right to the matter here. Someone has to produce the babies. To maintain a population in western civilizations the average number of children per woman dances around 2.1 and someone has to have them, clothe them, feed them, and provide them with shelter. If the upper class isn’t willing to do this, then where do we stand? If the lower class cannot always afford to do this, where do we stand then?
Which is why “full employment” usually means about 4% unemployment. At any time there are and should be people between jobs, relocating, and so on and so forth.
Yes, this is certainly something. In any solution to long term growth, goods must be done without in the present to ensure more goods can be produced in the future. This is the redirection of effort from production of goods and services to productions in capital and investment in capital (or investment in “human capital” e.g. education). My proposal is simply based on the fact that without an economic floor, “doing without some goods” logically entails “losing part of the workforce”, and that is unacceptable. When we are willing to accept, societally, that some goods must be done without, the only people that can bear this burden are those that have more than enough. Else the plan is one of extermination, plain and simple.
Which has been noted and agreed upon by all parties. The question is what is an acceptable loss. Personally, no society should organize itself so that people will be forced into unescapable poverty.
I do not appreciate this line of thought. Capitalism derives its utility from incentives to production, not from selling people down the river based on biological or sociological compulsion. Survival is only an incentive in a darwinian state of nature. If this is the way we want to run things, I suggest we make more people aware of it and state it plainly. I believe you’ll find money won’t go quite as far in a survival of the fittest competition. If anyone disagrees, they are welcome to move to the poorest sections of inner cities and see how long their wealth lasts.
Then you are simply mistaken in your understanding of communism. I don’t know what else to tell you. Communists depend on the labor theory of value, which is to say, labor is what gives products value, full stop. This understanding is what motivates almost the entire philosophy. Without it, I am as much a communist as you.
I find your desires for economic organization to directly cause abject poverty without a means of eliminating it. I feel the history of capitalist societies backs me up on that, and that the entire labor movement was powered, among many things, by being sick and tired of working for little, no, or negative gain. If this were not the case there would be no reason for organization and legislation.
Yes, we have to be able to determine what people wanted. Organizations, demonstrations, political activism, strikes, theft… these are all actions that give us a small hint what people want, wouldn’t you agree? Or is it just some big mystery that people can actually project their desires?
Because a surplus is not a balanced budget by definition.
This is often the goal overall, or at least it used to be. Which group would be the first you would like to marginalize and still be elected next year? And checking out our budget and thinking a bit, what are the next ten groups after the first you’d like to cut? Don’t forget that politicians act in their own interest as well. Sometimes this means they will be in the pockets of big business, but sometimes it means they will be in the pockets of whoever the hell will elect them.
Honestly, deficit spending isn’t automatically problem, and evidence has done everything short of realign the stars in the heavens to spell the message that it is often necessary. Who do you think buys the bonds that we pay interest on, anyway? Welfare moms? This is not to say that it can’t get (or hasn’t gotten) out of hand.
You want workers who are healthy (so they don’t miss work) and educated (so they can work well) yet these people don’t grow on trees and never shall. You can’t have your cake and eat it too. It takes effort, money, security, and incentive to raise a competent population. I humbly suggest that between you and me, only fifty percent of us recognize this.
I just want to say that as much as I’m enjoying this thread, my vacation is coming up and I’ve got a lot to get ready for. If we continue, my replies will be pretty sparse. This isn’t meant to discourage, of course.
Well, this is certainly what defines their economics, but it does not necessitate their entire philosophy. They also believe that the government is a tool for wealth distribution. They think wealth should be distributed to workers while you think it should be given to indigents. They also believe that property rights are entirely defined by whtever legal structure exists at the moment. That is we only have property rights granted by the state. You don’t go this far. You simply feel that most or our modern property is an entitlement from the state. They also hold to a relativistic morality which allows them to justify many of the attrocities committed in thier name. You don’t go this far, but you do seem to believe that “from each according to his ability, to each according to his need” is a “good” morality. Finally, they believe that rich bourgeoisie exist by enforcing poverty on the proletariate. You seem to agree that rich merchants logically implies a class of poor people who are poor through no fault of thier own.
I guess what I am saying is that while you certainly differ with the communists on purely economic grounds, you do agree with much of their morality.
I’m not sure what economic organization you are talking about here. This is the whole problem. We seem to agree that people should keep most of what they earn. We are only talking about how to determine the levels of government confiscation. We seem to agree that poor people need help. We are discussing how to determine the minimum level of help. I believe it should take property rights into account along with needs. You feel that only the needs of others are germaine.
I’m not sure this is correct. Certainly some of the “many reasons” might be considered “reasons[s] for organization and legislation”. Are you saying that the only motivation of the labor movement was one of “we need more food or we’ll starve”? None of their motivation was “let’s take the millionares down a peg”? Your sure that none of them were duped by politicians or other agitators for purposes they might not have really agreed with?
Are you seriously suggesting that capitalism created poverty? Or even that it has agrevated it worse than the systems it replaced? The period of the most explosive growth (population wise) in human history corresponds with a wide adoption of capitalism by the West. Can you point to a single economic system that has been more successful?
Well, the comment of mine to which this is a response, was a response to a comment of yours which seemed to indicate that you had some way to determine what people really wanted displite their actions to the contrary. Perhaps I misunderstood you, but did you not say that if people are free to act, but they then act in a way which fails to give them what they want, we must help them? Does not this imply that what they really want is different from what they take actions to get?
I was not using the term that way. I was simply talking about a derth, or at lease avoidance of, deficits. At least in the long run.
Again, I am completly unable to understand you. When did I ever suggest that people should be marginalized? Would you at least make an effort to form an argument which suggests that anything I’ve written says, implies, or in any way suggests this.
Like constituencies which want things they did not earn, for instance?
I’m not talking about deficit spending when I say shady accounting. Did I not say that deficits can be a good thing myself?
Seriously, why do you insist on taking everything I say to such rediculous extremes. If I say that deficits may be undesireable over a long term, you react as if I said we should never have them. If I say that individuals should be permitted to keep wealth they earn, you react as if I suggested a large portion of our people should starve in the streets. I am honestly trying to find the line below which people need help. I am honestly trying to find the level of government confiscation which is acceptable. Your constant prickling does not help.
If you could point out some way in which I started this cat fight of ours, I’d really apprciate it. I do remember suggesting that some of your ideas are similar to communism, but I thought I was careful to mention that I did not think you were a communist, and that you did not advocate violent overthrow of the government. If I am not mistaken, however, you were accusing me of starving people before this. Did I kick your mother or something?
Yes. But you want them to be able to work so that they can enjoy a better life. So that they can be free to live that life in the manner of their choosing. And so that they can pursue whatever happiness means to them individually. I suggest that between the two of us you don’t understand this.
Happy Holidays, erislover.
See, now, to me, this sounds very collectivist. It sounds like we’re thinking of western civilization as some kind of organism, and we’re concerned to make sure the organism survives and prospers.
I’m profoundly uncomfortable with saying ‘society needs this’ or ‘society should do that’. I won’t deny that Society exists in some kind of cause-and-effect way, or at least it can be sociologically useful to think about it as if it does. But Society doesn’t have moral intention. It cannot have needs/wants/desires nor rights/duties/responsibilities.
If might be desirable if fertility were at/near replacement rates, but it doesn’t follow at all, in my book, that Someone has to a duty to do it and that if Someone doesn’t, the state should bribe/cajole/coerce Someone to do so.
I think you misunderstood the thought-experiment I was trying to convey. First I drew an example of a choice between (say)
A) Avg. per cap. GDP growth=2.5%, Standard Dev. GDP=3%
B) Avg. per cap. GDP growth=2.6%, Standard Dev. GDP=4%
The idea here is that many government policies are both counter-cyclical and incentive-blunting. So, this like the choice to switch some of an investment portfolio from stocks (high avg. return, high risk) and bonds (low avg return, lower risk). In the medium and long run, even a small difference in annual growth rates swamps any utility loss due to increased volatility.
Then I drew up a somewhat different example, where I intended to mean a choice like
C) Status quo GDP, growth=2.5% per year
D) Institute restructuring policy. GDP drops by 3%, natural rate of unemployment increases by 1%, but growth increases to 2.6% per year.
Here, we’ve moved farther away from full employment, but in the medium and long run, we’ll have higher GDP. The link between full employment and GDP is strong in the short run, but weak to non-existent in the long run.
As far as you not appreciating my crack about professional graduate students, I think you’re either misunderstanding me or overreacting. What I meant was this: if people are in a comfortable rut, they often will stay in that rut. Your average graduate student is living in reasonably comfortable poverty. In general, I suspect that if people are comforable, they tend towards inertia.
You may or may not remember that I support measures to keep adults out of absolute poverty, and measures to make sure that children get a decent chance to develop their capabilities.
We differ greatly on our rationales. Yours (oddly, given your posts in a different thread) seem to be consequentialist.
I support the relief of absolute poverty among adults and (vaguely defined) ‘adequate’ investment in the human capital of children not for consequentialist reason, but for reasons of rights and duties.
I believe that the establishment of private property has deprived people of the ability to make a living via primitive subsistence methods. Therefore, those who most benefit from the establishment of those rights are duty-bound to provide primitive subsistence as compensation. (Possibly with a work-fare type requirement, since hunter-gatherers and primitive farmers have to work too.)
I believe that children are not yet fully-fledged moral beings who can be held responsible for their own behavior. I believe parents have a duty to provide for their children’s immediate welfare and invest in their human capital, but in cases where parents won’t do so, each of us (not Society as a whole) has a moral duty to undertake that responsibility.
“I believe that the establishment of private property has deprived people of the ability to make a living via primitive subsistence methods. Therefore, those who most benefit from the establishment of those rights are duty-bound to provide primitive subsistence as compensation. (Possibly with a work-fare type requirement, since hunter-gatherers and primitive farmers have to work too.)”
I’m sorry, HayekHeyst, but I must point this out. This cannot be true. While it is certainly true that there are no more (or very few) “wilds” that you could go to and be away from civilization, it is just as true that without private property these wilds exist because the population levels decrease to the point where we can survive in a hunter gatherer system. Systems of property are precisely why we do not rely on migrating bison to make it through the winter. In other words, while the indigent cannot go hunt bison, its a good thing that they do not have to. A good majority of the current population would not be here if they did.
I agree with your last paragraph. And I think the same principle can be applied to some indigent people as well. Some people are hopelessly poor through no fault of their own. I believe that a certain duty is incombant on us to support them. I think that much of this support can be accomplished through infrastructure. libraries, continuing education, food banks, and so forth. But it may be true that some form of welfare is necessary as well.
BTW, be careful about calling erislover collectivist. He doesn’t seem to like that.
Sorry, when I said “cannot be true”, I meant “I don’t thing this is true”. I did not mean to sound quite so snippy.
Yes, the existence of the human race, particularly in the form I enjoy living in which is western civilization, is important to me. Is it really outside your grasp that this is motivated in self-interest and not collectivism? And that, in order to accomplish its survival, things like population are important considerations?
Then I guess you need to ask yourself if macro effects are meaningful at all. If they are, then there is no problem. If they are not, then I’ll have to rethink the entire conversation we’ve had.
Oh, the only reason we have to is to cover social insurance for the elderly and ensure a stable civilization. If those two aren’t important, then I suppose it doesn’t matter if civilization crumbles, grows, shrinks, or is reduced to any number of states.
I have never denied this at all. The question is, whose incentives? As you hopefully noted, my desire is to encourage better incentives for the overwhelming majority of the population. I feel the flaw in current policies stem from seeing an economic floor as The Right Thing to Do as a Civilized People. Hogwash. We’re not one step up from cavemen except in our aggregate ability to create better and better survival mechanisms.
I agree. Which is why I feel that we need to pay as much attention to encouragement in the poor as in the wealthy. There is no reason to be responsible if you have no real fear of losing your wealth (a la Paris Hilton, if you’ve seen that show). Neither is there any motivation to be an efficient producer of consumer goods if you’re lulled into complacency.
Need, however, drives many things. Crime is one of them. However, encouraging legal and productive activity through incentives can work for us. We don’t make people better by reducing them to poverty. I should think that is self-evident.
It attempts to align consequences with intention by discouraging behavior which has extremely negatively valued unintended consequences. Like poverty, unemployment, abuse of authority, and so on. I see no rational escape from the conclusion that if we do not intend people to be in poverty, but our practices directly create said poverty, then we should do what we can to align consequences with our intentions. In a theory of subjective value, I don’t see how to avoid intention over and over again. From the perspective of the federal government, this is reflected as aggregate preferences. Is society an organism? Who knows. What I do know is that aggregate effects are real as the sum of individual preferences, and that we can use these aggregate effects to determine intention. There is no perfect system to do this. Non-interference is not a neutral position. Etc.
Honestly, am I being any clearer as we go on or more obscure?
I think perhaps you are becoming more obscure. Perhaps my ignorance is increasing. I’m not sure.
“The question is, whose incentives? As you hopefully noted, my desire is to encourage better incentives for the overwhelming majority of the population. I feel the flaw in current policies stem from seeing an economic floor as The Right Thing to Do as a Civilized People. Hogwash. We’re not one step up from cavemen except in our aggregate ability to create better and better survival mechanisms.”
I don’t seem to be able to grok this paragraph at all. Are you suggesting that an economic floor is not the right thing to do? You are proposing that we should have one for what reason then?
In other news, may I suggest re examining this assumption “I see no rational escape from the conclusion that if we do not intend people to be in poverty, but our practices directly create said poverty, then we should do what we can to align consequences with our intentions.”
Specifically that our (capitalist’s) actions have “created” poverty. I did a quick search for good reference material. The best I could find in such a short time is this review. . I have not read the book (although I am going to try and get a copy for christmas), but he makes several interesting points concerning the defence of capitalism. Especially that capitalism has produced massive wealth for the masses. That “The capitalist process, not by coincidence, but by virtue of its mechanism, progressively raises the standards of life of the masses.” These process were not coincidental to new resources nor to government interference.
It is an interesting read. Especially the reasons why the author thinks that capitalism will not survive.
Anyway I found it interesting and germaine to the discussion we are having. If you would like to point to any resources which bolster your claim that capitalism creates poverty, I’d be interested in reading them.