The problem with “left” neoliberalism

by Chris Bertram on August 5, 2011

This is just a short post seeking, for the purposes of mutual clarification, to highlight where I think the real differences lie between someone like me and “left neoliberals” like Matt Yglesias. I think that something like Yglesias’s general stance would be justifiable if you believed in two things: (1) prioritarianism in the Parfit sense and (2) that real (that is, inflation adjusted) income levels reliably indicate real levels of well-being, at least roughly. For those who don’t know, prioritarianism is a kind of weighted consequentialism, such that an improvement in real well-being counts for more, morally speaking, if it goes to someone at a lower rather than a higher level of well-being. So prioritarism is a bit like a utilitarianism that takes a sophisticated and expansive view of utility and weights gains to the worse-off more highly. This view assigns no instrinsic importance to inequality as such. If the best way to improve the real well-being of the worst off is to incentize the talented (thereby increasining inequality) then that’s the right thing to do.

Now inequalities in wealth and income can matter for a prioritarian. But not because they are of intrinsic significance, but rather because they can translate into lower levels of real well-being for the worse off. Cue Amartya Sen’s famous article “Poor Relatively Speaking” (arguing that the relatively poor get cut off from technologies increasingly central to societal functioning), cue Fred Hirsch on positional goods, cue Michael Marmot and Wikinson & Pickett on health (and other welfare) outcomes consequent on inequality as such. Likewise if you think that high levels of inequality undermine social solidarity and political equality and that those also have impacts on real well being, then you’ll have a further reason to be concerned about the consequences of inequality for real lives of ordinary people. People like me think these things matters a lot for real levels of well-being, but others, such as Yglesias’s friend Will Wilkinson (and any number of others) are sceptical. If you think like me that those factors are very important, then you’ll be doubtful about whether increases in real income will translate into increases in real levels of well being if inequality is also growing; if you think they aren’t, you won’t. Add to these concerns some worries about the natural and social environment. If you think that neoliberal policies are also often associated with an erosion of the natural environment and of the social commons (I do) then you’ll have further reason to believe that rises in inflation-adjusted income don’t give you the true picture about real levels of well-being.

There’s some stuff that cuts the other way. When I said that Matt has to believe that inflation-adjusted income tracks real levels of well being, he doesn’t have to believe that all the way up the income scale. Given familiar facts about the diminishing marginal utility of income, it is probably the case that extra money does very little for the rich. But it really does make the lives of the poorest better off, other things being equal. The trouble is, that as far as I can see, other things aren’t equal and their inequality leads to all the bads in the preceding paragraph.

There’s a risk in the points I’ve made and one that has recently been exploited (at least rhetorically) by Britain’s Conservative-led government. That is to say, that, since there’s a disconnect between income and well-being, we should not worry about the former. This then gives the right-wing a license to cut programmes that tranfers to the worst off on the grounds that you can’t solve their problems with money, etc. Naturally, I don’t agree with that. My point is not that we shouldn’t care about the real incomes of the worst off, but rather that we shouldn’t pursue policies that have the effect of increasing their incomes but which also have side-effects involving inequality and natural and social deterioration that swamp the gains and actually make them worse off, all things considered.

{ 148 comments }

1

Lemuel Pitkin 08.05.11 at 4:22 pm

The list is right as far as it goes, but doesn’t it miss the real difference? I had thought the main argument was that neoliberals lack a theory of politics. And I thought that was right.

2

Chris Bertram 08.05.11 at 4:26 pm

Lemuel, that debate was about the practical business of pursuing progressive politics, this post is about the policy objectives we should favour (bracketing off some of those earlier issues). I.e things we’d disagree about even if they had (and even shared with us) a theory of politics.

3

Lemuel Pitkin 08.05.11 at 4:37 pm

OK, that wasn’t clear. The phrase “the real difference” doesn’t come with qualifiers.

In any case, while I agree with this post, i think you need to be careful about mixing up the arguments that we should care about distribution because relative income matters, and we should care about distribution because the absolute income of the poor matters. Because the Wilkinsons of the world aren’t wrong to say that the inflation-adjusted incomes of the poor are comparable to those of households well up the distribution just a few decades earlier. If a flat-screen tv is a genuine source of wellbeing and not just a status marker, then the case for prioritizing equality oveer growth gets a lot weaker.

4

Clay 08.05.11 at 4:46 pm

I don’t even understand the concern. We’re talking about real well-being, correct? So if the poor are driving a beat-up looking ford, but it has airbags and pretty good gas mileage and the rich are driving a lamborghini that has had it’s engine replaced with a ford-equivalent, is there still a problem? If the income difference is largely signalling and no real well being difference – is there a problem? I didn’t read Parfit but I’m guessing he was just trying to allow for the signalling potential for income – not that he was ruling out any real value to income.

5

Watson Ladd 08.05.11 at 4:46 pm

So how does one solve the problem of say the Chicago public schools or public housing with money? The structural problems that lead to the city being in the state its in won’t go away because you give more money: the actors will always have different incentives from those they serve. Don’t forget that the rises in more core goods like transport, health, and shelter, that probably compensate a lot for technological growth.

6

Chris Bertram 08.05.11 at 4:57 pm

Lemuel, I guess I want to say that the relative and absolute levels of income both matter, but only instrumentally, insofar as they impact on real well-being. On that Wilkinson point, I’d (1) make at least a partial counter by referring to some of the things Amartya Sen has to say about things like the comparative life expectations of people in Kerala versus poor black Americans with larger incomes and (2) say that I don’t need to deny that the additional income that gives you a flat-screen tv makes you better off, nor that the tv makes a real contribution to your well-being, its just that this contribution is swamped by other factors (esp the inequality derived ones) such that todays poor don’t enjoy the levels of well-being of the better-off groups in earlier decades you refer to.

7

Nicolas Mendoza 08.05.11 at 4:59 pm

Didn’t Yglesias recently write a post in response to John Quiggin saying that real income isn’t everything?

“…the fact of the matter is that the median American household has quite a lot of money compared to the median household of almost every other country. And yet, I think there are a lot of other respects in which quality of life in the United States falls short. We spend a lot of time in traffic jams. We have both a frighteningly high murder rate and a frighteningly high level of incarceration. Our health care system is very inefficient. Americans work very long hours and have unusually little vacation time.”

All of these things he mentions overwhelmingly affect poor people, and aren’t much cured by increasing their real income at the margin. I think you’re exaggerating the differences between you and “left-neoliberals”, if that indeed is what Yglesias is.

8

Lemuel Pitkin 08.05.11 at 5:09 pm

OK.

I’ve been thinking of writing something about this, actually. Generally I prefer not to use utility functions, but you could capture an important part of this argument by writing one like u = A – c/i, where i is money income, c is some reference level of consumption, and A is a vector of non-monetary contributors to utility.

So as money income falls short of necessary consumption, the disutility from the shortfall gets arbitrarily large. (People who are sufficiently poor will abandon their children, or sell them into slavery, for a few dollars.) But as income rises, not only does its marginal contribution to utility fall, but utility asymptotically approaches some finite ceiling that is determined by non-monetary factors. (Once you have enough money, there is no additional amount that will induce you to give up your family or work that you care about.) Of course one of the elements in A is relative income, or alternatively you could say that various elements in A (status, respect, security) depend on relative income.

9

washerdreyer 08.05.11 at 5:13 pm

This post is a promising sign that intra-left (for U.S. values of left) blog arguments might actually be going somewhere interesting, which I’d pretty much given up hope on.

10

Cranky Observer 08.05.11 at 5:19 pm

IMHO there is also another factor (or perhaps tell would be a better term) that should be considered: the modern young neoliberals’ overall dislike of manufacturing industries and classic manufacturing/production jobs. As far as I can tell the young neolibs would say that given a choice between a $50k/year manufacturing job and a $70k/year personal service job working for a Prince of Wall Street (high-end maid, say), the latter is clearly preferably to the former. And to the extent that our economy is losing the manufacturing jobs and gaining what are fundamentally personal service jobs for the 10%, and those jobs carry higher nominal pay, that “we” are all better off.

Yet I don’t think you will find many – if any – people who have worked manufacturing and similar tangible goods jobs who will agree that the two types of work are equivalent, or that getting more money [obligatory cheap big-screen TV reference too] makes up for the difference. Production-type jobs generally also require tangible knowledge and skills that the worker owns and can be transferred to different employers and similar types of jobs if necessary. Service, and particularly personal service, jobs are often based on contacts and other non-skill social data and networks that the /employer/ generally controls (if get fired from your jobs as a maid on 5th Ave and don’t have a reference, you aren’t going to get a similar job again).

The young neolibs are highly educated, on-line, schmoozing-type people and often have an expectation that their income will grow into the 10% range or beyond. It is not surprising that they are comfortable with personal service type work and consider that salary equals value, but it seems to me a substantial blind spot that they don’t understand that a large percentage of the population doesn’t think that way.

Cranky

11

elm 08.05.11 at 5:37 pm

Cranky, I think you can tie that fairly directly to inequality again.

The personal service job depends, inherently, on massive inequality. The existence of your hypothetical $70k/year personal maid job relies on the existence of people with earnings dramatically higher than that.

On the other hand, if I have a job in a toilet factory, then my continued employment depends on a more-even distribution of goods. The Prince of Wall Street stockbroker doesn’t buy dramatically more toilets than the autoworker in Detroit. The factory worker benefits more if income gains are distributed over more households, as that is more likely to increase demand for those goods.

12

shah8 08.05.11 at 5:38 pm

I’ve gotta go running be back in an hour, so I’ll write more…

but…

no, no, no, no, no.

Poverty is an artifact of political consensus. And I think that the placement of concepts, like the aforementioned Amartya Sen articles (hot cynicism, another JSTOR article…) are completely out of the proper context and flow in this blog post.

Will say more later.

13

Henri Vieuxtemps 08.05.11 at 5:39 pm

If the best way to improve the real well-being of the worst off is to incentivize the talented (thereby increasing inequality) then that’s the right thing to do.

This is just too vague, even if we do accept that only the absolute income matters. Should the CEO be incentivized by getting paid twice as much as the janitor? Or should he be incentivized by getting paid 1000 times more? Why don’t they produce the multiplier that maximizes janitor’s income, and then we’ll see. I suspect, it won’t be very high.

14

purple 08.05.11 at 5:42 pm

I get that you’re an academic , but if your goal is rouse the masses, starting a paragraph with ‘prioritarianism in the Parfit sense’ isn’t going to cut it. Assuming the goal in writing a blog is to reach a mass audience beyond the people one usually talks too.

15

Corey Robin 08.05.11 at 5:42 pm

Chris, this is an excellent post and clarifies a lot of things, at least for me. Would it be fair, in your mind, to rephrase the distinction between the two positions as follows: Your position — which, if I understand it correctly, I share, for the most part — presumes that inequalities matter because they generate power differentials between rich and poor (and everyone in between) that can be and are exploited in such a way as to have a real impact on the well being of those further down the ladder (I’m still unclear if that consequence for well being is what you think matters about those inequalities or if it’s just one of many things that matter, and is maybe even not the most important consequence; also unclear if you think the neoliberal position is open to that possibility but is just skeptical that it’s an actual consequence). The worker/employer relationship is of course the classic instance of this. The neoliberal position looks at income/well being of individuals in isolation from each other. Not entirely, of course: to improve the lot of the worst or the worse off, you have to establish that they are in fact worse off in relationship to someone else. But that’s mostly it: it’s an index of where to target your policies, but it doesn’t see those at the bottom or beneath in any kind of dynamic relationship to those who are above. It essentially presumes that we live our lives in isolation, and if we can just have enough of the good things in life, we can be on our way to enjoy them. Whereas I — and I think you — don’t believe that’s how these things go. Inequalities of income and resources generate inequalities of power because we do live and act in relationship to others. At work, in the home, at the level of the state, and elsewhere. Or am I misunderstanding your argument and/or pushing it in a direction you don’t want to go?

16

elm 08.05.11 at 5:46 pm

Henri: I think the If at the beginning of that sentence is terribly important.

I don’t agree with the antecedent, but the conditional itself is sound (the last two rows are relevant).

17

chris 08.05.11 at 5:47 pm

it’s simple: matt doesn’t believe that he can use his opinions to rally people. he uses arguments to correct misstatements or bad policies, not to spur action. (ie the public option was always dead because his logic told him so, etc)

a matt y that’d passionately argues positions that can never ever pass, while not describing the realities of a 60-vote senate for the millionth time? that would be awesome. social movements aren’t started by carefully describing the world as it is and adjusting your positions accordingly. they are brought about through arguing for a world that should be, despite the overwhelming evidence to the contrary.

18

temp 08.05.11 at 5:58 pm

Can you say which part of the “left neoliberal” policy agenda is relevant here? If we can sum up the neoliberal position as “grow and redistribute” I don’t see the problem. For any desired level of income equality, there is a progressive income tax that will get you there. So I don’t think neoliberal positions on, say, trade policy, or labor unions, or barber cartels, poses any problem to this particular concern.

Similarly, which instances of “erosion of the natural environment” cannot be solved by an appropriate Pigvonian tax? There are some ( preservation of undisturbed land) but for most environmental issues it seems like an appropriate response.

I don’t think the actual neoliberals we have (Yglesias included) are sufficiently radical on these issues (nor are most paleoliberals)–we should have more neoliberal redistribution, and more Pigvonian taxes–but the problem is not in the fundamental principles.

19

Cranky Observer 08.05.11 at 6:05 pm

> If we can sum up the neoliberal position as “grow and
> redistribute” I don’t see the problem.

I haven’t seen the modern (generally young) neoliberals defining their position as that. Generally I have seen the Slashdot formula with a slight modification in the payoff line:

1) Lots more growth, primarily by implementing libertarian theories [1]
2) Profit!
3) ?????
4) Happier, more just, higher-welfare, Pareto-optimal society!

As always it is that undefined step 3 that is the problem.

Cranky

[1] Hippie punching optional.

20

chrismealy 08.05.11 at 6:06 pm

Wait, I thought what we all just learned (or knew already) is that you can’t separate policy from politics, and programs from their constituencies? Anyway, to Chris’s list I’d add Robert H. Frank on consumption and expenditure cascades, and the MMT crowd’s job guarantee.

21

Lemuel Pitkin 08.05.11 at 6:09 pm

For any desired level of income equality, there is a progressive income tax that will get you there.

Except that’s not even remotely how the world works.

22

Lemuel Pitkin 08.05.11 at 6:10 pm

I thought what we all just learned (or knew already) is that you can’t separate policy from politics, and programs from their constituencies?

That’s what I thought too…

23

Myles 08.05.11 at 6:11 pm

So how does one solve the problem of say the Chicago public schools or public housing with money? The structural problems that lead to the city being in the state its in won’t go away because you give more money: the actors will always have different incentives from those they serve.

Is the educational architecture available for poor Chicago schoolchildren better today than it was in 1940? Yes. Is the educational architecture available to poor Chicago schoolchildren better than it was in 1900? Yes. Is the educational architecture available to poor Chicago schoolchildren better than it was in 1850? Absolutely.

So what changed, in economic terms? Oh yeah, that really obscure thing called “real income.” Real income is higher today than it was in 1940, it is higher today than it was in 1900, it is higher today than it was in 1850. Income is fungible; more income overall means more can be re-allocated from other areas to education.

And better education results.

The inability and unwillingness of people to make intertemporal comparisons (which are the best comparisons there are if you want to talk about real income) is just silly.

Add to these concerns some worries about the natural and social environment. If you think that neoliberal policies are also often associated with an erosion of the natural environment and of the social commons (I do) then you’ll have further reason to believe that rises in inflation-adjusted income don’t give you the true picture about real levels of well-being.

The first carbon tax in all of North America (and probably the entire Western Hemisphere) was implemented by a centre-right Liberal (and proudly neoliberal) government in Canada (in the British Columbia province). I believe it is actually set to rise in a periodic manner. So I think your point is pretty soundly refuted at least in the environmental department.

24

elm 08.05.11 at 6:12 pm

Lemuel @ 6:09PM

Right now (as always), it’s time embiggen the pie.

At an undefined future date, the pie will be so big that nobody will oppose redistribution!

25

temp 08.05.11 at 6:29 pm

I haven’t seen the modern (generally young) neoliberals defining their position as that. Generally I have seen the Slashdot formula with a slight modification in the payoff line:

Step 3, at least for Yglesias-style neoliberals, is “redistribute downwards.” See, for example, Matt’s neoliberal coming-out post (third result on google for “Pas D’Ennemi à Gauche”). Here is his policy agenda quoted from the post:

— More redistribution of money from the top to the bottom.
— A less paternalistic welfare state that puts more money directly in the hands of the recipients of social services.
— Macroeconomic stabilization policy that seriously aims for full employment.
— Curb the regulatory privileges of incumbent landowners.
— Roll back subsidies implicit in our current automobile/housing-oriented industrial policy.
— Break the licensing cartels that deny opportunity to the unskilled.
— Much greater equalization of opportunities in K-12 education.
— Reduction of the rents assembled by privileged intellectual property owners.
— Throughout the public sector, concerted reform aimed at ensuring public services are public services and not jobs programs.
— Taxation of polluters (and resource-extractors more generally) rather than current de facto subsidization of resource extraction.

I see nothing on this list that is incompatible with even radical egalitarianism. Now you can argue that neoliberals have no good political plan for achieving this outcome. But the policy agenda is clear enough.

26

Cranky Observer 08.05.11 at 6:39 pm

> I see nothing on this list that is incompatible with even
> radical egalitarianism.

Allowing the vast majority of the wealth and concomitant power in a national society to collect in the hands of a very few (whether that is 10%, 1%, or 0.1%), then “redistributing” some of that via confiscatory taxation[1], cash payments, and cheap big-screen TVs is not compatible with even basic concepts of decent work and self-sustaining (ie non-charity) economies much less radical egalitarianism. Again, neoliberals simply won’t address those points whether in the concept of a theory of politics or not.

Cranky

[1] I’m disturbed; I am close to sounding like Mr. B**2 with that sentence.

27

Chris Bertram 08.05.11 at 6:47 pm

Nicholas Mendoza @7: I don’t contend that Yglesias (or others of a similar ilk) don’t think these things matter at all, I contend only that they don’t think they matter anything like as much as they should.

Corey Robin @15: Thanks. The way I framed the issue here I placed the emphasis very much on the causal claims about individual well-being and not on the normative side. So whilst I myself believe that part of the value of equality is intrinsic, that there are things of value other than individual well-being (equality, nature, …) and that community is valuable, I think prioritarianism is a reasonable position to take and that it (conjoined with the factual stuff) might provide a good grounding for left-neoliberalism. So here I’m assuming prioritarianism is right (for the sake of argument). Given that, I wanted to emphasise the impacts of inequality on individual well-being, rather than on other things. And yes I think that power differentials are an important part of the story of how inequality gets to impact in individual well being.

Myles @23 I’m not sure why the passing of a carbon tax by a neoliberal government (laudable though that is) “pretty soundly refutes” my belief that neoliberal policies generally have tended to be damaging to the environment.

28

shah8 08.05.11 at 6:48 pm

I think it is important to emphasis, with comments 20 and 22, that any egalitarian advocacy group has to expect the necessity of having to convince people that other people should not be materially poor.

Redistribution without political advocacy does.not.work.

Both Egypt and Taiwan undertook land redistribution policies at around the same time. Why was it that in one case inequality dropped, and in the other case, inequality remained largely the same?

Why is Venezuela such a repressive and corrupt place? I posit that it’s because Chavez is addressing inequality without a large faction of the population having accepted the need.

Why do you think that the neoliberal agenda got so much intellectual heft that might have advocated more classically welfare-focused liberalism?

It’s easy to beat up some rightwinger pretentious know-nothing of an economist. It’s a lot harder to aggressive engage with Cass Sunstein’s ideas. And I think Sunstein would whip you guys. I think Samuel Bowles would bury you guys. I think Ostrom and Romer would taunt you guys, and I think you’re just not as cool as Rajiv Sethi (check his blog out).

29

Cranky Observer 08.05.11 at 6:52 pm

> Is the educational architecture available for poor Chicago schoolchildren
> better today than it was in 1940? Yes. Is the educational architecture
> available to poor Chicago schoolchildren better than it was in 1900? Yes.
> Is the educational architecture available to poor Chicago schoolchildren
> better than it was in 1850? Absolutely.

I’m not going to get into this byway on this thread, but my big-city public school diploma is twisting my arm to post the query: do you have any idea what your words “yes” and “absolutely” are trying to accomplish in your paragraph? Do you have any idea about the number, average quality, and percentage of high performers that the big-city school districts turned out between 1880 and 1970 (and some, such as NYC and Chicago, still do to a lesser extent)? Do you have any idea what the loss of essentially free labor in the form of college-educated women denied employment elsewhere did to public school budgets and the “architecture of learning”?

Also, have you ever looked at the percentage of children who are students in public school students in big-city vs. suburban vs. exurban districts over the last 40 years?

I’d like to be charitable but I have to suspect the answers to those questions are “no”.

Cranky

30

temp 08.05.11 at 6:53 pm

Allowing the vast majority of the wealth and concomitant power in a national society to collect in the hands of a very few (whether that is 10%, 1%, or 0.1%), then “redistributing” some of that via confiscatory taxation[1], cash payments, and cheap big-screen TVs is not compatible with even basic concepts of decent work and self-sustaining (ie non-charity) economies much less radical egalitarianism.

Explain? Do you think Nordic-style redistribution is problematic in this regard?

31

Cranky Observer 08.05.11 at 6:56 pm

> Explain? Do you think Nordic-style redistribution is
> problematic in this regard?

Explain? Do you think the German policy of maintaining reasonable amounts of tangible goods jobs, skilled labor, and product quality standards while using social pressure and legal/tax nudges to keep ruler:ruled compensation & wealth ratios in reasonable alignment is problematic in this regard?

Cranky

32

conchis 08.05.11 at 6:58 pm

Lemuel, for what it’s worth something more like u = A + ln(i/c) tends to be the preferred empirical specification (and seems to fit fairly well).

33

Lemuel Pitkin 08.05.11 at 7:10 pm

u = A + ln(i/c)

But there utility still rises without limit in income. I want one where the limit of u(i) is finite as i goes to infinity. I know Sen uses a utility function like that somewhere, but I couldn’t find it so I just wrote the simplest one I could think of.

Right now (as always), it’s time embiggen the pie. At an undefined future date, the pie will be so big that nobody will oppose redistribution!

Yup. That’s it in a nutshell.

Allowing the vast majority of the wealth and concomitant power in a national society to collect in the hands of a very few (whether that is 10%, 1%, or 0.1%), then “redistributing” some of that via confiscatory taxation[1], cash payments, and cheap big-screen TVs is not compatible with even basic concepts of decent work and self-sustaining (ie non-charity) economies much less radical egalitarianism. Again, neoliberals simply won’t address those points whether in the concept of a theory of politics or not.

Yes. It’s what Mike Konczal calls “pity-charity liberalism.”

34

temp 08.05.11 at 7:16 pm

Cranky: If you’re asking whether I prefer the Nordic to the German model the answer is yes. In particular, I don’t see any problem with “decent work and self-sustaining (ie non-charity) economies” in the Nordic countries despite high levels of redistribution through the tax system. If you have some examples I would be glad to be enlightened.

35

Corey Robin 08.05.11 at 7:19 pm

Thanks for the clarification, Chris. So to follow up, do you think part of the problem with the left neoliberal view — the reason why it is skeptical that inequality has an impact on well-being (even though it’s open to that argument) — is that it doesn’t really understand individuals as living and acting in relationship to one another, relationships that often involve differentials of power? Again, my sense — admittedly from afar — is that what allows left neoliberals to see improvements in income and well being at the bottom rungs as consistent with galloping inequality is that they don’t understand those in the bottom tiers as in any kind of relationship with those above them. It’s that vision of individuals in isolation — i.e., just grow the economy, redistribute through transfer payments, and all will be well — that allows them not to think much about inequality and its impact on well-being. Or no?

36

L2P 08.05.11 at 7:19 pm

“Explain? Do you think Nordic-style redistribution is problematic in this regard?”

Imagine a country where 1 person made ALL of the income, and had the ONLY job. She makes enough that a 40% income tax gives a comfortable living to the other 999,999 citizens and funds the government, etc. It’s possible you’re an Yglesian, neoliberal, but can you try to see how that single wage earner would completely dominate the social and political landscape of that country, make the other citizens feel like useless crap, etc.? Can you see how that one person would feel a sense of superiority, ownership, etc.? How it would distort democratic feelings, incentives, etc.? How the only way this can be fundamentally different from Yglesias’s policies is if you take way the “comfortable” part, meaning his policies don’t actually work?

And do you really have such a a crabbed little mind that you can’t extrapolate from this simple thought experiment to see that the Ygelisian policy of “let the proles work crappy jobs at Starbucks and thank their betters for handouts” is, in the end, no real substitute for policies that allow people to have good livings and support themselves?

There’s actually a famous short story, Riders of the Purple Wage, on a similar theme. Check it out.

37

Henri Vieuxtemps 08.05.11 at 7:23 pm

Allowing the vast majority of the wealth and concomitant power in a national society to collect in the hands of a very few (whether that is 10%, 1%, or 0.1%), then “redistributing” some of that via confiscatory taxation[1], cash payments, and cheap big-screen TVs is not compatible with even basic concepts of decent work and self-sustaining (ie non-charity) economies much less radical egalitarianism.

Yes, this is worth repeating. That’s their “third way” idea in a nutshell: the top 1%, the aristocracy, incentivize themselves up the wazoo, while the rest 99%, the sheep, the peasants (un-licensed barbers, cab drivers, and yoga instructors), they live mostly on handouts, supplementing those (mythical) massive transfers with 50c/hr wages.

38

William Timberman 08.05.11 at 7:30 pm

HV @ 37

When you’re right, you’re right. Ordinarily, I suppose, that would be enough, but I’m soooo glad you went farther than you needed to. It did wonders for my morale on a fairly bleak Friday. Thank you.

39

redis 08.05.11 at 7:31 pm

Neoliberal strategy of ‘grow and redistribute’ is being critcised for lacking a theory of politics. But consider the resilience of programs with a significant redistributive component like Social Security, Medicare and how difficult it has been for its opponents to make cuts in these programs. Even the Republicans opposed Medicare cuts temporarily for political points. These programs create a strong constituency which defends them.

The main problem, if anything, seems that these programs dont go far enough and cover everyone. If there was a program which would give a basic income (of say, 1/4 the mean income) to everyone, then this program would be very difficult to remove, once passed. Everyone not just poor people should benefit from the program, both because of marginal tax issues, and more importantly it creates a far broader base of support rather than just the bottom 10% of the population. Welfare programs which were diminished in the 90′s suffered from this political problem.

The political problem, here, seems to be a one time issue – of how to get it passed initially and not a sustainability problem. With increasing unemployment and automation of many common jobs, there is a chance that an opportunity opens up just like when bills like Social Security where passed. IMHO, direct redistribution this way seems more doable and valuable than a more indirect way of using unions to increase labor power.

40

c.l. ball 08.05.11 at 7:34 pm

At the crux of this debate is the level at which inequality becomes harmful. This is rarely specified, and leads non-left neoliberals and others to argue that inequality-mitigation already occurs (e.g., the top 1% have 20% of income but pay 38% of federal income taxes).

The arguments against “left neoliberals” also attach “no instrinsic importance to inequality as such.” The consequences of inequality are what matter in the arguments above — the loss of political influence, solidarity, health, and well-being — not the unfairness of some gaining more than others (usually via uncompetitive, arbitrary, or unfair means). One could mitigate economic inequality by highly progressive taxation, but one could instead address the consequences (e.g., regulate broadcast political messages and donations, establish universal healthcare, expand merit-based civil service positions) without doing much to decrease inequality. Whether that is politically feasible, is a different matter.

41

mw 08.05.11 at 7:47 pm

If you take an historical perspective, neoliberal market economies have a long and impressive track record in bringing benefits to the least well off in societies where it is practiced (and to more and more countries where it is adopted). Nobody does it better than Hans Rosling:

http://www.youtube.com/watch?v=jbkSRLYSojo

http://www.ted.com/talks/hans_rosling_and_the_magic_washing_machine.html

If you think that neoliberal policies are also often associated with an erosion of the natural environment and of the social commons (I do)…

I just can’t imagine holding that position given the appalling record of communist countries as compared to western countries with respect to the environment. It seems pretty obvious that as wealth produced by neoliberal economic policies rises, demands by citizenry for a cleaner environment and preservation of natural areas increase. It also seems clear that democracy is essential for allowing citizens to freely press those demands (as, for example, they are not yet fully able to do in China). So wealth and democracy gives you a clean environment, and neoliberal policies have proven themselves compatible with this formula.

42

Cranky Observer 08.05.11 at 7:53 pm

> mw
> I just can’t imagine holding that position given the appalling record
> of communist countries as compared to western countries with respect
> to the environment.

mw,
Neoliberalism has only existed since around 1985; modern neoliberalism since the Age of Blogging (say 2001). You first need to present some evidence that the difference you describe is between Soviet Communism and neoliberalism, not between Soviet Communism and social democracy (modern liberalism) since social democracy was the dominant political strain in the Atlantic nations from 1945 through at least 1980.

Cranky

In your discussion you might want to touch on the assistance Lawrence Summers provided in redesigning the economy of post-Soviet Russia and how well that worked.

43

Lemuel Pitkin 08.05.11 at 7:56 pm

But consider the resilience of programs with a significant redistributive component like Social Security, Medicare

True, but those programs are under attack, and those attacks have already been somewhat successful — the increase in the Social Security age is a substantial cutback in benefits. Whereas in the postwar era where pretax/pretransfer income was more equally distributed, redistributive programs were being substantially expanded, instead of just being (barely) preserved.

And if temp, I suppose, thinks that the Nordic model of redistribution is completely independent of the fact that those countries have the highest union density in the world.

I continue to think that while the normative arguments Chris makes here are right, and important, the political untenability of left neoliberalism is the really decisive strike against it.

44

temp 08.05.11 at 8:01 pm

L2P:

So your argument is: solving income inequality through progressive taxation is problematic because it will replace income inequality with an inequality in self-regard; the net contributors will take pride in the social benefits they provide and the net receivers will feel shame.

This is a better argument against left-neoliberal principles than Chris Bertram’s. But let’s be clear what you are saying. Not that the government shouldn’t intervene to effectively redistribute wealth (that would be a libertarian position), but that it should do so in a hidden way so that people can maintain their dignity. You want, basically, for tea party types to be able to say “take your government hands off my medicare” and think that they got where they are by their bootstraps. I think this has problematic consequences for government transparency and democracy (the exact problems Henry accused neoliberalism of having last week).

I think most people realize that the wealthy aren’t wealthy because of innate superiority but because of luck and a (often corrupt) system that favors them. Redistribution acts as a correction to this. It is not a transfer from the worthy to the unworthy.

As for your hypothetical, I would take it in an instant (though I would tax superwoman at higher than 40%) Why would I feel like crap? My income is not my main source of self-regard. Free from the need to work, I expect people would construct hierarchies based on skills in various hobbies and income would simply cease to be an important factor in self-worth.

45

Lemuel Pitkin 08.05.11 at 8:04 pm

the top 1% have 20% of income but pay 38% of federal income taxes

This is a meaningless statement. Of course the tax system looks progressive if you pick out the one progressive component of a system that includes progressive, flat and regressive components. Might as well say that the top 1% have 20% of the income, but pay 100% of the taxes paid by the top 1%. (Confiscatory!)

The relevant question is the share of total taxes paid. In fact, the top 1% have 20% of income, and pay 21.5% of total taxes. There is no significant downward redistribution through the tax system.

46

Chris Bertram 08.05.11 at 8:20 pm

Corey @35 – yes I think I can agree with that.

47

soru 08.05.11 at 8:29 pm

Cranky: If you’re asking whether I prefer the Nordic to the German model the answer is yes.

In the last thread on this topic (or perhaps the one before that), it was claimed that Germany was the epitome of neoliberalism. Growing economy, highish taxes, high quality universal services, and in particular high quality, directly-useful education available for the non-academic. But minimal inequality-addressing transfer/insurance payments, at least by European standards (famously less than Greece).

So I think some definition of terms may be in order.

48

Morgan Warstler 08.05.11 at 8:41 pm

Cranky,

You don’t watch enough TV to correctly value the importance of big cheap ones.

Big cheap TVs with 500+ channels and broadband Internet is the price of paying of the hordes.

Since we have established what kind of lady the hordes are, its just a matter of price.

Passivity is sold. Compliance is purchased. All things are traded. If you want to get a better price for passivity and compliance of the hordes… you don’t do it by arguing with the buyers.

Intellectual blogs will get you nowhere… you need to go out into the middle class neighborhoods and convince them to not value their TV.

49

shah8 08.05.11 at 8:42 pm

I think this is a useful article in this context, especially in how the mention of the same Amartya Sen paper is used.

http://mondediplo.com/1999/09/06poverty

50

shah8 08.05.11 at 8:44 pm

*soru*, I believe I’m the only one who said anything about Germany, and I was arguing against the grain of the thread.

51

K. Williams 08.05.11 at 9:09 pm

“Explain? Do you think the German policy of maintaining reasonable amounts of tangible goods jobs, skilled labor, and product quality standards while using social pressure and legal/tax nudges to keep ruler:ruled compensation & wealth ratios in reasonable alignment is problematic in this regard?”

No, it’s not problematic per se. But it’s far more effective in Germany than it would be in the U.S. because German culture is far more comfortable with authoritarian/communalist governance than American culture is.

52

More Dogs, Less Crime 08.05.11 at 9:27 pm

What if one were a mere utilitarian without differential weighting? How different would one end up?

53

Gordon Henderson 08.05.11 at 9:44 pm

Alright, Mr. Chris Bertram. I do not convince easily, and you have convinced me that you are right and your view is more sophisticated and humane than the left neoliberals’, not to mention better describes the human condition. What do I have to read to understand your position on the level that you do, so that I’m not just taking your word for it?

54

shah8 08.05.11 at 9:46 pm

Bertram has his sources, right there in the post! Read them!

55

redis 08.05.11 at 10:08 pm

Lemuel, The cuts might be somewhat successful, especially when facing a budget crisis, but I am trying to make a smaller claim – ‘Grow and redistribute’ policies can have very strong political forces supporting them even if these forces sometimes fail. Politicians are afraid of being seen to be cut these programs. Going back to MY’s point, is it clear that the other strategies like unionization are stronger and more successful? Of course, one strategy doesn’t exclude the other.

56

Norwegian Guy 08.05.11 at 10:12 pm

Isn’t this just an academic question? That may be appropriate for an academic blog, but the question of whether inequality should be reduced by doing A, or by doing B, is not that politically interesting. Why not do (some amount of) both? There is no need to choose between progressive taxation and say, financial regulation or public ownership.

57

Watson Ladd 08.05.11 at 10:15 pm

@Norwegian guy: Because one may have more costs then the other. If your goal is reducing inequality, there may be ways you don’t choose because of that. Or to put it a more polemical way: by accepting that we are going to reform capitalism, we remain within its logic, and so have to deal with all the effects of our policies. In effect, we’ve created a situation in which an apolitical technocratic rule becomes the best means for our political goals to be achieved, which doesn’t bode well for anyone.

58

Meredith 08.05.11 at 10:52 pm

I wonder how many people come to this site who, like me, are academics in the traditional humanities, or who were formally educated in them and continue to think largely in terms of them. (Me, I’m in Classics.) This insightful post and discussion recall for me the age-old question, What is a good life? (It’s not a question I turn to a Matt Y. for guidance on.) I appreciate what I see as CB’s inclination to value things like (okay, my words coming, but where I think CB’s could fairly be nudged) an individual’s sense of agency and dignity, and to recognize the social as well as economic webs that implicate us all and even shape each person’s sense of himself of herself. (I’m trying to be good: I said “shape” rather than “construct.”) I’d only add to CB’s musings that even those with more wealth might be “better off” if wealth and especially power were more equitably distributed. (Does Donald Trump lead a good life? Is he even happy? Not that I’m overly worried about Donald Trump….)
We shouldn’t shy away from talking about these questions even if the right has a habit of highjacking public discussions that engage them. Let’s stop the highjacking.

59

elm 08.05.11 at 11:04 pm

@Norwegian Guy: Part of the disagreement is that neoliberals don’t see inequality as inherently bad. Oftentimes, they argue that inequality is instrumentally good, with the argument that inequality drives growth and that the larger total economy will admit larger redistribution to everybody who loses out.

I don’t know if they make it explicit, but they don’t support redistribution that would actually reduce inequality or reallocate shares of income.

I believe the principle is that while the bottom quintile get 3.5% of total income now (using Lemuel Pitkin’s numbers from #45), neoliberals intend to (for example) double the real per-capita GDP while shaving the bottom quintile’s share down to 2% of the larger total. They consider this acceptable (and even desirable) because the amount of income has grown.

I don’t know if they would agree with that phrasing, but it’s clearly implied.

60

chrismealy 08.05.11 at 11:09 pm

It’s easy to beat up some rightwinger pretentious know-nothing of an economist. It’s a lot harder to aggressive engage with Cass Sunstein’s ideas. And I think Sunstein would whip you guys. I think Samuel Bowles would bury you guys. I think Ostrom and Romer would taunt you guys, and I think you’re just not as cool as Rajiv Sethi (check his blog out).

shah8, what are you getting at here?

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Watson Ladd 08.05.11 at 11:13 pm

@elm: Shouldn’t we all agree to that situation as an alternative to the present? I would prefer the bottom whatever get 5% with 2xGDP, but I’m not sure why I should care about inequality as compared to inadequacy of certain things.

62

BillCinSD 08.05.11 at 11:45 pm

Why is Venezuela such a repressive and corrupt place? I posit that it’s because Chavez is addressing inequality without a large faction of the population having accepted the need.

Didn’t Chavez run on redistributing land to the peasants, and win in a landslide twice because (or partly because) of this? Now if you want to argue that the monied elite who had been in power for decades did not accept this and this has created problems, then you might have something

63

soru 08.05.11 at 11:54 pm

I believe the principle is that while the bottom quintile get 3.5% of total income now (using Lemuel Pitkin’s numbers from #45), neoliberals intend to (for example) double the real per-capita GDP while shaving the bottom quintile’s share down to 2% of the larger total. They consider this acceptable (and even desirable) because the amount of income has grown.

Which comes back down to the definition of who or what is neoliberal and/or left-neoliberal. Because clearly CB is:

1. claiming Blair and New Labour were one or the other
2. acknowledging they did succeed in doing better than the above on _relative poverty_.
3. counting them as, nevertheless, failing by his own standards.

What I am not quite clear about is exactly on which grounds he is claiming they failed. I am seeing at least five distinct arguments, not all of which are strictly contradictory, but seem unlikely to all be equally valid:

1. a house built on sand: GDP growth was created, but that was more or less illusory, and that fake growth has to be deliberated reverted by budget-balancing austerity measures before real growth, and so redistribution, can resume. Presumably this is the position of any economic literate leftist who still supports the Lib Dems.

2. income inequality directly matters: even when it doesn’t correspond to relative poverty (e.g. Championship vs. Premiership footballer).

3. absolute rather than proportional inequality matters: so if everyones income grows by an equal percentage, then the poorest are worse off.

4. theory of politics: the political process that led to New Labour winning elections and governing are not replicable in the USA, and may not be repeatable in the UK.

5. have you seen Merthyr?: the numbers are in some way wrong, true relative poverty did increase in a way not captured by the statistics

6. something else.

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shah8 08.06.11 at 12:03 am

@62, exactly. The monied elite and their followers are a faction large enough (and insulated enough) to make themselves pains in the butt.

65

dictateursanguinaire 08.06.11 at 12:26 am

“Both Egypt and Taiwan undertook land redistribution policies at around the same time. Why was it that in one case inequality dropped, and in the other case, inequality remained largely the same?

Why is Venezuela such a repressive and corrupt place? I posit that it’s because Chavez is addressing inequality without a large faction of the population having accepted the need.”

No causal mechanisms mentioned at all here. No history or sociology of either of those countries taken into account.

66

Billikin 08.06.11 at 12:26 am

elm: “Right now (as always), it’s time embiggen the pie.

“At an undefined future date, the pie will be so big that nobody will oppose redistribution!”

I suspect, if that were the case, the pie would already be so big that nobody would oppose redistribution.

67

Random Lurker 08.06.11 at 12:28 am

In my opinion, the problem of inequality is not posed from the correct angle:
Suppose that there are some jobs that pay me 10, and other jobs that pay me 100.
Why should I settle for a job that pays me 10?
In a stalinist country, someone shows up and beats me with a big bat until I agree to work for 10. But we are more civilized, and thus use unemployment: since I need to eat something and have some shelter, if I can’t find nothing better I will settle for the job that pays 10.
Extreme levels of inequality thus can exist only as long that there is a form of soft coercion called unemployment that can force workes to settle for low wages; otherwise workers would ask higer wages, that would cause inflation and eat up unequality. This is the idea that there is some “moral hazard” in paying high unemployment subsidies and in similar forms of help to the poor.
In this sense, the idea that we can have a sistem with big inequalities because it permits faster growth[1] and then tax and redistribute is wrong, because such a system could not work in reality.
This idea seemed to work during the “great moderation” for two (interconnected) reasons:
1) we live in a world economy, in which many people in developing nations had an still have wages close to subsistance level
2) many financial umbalances had been papered over through an increase of leverage.
At least the second condition seems to be no more possible.

[1] I am not so sure that an increase of inequality is so useful or necessarious for growth.

68

dictateursanguinaire 08.06.11 at 12:34 am

mw’s arguments have the same problems as shah8′s. On the Communist vs. neoliberal countries on the environment, you forgot several major points. One, most Communist countries had not finished industrializing and were also very rapidly industrializing whereas most countries that went neoliberal were entering services/tech./far less heavy manufacturing eras. That has to do with history. And rapid industrialization is not an intrinsic feature of any abstract economic system. You also don’t talk anything about either of the regulatory systems of those countries (surely you realize that if the state is running most major industries – as in a Communist country – that means that the state is in effect regulating [or not regulating] itself vs. a state regulating private industry, which is a very different relationship.) Even moreso, the whole concept and popularity of environmentalism started hitting its stride as Communism was ending and neoliberalism was starting. Not to stand up for the former sort of countries but it’s this kind of argument, where you don’t propose a causal mechanism (and where there is a clear one that refutes your argument) that makes me skeptical. There are so many variables that are evident even based on a cursory look at the examples.

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shah8 08.06.11 at 12:48 am

@60…

What I’m getting at is that there was an actual evolution in thinking in about economic matters that happened here. The jury is out on whether it’s right or now, but I generally consider the attitudes present by CT writers to have very little flexibility in terms of engaging with newer economic thinking. For example a common meme throughout these threads is that of “nudges”. However, the concept by Sunstein isn’t engaged with any depth at all, and less than the treatment that Charles Stross’s new book Rule34 does (in a total conspiratorial fashion, of course). Furthermore, Sunstein has incorporated a pretty deep vein of intersectionality between agency, politics, and economics. I think that Sunstein is much more easily able to empathize with what Bertram, Quiggen, et al is trying to argue, than the inverse relationship, therefore, I do not think Bertram can easily hang with Sunstein in a no-holds-barred debate–not because Bertram is dumber, but because he seems to be much more constrained in understanding what fields of decision/probability matters, how they intersect, and the values of juggling different value systems in applying different intellectual architecture towards a real-world problem. It strikes me that he’d see David Romer’s “work” on fourth downs in American football in a way that is too flat, 2-D, and would only make the obvious connects to the broader society.

Moreover, I’d see the way that Amartya Sen is used in this blog-post, and I’m like, no, but HELL NO–Sen would be firmly on Yglesias’ side here. I have not read that particular article, but Sen is fundamentally about how raw poverty constrains choices, in my mind. Inequality is part of the story, but basic material inadequacy enables political and economic inequality just as much as it’s caused by inequality. It’s things like this that makes me think that Bertram et al sometimes have serious trouble following the various flows of power, politics, economic, whatever. There are zillions of feedbacks everywhere, that goes every which way and there are tons of theories, by many really smart people, like Al Hirschman, that get modded by present day thinkers. I don’t really perceive Yglesias as thinking about issues in a way that’s fundamentally different from Cristina Romer, if you read her papers. Of course, one could say that it’s evil neoliberal thinking that’s infected Yglesias. I would say it’s because we’re all reading a certain generation of books and thinkers and I think they have substantial influence, not because they are charlatans waiving around a new fad, but because they are empiricist who are seriously anti-Green Lantern, and who are able to adequately attack the concept of The Big Move.

Personally, in my readings, I’ve argued and ranted against people. I bet within 5 minutes of meeting Ernst Fehr, we could have a beautiful feud going. I’ve bought books like Reputation and International Cooperation by Tomz, which I was totally disappointed by (and learning that I really have to be careful about ambitious dissertation by far too young people). I’ve read Findlay and O’Rourke’s Power and Plenty, and totally caught on to the change of themes right when the chapters that talk about living memory occurs. I am just really familiar with the brands of neoliberal thought that I *do* despise, and I am familiar with their characteristics. I think other people do, too, and that “left neoliberalism” as it is understood by me is *really* unfairly painted. Then again, agency and politics and history, and all that crap is really, really messy.

70

elm 08.06.11 at 12:56 am

Watson Ladd @ 61

@elm: Shouldn’t we all agree to that situation as an alternative to the present?

Not necessarily. I side with Chris Bertram here.

Likewise if you think that high levels of inequality undermine social solidarity and political equality and that those also have impacts on real well being, then you’ll have a further reason to be concerned about the consequences of inequality for real lives of ordinary people. … If you think like me that those factors are very important, then you’ll be doubtful about whether increases in real income will translate into increases in real levels of well being if inequality is also growing; if you think they aren’t, you won’t.

I take this exchange as evidence that Chris Bertram’s post has successfully highlighted some fundamental differences in our philosophies and positions.

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Watson Ladd 08.06.11 at 1:47 am

But social solidarity is already undermined today. (I’ll admit we are now changing what we are talking about). Painting the egalitarian 1960′s as a socially harmonious time in the US is not going to fly. Besides, does political equality affect my well-being except in the services I am provided? Does social solidarity ever matter except when I need to fall back on society? An argument could be made (and is definitely a reasonable one) that extreme inequalities in wealth and power lead to neglect of the lower class without the capacity for organization in the present moment. If you’re worried about the effect not having work has, then how about we eliminate work as a socially orienting category? (What made Riders of the Purple Wage a horror story was the welfare state. Its the lack of this that makes the Culture a utopia)

72

elm 08.06.11 at 2:10 am

I didn’t say a word about the 1960s. I’m aware that they had many undesirable elements.

Besides, does political equality affect my well-being except in the services I am provided?

Yes, absolutely. In the current U.S. political system money is speech (and it’s the most important sort of speech). If my share of income falls, then my influence is diminished and with it, my power to control my own fate.

Beyond that, there’s no reason to believe I can still acquire comparable goods with my smaller slice. The relative prices of services from skilled, high-income people may well increase much faster than the general price level. A larger television or better iPod is of no value if I can no longer afford medical care or legal advice.

Does social solidarity ever matter except when I need to fall back on society?

I am a part of society every day of my life, whether I like it or not. If I am diminished, compared to my neighbors, then they may no longer stand for my interests.

Similarly, if we must compete for an ever-shrinking share of resources then we may refuse to cooperate in other ways.

An argument could be made (and is definitely a reasonable one) that extreme inequalities in wealth and power lead to neglect of the lower class without the capacity for organization in the present moment.

It seems manifestly true to me. This is an effect that can only become more severe so long as people at the lower end get an ever-smaller slice the pie.

73

kidneystones 08.06.11 at 2:22 am

Bullshit Artists. Forgive me, but I just watched a short clip of Ezra Klein, one of Matt’s pals, try to explain what America must do to save the economy. Matt majored in philosophy as an undergraduate and is, by all accounts, bright. That alone, IMHO, doesn’t qualify Matt to pen a tome on foreign policy, which I believe he has. Nor do I think Matt has enough work experience or training in economics, foreign policy, or political science to understand these well enough to wax eloquent on these topics in public discourse. I know I don’t.

Like it or not, the left is losing the war of public opinion on many fronts. Right now, as I tap, ratings agencies have just downgraded US debt. It’s extremely difficult for me to see how employment numbers are going to rise in the near or middle term. I work as an adjunct and tip-toe back and forth between academia and the private sector. I can assure that it’s scary out here. Really scary. And we are relatively well situated. Yet, in the midst of all the madness we have people without training or the special knowledge required to understand complex problems telling people who do that they are wrong. John to his credit is both gracious and unbending.

Watching, reading, and listening to Matt and Ezra reminds me most of sitting in grad seminars with students who haven’t done the readings wax forth. Matt is a professional propagandist at Think Progress right now, I believe. (Sorry, to single him out.) In that sense, he’s a lefty, one of the choir. However, he shouldn’t be a soloist, without additional training and experience, and his place is probably in the pews. Ditto Ezra.

The challenge for the liberal left is daunting. The academic left needs to do a much better job of reaching out and educating the very people many here profess to loathe, those frightened individuals terrified of losing the way of life they hold dear. Namely, the tea party and its supporters. Instead, the left offers sneers. Doing better is a necessity, not an option. And part of doing better job of educating the public and winning the public debate is re-establishing the authority of the well-educated. Matt, Ezra, (and I) simply aren’t in the same league as Henry, Chris, and John and others here, when it comes to questions of political science and economics, theoretical or applied. No shame in that.

I see more tribalism than a willingness to engage and bond, with rare exceptions. We simply can’t reduce the concerns of people fearful of losing their homes to “racism” and then expect the same people to listen to us again. Ever. That’s us shooting ourselves and the poor in the face.

We face enormous challenges. I frankly don’t see us making any progress until we sit down with the folks so frequently belittled here and elsewhere. They need to be engaged and challenged on a personal and intellectual level. As do we. We’re in this together, like it or not.

I’m not, btw, suggesting we lecture “our intellectual, moral, and social inferiors” to eat their peas. Many already do and enjoy the dish. Nor am I holding my breath, however.

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Harold 08.06.11 at 3:01 am

c.l. ball @40: As far as U.S. taxes, according to a commenter on http://paul.kedrosky.com/archives/2011/07/tax-burdens-around-the-world.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+InfectiousGreed+%28Paul+Kedrosky%27s+Infectious+Greed%29

“In 2010 income taxes made up only 41.58 percent of federal taxes. Taxes on wages (social insurance taxes) make up 40 percent. The corporate income tax amounted to 8.83 percent, and other receipts to 9.57. Income taxes of the top ten percent amounted to almost 19 percent of all federal taxes. The top ten had 33.5 percent of income, and with a wild guess, probably about 55-60 percent of all assets. For the income numbers see CBO website for The Budget and Economic Outlook last January, page 87.”

to Watson Ladd and Myles about Chicago – a very good explanation of what happened in Chicago is contained in Nicholas Lemann’s excellent book “The Promised Land: The Great Black Migration and How It Changed America “

75

Norwegian Guy 08.06.11 at 4:04 am

“Because one may have more costs then the other. If your goal is reducing inequality, there may be ways you don’t choose because of that.”

When that’s the case, the commonsensical solution is to pragmatically do a bit of everything, not to go all-in for one particular solution. But what costs are we talking about? After all, neoliberalism has been extremely costly for the world economy.

This whole discussion is premised on a hypothetical question:

“the bottom quintile get 3.5% of total income now (using Lemuel Pitkin’s numbers from #45), neoliberals intend to (for example) double the real per-capita GDP while shaving the bottom quintile’s share down to 2% of the larger total. They consider this acceptable (and even desirable) because the amount of income has grown.”

i.e. that more equality leads to less growth. What if this is not the case? The thought experiment is then rendered pointless. And lo and behold, real world data indicate that neoliberalism has been disastrous for growth.

76

elm 08.06.11 at 4:40 am

Norwegian Guy @75

i.e. that more equality leads to less growth. What if this is not the case? The thought experiment is then rendered pointless. And lo and behold, real world data indicate that neoliberalism has been disastrous for growth.

Neoliberals appear to believe that inequality drives growth despite evidence to the contrary.

To be clear, I do not t believe that.

Additionally, even if that proposition was true, I would still prefer egalitarian policies to maximum growth.

This strand of neoliberal (U.S. sense) thought appears to have been lifted straight from U.S. libertarianism. The neoliberals tack on some good intentions about eventually taxing the winners to compensate the losers (though not enough to address inequality, of course), but they seldom have concrete plans to implement those policies.

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terence 08.06.11 at 4:57 am

What if one were a mere utilitarian without differential weighting? How different would one end up?

Probably still in favour of prioritising the material and other needs of the poor. Or, at least, you will if you believe that the marginal utility of income decreases as income increases. (i.e. beleive that earning an extra $10 a week will do more for the happiness of someone earning $100 a week than for someone earning $100,000 a week). If this seems plausible to you then, everything else being equal, you would believe that optimal policy will focus on increasing the income of the poor for the simple reason that this is a more efficient way of maximising overall utility than increasing the income of the rich.

The idea that the marginal utility of income decreases as one gets wealthier is intuitive. It’s also supported by almost all the available evidence. See for example this paper by Kahneman and Deaton [pdf]

Of course, everything else may not be equal. Maybe high levels of inequality are the price we must pay for economic growth, which itself will help the poor if it increases their incomes. However, even here the best available evidence suggests that <i>high</i> levels of inequality don’t foster rapid growth and that, in fact, they impede it (see this paper by William Easterly [pdf]).

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shah8 08.06.11 at 6:34 am

/me scratches head…

*terence*, the ES hypothesis in the Easterly paper (haven’t got to part II, gotta go to bed) is what I’m buying into. High inequality *must* be politically supported, or its adversaries be made impotent. Therefore, highly unequal societies have mechanism for generating support and suppressing/kicking out dissent. Addressing structural inequality by whatever means possible, to the point that people can negotiate wages and participate in politics is worth ignoring a great deal of inequality, because those people will claw it back, eventually, and one can work on convincing the faction of the elites that could benefit from higher human capital to betray their fellow class members who need cheap labor.

It’s also important to recognize structural inequality in the sense that proponents of inequality has massive control over the populace’s ability to learn, in terms of propaganda dissemination and insidious decoupling of needed resources (food deserts, redlining, distant and overcrowded voting locations, attempts to use voucher to defund schools, etc, etc, etc) from the target populations. Part of creating the infrastructure of good government is about immersing the population in a soup of reliable information (I feel that I do my part by encouraging people actually *use* the internet, LOOK THINGS UP). We don’t want it to be like in Venezuela where the government is constantly repeating slogans and narratives about redistribution because anything more comprehensive/complicated can’t generate support. People who feel comfortable about what the future will bring can engage in politics about long term goals and spend the necessary head time on complex goals. That this requires jobs is understood, but it was always going to be a chicken or egg problem, and people jacking off about how “left neoliberals” don’t have solutions routinely underestimate the complexity in thinking about how to solve these problems.

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Henri Vieuxtemps 08.06.11 at 7:46 am

shah8, colorless green ideas sleep furiously. Perhaps you could clarify your position by linking a relevant (and comprehensible) short piece, written by Yglesias or Sunstein?

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terence 08.06.11 at 8:32 am

High inequality must be politically supported, or its adversaries be made impotent.

Kind of related: from the latest Journal of Politics

Diversionary Nationalism: Economic Inequality and the Formation of National Pride

Frederick Solta

Abstract

What accounts for differences in the extent of nationalist sentiments across countries and over time? One prominent argument is that greater economic inequality prompts states to generate more nationalism as a diversion that discourages their citizens from recognizing economic inequality and mobilizing against it. Several other theories, however, propose different relationships between economic inequality and nationalism. This article provides a first empirical test of whether and how economic inequality is related to nationalism. Multilevel analyses using survey data on nationalist sentiments in countries around the world over a quarter century and data on economic inequality from the Standardized World Income Inequality Database provide powerful support for the diversionary theory of nationalism. This finding is an important contribution to our understanding of nationalism as well as of the political consequences of economic inequality.

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actio 08.06.11 at 9:17 am

elm @59: “Part of the disagreement is that neoliberals don’t see inequality as inherently bad.”

Well CB hasn’t really argued that inequality is inherently bad in the OP either AFAICT. He argues that left neoliberals underplay a set of non-economic instrumental disvalues of inequality.

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Chris Bertram 08.06.11 at 9:31 am

_Well CB hasn’t really argued that inequality is inherently bad in the OP either AFAICT. He argues that left neoliberals underplay a set of non-economic instrumental disvalues of inequality._

Indeed. The post deliberately eschews relying on any premise that inequality is inherently bad and I restrict myself to effects (actually not just non-economic) on individual well-being. I happen to believe that inequality is inherently bad, but I’d prefer to start from a weaker premise.

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soru 08.06.11 at 11:02 am

When you say ‘effects (actually not just non-economic) on individual well-being’, do you mean ‘national level political mechanisms that will tend to cause miscellaneous large scale bad things (poverty, environmental decay, war, etc.) ‘, or ‘personal level psychological/social mechanisms that will tend to cause small scale bad things (bad health, poor career choice, Daily Mail reading, unhappiness)’?

I think those two things are different enough that any political plan of action to attempt to address one or the other would have little in common.

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Chris Bertram 08.06.11 at 11:43 am

I don’t think your question is well formulated soru. Effects and mechanisms are different things aren’t they? Moreover, one of the things you identify as “personal”, bad health, has obvious large-scale correlates in things like longevity, rates of disability and disease etc. Anyway, what is pertinent here is not policy directly aimed at reducing the incidence of bad health, but whether the objective of reducing the incidence of bad health gives us reasons to attack inequality (rather than just poverty). If you buy the Wilkinson & Pickett/Marmot line on this, you’ll say yes.

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mw 08.06.11 at 12:46 pm

Cranky Observer: Neoliberalism has only existed since around 1985

Since the beginning of the industrial revolution, the policies associated with neoliberalism have been in effect most of the time. In U.S., they were really only (partly) out of fashion for decades between 1930 and 1975. Here, neoliberal reforms began not under Reagan, but Carter — including major deregulation of trucking, airlines, and telecommunications industries. Carter was also the president who signed the bill legalizing home brewing, eventually resulting in the explosion of microbrewing in the U.S. Clearly that part of the neoliberal deregulation still has a ways to go:

http://www.huffingtonpost.com/2011/08/03/rawsome-raid-_n_917540.html

http://www.acresusa.com/toolbox/reprints/Salatin_Sept03.pdf

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soru 08.06.11 at 1:12 pm

Yes, the Spirit Level stuff is one story about an actual mechanism: social status causes biological stress causes heart disease. With income differential (as I read it) being a _marker for_, not _cause of_, social status: people with it are able to win, or take, the money. If that’s true, moving money around, even if successful, won’t really change anything, any more than painting the skin of someone with jaundice.

To reference the other post, this has the advantage that it could be wrong. In fact as an alternative, this study would tend to suggest things mostly run the other way, from health to social status:

http://www.guardian.co.uk/society/2011/aug/03/birth-weight-illness-jobs-prospects

Obviously, a bad job can’t cause low birth weight (unless they screwed up the study) .

Similarly, there are other mechanisms that can be talked about, say: wealth leads to newspaper ownership leads to political influence leads to low taxes, rinse repeat.

What I am starting to increasingly object to is talk about meaningless arbitrary aggregate metrics. Like when the word _inequality_ is used to mean _Gini Coeeficient_. No doubt I am being philosophically naive here, but those things _don’t actually exist_. So they can’t actually do anything, have no causality. Talking about them is noise, not politics.

The relevant features are actually at a lower scale (social class, or individual).

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David 08.06.11 at 1:25 pm

A college friend of mine founded a software startup. (In an area of the country that does not abound in CS/software opportunities)

5 years later, he had about 80 people working in it, most of them making considerably more than the median wage in the US. Then he sold the company to a bigger fish for 300 million dollars or so.
He made millions on his stocks, his workers’ options were worth mostly in the low six figures.
(The product is still being developed, and the acquiring company has actually added positions to the facility.)

Obviously, the inequality between my fiend and his former workers skyrocketed, but it would be odd to claim that they are worse off.

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Chris Bertram 08.06.11 at 1:59 pm

Interesting study soru, but surely it just suggests an interesting correlation, rather than showing that things “_mostly_ run the other way” as you say. Presumably also they controlled for social status and poverty of the parents?

Also disagree with what you say about wealth and social status. Varies a lot from society to society, of course, but afaics, lots of money buys you (and therefore is a cause) of social status all over the place.

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zamfir 08.06.11 at 2:20 pm

@david, can you elaborate your plan to make everybody rich on software stock options? And did the janitors of the company get 6 figure sums?

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Henri Vieuxtemps 08.06.11 at 2:36 pm

Yeah, the software business is funny. However, as far as those 80 people not being worse off: surely they would’ve been even better off had the 300 million payout (sounds kinda high, though) been divided among them, instead of being pocketed by the boss.

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soru 08.06.11 at 2:55 pm

Well the arrow of time argument shows that it can’t be mere correlation. It has to be either causation, or wrong (i.e. ‘screwing up the study’). Failing to control for parental social status would be the most obvious way of doing so: hopefully any real error would actually be more subtle, as the report’s author doesn’t appear to be an obvious hack:

http://www.ucl.ac.uk/ucl-iris-project/iris/staffprofile.php?ref=MJKIV95

@David

I can take that anecdote as supporting my point. Assuming it happened as described, that was a good thing, and is not made otherwise by it’s effect on meaningless aggregate metrics.

The mistakes of the last decade were more in the opposite direction: just because something isn’t influencing an aggregate in a way you would, in the abstract, prioritise, _doesn’t mean it isn’t a problem_.

You wont get far with ecology by looking at ‘total biomass’, or some similar aggregate. You need to at least talk about predators and prey, summer and winter, herds and nests. Once you get that structure right, you can measure the elements of the structure. Not before.

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mw 08.06.11 at 3:08 pm

However, as far as those 80 people not being worse off: surely they would’ve been even better off had the 300 million payout (sounds kinda high, though) been divided among them, instead of being pocketed by the boss.

Not ‘surely’ — that’s far from clear. What legal environment did you have in mind where all 80 employees would receive an equal share? And is that an environment in which anybody bothers to take the trouble & risk of starting and growing a new software company? Where VCs provide funding?

As it is, most tech startups don’t pan out. The profits never materialize, the investors eventually pull the plug and the company has to shut down. Instead of a 300 million dollar payout, the ‘boss’ has invested years of hard, stressful work (and quite often his life savings) and ends up having less than he started with. A guy who lived in the neighborhood years ago had a company that hit a rough patch after the tech bubble collapsed. He stupidly took out all the equity in his house to try to keep the business afloat. It didn’t work. He shot himself–unable to face the failure and humiliation and with the idea of keeping his family from losing everything (which the insurance payout did do). Now suicide is obviously not typical, but the pressures and frequent failures are common. The employees, on the other hand, get years of paychecks and, if the business fails, they move on.

Personally, I’ve been involved with a number of startups over the years and have cashed out some options, but I’ve never been the guy taking all the risks and facing all the pressures, and that’s the way I’ve wanted it — since it it was not my big idea and since I never took the big risks or faced all the pressures, I didn’t expect the big payouts.

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William Timberman 08.06.11 at 3:23 pm

Well, yeah, mw, as a library drudge in a public institution, I wouldn’t have begrudged Andrew Carnegie the big bucks, but I never would have agreed that his intrepid contributions to the general welfare, or even his libraries, could justify putting down the Homestead Steel strike. Just how does entrepreneurial stress justify dissing a Wall*Mart greeter who can’t afford to go to the doctor, teaching your kids that poets aren’t worth feeding, or kissing Robert Rubin’s bum.

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Henri Vieuxtemps 08.06.11 at 3:36 pm

What legal environment did you have in mind where all 80 employees would receive an equal share?

What kind of legal environment allows one guy to sell something produced by 80 people for $300 million and take it all?

And is that an environment in which anybody bothers to take the trouble & risk of starting and growing a new software company?

You bet. Plenty of people develop software for no monetary reward at all; and 1/80 of $300 million doesn’t sound too shabby.

Instead of a 300 million dollar payout, the ‘boss’ has invested years of hard, stressful work (and quite often his life savings) and ends up having less than he started with. … etc.

Sounds like another good reason to share the effort with 80 people.

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Chris Bertram 08.06.11 at 3:36 pm

soru, you’re missing the point. The fact they’ve demonstrated an effect doesn’t entitle you to your “mostly”. So if they demonstrate that, of two babies with the same social status, the one with higher birthweight has better prospects that the other, that doesn’t show that health _generally_ has more of an effect on social status than vice versa. And even if you could demonstrate _that_, it still wouldn’t establish that effects running the other way were _unimportant_ and gave us no health-based instrumental reason to restrict inequality.

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Chris Bertram 08.06.11 at 3:40 pm

AFAICS, the widening gap between a tech start-up’s boss and his smallish number of better-off employees tells us nothing interesting about what we should think regarding economic inequality in the wider society whatsoever.

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Watson Ladd 08.06.11 at 3:52 pm

@Henri: But the only way to do that is to abolish capital, not through some regulation. The employees knew they would not be receiving the full value of the company. They sold their labor to the employer and in doing so alienated themselves from its products. No ones work was stolen: everyone received an amount mutually agreed upon for their efforts. The employees could have taken less in wages and more in options or more in wages and less in options by moving to more or less established firms (given the competitiveness of the industry for workers, this is a reality right now). Or should we force all employees to take lower wages in the hope that the company might be worth more?

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Henri Vieuxtemps 08.06.11 at 4:04 pm

What are you talking about, Watson? We all know what wage employment is all about. The comments I responded to (87, 92) argue that the hypothetical boss getting $300 million reward is essential to the well-being of 80 people working at that start-up. I disagreed.

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soru 08.06.11 at 4:28 pm

@93: yes, that logically _might_ be true. But the effect they are talking about is of a similar size, and in exactly the same cohort (mid-ranking UK civil servants), so it does seem to strongly undermine the case that it actually _is_ true.

And I would think political decisions should generally be taken on the latter basis.

@96: The thing to be beware of here is the kind of voodoo economics that says ‘startups increase inequality, so if we increase inequality we will increase startups’.

Case in point: the plan of the current UK conservative government, worried about anaemic growth and balancing the budget, to _cut the top rate of income tax_. How could they possibly come up with a story that enables that without people going round preparing the case by talking about hypothetical moral trade-offs between growth and equality?

National level metrics are almost always acausal, so meaningless, simply not something that can be involved in a trade-off. Sentences that talk about them have negligible potential truthiness, like arguing whether or not a particular wine tastes of liberalism.

What matters are class-level numbers, like:

how much land reform will the landowners tolerate before they start forming goon squads?

what level of services need to be provided to the middle class before they systematically start evading tax?

what level of income needs to be available for someone with minimal skills before they abandon the job market?

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Chris Bertram 08.06.11 at 4:42 pm

_@93: yes, that logically might be true. But the effect they are talking about is of a similar size, and in exactly the same cohort (mid-ranking UK civil servants), so it does seem to strongly undermine the case that it actually is true._

(Presumably @95)

So you have read _Status Syndrome_ and/or _The Spirit Level_ right? So you presumably know that, yes, the civil service study was what got them thinking along these lines but that their conclusions are supported by a wealth of other evidence?

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Watson Ladd 08.06.11 at 4:51 pm

@Henri, yes, by arguing that the 80 should have instead formed a partnership. I pointed out that in the employment market for programers this is already a possibility. 87 and 92 are not arguing the boss’s $300 million payout is essential for those working at the startup, but rather that the workers decided to not take a risky $3.75 million and instead receive a salary. When the workers were negotiating with the boss that $300 million did not exist. It could easily have not materialized. The boss could easily have decided to take on additional founders to shed risk. He chose to retain that risk, but had to compensate by paying higher salaries since employes do include stock options as benefits. Would you want to tie a significant amount of your compensation up in the fortunes of your employeer, particularly if your employeer has a nontrivial risk of going bust?

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Sebastian H 08.06.11 at 4:59 pm

“The post deliberately eschews relying on any premise that inequality is inherently bad and I restrict myself to effects (actually not just non-economic) on individual well-being. “

I don’t understand this distinction. Do you mean that you aren’t relying on the premise that inequality is definitionally bad (moral structure such that you don’t even care about effects)? Effects have got to be why you think it is bad unless we are taking some sort of religiously inspired route.

But the effects question is pretty darn mixed. The Spirit Level for example appears to be a giant game in selective outliers. For example, no relation at all in the studied countries re murder (note *all examples* allegedly linked to inequality), without the outlier USA. But–murder has gone way down in the USA at the same time that inequality has gone up. So you need the outlier to get your trendline, but the outlier’s actual history doesn’t support your thesis. South Korea’s exclusion in favor of Portugal (even though South Korea is a better fit for their criteria) is strictly necessary to get a host of their correlations. (Health care, life expectancy, social cohesiveness). And what about the fact that Hong Kong and Singapore (enormously unequal) share all the same levels as Japan (much more equal)? That sounds like a bunch of it is cultural factors rather than inequality. The community trust factor is also an exercise in different outliers–the Nordic countries. Without them you get no correlation, with them you get a strong one. Sounds to me as if the strong community trust factor is a cultural feature of the Nordic countries (which may lead to more income equality rather than the reverse). But plotting it as a trendline without strong reason to believe you have the casaul arrow pointing the right direction is bad science.

And then there are the studies which strongly suggest that it is absolute income, not community inequality which is best correlated to health outcomes: Fiscella and Franks. This directly supports the neo-liberal project instead of yours. (What is the label we should use for the non-neo-liberal project?)

And there is good work suggesting that the inequality/mortality link is either non-existant or incredibly tiny Leigh and Jencks

Studies showing a fair amount of correlation between absolute income and health are well established, don’t rely on outliers, and have robust findings as you tinker with different inputs. Studies showing correlation between inequality and the same are hypersensitive to outliers, precise measure of inequality (back and forth on GINI) and aren’t robust when you start tinkering with inputs. So the state of play on measurable effects seems to be that absolute income correlations are fairly strong while relative income correlations are fairly weak. This supports the neo-liberal project insofar as it is more worried about anti-poverty than anti-inequality.

Of course none of this says that inequality cannot become a problem at sufficient extremes. But like the Laffer curve, just because something is theoretically likely at extremes doesn’t mean we should talk about it as established, nor act as if it is obvious where we are on the curve.

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Cranky Observer 08.06.11 at 5:05 pm

> mw @ 12:46
> Since the beginning of the industrial revolution, the policies associated
> with neoliberalism have been in effect most of the time. In U.S., they
> were really only (partly) out of fashion for decades between 1930 and 1975.

That is an interesting reading of US economic history, particularly of the early Industrial Age and Gilded Age vs. the 1950s, but you are really going to have to cite some substantial works – dozens of them in fact – to support it. Because such a theory requires quite a bit of retconning and very large leaps of, well, leaps of something not found any standard reading of political economy.

Cranky

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Henri Vieuxtemps 08.06.11 at 5:17 pm

Watson, there is no reason to argue that “the workers decided to not take a risky $3.75 million”. The thread is about inequality. Is it good, bad, irrelevant? Is it inevitable, and if so, to what extent?

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StevenAttewell 08.06.11 at 5:30 pm

A couple of points:

1. I’m not sure everything on Yglesias’ list is egalitarian – his emphasis on reducing licensing for “skilled” trades could very well lead to a slump in wages of those trades, causing unskilled workers to move sideways instead of forward while decreasing the incomes of those skilled workers (a parallel could be seen in the mechanization of textiles: low-wage agricultural workers became low-wage factory workers, skilled weavers’ wages decreased in their new employment). Likewise, “concerted reform aimed at ensuring public services are public services and not jobs programs” harms the ability of government to expand public sector employment to fill the employment gap and especially hammers one of the few sources of living wage jobs in the African-American community.
2. Just to push Bertram’s point about neoliberals’ lack of a political strategy a bit further: I think we can also hypothesize that pre-tax interventions on inequality increase the likelihood of pro-equality politics beyond social movements. In part, this is about decreasing the load that redistribution has to carry – if you have more unions/etc., not only do you have pro-equality social movements going on, but you’re more likely to have more wage compression, meaning you have less inequality to redistribute. Likewise, in the realm of political identity (as opposed to mobilization), if you have wage compression, you are more likely to see recognition of commonality across professions/skills/classes, etc. leading to support for universal policy as in the Swedish model.

This brings me to temp at 18 – while it’s true that theoretically, you can just redistribute the inequality away, in addition to Bertram’s point that inequality makes the politics of redistribution harder, there’s also the issue that inequality makes you have to do more redistribution than would otherwise be the case. It means that policy is swimming ahead of the current, instead of with it.

redis at 39 – the problem with basic income is that it runs head-on into deep cultural beliefs. Americans (and I’ve seen the same results in U.K research) HATE gmi with a passion – even poor Americans who would benefit from it. Here, it’s not just a question of coverage; GMIs don’t accord with deeply held beliefs about the importance of work, reciprocity, etc. Those same people are much more positive about Guaranteed Annual Wages or Job Guarantees.

cranky at 42 – I think 1985 is too late for an emergence of neoliberals. From my own research, I’d say a starting point has got to be in the 1970s.

sha8 at 69 – you give way too much credit to nudge as an innovation. It’s nothing new, and it runs into the same political problem that Bertram alludes to. Namely – if it’s invisible, you don’t generate a constituency for its continuation.

kidneystones at 73 – Tea Partiers are likely to be conservative Republicans from middle class/upper middle class backgrounds, not disaffected working class. Why should we waste energy in trying to win their votes?

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bianca steele 08.06.11 at 5:33 pm

I don’t know the expected ratio, but I’d guess if the founder ended up with equity worth $300mil, the lawyers and bankers who took the company public got, at least, significantly more than those 80 employees.

Dave’s friend’s employees are 80 people who now have much more money–more political power–than they would otherwise have had, and they may now be about to decide whether they would like to get involved in politics.[1] Likewise, Dave’s friend now has significantly more political power than he had before, and very likely having said goodbye to the day-to-day management of the organization he built up, he is now going to decide how to think about his relationship to those 80 people and to others.

In the ideal socialist world, I suppose, if I understand Henri correctly, the organization would be owned by the state, planning would be done centrally and rationally, those 80 people would all take low, reasonable wages and work hard for the public good and for recognition as having contributed to the public good, and Dave’s friend would be a public servant (and Party member or who-knows-what). Sounds terrific if it can be got to work. In the meantime, what?

[1] Though they also have a darn good line on their resume and the ability to take the next high-stress job that will likely be very exciting for the first 3-15 years and may or may pay out as well again.

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Watson Ladd 08.06.11 at 5:45 pm

@StevenAttewell: At least in chicago the patronage system is doing tremendous damage to schools and hospitals, because the politicians target the least powerful to receive the worst services. You raise a good point in your reply to temp, but I’m not sure we can cleanly separate government support for unions from government support for redistribution. They had very different effects, but both depended on the government.

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mw 08.06.11 at 5:49 pm

Henri Vieuxtemps: What kind of legal environment allows one guy to sell something produced by 80 people for $300 million and take it all?

But he *hasn’t* taken it all. In most of the startups I’ve done work for, it played out like this — I was well paid for the work I did as were the other employees and contractors. Where did that money come from? Profits? Ha! No — there never were any profits. All the money for our checks came from founders & investors who were *hoping* for a big payout (but who knew that, more likely than not, it was going to be a dry hole — 10 failures for 1 hit is expected). Had I wanted to receive 100% shares or options in the company instead cash (and share in the risk and the possible big rewards), they would have been *more* than happy to sign me up. But I didn’t. You academic types really don’t have much of a clue how all it works, do you?

You bet. Plenty of people develop software for no monetary reward at all.

Yes, they do. But there’s a huge difference between, say, writing a free iPad app or contributing a bit to an open source project and building a successful company from the ground up.

Sounds like another good reason to share the effort with 80 people.

Most people would, indeed, rather take fewer risks and take home a steady income. But those kinds of people (most people!) don’t create the next big thing. They guy who invented the Frisbee — know how long it took for the big payoff? He spent 10 years selling the idea, even going around to county fairs dressed up in a spaceman suit hawking his ‘Pluto Platters’:

http://www.boston.com/bostonglobe/obituaries/articles/2010/02/13/fred_morrison_carpenter_and_pilot_invented_frisbee/

Would *you* do something that? I wouldn’t.

Cranky Observer: That is an interesting reading of US economic history, particularly of the early Industrial Age and Gilded Age vs. the 1950s, but you are really going to have to cite some substantial works

So you’re disputing that the regulatory burden and government involvement in the economy was lower in the ‘classical liberal’ period in 19th century and through the 1920s? Or that it increased with the New Deal and WWII and continuing through the 50s and 60s? (Remember, Nixon imposed wage and price controls — something that would be unthinkable for Clinton or even Obama) Or do you dispute that deregulation began in earnest in the 1970s and 80s? Which part of that general outline do you object to?

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StevenAttewell 08.06.11 at 5:57 pm

107
Watson Ladd – I guess what I’m saying is that there’s a difference between treating government as a jobs program and corruption. For example, there were plenty of good government types in the War on Poverty who felt that expanding civil service employment (the Post Office, etc.) would be a good way to help out unemployed people of color – and it’s one of the few things they were right about.

I’m not saying that you should “cleanly separate government support for unions from government support for redistribution” – I think one feeds into the other.

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Chris Bertram 08.06.11 at 6:03 pm

_I don’t understand this distinction. Do you mean that you aren’t relying on the premise that inequality is definitionally bad (moral structure such that you don’t even care about effects)? Effects have got to be why you think it is bad unless we are taking some sort of religiously inspired route._

When I read this I just shrug. These distinctions are really pretty basic in my line of work and don’t depend on anything religiously inspired at all. There’s actually a threefold distinction that’s relevant: you might object to inequality because you think it intrinsically bad; you might object because you think it unjust; you might object because you think it has other bad effects (on health, social solidarity, political equality, etc etc). I’m just relying on the third of these here, but I’m bemused by the fact the you can’t grasp the other two.

Of course even if the Spirit Level stuff was completely bogus, as I don’t think it is, there are the other non-health effects that I can call on. Also, the argument in the OP is conditional (if the following facts are the case, then ….). The SL stuff probably deserves its own post, but I’m unsurprised and unimpressed by the fact that the friends of inequality (and any number of conservative and libertarian think-tanks and pundits) are resistant to its findings.

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Cranky Observer 08.06.11 at 6:18 pm

mw @ 5:49,
I think it is quite clear from the thread what claims you have made and how they have changed as they have been challenged due to weaknesses and inconsistencies. Please answer the challenges posed upthread; then if still necessary we can continue the discussion.

Keep in mind that the topic of the last 3 discussions has been neoliberalism as currently defined, which didn’t exist before 1970 at the very earliest, and also the modern form of neoliberalism which I claim came to the forefront in the Age of Bl0gging (2002 forward). The topic is /not/ what carefully cherrypicked features of the Gilded Age can be matched up to carefully cherrypicked features of today’s political economy.

Cranky

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Henri Vieuxtemps 08.06.11 at 6:35 pm

mw, “founders & investors” taking risks don’t necessarily contribute to inequality. ‘Founders & investors’ could be 10 million people investing 10 bucks each.

People who invent things and spend 10 years to promote it most likely are not motivated by the big payoff. If all you want you is money, you should probably quit messing around with frisbees and just go and rob a bank.

there’s a huge difference between, say, writing a free iPad app or contributing a bit to an open source project and building a successful company from the ground up.

Well, company has sales, marketing, finance departments; the CEO, the CFO, and a bunch of VPs. The overhead. The company wants to make money and to expand its market share, and it doesn’t really care about the quality of its product; only to the extent that it helps to make more money. Did I miss anything? Read some Scott Adams.

But those kinds of people (most people!) don’t create the next big thing.

Of course they do. I mean, they do. Those who you admire only commercialize it.

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mw 08.06.11 at 7:44 pm

Henri Vieuxtemps: ‘Founders & investors’ could be 10 million people investing 10 bucks each.

Investors, yes — founders, no. So go over to Kickstarter.com and make some investments. Maybe ‘crowdsourced’ venture capital is the wave of the future. But even if it is, the founders with the big idea are going to insist on holding onto a bigger share of the equity than each of their countless $10 micro-investors. And the employees (as opposed to investors) will continue to get their paychecks, but not equity unless they also make investments (or unless stock or options are negotiated as part of their pay). As it should be.

People who invent things and spend 10 years to promote it most likely are not motivated by the big payoff. If all you want you is money, you should probably quit messing around with frisbees and just go and rob a bank.

And just how did you determine that inventor/entrepreneurs are not motivated by the money? Robbing a bank doesn’t tend to result in a multi-million dollar payoff (which inventing and prom0ting and selling rights to the frisbee ultimately did) — or the freedom to enjoy it.

Did I miss anything? Read some Scott Adams.

Yes, you did. Startups are not the bureaucratic, sclerotic organizations that Scott Adams satirizes. Eventually, those older companies tend to get their asses kicked by newer, nimbler, more efficient companies (Blockbuster meet Netflix, Borders meet Amazon). At that point, the older companies either get their acts together or fade away as countless formerly large tech companies have in recent decades — DEC, Nortel, Sun, and many others — you may be able to add RIM and Nokia to that list before too long. Today’s giants all live in fear of the same happening to them (or at least they should — the well-managed ones do, anyway).

Cranky Observer: I think it is quite clear from the thread what claims you have made …

Uh, yeah, I’m never really up for the silly ‘if you don’t know, I’m certainly not going to tell you game’.

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Henri Vieuxtemps 08.06.11 at 8:27 pm

@113, “As it should be” – well, that’s the question, isn’t it. Opinions differ.

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Jim Harrison 08.07.11 at 12:19 am

We’re really in uncharted territory since capitalism was previously countered on the right by various traditional power groups such as land owners and on the left by socialist and communist movements. It will be interesting, if only in the sense that witnessing the vivisection of a live human being is interesting, to see what capitalism without an effective opponent turns out to be.

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Sebastian H 08.07.11 at 12:38 am

“When I read this I just shrug. These distinctions are really pretty basic in my line of work and don’t depend on anything religiously inspired at all. There’s actually a threefold distinction that’s relevant: you might object to inequality because you think it intrinsically bad; you might object because you think it unjust; you might object because you think it has other bad effects (on health, social solidarity, political equality, etc etc). I’m just relying on the third of these here, but I’m bemused by the fact the you can’t grasp the other two.”

It sounds like you’re using jargon that I’m trying to tease out, specifically how “inequality” could be intrinsically bad (in a non-dictated from the outside sense) apart from it having bad effects, but if you’d rather be bemused, I guess that is your right.

“The SL stuff probably deserves its own post, but I’m unsurprised and unimpressed by the fact that the *friends of inequality* (and any number of conservative and libertarian think-tanks and pundits) are resistant to its findings.”

Umm, ok. So your response is strict argumentum ad hominem. People who bring up contrary factual evidence can be discounted as the friends of inequality.

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temp 08.07.11 at 12:47 am

StevenAttewell @ 105:

My claim wasn’t that everything on Yglesias’ list was egalitarian, just that it was compatible with egalitarianism. Do everything on the list and then implement a progressive income tax and you’ve got whatever income distribution you’d like. Supposing that Chris is right about the difference between him and Matt, and supposing he convinced Matt to change to his position on equality, what would Matt actually have to change about his policy agenda? As far as I can tell, all he’d have to do is emphasize point 1 more–instead of redistributing X downwards, redistribute Y, with Y some amount greater than X. He wouldn’t have to change his list at all. And we’d still call him a neoliberal.

My point is that the defining difference between left-neoliberals and other leftists is not on the desired level of equality. It’s how to get there.

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yeliabmit 08.07.11 at 1:21 am

Sebastian H: “People who bring up contrary factual evidence can be discounted as the friends of inequality.

What about merely calling them The Friends Of Inequality, would you say, carries some implicit discounting equal to an ad hominem? Is there something inherently negative about being a friend of inequality? If not, why are you concerned by the turn of phrase – why do you object to it? If so, doesn’t that basically answer your first question about why inequality might be “intrinsically bad” (i.e. you yourself would object to being characterized as a friend of inequality)?

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Cranky Observer 08.07.11 at 1:21 am

>> Cranky Observer: I think it is quite clear from the thread what
>> claims you have made …

> mw
> Uh, yeah, I’m never really up for the silly ‘if you don’t know, I’m
> certainly not going to tell you game’.

mw, you made a number of specific claims. Such as your 7:47 PM where you claim that neoliberalism defeated Soviet Communism. When I pointed out that neoliberalism (note the “neo”, as in “new”) didn’t exist until some time between 1984 (my version; Gary Hart’s Presidential run) and 1970 (other posters’ assertion) and therefore could not possibly have had anything to do with the collapse of Sovietism (which is generally thought to have been done in by competition with social democracy) you pivoted into an incredible claim that neoliberalism has existed since “the dawn of the Industrial Age”. When I asked for some citations to that heretofore unknown theory of the political economy of the 1800s you put up another smokescreen. Please – have some basic respect for the ability of those participating here to read and remember what you posted just 20 entries up the thread.

Cranky

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Bruce Baugh 08.07.11 at 2:21 am

yeliabmit: It’s just Sebastian’s usual cowardice. He’s fine with supporting actions that kill and cripple more babies in the name of saving them, that remove medical choice in the name of expanding it, that undermine democracy in the name of protecting it, and so on. It’s just very important to him that we not point any of this out, to him or each other, so that he can go on thinking of himself as a fine fellow with noble aims. Since he usually wants to borrow our moral compass, like a like of conservatives, presumably he finds it unappealing to be called a friend of inequality because actually moral people seem to dislike it. If we stopped talking about it, he’d stop thinking about it.

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Bruce Baugh 08.07.11 at 2:23 am

Like a lot of conservatives, that is.

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Sebastian H 08.07.11 at 2:43 am

“What about merely calling them The Friends Of Inequality, would you say, carries some implicit discounting equal to an ad hominem?”

No it is the labelling dismissal that is ad hominem. Chris labels them to mark them as other, and then gets to dismiss them by group name rather than by argument. That is how ad hominem works.

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Sebastian H 08.07.11 at 2:45 am

In this example, I bring up specific problems with the Spirit Level data and offer specific cites to research contradicting it. That data and research is dismissed with “I’m unsurprised and unimpressed by the fact that the friends of inequality (and any number of conservative and libertarian think-tanks and pundits) are resistant to its findings.”

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Sebastian H 08.07.11 at 2:55 am

And I hate to post three in a row, but note that apparently we should dismiss the British Medical Journal as a “friend of inequality”: one of the main proponents of evidence based medicine and the one of the first to publish the studies linking smoking to negative effects. They aren’t conservative or libertarian think tank or pundit at all.

But of course you wouldn’t know that, because we don’t care about the facts. Ad hominem doesn’t require that the label be accurate, so long as the dismissal is curt enough.

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Meredith 08.07.11 at 4:22 am

I’ve learned a lot — certainly I have a lot of new questions to ask about policy — from reading the comments here. But I was hoping to learn much more about ways thoughtful economists might address issues about well-being that, although fully implicated in issues about income and power (in)equality, can’t be reduced to questions about different individuals’ income or access to capital.

Beyond taking as given that eating, being housed, and having access to basic healthcare are necessary for every person’s well-being (let’s leave eccentrics like Socrates and the Cynics to the side), and beyond the arguments about, say, how best to measure the distribution of wealth in relation to health or how best to incentivize software designers…. What about measuring well-being in terms of things like time? Time for friends and family, time for civic engagement, time for hobbies, for reading, for going to ball games or concerts, for preparing home-cooked meals, for fishing, for scratching one’s ass? (I always figured time was an area of Economics. Julie Shor’s work comes to mind, but there are plenty of more conventional economists who worry about time, no?) What about the presumption of mobility (people will flow where the jobs are), when that mobility is disruptive or even destructive of family, friendships, community (cf. CB’s “social solidarity”)? (Didn’t Adam Smith himself recognize the problems with the presumption of mobility?) What about women, who for some time to come, I assume, will be bearing children and taking most of the responsibilities for early care, at the very least? Are marriage and raising children still of great value to most people, male and female, including those who themselves don’t marry or raise children? (At the very, most crass least, somebody has to produce and socialize future producers and consumers.) I heard questions like this lurking in CB’s post — maybe he’ll be taking them up later. Did so many comments go elsewhere because the questions I’m raising can’t so easily be addressed with measurements of number? Maybe in part, but I think something else may be up.

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Chris Bertram 08.07.11 at 10:41 am

Right, Sebastian, arguing _ad hominem_ ….

First thing, the BMJ research you linked to predates SL. Nothing wrong with that of course, and I’m quite happy to consider that there might be _bona fide_ research that goes the other way. However many of the attacks (then recycled on blogs) come from think tanks, researchers, “institutes” etc that I’m not willing to take the time to consider. Why? Because they have an agenda – as with other things such as global warming, tobacco, gun crime etc – and are just partisans engaged in the business of attacks aimed at muddying the waters so that people shrug and say “who knows?”. Case in point, Christopher Snowdon, “adjunct scholar” at the “Democracy Institute”. So when I think we’re in astroturf territory, I stop listening.

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Chris Bertram 08.07.11 at 10:54 am

Or to put it more succinctly, there’s nothing “ad hominem” about the reasonable epistemic practice of being respectful of the testimony of some kinds of people and heavily discounting that of other kinds of people, especially when you aren’t in a position to review and assess the evidence personally for whatever reason.

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A H 08.07.11 at 11:01 am

Who has the linked to agenda driven research institutes? Are Andrew Leigh and Christopher Jencks part of the “other kind of people” that you don’t need to pay attention to?

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Chris Bertram 08.07.11 at 11:13 am

AH, no, that’s why I wrote: “I’m quite happy to consider that there might be bona fide research that goes the other way.”

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mw 08.07.11 at 11:49 am

mw, you made a number of specific claims. Such as your 7:47 PM where you claim that neoliberalism defeated Soviet Communism

Now where the *hell* did I say anything that could be misread or misconstrued as ‘neo-liberalism defeated Soviet Communism’? In that 7:47 post, I made claims about success in environmental protections.

…you pivoted into an incredible claim that neoliberalism has existed since “the dawn of the Industrial Age”.

Obviously neo-liberalism hasn’t existed since the dawn of the industrial age, but that ‘neo’ should give you a little clue that the ‘neo-liberal’ economic order might have just a few things in common with an earlier liberal economic order. Sheesh.

When I pointed out that neoliberalism (note the “neo”, as in “new”) didn’t exist until some time between 1984 (my version; Gary Hart’s Presidential run)

Gary Hart, seriously? Sorry, I’ve been using ‘neo-liberalism’ in the common usage — (as expressed, for example, in the first couple of sentences of the wiki article):

“Neoliberalism is a label for the market-driven[1] approach to economic and social policy based on neoclassical theories of economics that stresses the efficiency of private enterprise, liberalized trade and relatively open markets, and therefore seeks to maximize the role of the private sector in determining the political and economic priorities of the state. The term is typically used by opponents of the policy and rarely by supporters.[2][3]“

You seem to be restricting ‘neo-liberal’ to mean only the center-left modified version of it. What was called at the time ‘The Third Way’. So I’m guessing that from your perspective only Clinton & Blair would count as ‘neo-liberals’, but I would include Reagan & Thatcher (and would consider Gary Hart a mostly irrelevant obscurity remembered dimly if at all for ‘Monkey Business’). So we’re talking past each other. But my sense of neo-liberalism is certainly the more common one.

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F. Graeber 08.07.11 at 12:40 pm

“especially when you aren’t in a position to review and assess the evidence personally for whatever reason.”

Chris, come on. You’re very interested, obviously, in the subject of inequality, and you’re sophisticated enough to be able to review and assess statistical evidence. “The Spirit Level” is a much-cited text by advocates of the “inequality is bad for people” position that you’re taking as a baseline in this post. Sebastian’s critiques of “The Spirit Level” seem pretty straightforward (in the sense that they’re making factual statements that are true or not) and not all that difficult to assess. Yet your response was essentially “I’m not going to respond to this comment because it repeats things that friends of inequality say.” That seems weak at best.

At the very least, why do you think Hong Kong and Singapore look very similar in spirit-level terms to Japan, despite having much higher levels of equality? Does it bother you that South Korea was excluded in favor of Portugal, given the fact that if you’d done the opposite, the book would have find no correlation between equality and health results, social cohesion, etc.? Do you really think the Nordic countries’ high levels of community trust are a replicable consequence of lower inequality? Surely all these questions are important if you want to know if your statement that high levels of inequality are bad for people’s “real well-being” and undermine social solidarity is actually true, rather than simply a blind statement of faith.

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Chris Bertram 08.07.11 at 1:42 pm

No, not getting into this. For two reasons. 1. The post wasn’t about The Spirit Level other than tangentially, but referred to their findings as one reason (among several) why a person might think that inequality was bad for individual well-being. I was in the business of identifying some differences. I was saying that IF you believe P to be the case they Q …. If I’d wanted to write a post about TSL, I’d have done so. I might do so in the future, but I haven’t got the time at the moment. 2. The points about the inclusion and exclusion of certain countries are well-addressed by W&P at their website. You can go there and look up their responses. (The specific cases you refer to are straight out of the attack literature btw).

Incidentally, I note that W&P have now decided to respond only to peer-reviewed criticism, having been exhausted by the battering they’ve had from the likes of The Taxpayers Alliance, Policy Exchange, Democracy Institute etc. They explain their reasons here
http://www.timeshighereducation.co.uk/story.asp?sectioncode=26&storycode=413094&c=1

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F. Graeber 08.07.11 at 2:25 pm

“The points about the inclusion and exclusion of certain countries are well-addressed by W&P at their website. You can go there and look up their responses. (The specific cases you refer to are straight out of the attack literature btw).”

If you don’t want to talk about TSL, that’s fine — I’ll shut up after this comment. (Although if you or anyone else does have a response, I’d be very interested.) I’ll only say that the points about the inclusion and exclusion of certain countries are certainly not well-addressed by W&P at their website, which is why I asked about them here. South Korea and the Czech Republic are among the 50 richest countries in the world, and have populations greater than 3 million people. They’re both richer than Portugal. (The same can be said of Hong Kong.) Yet W&P leave them out.

I also don’t understand the failure to control for absolute levels of income, or to control for cultural variables. That is, I don’t understand how you can demonstrate that inequality causes lesser well-being if the only variable you’re controlling for is inequality. And again, I don’t think W&P have adequately answered this objection.

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Sebastian H 08.07.11 at 3:26 pm

“First thing, the BMJ research you linked to predates SL. “

It predates the book, but took place in the last five years and post-dates much of the literature which the Spirit Level cites. The fact that it pre-dates SL also suggests that the authors were not “friends of inequality” in the sense you use to dismiss them. It is also peer reviewed, see below…

“Incidentally, I note that W&P have now decided to respond only to peer-reviewed criticism”

Yes it is nice to write a non-peer reviewed book, make quite a bit of money off of it, and then say that you will only respond to peer-reviewed criticism so that you can put off any response for years. I can see why they might want to do that (book in another printing run by the way).

Their inclusion of Portugal vs. South Korea is not well explained anywhere. They discuss their inclusion criterea in their book on page 7, figure 1.1. “these countries are on the flat part of the curve at the top right in Figure 1.1 on p. 7, where life expectancy is no longer related to differences in Gross National Income.” You’ll immediately note that South Korea appears on that figure (as does the Czech Republic). I can understand omitting Malta and Oman on size, but South Korea and the Czech Republic are both bigger than (and more successful than) included Portugal. And with those included, nearly all of their alleged associations between inequality and various societal maladies disappear to well below statistical significance.

“(The specific cases you refer to are straight out of the attack literature btw).”

You’re flirting with ad hominem again. The fact that the attack literature picks up criticism which is both statistically strong and cuts to the heart of their thesis is not an argument against the criticism.

The literature shows a strong relation between income and health, not between inequality and health. On that topic, neo-liberals tend to be focused more on anti-poverty rather than anti inequality. On that topic neo-liberals appear to be more in line with the research.

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Chris Bertram 08.07.11 at 3:32 pm

_Yes it is nice to write a non-peer reviewed book, make quite a bit of money off of it, and then say that you will only respond to peer-reviewed criticism so that you can put off any response for years. _

That strikes me as completely unfair and borderline dishonest Sebastian. You know perfectly well that they put in a great deal of time and effort into responding to journalistic and think-tank criticism from people like Saunders and Snowdon, and that these responses are on their website. They did respond, but after a while decided that continuing to do so was pointless.

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Chris Bertram 08.07.11 at 3:39 pm

_You’re flirting with ad hominem again. The fact that the attack literature picks up criticism which is both statistically strong and cuts to the heart of their thesis is not an argument against the criticism._

Sebastian, your comments are little more than cut-and-pastes from Snowdon’s website. I’d be happy to have a proper discussion of TSL (though ideally not with you) at some point, but it isn’t a good use of my time to respond to comments produced in this manner on a topic that’s only a small part of the OP.

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Sebastian H 08.07.11 at 4:32 pm

Actually I have no idea who Snowden is. I got much of it from Tino Sanandaji’s work on it where he goes through the individual regressions.

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Curt Doolittle 08.07.11 at 4:56 pm

Interesting comments. Mostly emotive, and lacking scientific or empirical or analytical reasoning. But interesting none the less. Here is the CAUSAL RELATIONSHIP that you must work on in order to achieve your preferential society:

“SOCIAL STATUS”
Social status is necessary for the process of heuristic learning we call ‘imitation’. Social status determines access to mates (largely because women are hypergamic). Social status also determines access to opportunities, to social groups, and therefore to experiences and stimuli. However, status signals are of higher value in-group than out of group. This in-vs-out discount is true for (as unpleasant as you might think it is) biological reasons including everything from natural differences in attractiveness, to selection pressures, to natural differences in expresion, and more importantly to differences in “Time Preference” (what separates social classes), and most importantly due to the system of discounted opportunity-costs that occur between peoples with similar time preferences, morals, ethics, manners, and SIGNALS.

Because of the diversity within groups, of human intellectual ability, physical ability, health, symmetry, and attractiveness — and because of the permanent and biologically necessary system of status signals (“Signaling”) — small, ethnically and culturally homogenous states demonstrate a preference for high redistribution. While large ethnically and culturally heterogeneous (diverse) states demonstrate class, race and cultural favoritism resulting in competition for access to political power, with which they can alter their social status. ie: our current society. (Look at Belgium. They haven’t had a government in over a year now.)

You can have a neoliberal society if you break the nation into small parts and dramatically constrain immigration to the top, and deny it to the bottom. Cultural homogeneity will defat even racism. That is because cultural differences outside of food are almost entirely economic differences in the allocation of property, opportunity costs, and metaphysical value judgements that are incommensurable and increase the costs of interaction. These costs are tolerable in brief periods of economic prosperity. They are increasingly intolerable during periods of economic contraction or stasis. If you create many small culturally homogenous societies everyone can be accommodated. And people in these societies will naturally form redistributive ‘liberal’ social sentiments, and therefore redistributive ‘liberal’ policies.

It’s not a complicated formula. But the left’s broader egalitarian fantasy is counter to the evidence provided by the demonstrated preferences of human beings across all cultures. Period, end of story.

People are not equal. In fact, the upper 10% is more impactful than the lower 90% combined. It may be that the upper 1% is more important to a society than the rest combined. And neither are beliefs and preferences equal. Beliefs are economic strategies, and economic strategies are demonstrably unequal in their utility.

Do you wish to believe a fantasy? Or do you wish to achieve a materially superior end for all people?

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Walt 08.07.11 at 5:18 pm

I think we’ve just witnessed a major breakthrough in artificial intelligence. The technology has advanced to the point that AIs can comment in blog comment sections.

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Chris Bertram 08.07.11 at 5:33 pm

_Actually I have no idea who Snowden is. I got much of it from Tino Sanandaji’s work on it where he goes through the individual regressions._

So that would be Tino Sandaji, *co-author with Snowdon* of a WSJ attack on TSL, and co-author of a pamphlet republished by The Taxpayers’ Alliance in the UK and author of the blog

http://super-economy.blogspot.com/

which attacks the “increasingly unhinged” Paul Krugman, multiculturalism, etc etc.

Of course, Sebastian, you can point out that all of this doesn’t mean his sums are wrong.

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Ed Marshall 08.07.11 at 5:44 pm

@Walt Not really, I could make a Doolittle script pretty easily. Just a mashup of racist, sexist, bromides that had nothing to do with the topic at hand. It couldn’t pass a Turing test, but neither could Doolittle.

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Curt Doolittle 08.07.11 at 9:23 pm

ad hominems are what they are – nothing.

Facts are facts, data is data, and humans act as they act. The topic at hand is whether or not the political sentiments and therefore policy under democracy can be adjusted by one means or the other, and what methods and measures should be used for addressing the abstract notion of ‘equality’. However, none of the options offered address the reason that there is a problem in the first place. I offered the reason not only that the problem exists, but why it will persist regardless of the proposition. I am saying it ‘doesn’t matter’ at this size and diversity of polity, because it is impossible to prioritize policies.

Homogenous groups are cooperative and redistributive because of a limited number of conflicting goals which are then possible to prioritize by the democratic process – and they are so for the reasons I stated – its pretty simple behavioral economics. That groups behave like this is simply empirical fact. Whether you disapprove or not is not material. It’s just fact. Whether you agree with the reasoning that I’ve put forward for this behavior is a different issue you’d have to argue against.

In regard to the issue at hand, the question is only whether the approach you are using will achieve the ends you desire – even if you understand those ends, and could determine them. And whether your goal is to obtain political power in order to implement policy, or whether the effect of the policy will materialize should you gain political power and the ability to create policy. But it is unlikely you will fix your problem, if you’re tilting at windmills because you fail to understand the underlying reasons why there is a **permanent pervasive conflict in the current political debate** that is opaque to resolution. Furthermore, you may not understand that political sentiments do not change in a population except that they trend more conservatively with age and experience. And therefore only demographic changes alter political distributions. And that what we are observing today is the natural byproduct of demographic changes and the rate of change within the two party system, in contrast to the rate of change in the global patterns of sustainable specialization and trade, (PSST) and the changes in the flows of capital as those patterns change.

ie: the polity is too big and diverse and under too much flux and duress to solve the problem democratically. And the mandatory nature of signaling guarantees it will remain that way. Just as I said.

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Henri Vieuxtemps 08.07.11 at 10:42 pm

It seems ironic, Curt, that you’re so sure of your ethnic paradise idea at exactly the moment when this is happening:

On Saturday night, more than 250,000 protesters across Israel demonstrated while waving red flags symbolizing old-time socialist political movements, and chanting for “social justice” and a “welfare state.”

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Sebastian H 08.08.11 at 12:53 am

Well I guess the answer is that you find his sums unimportant, so it really doesn’t matter to you if they are correct. You win! I think!??

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shah8 08.08.11 at 1:10 am

Wait, is this the same *Sebastian* that used to troll Calculated Risk?

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Sebastian H 08.08.11 at 1:37 am

I’ve read Calculated Risk, but I don’t think I’ve ever commented there. It isn’t an impossibly rare name.

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Peter T 08.10.11 at 10:29 am

This and the previous post simply make me more aware of the utter inadequacy of economics as a way of looking at socio-political issues. Inequality and its impacts are – as Chris points out – much more than a matter of relative income. And incomes as measured in dollars are not the whole story either – it also matters what the money signifies and is used for. The issue is not to even out dollar incomes, but to nudge societies towards political and social structures that minimise the tensions, waste and miseries that flow from the more egregious kinds of inequality. And it seems to me the more we look at this through the lens of economics, the more we lose sight of this aim, or of any associated possibilities. The kind of thinking exemplified by Meredith’s comments above strike a different and richer note.

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Alex 08.11.11 at 9:42 am

Carter was also the president who signed the bill legalizing home brewing, eventually resulting in the explosion of microbrewing in the U.S.

I should really do that “Great Unacknowledged Statesman: Jimmy Carter” post, shouldn’t I?

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