The Playstation Proof

by Henry Farrell on January 4, 2007

One of the more annoying libertarian shticks to us lefties is the “increasing poverty and inequality don’t matter because consumer spending is going Up! Up! UP! ! !” three card monte routine. I think it must surely have reached its apotheosis in this “failed November hack job on Edwards”: by Jeff Taylor in _Reason Online_ which I didn’t see until Nick Gillespie linked to it today.

However, the slapstick of the Edwards misstep should not obscure the really big picture, the fatal flaw in his “Two Americas” spiel. Many thousands of Americans evidently have $600 to spend on a video game machine. What’s more, this Christmas is expected to usher in the year of the flat-panel. With price points dropping below the $1000 mark, high-end TVs are moving down-market fast with Wal-Mart leading the way. Contrary to the Edwards’ pitch that labor-hostile companies are leaving American workers destitute, somebody is making some money out there in America. More importantly, they are making it in many, many cases without a union card. This reality will very hard [sic] for union-funded Democrats like Edwards to ignore as the 2008 presidential campaign unfolds. Hewing to the union rules, clear evidence of prosperity, like perhaps a shortage of $600 game machines, will have to be swept out of the campaign.

It isn’t hard for me to believe that someone would make the hilariously cackleheaded argument that because “many thousands” can afford a Playstation 3, economic inequality is a non-issue; I see this kind of guff in the comment sections of blogs all the time. But it is rather surprising that it’s being published by a sometimes quite interesting website as a purportedly serious contribution to political debate.

(As an aside, Taylor also introduces us to the interesting sounding concept of ‘Pythonseque depravation one-upsmanship;’ a spelling error trifecta unless depravation is a portmanteau term indicating Taylor’s opinion of the moral qualities of those wicked enough to be poor. Someone really needs to be proofreading the contributions to Reason’s website a little better).

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Miracle Max 01.04.07 at 10:06 pm

Today in the Washington Post an article says the bootleg price for the PS3s has settled down to the list price, as people discover the things kind of suck for the money involved.


Josh 01.04.07 at 10:35 pm

Aside from the well-documented logical (and spelling) flaws in this particular article, I think it fits into a larger pattern of overt hostility toward New Deal-style, “old” Democrats. The last thing anyone should do, we’re constantly told by the likes of the RNC, DLC, and Thomas Friedman, among others, is question the magic of “the market.” Advocating any type of “interference,” such as stronger labor laws/unions, national health insurance, etc. is strictly forbidden and foolish, they tell us.


Gareth Wilson 01.04.07 at 11:21 pm

Playstations are a poor example, granted. But if John Edwards is going to campaign with members of the downtrodden American working class, they should probably turn their cellphones off first.


P O'Neill 01.04.07 at 11:37 pm

There was a variant of this shite that was tried for a while with Iraq — “Look: cellphones and satellite dishes everywhere!,” how can things be that bad?


radek 01.04.07 at 11:41 pm

One of the more annoying libertarian shticks to us lefties is the “increasing poverty and inequality don’t matter…

Well an illustrative example in the context of a story about some goofy behavior on the part of the Edwards team is still better than an assertion made with no data what so ever.
Which said data is here:

(if you don’t feel like looking; No real trend in poverty rate since about 1965, though somewhat higher during and immiediately after recessions. In terms of absolute numbers, growing pop and all, it went about between 2000 and 2004 but is still not up to its peak of 93 or so. Again, the numbers tend to go up during and after recessions then come down and level off.)

Now, of course with respect to inequality the story is different, but I don’t see Taylor saying anything about inequality, rather just the ability to purchase a fairly expansive product (ie. poverty). Not sure who’s playing three shell monty here.

Oh and I must say that I find the existance of a hostility toward New Deal-style, “old” Democrats” on the part of liberterians just shocking. Shocking! Next thing you know they’ll want to legalize dope or something.


KCinDC 01.05.07 at 12:23 am

What’s wrong with “one-upsmanship”? That’s a variant, not a spelling error. Maybe it’s an American thing.


Bruce Baugh 01.05.07 at 12:48 am

The market rah-rah criticism of luxury spending makes perfect sense, if you accept the premise that since things aren’t getting any worse in areas like income volatility or real wages, only a self-centered bum would blow good money on toys when there are real needs. If you start by denying the existence of things that are necessities of a healthy, safe life but now priced out of the reach of more and more people and unreliably held in the hands of many of those who have them at the moemnt, then it all follows.


John Quiggin 01.05.07 at 12:57 am

Bruce, I’ve made exactly this point in the next post above this one.


Bruce Baugh 01.05.07 at 1:24 am

No surprise, John. Your writing on the subject’s influenced me.


Rich B. 01.05.07 at 10:12 am

While your argument is surely correct, I don’t think it effects the critique of the Edwards campaign. “Inequality” is certainly an issue, but when a median household is making around $60K, a campaign based on “two Americas” risks leaving the majority of voters thinking that they are in the richer America.

Poverty and inequality are certainly important issues, but I don’t think you can win by separating the “haves” and “have nots”. While it continues to suck to be a “have not”, more and more people consider themselves to be “haves”.


Bruce Baugh 01.05.07 at 10:18 am

Rich B, what evidence do you have for the claim about more and more people regarding themselves as “haves”? My impression from surveys in recent years – which I admit is prone to all the usual selection bias and everything else, so I’m open to correction – is just the opposite. that more and more people see themselves as barred from meaningful advancement, more at risk from uncontrolled calamity, unable to find grounds on which to expect a better future or even a continuation of whatever good they now have. This is a major shift in self-identification, but it seems to have been well enough documented.


Henry 01.05.07 at 10:25 am

radek – by poverty, I meant relative poverty, as should have been clear from the rest of the post. Capisce? The problem isn’t that libertarians being opposed to New Dealers, it’s that in this case at least (and others that I know of) they are making sucky and stupid arguments.

Rich b – the critique of the Edwards campaign doesn’t hold, because Taylor isn’t claiming that the two Americas theme is politically unpopular as you are – he’s claiming that the two Americas don’t really exist, because of all of ’em non-union workers who are out there bidding up the prices of PS3s. Which is, to put it baldly, a bullshit argument. The response to your argument is that it isn’t nearly as clearcut as you think – there is a high and rising degree of economic insecurity among the middle classes too. Edwards is aware of this – see his enthusiastic blurb for Jacob Hacker’s book on the issue (which is aimed foursquare at the middle classes) – and I imagine that this is going to be part of his stump speech as things progress.


sara 01.05.07 at 12:09 pm

Let them buy Playstations and new TVs and eat Doritos!

(Yes, I know the original quotation is apocryphal.)

In fact, many of the Playstations were bought by people intending to resell them at a profit when the artificially low supply ran out.


Ron Davison 01.05.07 at 1:28 pm

I suppose it could just be my bias showing, but the conservative movement seems to specialize in non sequiturs. “People are buying play stations. How can we say that there is growing inequality?” The problem is not inaccuracies in the writing – the problem is the inaccuracies in the reading, as the conservative crowd seems to merrily hop along from thought (9-11 changed everything!) to thought (we need to invade Iraq now!), confusing the proximity of scattered thoughts for connections between them. Sigh.


Maynard Handley 01.05.07 at 3:39 pm

I’d like to tackle this claim from a different point of view.

Let us assume that the people buy these playstations are, in fact, poor. Even so, why is this a problematic purchase? There is a long long tradition of economists dismissing purchases of certain goods (let’s call them “entertainment”) as somehow frivolous; but why should this be so? People are more than cows that walk on two legs. If they value entertainment so highly that they are willing to pay for it even when they are poor, that is telling us something about the human condition, not that they are not poor.
(Of course there are all sorts of aspects to this argument. You can claim that PS3s are a stupid purchase in terms of entertainment/dollar. You can make various slippery slope arguments. You can wish that people entertained themselves in more constructive ways like reading non-fiction books or listening to non-fiction audiobook.
My point, right now, is to stand up and say proudly that it is inhuman [from the same people like Leo Kass who seem to take “humanity” very seriously”] to deny that “entertainment” is as important to humans as food and shelter and health.)

For more on this subject, my blog post
has a reference to and discussion of an academic article about how people around the world living on less than $1 or $2 a day spend their money. A striking point of the article is that, once again, revealed preferences show the importance of entertainment. A lot of money is spent on “entertainment” (at least 10%, perhaps more depending on how you define things).


dsquared 01.05.07 at 4:33 pm

for what it’s worth, I’ve been to a fair few villages in Africa and Southeast Asia where there was no clean water but there was satellite TV, and am mildly surprised that people who have never seriously had to think about being able to afford either express such strong opinions about what people ought to be prepared to pay for, particularly in the face of the market outcome.


Matthew 01.05.07 at 4:44 pm

This same logic (some expensive PS3s exist somwhere, therefore everyone is middle class) was found in some Wall Street Journal article.

The only thing is there are hardly any PS3s and they’re still not selling out. Even if they were selling in large numbers to lower class people, going $600+ deeper into debt is not a good sign of someone’s economic security.


radek 01.05.07 at 10:09 pm

by poverty, I meant relative poverty, as should have been clear from the rest of the post. Capisce?

Except it wasn’t. Your precise words were “increasing poverty”. And it doesn’t seem to me like Taylor’s talking about relative poverty. He’s talking about straight forward ability to purchase a product. That sounds more like absolute poverty.
And aside from asserting that liberterian arguments are “stupid and sucky” you have made no argument that (absolute or relative) poverty is increasing.

John Q:
Your post is correct but again I don’t think Taylor’s talking about inequality. Everyone can agree that (absolute) poverty is bad. Inequality is generally bad but it also opens up a host of other issues. Given that Reason is a liberterian mag I expect they take the “if povery is non-increasing then who cares about inequality” view.

Maynard H:
There is a long long tradition of economists dismissing purchases of certain goods (let’s call them “entertainment”) as somehow frivolous

Huh? Aside from Veblen I can’t think of any. If anything the economist are more prone to committing the opposite sin of “people buy whatever they buy and who are we to tell’em different” even in extreme circumstances (like John E’s heroin example)

Which means dsquared above is right though I don’t know what that’s supposed to imply.


radek 01.05.07 at 10:22 pm

The idea of “relative poverty” as generally used is really just a particular measure of inequality – % of folks with income relative to some threshold which is a function of the absolute affluence of the society they live in. “Absolute poverty” means people living below some threshold which is independent of the affluence of the society they live in. Like 1$ or 2$ a day, that the WB uses a threshold for poor countries. Obviously not many people in US like that.

The data I linked to above is probably a measure of “relative poverty” so even as far as that goes Henry is incorrect. This is because the threshold used to asses the poverty rate changes year to year as average income has increased. I could be wrong if those adjustments only reflect accounting for inflation, but I think they’re more than that. I’ll check around.


radek 01.05.07 at 10:27 pm

Ok, I’m wrong, they do reflect adjustments for inflation only. It’s a bit annoying that the Census website doesn’t come out and say so and you have to crunch the numbers yourself to see. So it is a measure of absolute poverty.


Maynard Handley 01.05.07 at 11:25 pm

“Maynard H:
There is a long long tradition of economists dismissing purchases of certain goods (let’s call them “entertainment”) as somehow frivolous

Huh? Aside from Veblen I can’t think of any. If anything the economist are more prone to committing the opposite sin of “people buy whatever they buy and who are we to tell’em different” even in extreme circumstances (like John E’s heroin example)

Here’s an idea. Read the paper I referred to. That will give you at least one example. They don’t quite come out and say “these people are idiots for spending 10% of their miniscule income on festivals” but they do everything they can via nudges and winks to convey that idea.


Dave 01.06.07 at 12:40 am

The reaction some of you have is what separates leftists from conservatives.
Conservatives say “ look how good things are.” People are still unequal but that is no ones fault. The overall historical standard of living continues rising. The poor have more resources than ever, so much money they can afford Play Stations. The wealth of the nation is at unprecedented levels. If the economy continues to grow even more poverty will be wiped out.
The rich must either spend there income or invest it. Either way the economy benefits including the poor people. Higher taxes might weaken the economy and would take discretionary funds away from earners and put it in the hands of government functionaries. Libertarians and conservatives think that excessive taxing is unjust. Lefties love the public sector because they think the government functionaries spend the public’s earnings more wisely and in a more socially just manner than earners. But mainly they just want the wealth of the rich to somehow be diminished so that the wealth of the poor and rich will be brought percentage wise to a closer mathematical value.

If the economy were doing poorly there would be calls for government actions to improve it. If there were severe unemployment, that would be a big issue for the left. Now the best they can do is bemoan the good fortune of the wealthy. Since all boats are rising with the vigorous economy, conservatives and libertarians have a positive reaction to the good news. Since left believes there is some type of cosmic injustice to inequality, it decries the good fortune of the more affluent. At a certain point this becomes a symptom of envy and class hatred. There is nothing laudable about this, though the left thinks that it is promoting justice. If there are not enough funds to address problems faced by the citizenry, spending proposals should be offered. Since the affluent have more resources, they should disproportionately fund government activities as they do now with the progressive income tax. There are unlimited spending agendas so wants can only be partially addressed. The issue should be taxation to fund specific needs rather than the promotion of justice through forced equalization of income.


radek 01.06.07 at 10:46 am

Maynard, I read the article. I did skip over your own comments on your blog. Now going back over them I gotta say that I pretty much agree with you (more to life then getting more calories, even if you’re damn poor). However, I don’t get the same sense from the paper that you do and even if I don’t think one paper a “tradition” makes.
In the economist circles I hang out in “paternalism” is a dirty word, and probably righly so.


Henry 01.06.07 at 11:49 am

radek – I don’t want to be rude here, but are you able to read properly? I _didn’t_ say “liberterian arguments are stupid and sucky” or even “libertarian arguments are stupid and sucky.” I said that in this case, and in some others I know of, the arguments are stupid and sucky. This rather obviously doesn’t apply to libertarian arguments _tout court_; indeed, if you would care to read the original post, I say that Reason’s website is sometimes quite interesting, and shouldn’t be publishing this kind of guff. But if you really want to defend the argument that high prices for Playstations are decisive evidence that inequality isn’t an issue, then please, be my guest.

And as for relative poverty – the case that economic inequality is increasing is accepted by all, as far as I can see, except the most sedulous WSJ hacks. Even the bloody _Economist_ accepts it. Measures of relative poverty are _ipso facto_ going to increase (as the mean income, on which these measures are based, increases but the incomes of lower deciles don’t keep pace).


radek 01.06.07 at 10:53 pm

henry, I’m not sure who’s having trouble with reading comprehension here. Where do I come off as wanting to defend that “high (sic) prices for Playstations are decisive evidence that inequality isn’t an issue”?. In light of this misrepresentation of my view, my slight generalization of your statement from a particular case to “some” or even “most” is pretty innocous. So why are you splittin’ hairs?


abb1 01.07.07 at 2:43 pm

Well, I was just visiting the US and I’m reporting that the Americans look prosperous, happy, and fat. At least in the vicinity of Boston’s Rt. 128. Of course I didn’t go places in and around Boston where one is not supposed to go, so I can’t report on that, unfortunately.


Henry 01.08.07 at 12:58 pm

radek – the technical term for what you did isn’t a “slight generalization.” It’s a falsehood. You’ve been making a thorough pain of yourself in comments, trying to defend an article that is hilariously badly argued and that clearly is intended as an attack on claims about inequality, making bullshit assertions about Edwards etc. The ratio of hackishness to insight is far higher than I’m prepared to tolerate in my comments threads. Consider yourself under caution.

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