The Myth of the Rational Voter

June 1, 2007 9:52 PM

Why are American voters reluctant to support free market policies when professional economists have achieved near-consensus? Bryan Caplan of the Cato Institute investigates. (pdf)
posted by stammer (71 comments total)

In other news, professional imams have achieved near-consensus that Islam is totally awesome.
posted by delmoi at 9:55 PM on June 1, 2007 [21 favorites]

Economists. Right on, delmoi.
posted by hank_14 at 9:58 PM on June 1, 2007

There are things in life more important than profit.
posted by Saydur at 10:07 PM on June 1, 2007

The Myth of the Rational Economist
posted by wendell at 10:13 PM on June 1, 2007 [1 favorite]

"It's like when you ask about taxing cigarettes, the people who support it, amazingly, are those in the population who don't smoke,"

--From "reluctant" link

Yeah, this'll teach those damn old people to retire!
posted by Cyclopsis Raptor at 10:14 PM on June 1, 2007

Who is our economy for?
posted by Artifice_Eternity at 10:16 PM on June 1, 2007

There are things in life more important than profit.

I doubt keeping low-skill manufacturing jobs in the United States is one of them, though.
posted by Mr. President Dr. Steve Elvis America at 10:17 PM on June 1, 2007 [1 favorite]

I'll wait right here until the MeFi Young Octobrist Red Brigade shows up to refute the anti-environmental capitalist pigs and their cronies in the oil industry.

/me whistles, taps foot

Hmm, they're kinda late. Must be a drum circle going in the dorm room dining hall.
posted by frogan at 10:19 PM on June 1, 2007

Hmm, they're kinda late. Must be a drum circle going in the dorm room dining hall.

Either that, or they're burning a strawman in effigy.
posted by Blazecock Pileon at 10:23 PM on June 1, 2007

Nothing burns like an effigy.
posted by LoopyG at 10:28 PM on June 1, 2007 [2 favorites]

Blazecock Pileon proves once again that one of the conditions of joining the MeFi Young Octobrist Red Brigade is to surgically remove one's senses of humor and hyperbole.
posted by frogan at 10:29 PM on June 1, 2007

_{The upshot is that we can statistically test whether the vast belief differences between economists and the public are just a byproduct of economists’ privileged circumstances, a rightwing orientation, or both. In other words, we can use the data to run a thought experiment: What would a person with average income, average job security, average party identification, average ideology, average everything, think if he had a PhD in economics? I call such a person a member of the “enlightened public”—someone who combines the circumstances of the layman with the knowledge of the expert.22
...
22) To estimate the beliefs of the enlightened public, I first regressed economic beliefs on respondents’ characteristics, including income, job security, income growth, sex, race, party identification, ideology, education, and “econ” (a dummy variable equal to 1 if the respondent is an economist, and 0 otherwise). Then, for each equation, I calculated the predicted belief assuming a respondent had the general public’s
average income, job security, income growth, sex, race, party identification, and ideology, combined with a PhD in economics. For more details, see Bryan Caplan, The Myth of the Rational Voter: Why Democracies Choose Bad Policies (Princeton, NJ: Princeton University Press, 2007), pp. 84–93.}

No surprise the "enlightened public" agrees with the economists (look at the graphs), that is to say an economic PhD has a greater effect on people's views then race, economic stature or whatever. I would be silly to think otherwise, but I suppose he was worried about imaginary "liberal" foes who would say the opinions were class based. Most of the questions that the public gets wrong are simply "knowledge" questions that you would certainly hope economists would get right, and you would wouldn't expect people who don't follow the data to know. Some are political (like that there are too many immigrants)

I'm sure there is a lot of good math in the world of economics, but a lot of the 'layman' stuff seems to be simply a recitation of the "Econ 101 worldview", which takes economic theories and makes them Normative.

Anyway, his solution is even dumber, it's to limit government and stop people from making too many "group choices" He, as you would expect from someone from the Cato Institute, ignores the fact that allowing individual choice in some areas can cause group harm. Millions of individual bad choices cause problems in aggregate just like irrational voting. People irrationally vote for global warming every time they fill up their SUV. The population is too large to really escape everyone else's bad choices. The other problem is that peoples individual bad choices may harm them greatly. Just look at Casey Serin. Not having a social safety net means that a few poor choices can throw people "off track" and lead to a lot of suffering. The fact is, some people are just stupid, and it's reasonable for the government to protect them from some of the consequences of their own dumbness.
posted by delmoi at 10:33 PM on June 1, 2007 [1 favorite]

My theory as to why the public is reluctant to embrace policies such as outsourcing;

It may well be true that allowing completely free labor markets and such increases prosperity overall, but we with good reason care more about the prosperity of our families, communities, and nations. If tons of well paying jobs are outsourced to poorer countries, that raises prosperity levels in the poorer countries. In the short run, however, it fucks with the economy and thus the lives of people in our communities.

Yeah, in the long run it will likely raise prosperity everwhere, but as Keynes said, in the long run we're all dead. You expect people to be willing to suck it up and have shittier lives because it will pay off sometime in the future when they and their family won't be around to see it?

Ahahahah, no.
posted by Justinian at 10:34 PM on June 1, 2007 [2 favorites]

Americans have seen that the decades of neo-liberal economic policy has been a very mixed blessing: people are working longer hours and are less able to rely on their communities for support. Many traditional forms of social relationships are in a process of disintegration, replaced for many by an unprecedented sense of isolation and paranoia. Wealth has increased in absolute terms, but the inequality in its distribution has grown dramatically.

Economists are not experts on personal well-being, meaningful communities or ecology, and a market is not an unmanned rocket in deep space, to be entrusted to a cabal of expert navigators -- it is a sum of social relationships, and so people have a right to be distrustful if their society is piloted in a way that makes them unhappy.

Finally, the American voters, to my recollection, have never had the opportunity to vote on "free market" as such, with all that this implies, such as the free movement of labor. Instead, it has always been the neo-liberal "free market"--a market which protects the freedom of corporations to exploit and pollute with impunity, while limiting the ability of individuals to organize against them.
posted by ori at 10:35 PM on June 1, 2007 [8 favorites]

[O]ne of the conditions of joining the MeFi Young Octobrist Red Brigade is to surgically remove one's senses of humor and hyperbole.

Who is this strawman you keep kicking and punching in an incoherent, rambling manner?
posted by Blazecock Pileon at 10:40 PM on June 1, 2007 [1 favorite]

It may well be true that allowing completely free labor markets and such increases prosperity overall, but we with good reason care more about the prosperity of our families, communities, and nations. If tons of well paying jobs are outsourced to poorer countries, that raises prosperity levels in the poorer countries. In the short run, however, it fucks with the economy and thus the lives of people in our communities.

This isn't quite the claim. The claim is that allowing free movement of labor will make the American economy stronger as well. If this is true, we should be able to use some of the wealth created to cushion the blow on the individuals who are hurt in the short term. This seems like a better solution than trying to restrict the flow of labor.
posted by Mr. President Dr. Steve Elvis America at 10:42 PM on June 1, 2007

a market which protects the freedom of corporations to exploit and pollute with impunity, while limiting the ability of individuals to organize against them.

...as if corporations are not themselves owned by individuals...
posted by frogan at 10:44 PM on June 1, 2007

...as if corporations are not themselves owned by individuals...

frogan, perhaps you should distinguish between forms of social organization wherein individuals organize to achieve common goals for their communities and the type of deep moral and personal commitment you might have to a corporation on your retirement portfolio headquartered in a place you've never been to, peddling in wares that whose purpose and worth are often obscure.
posted by ori at 10:50 PM on June 1, 2007

If this is true, we should be able to use some of the wealth created to cushion the blow on the individuals who are hurt in the short term.

That would be nice! Let's remember real hard to do that part. I am sure the people at Cato will have done everything to factor that into their plans.
posted by furiousthought at 10:51 PM on June 1, 2007 [3 favorites]

Why are American voters reluctant to support free market policies when professional economists have achieved near-consensus?

Because they work in the nominal free market, and know what their nimrod bosses are like.
posted by ROU_Xenophobe at 10:53 PM on June 1, 2007 [2 favorites]

That would be nice! Let's remember real hard to do that part. I am sure the people at Cato will have done everything to factor that into their plans.

Don't worry, furiousthought -- the invisible hand takes care of all that! You just sit back and relax.
posted by ori at 10:53 PM on June 1, 2007 [1 favorite]

Adam Smith-style anti-corporatist, free market economics may make industry as efficient as possible, but it may create a pretty cutthroat, corrupt and unpleasant society in which to live, as China is finding out. Western-style corporatist "free" markets already do so. Economists ignore irrational, non-objective social factors such as "quality of living", to the detriment of being able to model reality properly. I like what Bhutan tries to do, if I don't necessarily agree with the methods.
posted by Blazecock Pileon at 10:55 PM on June 1, 2007

The Cato Institute look to me as though it's highly inefficient - they have large offices in DC (why not relocate to Hyderabad?).

"Cato's 2005 revenues were over $22.4 million, and it has approximately 95 full-time employees, 70 adjunct scholars, and 20 fellows, plus interns." - hmm, that money would go much further in Beijing. Most of the employees could easily be replaced by locals. The scholars and fellows would be expected to re-locate since from a purely economic point of view the location in which they do their work is irrelevant these days.

"The Cato Institute is a nonprofit, tax-exempt educational foundation under Section 501(c) 3 of the Internal Revenue Code. " - oh dear. So the the free-market applies to others, not themselves?
posted by thatwhichfalls at 11:04 PM on June 1, 2007 [5 favorites]

Adam Smith-style anti-corporatist, free market economics may make industry as efficient as possible, but it may create a pretty cutthroat, corrupt and unpleasant society in which to live, as China is finding out.

I wonder how much of this is due to the market and how much is due to the people participating in the market and their values. The free market doesn't attach a value to an hour of leisure time--individuals do.

It's true that many Americans have to work long hours just to afford a basic standard of living, but many more choose to in exchange for higher pay. For whatever reason, Americans don't seem to be interested in negotiating for 35 hour work weeks, six weeks of vacation, and less pay--even the ones who could live comfortably on such pay.

This isn't the fault of the market so much as the fault of the values of American workers. Again, I'm talking about the middle class, not the working poor.
posted by Mr. President Dr. Steve Elvis America at 11:07 PM on June 1, 2007 [1 favorite]

it may create a pretty cutthroat, corrupt and unpleasant society in which to live, as China is finding out. Western-style corporatist "free" markets already do so.

Your position seems to be that the freer the market, the worse off the society. And that's just insane.

Last time I checked, Colgate wasn't putting poison in the toothpaste, and the reason for that is two-fold. Market competition quickly removes the bad actors from the stage, and market competition makes for a better society, not a cutthroat one, that allows you to create a strong entity like the Food and Drug Administration.

China is just emerging into a market economy. It should surprise no one that a corrupt oligarchal regime never created the social bulwarks strong enough to keep the idiots from putting poison in the toothpaste. China needs capitalism ... to be placed into a time machine and sent back 50 years, so we wouldn't be having these problems today.
posted by frogan at 11:14 PM on June 1, 2007 [1 favorite]

Your position seems to be that the freer the market, the worse off the society. And that's just insane.

Is it? Why does the order of governments coalesce around regulating naturally free markets? Empirically, cultures have evolved structures and rituals to manage the problems caused by truly free, unfettered markets.

Last time I checked, Colgate wasn't putting poison in the toothpaste, and the reason for that is two-fold.

If there is a FDA-like government entity in a free market overseeing product reliability and safety, the economy is, by definition, no longer a classical, laissez faire free market.

When you have fixture of supply and demand in the marketplace (either by monopsony or monopoly, or by price fixing between competitors) you no longer have competition, also a hallmark of a classical, laissez faire free market.

Whatever word describes American capitalism, it is not really "free".
posted by Blazecock Pileon at 11:36 PM on June 1, 2007 [1 favorite]

"people are working longer hours"

Don't be so sure.

With respect to the content of the Cato paper. First, it just blithely assumes that profit and economic growth are good things. Frankly, I don't see that this is necessarily the case. Second, any theory that considers the ends to justify the means (the article considers greed to be engine of progress), is clearly suspect.
posted by oddman at 12:01 AM on June 2, 2007

Yes but see also: Post-Autistic Economics.

Just when that consensus seemed oh so close.
posted by washburn at 12:13 AM on June 2, 2007 [2 favorites]

Dr. Steve Elvis America: The claim is that allowing free movement of labor will make the American economy stronger as well. If this is true, we should be able to use some of the wealth created to cushion the blow on the individuals who are hurt in the short term.

Except you and I both know that ain't gonna happen to any real extant. Oh, there will be lip service paid, but that's it. Case in point; corporate profits are at record highs these days. How much has social welfare spending increased? Quelle surprise.

I am also completely shocked that many of the same people arguing for free labor markets are the same people arguing we should cut or eliminate many social welfare programs.

Note; I don't have a good answer to this situation. But I can certainly point out the bullshit that comes from other people! That's one of the advantages of not being a politician or economist.
posted by Justinian at 12:26 AM on June 2, 2007

Except you and I both know that ain't gonna happen to any real extant.

Well, it certainly isn't going to happen if the left can't bring itself to think beyond inefficient protectionism. The problem is that liberals are economically stupid, which is perhaps surprising, since their social welfare programs cost a lot of money. You'd think they'd be more interested in making a lot of money to pay for them.

Of course, conservatives know how to make money, but they kind of have this "fuck the poor" attitude. If the two sides could work together, though, I can almost see them doing something sensible.

Case in point; corporate profits are at record highs these days.

It might interest you to learn just who all benefits from corporate profits. Look it up sometime.
posted by Mr. President Dr. Steve Elvis America at 12:36 AM on June 2, 2007

So, I read the Caplan piece, and my thought on it is that, as ever, the Cato Institute fails to realize that many people disagree with them not because they don't understand economics, but because they simply value different things than the Cato Institute does. For example, I'm an environmentalist. The Cato Institute doesn't give a shit about the environment- or if they do, it's not in the same way as me at all. That being the case, I'm not going to support their policy prescriptions, because even if they are a good way to achieve what the Cato Institute wants, they aren't going to help achieve what I want. On many issues, like that one, universal health care, and Social Security, I think the disagreement between the majority of economists and the average person is not so much a disagreement on what works best, as it is a disagreement on what matters. Or, what ori and Justinian said, basically.

Also, I for one take exception to being lumped in with the Mefi Young Octobrist Red Brigade. As far as ridiculously over-the-top strawman caricatures go, it would be at least vaguely more accurate to call me a tree-hugging, anti-progress Luddite ecofascist, thank you very much. (I've found that a lot of the real Red Brigade types are actually pretty anti-environmentalist. They think it's a bourgeois ideology standing in the way of the industrial progress necessary for the liberation of the workers of the world, or something along those lines.)

Related to the topic of this thread and the article washburn posted, there's an interesting article here on heterodox economists.
posted by a louis wain cat at 12:48 AM on June 2, 2007 [2 favorites]

Whenever I hear the term "free labor market" I get the image of people becoming migrants in their own country. Stuffing their families into the family beater and chasing jobs from town-to-town, state-to-state. Modern-day Joads.
posted by Thorzdad at 5:14 AM on June 2, 2007

Is There a Free-Market Economist in the House? Most free-market supporters in academia may be economists, but most economists are not free-market supporters. (A nice claim.)
posted by ~ at 8:08 AM on June 2, 2007 [1 favorite]

(Oh for the love of... most economists apparently not web literate. Here.)
posted by ~ at 8:10 AM on June 2, 2007 [1 favorite]

delmoi writes "ignores the fact that allowing individual choice in some areas can cause group harm"

Cato maybe does, but not EVERY economist does. You are referring to the concept of externalities which derives from a very simple observation: there are consequences to actions ; these consequences may be undesiderable ; people affected by these negative consequences can be considered as-if they were sustaining a cost ; the cost may not necessarily be measurable with money, but nonetheless has REAL effect on the person ; on top of this, the person sustaining the cost may be completely -external- to the transaction, meaning he didn't take any part in it , nor benefits from it.

That's a type of Tragedy of The Commons externalities, in which we ALL breathe the same atmosphere, but the two parties involved in the SUV transaction are shifting some cost to us , and we don't benefit from the transaction 1

Logically we could :
1- demand to raise a tax on pollution, demand that the money is then distributed to ALL non suv owners or
1.a demand that the raised money is given to owners of the least polluting car, as an encouragement gift for their behavior

Which is all nice and dandy, BUT

1b. the day after the price of ecofriendly cars is immediately raised by the SAME amount of the gift. Or it is more slowly, less noticeably rised over time (of an amount not necessarily as high..but still).

That's because the car salesman thinks he will be able to obtain more profit while not buying more cars (risk of overstock) ; basically he tries to get some of the "surplus money" that was pocketed by the ecofriendly car owner.

In theory the smart consumer should immediately shift to another salesman , or another car BUT in practice the rational salesman will try , at corporate level, to strike an agreement with other ecofriendly car producers, in which they all decide to raise somehow the price or to disguise this increase in accounting. The bottom line being : WE WANT that surplus given to the ecofriendly car owners, we will find ways and means.

So the ecofriendly car owner meets reality : he can choose another car, another brand and maybe spend a little less, but still.

--------------

The second scenario is : putting a limit to the actual emission of the vehicle , plain and simple. If you respect it, you can sell the car. If you don't, sorry for you. KThxBye.

The limit could be determined by open consensus of industry and academia , could be changed over time and revisited ...BUT it should force the reduction of emissions over time. ( or reduce the consumption and (i guess therefore) the absolute amount of emissions). Now THAT skips the market entirely, but nonetheless have consequences on the companies that sell the car product.

The government MUST impose the limit, otherwise it would probably be ignored, or some kind of pro-forma index would be offered as candy by industry to consumer.

a. the next day it's bloody murder time : the gubmint is imposing an artificial restriction, AHH ! Cry me a river ! Whaaa ! HEY MR SENATOR, do you remember my contribution don't you ?! Don't you bullshit me Senator, don't confuse me with your electors !

b. the lobby apparatus does what lobbies do : redde rationem, either do what I say and forget my support, Mr Senator.

c. HOT NEWS , money can buy people behavior ! JUST OFF THE PRESS ! The limit is off, on , it's not well calculated, it's a sham. It's not enforced, it is enforced somewhere but not everywere. It's scandal , bribe, confusion.

/RANT ON

Now we "economists" with a college degree in economy may be the spawn of evil (I tought lawyers were!) , but not everyone among us is blinded by ideologies and some among us have more friends and influences among scientist and engineers then among government types and shady private interests.

Yet recently the discouragement has grown exponentially : at least in italy , we are considered by industries one step above lawyers and 2 under engineers, in a rigid logic evaluating degrees as per their potential productivity. Studies are discouraged in practice (no prohibition, but try accessing a database at a cost and finding data that isn't cooked), nosy economist point out that the market isn't approximaty free market AT all are regularly ignored , on top of this there is little or no investment into studies that don't directly benefit somehow the company ...and the few brilliant minds we have in universities, they are under STRICT political control, underpaid and depressed.

You will pardon me if I will increasingly mind my own business.
posted by elpapacito at 8:33 AM on June 2, 2007

a market which protects the freedom of corporations to exploit and pollute with impunity

Perhaps that explains why 65.0 percent agree that "the U.S. should increase energy taxes."
posted by Kwantsar at 9:28 AM on June 2, 2007

washburn writes " Yes but see also: Post-Autistic Economics.
""

Thanks for this interesting link :)

On a tangent, the critics of Perfect competition model often argue that its unrealistic , because the implicit conditions of the model (perfect information, equal access, free entry et al) will never be met in "real world".

Yet while one can certainly criticize the model and its conclusion , one shouldn't discard it BECAUSE it is being exploited in a dogmatic way. Unfortunately a lot of people still think 1=1 , rules of math are universal so the model must be right, because the numbers add up and that helps sell the model as a "scientific truth" , while iit may be implemented as far as it APPEARS to sustain tried and tested exploitation models that haven't changed since slavery was invented.
posted by elpapacito at 9:29 AM on June 2, 2007

since their social welfare programs cost a lot of money

employing a lot of people in productive enterprises, making it a wash.
posted by Heywood Mogroot at 10:06 AM on June 2, 2007

since their social welfare programs cost a lot of money

employing a lot of people in productive enterprises, making it a wash.

How does a social welfare program, employing people in a productive enterprise, generate enough money to continue to employ people in a productive enterprise? There's a law of thermodynamics that's being violated here...
posted by frogan at 11:02 AM on June 2, 2007

enough money to continue to employ people in a productive enterprise

social welfare isn't supposed to be cutting $700 checks for millions of people every month.

If I were King it'd be marshalling government to subsidizing the necessary services for people to become and remain productive members of society, since the free market is, historically, really piss-poor at capital investment -- in people -- like this.
posted by Heywood Mogroot at 12:25 PM on June 2, 2007

Because professional, better known as "academic", economists have not reached a near consensus.

You may be thinking of just one loud school of economics known as the Chicago School, which itself is deeply flawed and prefers normative theories to studying and understanding reality. From the economics papers I've attended, I gather that economics has just as much dispute and discussion as any other field. Of course, most of the economists I've met are economic historians (trained as economists, but doing research on historic economies), and they tend to be more rational and data-oriented than the average economist. Also, they have a much better sense of the long run of economics - you really need to think about economies in the sense of centuries.
posted by jb at 12:33 PM on June 2, 2007

Well, it certainly isn't going to happen if the left can't bring itself to think beyond inefficient protectionism. The problem is that liberals are economically stupid,

What a retarded statement.
posted by delmoi at 3:22 PM on June 2, 2007

Your bias is showing, jb, as Fama, Miller, Friedman, (and Murphy, and Goolsbee) and many of the rest of them are and were as comfortable with empiricism as they are and were with theory.

Seriously. Do you think that Milton Friedman never ran a regression?
posted by Kwantsar at 3:52 PM on June 2, 2007

There's a law of thermodynamics that's being violated here...

nope ... that only applies in a CLOSED system
posted by pyramid termite at 8:24 PM on June 2, 2007

nope ... that only applies in a CLOSED system

Agreed, and I was being facetious. But I think you would agree that the government can't put everyone on the dole and order them to go out and do good works (feed the homeless, build trails in Yosemite, etc), because then no one would be available to pay taxes in order to fund the dole in the first place. Although I'm sure the homeless and the hikers would be happy, for a day or two. ;-)

And therein lies the rub. How much money do you take out of the economy, in the form of taxes, in order to perform necessary, government-directed social work that provides little or unclear direct payoff?

I'm sure we can do without making new nuclear bombs and feed the homeless instead. At the same time, I'm just as sure that if I forcibly took 75+ percent of your salary and paid it out to poor people, you'd protest, at least a little. Hiking trails in Yosemite sound GREAT. But if you live in Florida...

That line gets drawn somewhere. And so the conversation continues...
posted by frogan at 9:02 PM on June 2, 2007

How much money do you take out of the economy, in the form of taxes, in order to perform necessary, government-directed social work that provides little or unclear direct payoff?

The only time money is "taken out" of the economy is when a coin accidentally rolls down the storm drain. Now, of course, inflation is the true cost of free handouts, but that is another debate.

The putative free market is good for giving us 40 shelf-feet of toothpaste, but it has not been that good about taking on the things that really matter to us.

We are rich enough -- strike that, sufficiently productive enough, such that we should not have tens of millions of people in this country scraping by or held in jails.

A side benefit of a truly democratic-socialist economy is that a lot of the "make-work" jobs -- health services, teaching, the arts, engineering, construction, et al -- are quite rewarding, more rewarding that making $6 stocking shelves at Walmart with Chinese-made crap, at least.

If I were King I'd also tax parasitical inherited wealth out of the system. My favorite mechanism for that is a Georgist site value tax, of course. I don't believe any economic reform is truly possible until the cancer in the system -- land speculation and earning money by doing nothing excepting holding one's part in the land monopoly -- is removed.
posted by Heywood Mogroot at 10:35 PM on June 2, 2007 [1 favorite]

Can I start selling crack outside the school playground yet? Please let me know when this starts, as I have an army of unemployed Mexicans waiting to go to work in my new enterprise.
posted by PeterMcDermott at 8:21 AM on June 3, 2007

Your bias is showing, jb, as Fama, Miller, Friedman, (and Murphy, and Goolsbee) and many of the rest of them are and were as comfortable with empiricism as they are and were with theory.

Really? Then their research was just wrong, since the research I've been reading goes against most of what they say. Ptolemy was confortable with empiricism and Tycho Brahe was the king of astronomical observation in his period, but I wouldn't use star charts made by either of them to navigate the universe. They misunderstood their empirical data.

There is a reason there is a backlash beginning - the theory does not fit the data, including the data which has continues to emerge through research. I'm not saying I understand the whole of it, but from all the recent research being done on the nature of development in the sixteenth to twentieth centuries, the old stories just aren't holding. Market integration isn't correlated with growth, for one thing. Nor are open markets always -- did you know that the European countries with the highest rates of growth in the early modern period were the protectionist countries with colonies (like Britain)? Openness to international markets was, in that time and place, correlated with slower growth.

We can't base the way we run our world on flawed theories. Personally, I feel that the theories were flawed in the first, because they asked the wrong questions. But aside from that, they even got the wrong answers to the questions they were asking.

I have a strong bias, one which I am proud of, against people who are afraid to have their theories tested and possibly overturned. If they believe in their theories, then they should engage in the debate.
posted by jb at 8:32 AM on June 3, 2007

Georgist tax theories made sense in the early modern period in England, when the monopoly of land actually did mean you could make a great deal of money by monopolising the means to a livelyhood. But they don't reflect a very different situation today. Who cares who monopolises land somewhere like Canada? Farmers, foresters, miners? These are not the aristocracy. The people who dominate are those who control business, not land.

Besides, all property based tax systems are inherently flawed. Taxing property instead of income means that people whose only asset is property (including their home) can be taxed away on it. Property isn't necessarily an-income generating asset. If a senior citizen owns a house that is now worth a great deal of money, it doesn't make a damn of difference to her - it's her home. She's not selling it, making money off it, she's trying to live in it. It may have emotional value to her which outstrips any financial - and it would be immoral to take it from her simply because she doesn't have the money to pay massive taxes on it.

If a farmer is running a farm on land near a city, it's not good for anyone that they should be forced to sell up just because that land could generate more profit as a suburban subdivision. If you did that in Canada, we'd have no agricultural land left because the only land low enough value for agriculture would consist only of rocks and trees, and then it better not be pretty or within driving distance of Toronto. And you want farms near cities, even when the land is worth a lot, so that you can cut down on the environmental effect and the cost of transportation. You also have the added benefit of creating green belts, protecting watersheds (to water that city).

I study the world that was dominated by landlords, when the main tax in Britain was the land tax. It made sense then and there - at the time land was the source of most income. But that time is gone - and never was in many places.

Tax should be based on income, and income alone. If someone has so much wealth that the wealth generates income for them (they are landlords, they have investments, etc), they can pay tax on that income, just like the rest of us pay tax on employment income.

Will tax cut into profits? Of course it will. Tough luck. Those profit-making businesses benefit from all the things that taxes pay for -- educated and (in civilised countries) healthy workers, good roads, infrastructure, social peace, domestic and international security. Every single person, company and corporation in a developed country benefits from the subsidies of government spending, and the more powerful they are, they more they benefit.

Also, are people with inherited wealth any more or less parasitical than people who, by virtue of their gender, race, connections, education, happen to be in jobs which are paid much more than other jobs? Does a lawyer contribute that much more to society than a police officer? Than a care-giver to the aged? A CEO who runs his company into the ground will always be paid hundreds of times more than the most competent and hard-working and deserving of adminstrative assitants -- how is he not a parasite?

Life is unfair, and I'm all for taxing inherited wealth, just as lottery winnings are taxed. But the vast majority of inequaliity in the developed world is not from inherited wealth, it is from out-dated and biased inequality of income, whereby high status positions receive high renumeration, and low status receive low, regardless of the ability of the individual or the social utility of the position. If you want to talk about real equality, then you have to talk about reducing income inequality. And not for any fuzzy feel good reasons (though those are nice), but because quality of life is better for everyone when income inequality is reduced.
posted by jb at 8:41 AM on June 3, 2007 [1 favorite]

But I think you would agree that the government can't put everyone on the dole and order them to go out and do good works

but doing good works is doing something, is it not? ... there have been societies in the past that spent much of their peoples' labor on such things as the pyramids

in any case, i don't know that anyone's argued that everyone should be on the dole

How much money do you take out of the economy, in the form of taxes, in order to perform necessary, government-directed social work that provides little or unclear direct payoff?

i don't see why thomas jefferson had lewis and clark wander all over the continent like they did ... it wasn't like there was a direct payoff - they didn't make money on the trip

i don't think direct payoff is the criteria you need to use ... hell, a junkie gets a direct payoff every time he does a hit, but that doesn't make it good

At the same time, I'm just as sure that if I forcibly took 75+ percent of your salary and paid it out to poor people,

every civilization i'm aware of required 50 to 60 % of a person's income in taxes, tribute or corvee labor ... in fact, with all the hidden taxes in everything we buy, we're probably not that different

who knows, we may be up to 75% and just not realize it

it's the price one pays for civilization
posted by pyramid termite at 8:52 AM on June 3, 2007

Taxing property instead of income means that people whose only asset is property (including their home) can be taxed away on it

there are a multitude of potential pitfalls with a different tax regime like the LVT. In my Kingdom, the LVT wouldn't tax HOME values, it taxes the land the home is sitting on. I would also scale it such that owners utilizing land under the median value would receive a proportional tax REFUND from those who are monopolizing land with valuation above the median. Senior citizens would also be free to defer their taxes onto their estate.

at any rate, I approach Georgism from the moral perspective and think about how it would work in the real world. If anything is certain in economics, it is the proposition that taxing land valuation is the least bad tax, for important reasons such as transparency of rate setting, extreme difficulty of avoidance, impossibility of transferring the tax onto others, not to mention the moral dimensions which I won't get into here.
posted by Heywood Mogroot at 11:01 AM on June 3, 2007

delmoi: The fact is, some people are just stupid, and it's reasonable for the government to protect them from some of the consequences of their own dumbness.

I guess I'm going to fundamentally disagree with you on that. The government should protect other people from individuals' stupidity, but not the person doing the stupid thing.

Otherwise, it's just a very blurry, subjective line what's "stupid" and what's not; I don't want the government stepping in to "protect" me from my own "stupidity" if I'm aware of the risk and choosing to do it anyway, and it's not directly hurting anyone else. That's not a 'slippery slope' or a 'path to tyranny' or anything else, that is tyranny, of a very real and significant sort.


As for why 'average people' don't see eye-to-eye with economists, I think it's because economists find it a lot easier to write off, say, virtually all low-skill manufacturing jobs in the U.S., while people living in communities held together by those jobs would rather not see them disappear, regardless of the theoretical net benefit to the nation or the economy that it might bring. Nobody wants to live in a ghost town with 50% unemployment because the mill closed down, and if it takes a little protectionism to prevent that, well, that's fine by them.
posted by Kadin2048 at 10:45 PM on June 3, 2007

I don't want the government stepping in to "protect" me from my own "stupidity" if I'm aware of the risk and choosing to do it anyway, and it's not directly hurting anyone else.

Except you are hurting someone else. You're hurting society at large.

In these types of cases, the "protection" offered for the individual's benefit is only ancillary to the effect on society as a whole. "Click it or ticket" seat belt laws aren't there to keep your head going through the windshield because we like you personally. The laws are there so large numbers of people don't die or become helpless invalids that are then a drag on society as a whole. Motorcycle helmet laws didn't start sprouting up until people started to realize that huge numbers of adults with closed-head injuries (many of which require expensive life-long care) were the result of garden-variety motorcycle crashes.

In fact, all laws are intended for this purpose -- keep the society running smoothly. The fact that it helps you, personally, is an after-effect.

In other words ... you are not a unique snowflake.
posted by frogan at 2:57 PM on June 4, 2007

Nobody wants to live in a ghost town with 50% unemployment because the mill closed down, and if it takes a little protectionism to prevent that, well, that's fine by them.

Yes. Let's go out of our way to ensure generations of people will remain in dead-end jobs forever. My son. I love him. I really hope he grows up to be a sheet metal worker. Better save the mill so his job is there for him when he grows up.
posted by frogan at 2:59 PM on June 4, 2007 [1 favorite]

Not all "dead-end" jobs are terrible. If it pays well and offers good benefits, where is the shame in doing factory work? At least if people have that option, they are better off.

Certainly beats fast food or Wal-Mart. I mean, not everyone can be a super-special professional. What about people with low skills? They need *something*.
posted by marble at 4:53 PM on June 4, 2007

What about people with low skills? They need *something*.

They need education. Not a knee-jerk "save the mill or else" reaction.

Hell, if you believe the news, there's more entrepreneurism happening in Third World nations via Grameen Bank-like initiatives than there is in Flint, Michigan. Tells you something about the culture of handouts and union rabble-rousers.
posted by frogan at 5:47 PM on June 4, 2007

They need education.

not everyone is capable of getting through a college degree ... and not every job ... or even most jobs ... is going to require it

someone's still got to mow the lawn at the golf course and take out the garbage

Hell, if you believe the news, there's more entrepreneurism happening in Third World nations via Grameen Bank-like initiatives than there is in Flint, Michigan.

oh, bullshit - please compare the yellow pages of flint, michigan and hovel of huts, thirdworldistan

like someone opening a restaurant in flint would be news ...
posted by pyramid termite at 8:53 AM on June 5, 2007

not everyone is capable of getting through a college degree ... and not every job ... or even most jobs ... is going to require it ... someone's still got to mow the lawn at the golf course and take out the garbage

Yes, let's save the world for the ditch-diggers. Me? I'd rather have machines do the digging, skilled people running the machines and hybrid grasses that don't need much mowing. And besides, your manichaen "all or nothing" worldview doesn't take into account that there are other forms of education besides college, or that you should take the long view and focus on the children of the millworkers.

But go ahead and jerk that knee some more.
posted by frogan at 10:38 AM on June 5, 2007

frogan, you're not really addressing my point or dealing with anything but some kind of utopian world where everyone's job needs whatever it is you'd like to define as an education and where everyone is capable of getting that education

i'm talking about the real world, not a worldview

you should take the long view and focus on the children of the millworkers.

most of the children of the millworkers i know are making less money than what they would have at the mill

you still haven't refuted that there are going to be menial jobs in any society that isn't a technological never-never land and you haven't addressed the problem of how a decent society should deal with that reality
posted by pyramid termite at 11:00 AM on June 5, 2007

you still haven't refuted that there are going to be menial jobs in any society that isn't a technological never-never land and you haven't addressed the problem of how a decent society should deal with that reality

Yes, I have, you're just refusing to accept it, attempting to bludgeon everyone with a knee-jerk "life sucks because of evil corporations that won't take care of the little guy" mentality.

Rather than protectionism that protects the rights of people to make $10 an hour from here to eternity, I proposed an increased focus on education at all levels -- grade school, colleges, trade schools, adult secondary education, re-training, etc -- that will lift people out of situations where they're solely reliant on $10 an hour jobs in the first place. It can't happen overnight. But it sure ain't utopian. There's nothing jet pack-y about night school for pipefitters.

Menial jobs are necessary, of course. The key, though, is to ensure that menial jobs are transitory in nature, that people are provided the opportunities to go do something else that is more worthwhile for the long term. Do you really want your kids to grow up to be pipefitters? Do you really want to reach into your wallet, pull out some dough and attempt to guarantee someone can be a pipefitter for 20 more years? Their kids, too?

Fuck that.

I said "education." You said "not everyone can handle college." I said "it's not just college." You said "you're not addressing the point."

So what IS your point? No, nevermind. You don't really have one. You just think you do. Just go listen to some indie rock or something.

The second anyone says "But I'm talking about the real world," that's when you know they don't actually live there.
posted by frogan at 1:27 PM on June 5, 2007

nice strawman you've built up there

Yes, I have, you're just refusing to accept it, attempting to bludgeon everyone with a knee-jerk "life sucks because of evil corporations that won't take care of the little guy" mentality.

translation - "la la la, i can't hear you"

i don't discuss things with willfully ignorant people
posted by pyramid termite at 8:19 PM on June 5, 2007

Ah yes, the strawman claim. Nice little hidey-hole you got there. Stay there. Please.
posted by frogan at 9:19 PM on June 5, 2007

Hold on, let me get the manual out ...

Setup of a straw man

One can set up a straw man in the following ways:

1. Present a misrepresentation of the opponent's position, refute it, and pretend that the opponent's actual position has been refuted.

"frogan, you're not really addressing my point or dealing with anything but some kind of utopian world "

2. Quote an opponent's words out of context -- i.e., choose quotations that are not representative of the opponent's actual intentions (see contextomy).

"not everyone is capable of getting through a college degree ... and not every job ... or even most jobs ... is going to require it"

3. Present someone who defends a position poorly as the defender, refute that person's arguments, and pretend that every upholder of that position, and thus the position itself, has been defeated.

"i'm talking about the real world, not a worldview"

4. Invent a fictitious persona with actions or beliefs that are criticized, and pretend that the person represents a group of whom the speaker is critical.

"i don't discuss things with willfully ignorant people"

5. Oversimplify a person's argument into a simple analogy, which can then be attacked.

"nice strawman you've built up there"

I will now point and laugh at the troll.
posted by frogan at 9:27 PM on June 5, 2007

see? ... you don't need me ... it's more fun by yourself
posted by pyramid termite at 10:09 PM on June 5, 2007

Still pointing and laughing at the troll.
posted by frogan at 10:22 PM on June 5, 2007

What kind of jobs are they going to do if they aren't pipefitters?

And actually, many people (most?) with college education make the same or less than blue collar jobs - definitely less than autofactory workers still do. Adminstrative assistants, tellers, clerical workers everywhere -- and a lot of people who have degrees have also failed to get jobs that require degrees. They are working in coffee shops and other service sector jobs.

When everyone goes to college, then a college degree just isn't worth what it was.

I'm not saying that we should go all protectionist, just that there aren't new better jobs replacing pipefitting. It's the service sector which is expanding, not jobs in business or technology (for all that we talk about an "information economy"), and service sector jobs pay terribly. They may be a bit cleaner than a mill, but you can't raise a family on the income. And they are much more insecure.

Maybe it's just reality that the first world will get poorer - at least the majority of the population (just as some get much richer). The first world has monopolised the majority of the world's wealth and income for the last 200 years, so maybe things are just returning to what they used to be before c1800 (when the spread of wealth in the world was more by population, leaving Asia much richer in total than Europe or the Americas), and that is kind of fair. But if so, we should admit it, and talk about who is losing and who is gaining in the shake-up and change of our economies.
posted by jb at 1:32 AM on June 7, 2007

Also - I realise that college isn't the only education - but what other education do you suggest? What kinds of jobs should people be training for?

Politicians like saying "education" because it sounds good, and in the past education has been a good way for an individual to move up socially. But what does increasing education do for a country? Education in what? No one ever seems to have any concrete suggestions. They say "technology", but don't say what people are suposed to do with their magical technology abilities other than be better at surfing the web.
posted by jb at 1:37 AM on June 7, 2007

And actually, many people (most?) with college education make the same or less than blue collar jobs - definitely less than autofactory workers still do.

You're simply way, way wrong. True, there are some union jobs that pay handsomely, and I'm sure your local Chilis has a few guys right out of college still tending bar, but the No. 1 indicator of life-long wealth is education level. I mean ... It's. Not. Even. Close. See the below stats, too.

What kind of jobs are they going to do if they aren't pipefitters? ... what other education do you suggest? What kinds of jobs should people be training for?

List of fastest-growing jobs in the U.S. Please note the relative skill requirements here. "On-the-job training" is listed as the the postsecondary education or training needed for only six out of the top 30 listed occupations.

On the same chart, please note the median annual earnings for these occupations. All but one of the occupations listed as requiring little education rank in the "very low" or "low" quartiles. The one that ranks in the "high" quartile is "Hazardous materials removal workers." So, that's not a salary. That's hazard pay.

But what does increasing education do for a country?

Nevermind that the U.S. took the world technological lead in the 50s and 60s with huge educational investments, especially in math and science. On this one, I'll go across the pond to Ireland. Please meet the Celtic Tiger:

The causes of Ireland's growth are the subject of some debate: credit has been commonly given to low corporate taxation, decades of investment in domestic higher education, a policy of restraint in government spending, transfer payments from the European Union, and a low-cost labour market. (emphasis mine)

They say "technology", but don't say what people are suposed to do with their magical technology abilities other than be better at surfing the web.

The Web. Brought to you in no small part by ... drumroll, please ... The National Center for Supercomputing Applications at the UNIVERSITY (emphasis mine) of Illinois at Urbana-Champaign, where the young undergraduate Marc Andreessen helped create one of the first commercially available Web browsers.

Later in the Web story, four Stanford students created some companies called Yahoo and Google. Those names might ring a bell.

Moral of the story: Send people to school. Good things tend to happen.
posted by frogan at 9:28 PM on June 7, 2007

Maybe I'm skeptical because I already have a master's degree, and if I quit school now (before finishing my PhD), I can't see myself finding any employment which would pay more than my mother makes right now as a bookkeeper without a university education (which her job does not need, because university does not teach the skills a bookkeeper needs, but increasingly offices are demanding BAs.)

Most people my age I know have masters degrees and/or PhDs - a friend of mine just finished a PhD in mathematics at one of the best maths universities in the world. I'm happy because he now has a job, but it's not in his field, and it took him a long while to find that job. If I finish my PhD, I may get a job that pays more than my mother's - but that is a bit of a crap shoot. Or I may have to go back and get a teaching certificate to teach high school. I did history - I knew this going in. But I am walking proof that education=! job opportunity.

As for education's relation to wealth - of course, more educated people are more wealthy (they are also more likely to have come from the middle class or higher). At least, they are NOW, when not everyone is educated. But when everyone has a BA, it won't mean anything. (Actually, I have another friend who finished her PhD a couple of years ago, who did her research on the job market -- and once you have a B.A., it's really about social networks and who you know -- only it's also more complicated than that (which is the original part of her PhD).

I look at that list of occupations, and I see - low paid health care workers and medium paid computer technology and network jobs (I realise they are the top quartile - it has a very large range). So maybe the answer to my question is networks and health support.

But it's not just "everyone should go to school" without any thinking past that. Would pushing 50% of the population into further education (as Britain is trying) really help technology if 90% of that 50% do unfocussed humanities degrees? Or maybe they do computers, as so many people do because their parents tell them to, and they get Ds because they just don't have the aptitude or skills? Then again, I have another friend who actually is very skilled with computers and has a BSc with good marks -- and could not find a job in computers.

I know this is all anecdotal - I'm just a schlep on the internet, and I'm not going to bother doing the research on this (I have too much real research to do).

But what I do know (because other people have done the research for me) is that inequality in the first world is growing, and that education is becoming less and less of a payoff, even as it becomes more accessible (and probably BECAUSE it is more accessible). I see steady manufacturing jobs replaced with insecure service sector jobs - even for the educated. And not just coffee shops -- there is a whole world of pink collar work -- low paid, insecure clerical work dominated by women, many of whom do have degrees. And science majors aren't that much luckier - with the exception of computing or engineering, BScs have worse job prospects than BAs.

You bring up examples of success from education, but they are all notably exceptional examples. Not all of us are entrepeneurs or inventors (like all of the sucesses you mentioned), we're not the kind of driven people who succeed whether educated or not - most people in the world are just simple people who are looking for a livelyhood. They are followers, not leaders; builders, not inventors. Most would also like to live as well as, if not better than, their parents, but I don't know if that is realistic anymore. (I have, but that's because I had a very low base to improve on. My husband, with a masters degree and soon to have a PhD, will probably never live as well as his parents).

I know education - I've been living inside higher education for the last 9 years. I read education news, think about education; if I left history, educational theory is an area I think I would be really interested in.

But I'm still skeptical of education as a panacea. I think it's a good in and of itself, and an educated populace makes for a stronger democracy, and I obviously support research (considering that's my job). But I think that claiming "go to school, it will all work out" is misleading to both the students and to the society. Saying we need to improve specific skills, or helping people to identify what their skills are, where their aptitudes lie, what best use they can make of them in a changing economy -- that could work.

Except, of course, for the still undeniable reality that inequality is growing, wages are down when adjusted for inflation, and no amount of education is going to change those structural realities.

I don't have any answers. If I did, I would get my own blog. And like I said, maybe this is just the world economy going back to equilibrium - we in the West have been living off the cream for a long time, and things will have to change. If only because if the world had our living and consumption standard, the planet would be gone.
posted by jb at 5:40 PM on June 8, 2007

But I am walking proof that education=! job opportunity.

Horseshit. And I mean that as a compliment. I bet if I come back to you in five years, you'll be out-earning any of your peers that didn't get a post-secondary education.

I'll finish off my rant with a series about education from the Los Angeles Times, about the failure of the school district to teach simple algebra, resulting in huge dropout rates.

Be sure to catch the thing on the bottom about plumbers and electricians...

"It triggers dropouts more than any single subject," said Los Angeles schools Supt. Roy Romer. "I think it is a cumulative failure of our ability to teach math adequately in the public school system."

Algebra, they insist, can mean the difference between menial work and high-level careers. High school students can't get into most four-year colleges without it. And the U.S. Department of Education says success in algebra II and other higher-level math is strongly associated with college completion.

Apprenticeship programs for electricians, plumbers and refrigerator technicians require algebra, which is useful in calculating needed amounts of piping and electrical wiring.

Educators say algebra offers a practical benefit: Analytical skills and formulas enable people to make sense of the world. Algebra can help a worker calculate income taxes, a baseball fan determine a pitcher's earned-run average and a driver determine a car's gas mileage.

"It's the language of generalization. It's a very powerful problem-solving tool," said Zalman Usiskin, director of the University of Chicago School Mathematics Project.

"If you want to work in the real world, if you want to wire buildings and plumb buildings, that's when it requires algebra," said Don Davis, executive director of the Electrical Training Institute, which runs apprenticeship programs for union electricians in Los Angeles.

Education is just about the best thing in the modern world. We need more of it. Not silly protectionism.
posted by frogan at 8:17 PM on June 8, 2007

I didn't say silly protectionism. (I did say that there is evidence that European countries with developing economies in the 17th and 18th centuries did better when they were protectionist, but developed economies are different).

But you still keep talking about how education makes someone more competitive today, against people without education . How will increasing the population's education (which is already very high for any first world country) increase the country's competitiveness in the world? How will it change the trend towards greater inequality and employment insecurity within those countries?

And when everyone has a BA (such that it is not an edge in the job world), what will a BA mean? Not very much - just another four years spent, most often going into debt.

Now, if you were talking about increasing standards in education to teach real skills in high school, then I could get behind it. There is no reason we can't teach the basic skills of univeristy in high schools - it's a lack of ambition. But not more tests - they teach no critical skills.
posted by jb at 3:53 AM on June 9, 2007