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March 2013 posts

A Conservative Makes the Case for the Welfare State

Jonathan B. Wight

This is dated and I meant to link to this sooner. Bruce Bartlett makes "A Conservative Case for the Welfare State".

Strange as it may sound, there are efficiencies to be gained by certain state welfare functions. Privatizing Social Security, for example, is a bad idea because it privatizes gains and would socialize the losses (huge moral hazard created).

Badly-run welfare programs are a mess—and I would include corporate welfare that is off the charts. Bartlett's point is that reforming welfare would be easier and better if Americans could come to some consensus on the desirability of a social safety net.

"Economic value is subjective”

Jonathan B. Wight

Ed Stringham is sponsoring a contest for econ students on the subjectivity of economic value.

To enter, students create a 3 minute video and can simply add new lyrics to any existing song. The winners get $2,500 and the professor of the winning entry gets $500. Entries are due May 15, 2013. That's a lot of cash!

Full details about the contest are here: http://hackleychair.wordpress.com/

To see the current entries click here: http://www.youtube.com/watch?feature=player_embedded&v=aAHR8NEpnP8&list=PLjiT5tt-WVpqPX1roEXtp8kttcHYVEv4g

A Woman’s Place in the Church?

Jonathan B. Wight

The new Pope's Easter homily is enlightening and uplifting.

It sure sounds as if he thinks women have a key part to play in the future church.

It sure sounds as if he is saying not to listen to the dead traditions of the past and to embrace new ones.

It sure sounds as though he has the ability to reach out and capture the imaginations of fresh audiences, even as he alienates an old guard.

(But kissing feet—I have to admit—that's not my thing.)

Soup Kitchens Caused the Great Depression

Jonathan B. Wight

The ethics of unemployment is tricky. By providing the unemployed with welfare benefits we clearly create a moral hazard: Econ 101 teaches us that humans are lazy and that work is drudgery. If I can free load off of government, why should I look out for myself?

This view of human nature is right in many instances, and it may create even larger inter-generational effects. But it is also dangerously incomplete. Many people—I'll go on a limb and say most people—derive some form of identity from their work, even if it is menial and hard. Being out of work is psychologically isolating and lowers self-esteem.

Moreover, the notion that most unemployment is voluntary (government welfare leading to high wages demands) just doesn't square with the facts. Look at low quit rates and low job vacancies during recessions. Krugman notes the absurdity of this view, equating it with the argument that "soup kitchens caused the Great Depression."

Krugman provides this thought experiment:

If you believe that the problem is excessive wages, you believe that the economy is fundamentally suffering from a supply-side constraint. In that case government borrowing is competing with the private sector for a limited quantity of resources, so big budget deficits should lead to soaring interest rates; meanwhile, because the supply of goods is limited, large increases in the money supply should lead to soaring inflation…. cuts in government spending should, if anything, be expansionary, because they both release resources to the private sector and make life tougher for workers who try to live on public benefits.

If, on the other hand, you believe that the problem lies in a shortfall of demand due to the zero lower bound [interest rate], you believe that government borrowing needn't drive up rates, because it puts unemployed resources to work; that monetary expansion won't be inflationary, because the money will just sit there; and that fiscal austerity will be strongly contractionary.

I leave the adjudication of these competing claims as an exercise for readers.

In the fifth year of feeling the repercussions of the Great Recession the market signals are quite clear: interest rates and inflation are low, low, low—indicating few supply constraints for capital and other resources. And profits are skyrocketing because productivity is soaring while wages are stagnant. Does that sound like workers exploiting management?

Debt and austerity

Jonathan B. Wight

Larry Summers on the choice between debts and austerity:

I am the father or stepfather of six children. Yes, on their behalf, I am concerned about the possibility that an overly inflationary psychology will develop in my country. Yes, on their behalf, I am concerned that an excessive debt not be placed upon them.

But I am vastly more concerned, because I care about their long-run future, that a slack economy will not provide them with adequate jobs when they leave school. I am vastly more concerned, on behalf of their long-run future, that they will live in a country with decaying infrastructure that will not permit investment to maintain leadership. I am more concerned on their behalf that inadequate resources forced by countercyclical austerity will stunt the ability of their generation to be educated. I am more concerned, on their behalf, that excessive austerity-oriented policies will lead to slower economic growth, and as a consequence to ultimately higher debt-to-annual-GDP ratios--and more pressure, in terms of higher tax burdens, on the future.

Those concerns, which come out of the improper management of current conditions, seem to me to be a larger issue especially for the long run than the concern that somehow unstable and overly expansionary policy starting from where we are now will stunt the opportunities that are open to them.

Now, of course, if policy were starting from a different place I would reach a different judgment.

There is a bad ethics of overspending and running up debt that cannot be repaid.

There is an equally bad ethics of failing to properly invest when interest rates are low and one has a duty to future generations to leave them an infrastructure that works.

More on Bishop Spong

Jonathan B. Wight

If you want to read someone shaking theology to its roots, try Bishop Jack Spong, whom I have previously mentioned here, here, here, here, and here. I don't think my emphasis on Spong is misplaced, when we consider how few monumental thinkers we have currently living.

Spong spoke again in Richmond today, visiting St. Paul's Episcopal Church, where he served as rector in the 1970s.

 Spong is working on a new book, due out in June, on the Gospel of John. His talk was very funny in places, but deadly serious in message. Here are some paraphrases:

"Moral and religious people are among my least favorite people in the world. Religions divide people and lead to war over theology. Fear has been the motivator of many religions.

"Moral and religious people know a lot about judgment, but little about love.

"John's Gospel is an antidote to this. It calls us to a new kind of humanity, one not built on the survival mentality.

"We are not called to be religious or moral but called to be free to live fully and love wastefully. Our mission is to offer that possibility to others, so that they also may love beyond their boundaries and fears."

Does this sound a bit Utopian, as if we can or should forget scarcity and hate? I don't think so. I've blogged a lot previously about "love" in the work of neuroeconomist Paul Zak (too many to link here). Love is real, and it is contagious. Our ability to use our moral imaginations to share sympathy with others is limited only by market size, time, and imagination. One of the great outcomes of capitalism has been the rise of leisure and technology that enhance our moral imaginations (yes, there are huge exceptions). Affection, according to Adam Smith, is habitual sympathy—and our capacity for that is growing.

So Spong, perhaps considered a visionary nutcase or heretic, may be onto the next big transformation of human consciousness. (Yes, I am a naïve sucker for positive thinking; the alternative is too depressing....)

Call for Papers – ASE at the Southern

Jonathan B. Wight

From Aparna Mitra at the University of Oklahoma:

The Association for Social Economics will host 3 sessions at the Southern meetings in Tampa, Florida, November 23-25, 2013.

This year's theme will be "Social Issues and Human Development." Research oriented towards health, education, poverty, family structure, and welfare of the general population in the U.S. as well as in any other parts of the world are especially welcome.

Please submit your proposals along with your department names, addresses, and affiliations to Dr. Aparna Mitra ([email protected]) by April 15, 2013.

On Mark Bittman, the soda ban, and "making people think twice" about their decisions

Mark D. White

It is no surprise that The New York Times columnist Mark Bittman laments the judicial rejection of New York City mayor Michael Bloomberg's ban on large sodas. Unfortunately he resorts to slander when addressing its opponents:

The argument that preventing us from buying 32 ounces of liquid candy in one container somehow restricts our “liberties” can be seriously made only by those who would allow marketing of tobacco to children.

I would hope that Mr. Bittman realizes that paternalistic intervention has significantly different ethical implications when directed towards children rather than adults. Or perhaps he doesn't, as indicated later in the piece:

If 16 ounces of soda isn’t enough for you, the ban would not, of course, have prohibited your purchase of two 16-ounce containers; the idea was to make you think twice before doing so.

This is a nice characterization of this particular nudge, "making you think twice." It's akin to cooling-off periods that are often mandated with major purchases (like cars and homes) and life decisions (such as divorce), to help ensure that people don't make such decisions in what psychologists call a "hot state" in which emotions may supersede rationality.

As I discuss in The Manipulation of Choice: Ethics and Libertarian Paternalism, these nudges are less offensive to autonomy than the standard type because they encourage better decision-making rather than steering people into the decisions policymakers want them to make. In other words, they engage rational deliberation rather than subverting it. Also, in principle they're outcome-independent, focusing on the process decision-making itself rather than actual decisions made. But in many cases, these outcome-independent interventions would not have been imposed if there were not some concern about the choices being made, and the ban on big sodas is a prime example.

I doubt supporters of the ban would be satisfied if people "thought twice" about their soda consumption decisions and still drink large amounts of it. After all, there is no way to test the quality of a person's decision-making process; they can see observe the decision made, not how or why it was made. And if the outcome is judged by policymakers to be inferior, they make an illegitimate inference regarding the decision-making process, judging it to be inferior as well—a judgment based on their idea of people's interests, not the actual interests of people themselves.

Maybe that's why Mr. Bittman feels it appropriate to "make people think twice" about soda consumption—if they only did, they'd come to the same conclusion he does. It is that presumption, the belief that policymakers both know better that people what's good for them and that they have the right to impose this by law, that makes the soda ban and other nudges so offensive.

(For more, I encourage you to check out The Manipulation of Choice: Ethics and Libertarian Paternalism.)

A New Pope

Jonathan B. Wight

It's too early to say what will happen with the new pope, the spry 76-year old Argentine Jorge Mario Bergoglio, who gets around on one lung. He is inspiring for that if nothing else.

In addition to being the first Latin American pope, Bergoglio (Pope Francis) will be the first Jesuit to serve. While I'm not Catholic, I spent my first year out of college working for the Jesuit Volunteer Corps engaged in social justice (highly recommended experience). The Jesuits I encountered were a cut above—in terms of educational achievements and intellectual curiosity. Despite the history of Jesuits who tortured indigenous people not of faith, the Jesuits I encountered were extraordinarily open-minded and accepting of others, even with religious misfits like me. They emphasized a deep appreciation for learning and love. They lived lives of simplicity in communities of faith.

It is not a surprise that Bergoglio is passionate about social justice. TPM reports:

"Like other Jesuit intellectuals, Bergoglio has focused on social outreach. Catholics are still buzzing over his speech last year accusing fellow church officials of hypocrisy for forgetting that Jesus Christ bathed lepers and ate with prostitutes.

"In our ecclesiastical region there are priests who don't baptize the children of single mothers because they weren't conceived in the sanctity of marriage," Bergoglio told his priests. "These are today's hypocrites. Those who clericalize the Church. Those who separate the people of God from salvation. And this poor girl who, rather than returning the child to sender, had the courage to carry it into the world, must wander from parish to parish so that it's baptized!"

"Bergoglio compared this concept of Catholicism to the Pharisees of Christ's time: people who congratulate themselves while condemning others.

"Jesus teaches us another way: Go out. Go out and share your testimony, go out and interact with your brothers, go out and share, go out and ask. Become the Word in body as well as spirit," Bergoglio said.

The break with orthodoxy in choosing a Latin American and a Jesuit is a welcome sign. But more substantive change in the Catholic Church would entail allowing some order of priests to marry, ordaining women as priests, and coming into communion with gays.

If you quarrel on this, ask: Is the repression of women and gays a winning moral proposition over the next 150 years? My answer is decidedly no. Historians will look back and shake their heads in disbelief, just as today we hold our heads in shame and disbelief about rampant slavery 150 years ago. I do not quarrel with a religious order that desires to maintain a single-gender priesthood for spiritual simplicity. But I reject the claim that this practice is desirable because women and gays are unfit to serve in these holiest of capacities.

I do not mean to diminish the deep appreciation for what the Catholic Church attempts to do for human rights in today's world. The Church will come around on spiritual inclusion, eventually. But it may not be this century. It was not until 2000 that Pope John Paul II apologized for the Vatican's role in the massacres of the Crusades and the Inquisition.