Tuesday, July 02, 2013

We care about fellow-Americans and not about Indians or Ethiopians because ...?

One of the serious essays that I read after the Costa Rica trip was this essay by Greg Mankiw, in which he lays out his defense of the one-percent.  I am surprised not with his wanting to defend the one-percent--after all, he has always been in the Bush and Romney camps--but with the approach that he took.  Mankiw seemed to offering a kind of unsophisticated moral and political philosophy interpretation that might be expected only from half-baked pseudo-intellectuals like this blogger!

I wouldn't be as harsh as Jonathan Chait, but I am on his side when he writes:
Mankiw — perhaps admirably, or at least bravely — ventures completely outside his area of expertise, economics, into moral philosophy. The result is — well, there’s no other way to put it. It’s an embarrassing piece of ignorant tripe.
Yet, I admire Mankiw for admitting, for acknowledging, that debates and discussions on income distribution in society cannot be simply resolved via econometrics:
fundamentally normative conclusions cannot rest on positive economics alone. 
If only economists would make this clear to the public every single time they convey their research findings.  If only they would stop claiming that economics is a science that can help in public policy decisionmaking! If only Mankiw himself would recite it every time.

And, yes to Mankiw when he makes clear up front:
At the outset, it is worth noting that addressing the issue of rising inequality necessarily involves not just economics but also a healthy dose of political philosophy. We economists  must recognize not only the limits of what we know about inequality’s causes, but also the limits  on the ability of our discipline to prescribe policy responses. Economists who discuss policy  responses to increasing inequality are often playing the role of amateur political philosopher (and, 3 admittedly, I will do so in this essay). Given the topic, that is perhaps inevitable. But it is useful to keep in mind when we are writing as economists and when we are venturing beyond the boundaries of our professional expertise. 
Give the man his due, I say, for stating that loudly and clearly.  We can then at least agree that income distribution discussions come down to how much we are able to persuade the audience.  Can we convince them that our way of thinking about it is correct?  Econometrics is only as good or as bad a tool as simple rhetoric can be.  Yes, I am channeling D. McKloskey here.

Anyway, in that essay, Mankiw writes:
Some of the largest income disparities are observed between nations. If a national system of taxes and transfers is designed to move resources from Palm Beach, Florida, to Detroit, Michigan, shouldn’t a similar  international system move resources from the United States and Western Europe to sub-Saharan  Africa? Many economists do support increased foreign aid, but as far as I know, no one has  proposed marginal tax rates on rich nations as high as the marginal tax rates imposed on rich  individuals. Our reluctance to apply utilitarianism at the global level should give us pause when  applying it at the national level.
Exactly. We are ok with California and New York sending in more dollars to DC in taxes than they get back from Congress.  Alabama or Mississippi are examples at the other end--they get more from DC than they remit as taxes.  Such national-level redistribution is considered acceptable, but not if we extend the courtesy to Ethiopia.  Even though Ethiopians are immensely poorer than the poorest in Alabama.

The tribal behaviors of the past, when humans helped out only their group are understandable.  But, we now live in a world in which people effortlessly seem to take on new identities.  I am an American citizen who came from elsewhere.  This entire country is full of such narratives; if not first-hand, then one only needs to go back a few generations to find out where the people came from--with the exception of the Native Americans, who are now a minority in their original lands.  Yet, we so easily defend not caring about the rest of the world even when we are ok with massive internal income distribution, to individuals and geographic areas alike.

It is so arbitrary a line that we draw, a political boundary. We then defend it with words and with guns. We then even claim that Indians and Chinese are taking away "our" jobs, as if "we" are the only ones entitled to those jobs and incomes.  But, really, do "they" not bleed when pricked? If tickled, do they not laugh?  If poisoned, do they not die?

So, yes, income inequality and redistributing incomes and wealth really does come down to our own versions of moral philosophy and how we justify them.

We use our own yardsticks to continue to define and re-define the tribes to which we belong and we want to make clear the us-versus-them distinctions.  Income inequality is merely one such example in which we demonstrate this tribalism.

We humans are a very strange life form on this planet.

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