Income Inequality Doesn’t Matter

Roger Koppl argues this week at ThinkMarkets that “Income inequality matters.” He thinks it matters so much that he says it twice. He believes “Austrian,” pro-market, economic liberals should be speaking up more on this “central issue.” I think Koppl could not be more wrong. The issue deserves all the inattention we can muster for it.

The problem I think is not Koppl’s motives. He rightly says that we should “watch out for ways the state can be used to create unjust privileges for some at the expense of others.” He is certainly right about that. He argues that unjust state policies may be skewing market results in such a way as to increase inequality. He may be right about that. But he is wrong in suggesting that we ought therefore to be paying attention to income inequality. We ought therefore to be paying attention to those policies. Whether they produce greater inequality is neither here nor there.

Koppl gives four examples: (i) policies that privatize profits and socialize losses, (ii) bad regulation, (iii) collapse of the rule of law, and (iv) public schools. I can certainly join Koppl in a hearty wish that we not only attend to these unwarranted policies, programs, and tendencies, but that we do so with a degree of urgency prompted, in part, by their effects on the poorest and most vulnerable among us. But talking about inequality is precisely a distraction from doing so.

In a great paper of a few years ago, Harry Frankfurt argued that “Egalitarianism is harmful because it tends to distract those who are beguiled by it from their real interests.”* Frankfurt thought that focusing on equality was actually pernicious because it distracted us from attention to real harms, of which inequality is at most an indicator. And he was right. It may well be that, for example, the evisceration of the rule of law results in greater income inequality. But it also might not. Whether or not it does so, however, it is unjust, and it deserves our attention. Similarly for the increase in moral hazard and regulation, to say nothing of the deplorable system of public education. All of these need attention, and one prime reason they do so is because of their effects on those least capable of circumventing their evils. If we care about the poor, what we ought to care about is bad policy, not indicators that may or may not have anything to do with policies that are making people worse off. As long as we are worrying about income inequality, we are worrying about the wrong thing.

* In “The Moral Irrelevance of Equality,” Public Affairs Quarterly, April 2000.

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The Necessary Inadequacy of Charity

A common libertarian and conservative response to questions about how beneficiaries of government programs will carry on after the removal of their subsidies is that charity should take care of them. This answer is often overly glib, even when combined with the observation that a lower burden of taxation might foster more giving (charity is already tax-deductible after all). Charity will always be insufficient to meet basic human needs, and in the absence of government programs, some people will fall through the cracks. (In the presence of government programs, some people will fall through the cracks.)

This aspect of charity is a feature, not a bug. Charity suffers from the same problem that government welfare programs do: the Samaritan’s Dilemma, as economists call it. The more you help those in need, the more need there will be, because people’s behaviors will change as they come to expect assistance. To the extent that libertarians and conservatives oppose welfare programs because of “dependency” issues, they must also oppose charity for the same reason. Of course, charity is superior to government programs in at least two respects: lower administrative expenditures and, more importantly, greater respect for the moral autonomy of the donor. To the extent that we can reduce extreme human deprivation, many of us will think it worthwhile to do so even if it somewhat reduces the productive efforts of those less deprived, whether through charity or through government assistance. Nevertheless, it is possible for charity to be excessive.

To see the point, consider the argument I made that libertarianism does not preclude mandatory health insurance for children.

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The Affordable Care Act and the Power of Meh!

Policy wonks and pundits are waiting in anticipation for tomorrow’s decision on the Affordable Care Act (I know it was one of the first things that crossed my mind this morning as I prepared for the day).  Although social scientists may not be too good at making predictions, I think most of us could  have long ago written the talking points for both sides of the dispute with great accuracy. But what of the public at large? Will the decision factor into their decisions in November? Will the Democrats and Republicans be able to use tomorrow’s decision effectively as a rallying point? I have my doubts.

The newly released NBC/WSJ poll has several questions on the SCOTUS and the Affordable Care Act.

From what you have heard about Barack Obama’s health care plan that was passed by Congress and signed into law by the President in 2010, do you think his plan is a good idea or a bad idea? If you do not have an opinion either way, please just say so.

• Good idea: 35%
• Bad idea: 41%
• Do not have an opinion: 22%
• Not sure: 2%

I am not certain how the Obama administration will spin a defeat at the Supreme Court (should it be handed a defeat). The obvious take is to present the Supremes as activist and counter-majoritarian. But in a world where only 35 percent think the Affordable Care Act was a “good idea,” will this spin have much traction outside of the 35 percent, who are likely already strong supporters of a second term?

If the Supreme Court rules that the health care law is unconstitutional meaning that it will not be implemented would you be pleased, disappointed, or would you have mixed feelings about it?

• Very pleased: 27%
• Somewhat pleased: 10%
• Somewhat disappointed: 5%
• Very disappointed: 17%
• Mixed feelings: 39%
• Not sure : 2%

Once again, how do you frame a defeat? 37 percent would be pleased, 22 percent would be disappointed, and those who would be pleased appear far more passionate about the issue. But overall, “mixed feelings” carry the day.

Now, if the Supreme Court rules that the part of the health care law called the individual mandate, that requires everyone to either have or buy health insurance is unconstitutional and will not be implemented, do you think this will help you and your family, hurt you and your family, or not make much difference either way?

• Help: 18%
• Hurt: 25%
• Not make difference: 55%
• Not sure: 2%

This may be the most interesting result. The vast majority of Americans get their healthcare through employers, Medicare or Medicaid. They are already covered and, as a result, they may feel that they don’t really have a dog in the fight when it comes to the personal mandate.

Bottom line: although those with hard positions will praise or curse the outcome, for most voters, I assume the response will be: Meh!

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Libertarian Welfare Statism

I agreed with the first half of Jessica Flanigan’s essay on “A Feminist Libertarian Dilemma,” but then nearly choked on my invisible coffee when I read this:

Bleeding heart libertarianism doesn’t rule out public policies that help women with families succeed in the workforce, like affordable public childcare, subsidized family leave, elder care, or a universal basic income.

So how exactly does bleeding-heart libertarianism differ from mushy-pated, Swedish-style social democracy?

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Krugman and “Imagine There’s No Welfare…”

Paul Krugman (NYT) turns to the article that we have been discussing on Pileus (here and here) and Monty addressed in an insightful post on Ace of Spades.  Krugman has never really acknowledged the reality of a looming entitlement crisis (indeed, it often appears that there can be no program large enough, no deficit large enough, no marginal rate high enough). So instead, he turns to the irony of the situation: those in the red states have a higher dependency on the social safety net than those in the blue states, yet they gravitate toward small government rhetoric and the GOP.  The question is: why?

Unsurprisingly, the focus turns to a few well-worn explanations.  One might argue (following Thomas Frank) that the plutocrats, who promise Jesus and deliver tax cuts for the rich, simply manipulate the red state rubes. Alternatively, one might argue (following Suzanne Mettler) that people would love the state if they only understood all the good things it does for them (e.g., many Social Security and Medicare recipients deny that they have used government programs).

Yet, the NYT article that has been the subject of conversation does not provide much support for either of these theses. Social issues rarely find much of an expression in the vignettes and those interviewed seem quite aware that they are using government programs. Their discomfort comes from the fact that they are ideologically opposed to these programs despite the fact that they see no options outside of the safety net. They are, to quote the title of one of my favorite James Buchanan essays, “afraid to be free.” Perhaps it is with good reason, as suggested earlier, given the erosion of civil society institutions and norms of self-help and communal responsibility.

Krugman rightly chastises Mitt Romney for his lack of frankness when addressing the issue of entitlements (e.g., Romney attacks Obama for failing to embrace entitlement reform and then, without a pause, attacks him for slashing Medicare). But I think he fundamentally misunderstands the broader situation:

The message I take from all this is that pundits who describe America as a fundamentally conservative country are wrong. Yes, voters sent some severe conservatives to Washington. But those voters would be both shocked and angry if such politicians actually imposed their small-government agenda.

Perhaps, does this sad state of affairs speak to their conservatism? I am skeptical.

Let me draw a quick example: all of us have known people with severe substance abuse problems. In some cases, it was simply a product of choice; in other cases, they had sought refuge in intoxicants following some significant crisis. They clearly understand the evils of dependency and they are painfully aware of the ways in which their addictions undermine their ability to live a flourishing life. At the same time, after years or decades of abuse, they find the idea of going into rehab unbearable. Some rightly anticipate that the act of regaining sobriety could imperil their very lives. At the very least, it would disrupt their social relationships and daily activities. Given the damage already done, they may wonder whether the benefits of sobriety would be higher than the costs.

Does this mean that they should be avid supporters of universal intoxication? Not to my mind. It means that are in a tragic and untenable situation, often with the assistance of myriad enablers.

A few readers might object to drawing parallels between welfare and addiction. But recall that even the father of the modern welfare state, Franklin Roosevelt, saw the connection when he noted in his 1935 SOTU address that “continued dependence upon relief induces a spiritual disintegration fundamentally destructive to the national fiber. To dole our relief in this way is to administer a narcotic, a subtle destroyer of the human spirit.”

A few years ago, a good friend was dying. Decades of alcohol abuse and heavy smoking had taken their toll. After a stroke, the doctors told me that their immediate concern was not the effects of the stroke but the severity of the withdrawal symptoms. Soon thereafter he was diagnosed with terminal lung cancer.  Our last meeting occurred in a bar, where he sat with a beer in one hand and a cigarette in another. Filled with cancer, he took a draw on his cigarette, smiled, and said: “These damn things killed me.”

Of course, this was not a new revelation for my friend. He was brilliant, witty, and had made comparable comments in the past when the future was still unclear. Nonetheless, the pain of withdrawal would have been far too great for him to take the steps that would have extended his life.  One might have assuaged his concerns by explaining that the chemical effects of the drugs he consumed had a positive impact on the pleasure centers of his brain. One might have encouraged him to simply celebrate addiction.

He never would have bought it.

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Florida’s Drug Testing Law Not Working Out So Well

Florida recently passed a law requiring welfare recipients to be tested for drugs and throwing them off welfare if they test positive. Governor Rick Scott justified it as saving taxpayers’ money and discouraging drug use. It turns out to be costing taxpayers more money than it saves them, because hardly anyone tests positive. This isn’t conclusive proof, by the way, that the law isn’t discouraging drug use – after all, prospective welfare recipients could have modified their behavior after the law was passed – but it’s strongly suggestive that it is not, for low-resource citizens tend to have higher levels of political ignorance, and it would not be surprising if many of them did not know of the new law before applying.

Even if the law were working as intended, I think it would still be unjust. As Mike Riggs points out in the first link above, the law does not test corporate welfare recipients for drugs, only poor people. The fact that this is a government benefit does not mean that the government is justified in attaching any conditions it wants to it. Would it be justified in requiring every public school student (and parent??) to be tested for drugs? Would it be justified in requiring strip searches of welfare recipients? Drug testing is invasive and should always bear a significant burden of proof when conducted by government. In my view, while private employers have every right to test their employees for drugs, the bureaucratic, “zero tolerance” culture of drug testing has gone too far and should not be further encouraged.

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