Thursday, July 24, 2014

Real Economics II

Welcome friends!

I had a few additional thoughts about those distributional issues I raised in my last post so maybe this time out we can do yet another follow-up post.  Sorry about that.  But that’s half the fun of talking things out, right?  The way one thing leads to another?

My additional thought was that last time when I said I doubted anyone could take seriously the sort of utility discussed within economic theory and hence within conservative social philosophy I may have failed to take into account the potential differences in the fundamental moral senses of liberals and conservatives.  I probably should have said I doubted any liberal could take that sort of utility seriously because upon further reflection it occurs to me maybe some conservatives do.  The reason I think so is it seems to me an important difference in the fundamental moral perspectives of liberals and conservatives involves the degree to which we are all the same or different.  Most liberals, starting from the belief that at some level we’re all pretty similar, would naturally recoil from any ethical theory implying the desires of any one person should dominate those of everyone else.  Many conservatives, on the other hand, starting from a conviction vast differences exist between people, may very well not have the same reaction.

Now you may have noticed that in our society, as in most societies relying mostly on a market based system of allocating resources, the most trivial material desires of the wealthy outrank even the most desperate needs of the poor.  I suppose that rather unsightly phenomenon must be one of the great underlying ethical issues of our age.  Is it a problem or isn’t it?  Hmm, well, that’s a tough one.  You can probably guess which way I lean but I do appreciate there are a lot of issues involved and I’m certainly not going to resolve those issues today.  In this post I would simply like to point out if one were to wholeheartedly support the status quo, as many conservatives are wont to do, then one would need some sort of ethical proposition implying there is something pretty special about rich folk that renders this result morally acceptable no matter what ethical theory one may choose to adopt.  I’ve mentioned before there are plenty of different approaches one might take to attaching the necessary significance to the desires of rich people.  One might talk about the issue in terms of their rights or their merit or what have you.  However, if one were going with a utilitarian framework then I suppose one’s concept of utility would have to allow that rich people’s desires might just be associated with a lot more utility than those of other people.  In other words, it occurs to me the distinctive type of utility used in economic theory is probably the only type of utility that would make utilitarianism palatable to many conservatives. 

When it gets to the close intellectual relationship of economists and conservatives the interesting wrinkle that has always fascinated me is that although economists espouse the requisite form of utility they back away from actually arguing fulfilling rich people’s desires generates more utility than fulfilling the desires of other people.  No, economists are satisfied to step back and say merely that fulfilling the needs of rich people may be associated with greater levels of utility or may not.  Now as I’ve suggested before this would obviously be a troubling result for anyone who really took this form of utilitarianism seriously because it implies one cannot address any of the potentially ethically troubling situations involving conflicting needs, wants, and desires, such as occur for example in the distribution of resources.  Indeed, one could only invoke one’s utilitarianism when thinking about one person in isolation which, of course, is a situation I think many people probably suppose doesn’t really require any ethical theory at all.  That would be a rather funny form of utilitarianism, wouldn’t you say?  I suppose if that were the type of utilitarianism one really supported then at the very least one would have to come with some additional ethical propositions to handle all the ethically significant cases involving resolving conflicting desires.  Otherwise we’re talking about a whole lot of indifference.  (For the economically literate note we would be talking not only about indifference between Pareto optimal outcomes but also between a Pareto optimal outcome and any non-Pareto optimal outcome that implied a different distribution of resources because one could never know if the associated costs were worth it or not.  Pretty much the only conclusion one could make would involve moving between a given non-Pareto optimal outcome and a Pareto optimal outcome implying the same distribution, in which case one would obviously do better with the Pareto optimal outcome.)

You may have noticed that neither conservatives nor economists espouse quite the level of indifference one might reasonably expect a serious supporter of the relevant form of utilitarianism to demonstrate.  Indeed, quite the contrary.  Most of them tend to get rather agitated if anyone mentions anything having to do with redistribution.  I think it’s reasonable to suggest something else must be going on.  However, I suppose we shouldn’t be too hasty in our speculations about what that something may be.  The possibility I concentrated on last time was that conservatives and economists don’t sincerely endorse the relevant form of utilitarianism at all but instead support the status quo distribution on some unexpressed and entirely different ethical basis and only talk about the particular form of utility they talk about because doing so displaces discussion of other conceptions of utility that other people, such as liberals, might find more ethically compelling.  However, after thinking about it a bit more I now wonder if perhaps I was being a little too cynical.  I suppose another possibility is at least some conservatives actually do sincerely support this form of utilitarianism but because of its limited practical significance they augment that theory with some unrelated ethical premises just to get them where they need to go.  Like what you ask?  Well, at the very least I suppose one would need to attach some independent value to upholding the status quo to escape the anomie of complete indifference.  You know, if we can’t tell what we have stinks or not we should just keep it because it’s what we have.  That sort of thing.  It’s fine in isolation I suppose but a little awkward if you’re trying to discuss things with someone holding an ethical theory that does have implications for resolving interpersonal conflicts.  Basically you’d be saying something along the lines of my own ethical theory implies I don’t know what would be better but in such situations I give precedence to the status quo and it doesn’t really matter to me how you or anyone else thinks about it or that your suggestions are just as likely as not to improve matters even under my own underlying ethical system.  It’s a little weird if you think about it.  I guess one must just really love that status quo.  Of course, one might always go further and add any number of value premises to address the many situations in which the necessary information on utility is not forthcoming.  Actually I suppose the need for additional value premises is much the same as last time.  If one restricts oneself strictly to the type of utility used in economics one can’t really can’t say much about anything at all.  Should we stay or should we go?  I don’t know.  What’s changed is in this case I’m suggesting conservatives might be holding these additional value premises in addition to the relevant form of utilitarianism rather than instead of the relevant form of utilitarianism as I postulated last time.

Figuring out if any economists and conservatives sincerely support the type of utility we’re discussing here is obviously an enormously difficult task because of course one can’t just walk up and ask them.  At least that’s been my experience.  With conservatives it’s all about misdirection, bait and switch, double meanings, false leads.  Honestly, it makes one’s head spin.  However, here’s a simple thought experiment that might work.  You’re familiar with thought experiments in the context of ethics, right?  You imagine a counterfactual state of the world to isolate the implications of a given ethical proposition and see how you feel about it.  So let’s see.  Imagine you lived in the first half of the twentieth century.  In Germany.  (Why?  Because it’s easy.)  Let’s say you were omniscient so if something existed then you knew all there was to know about it.  Yes, you were very special.  Indeed, you even knew the amount of utility (as conceived of by economists) different people derived from fulfilling their desires.  One day you considered the case of that great bugbear himself, Adolph Hitler, and you discovered he was one of those superconductors of utility that is allowed for under the type of utility discussed within economic theory.  Indeed, you determined that fulfilling his preternaturally strong desire to kill off various groups of people generated higher levels of utility than the combined utility that would be generated by fulfilling his victims’ desires to survive.  So would it have been socially optimal to maximize utility in this case?  Would it have been ethical to get behind Hitler and support him in his famous struggle?  In other words, would Hitler have been in a comparable situation to rich people whose trivial desires trump the more vital desires of poor people because (maybe) they just get a lot more utility from fulfilling their trivial desires?  Yes?  OK, well then you do indeed have a sincere interest in the form of utility discussed within economic theory.  I’m sorry I doubted you.  No?  That’s basically the case I discussed last time.  If you’re not really interested in maximizing that type of utility then you shouldn’t talk as though you are.  Someone will think you’re up to something.  Can’t say / won’t say / situation is logically impossible?  Hmm.  Yeah, I’m not sure you think utility actually exists.  Forget about the supposed difficulties in measuring or inferring utility, I think you must be using utility as just a funny way to talk about your perspective on the ethical implications of allowing a single person in isolation to do what he or she wants.  In that case you could do us all a big favor and just talk a little more clearly.  Don’t blather on about utility.  Just say what you think and maybe add something like, look I’m not interested in resolving situations involving people with conflicting desires.  That’s not what I’m talking about.  I don’t have any opinion on how that should play out.  Or, if you do want to address those issues then just talk about whatever values you’re using to address those situations.

I know what you’re thinking: conservatism is complicated, isn’t it?  Sometimes I wish they could just talk plainly and honestly about they believe.  But what would be the fun in that?

Thursday, July 10, 2014

Real Economics

Welcome friends!

I read an article the other day that got me thinking about distributional issues once again.  I know, doesn’t seem to take much, does it?  Why can’t I just accept things as they are?  Why am I always rethinking things that have all been hashed out and resolved long ago?  Why am I not a conservative?  Well, gosh, I don’t know.  Maybe because I think these issues are important and there’s a lot of room for improvement?  Ready for another go around?  OK then, let’s get to it!

Now did you see the article about the rather alarming number of suicides that were associated with the so-called Great Recession ushered in a few years about by conservatives’ ongoing love affair with Wall Street tycoons and by their unalterable conviction nothing bad can ever come from unregulated markets?  Apparently the economic downturn led to at least an additional ten thousand people offing themselves in the US, Canada, and Europe alone.  You know, that’s the type of thing I’m talking about.  Economic matters are important.  People die from economics.  That’s what makes the intellectually lazy, wooly headed, laissez faire, whatever happens happens, half-assed social philosophizing of conservatives so damned irritating to liberals like me.  Whatever happens happens just isn’t good enough.  When people lose their jobs and their livelihoods that’s a humanitarian crisis or it can be one anyway depending on how much wealth the people involved have socked away and how well they’re able to weather the storm.  For many people it’s a pretty big issue.  We should be thinking about it like the outbreak of a war or the advent of some new disease.  And distributional issues are a big part of it because when economic calamities happen we generally just let all the hardship fall on the unfortunate few, don’t we?  We could rally as a society and look out for one another in cases like this.  We could spread the hurt around a little so we all come out of it all right.  But that’s not how it usually plays out.  Not by a long shot.  It’s more like every man and woman for himself or herself.  And we all thank our lucky stars it’s the other guy whose number came up and not ours.

But hey, we don’t have to be talking about people killing themselves to see the importance of distributional issues.  Indeed, I read another interesting article about some research that found one’s “emotional well-being” goes up with income but the main effect takes place in a range up to about seventy-five thousand dollars after which additional income doesn’t really add all that much.  I must say that comports rather well with my own observations and life experience.  I mean, it’s kind of hard to exude a whole lot of emotional well-being when you’re wondering where you’re going to get your next meal or where you’re going to sleep for the night or what’s going to happen to your kids or whatever.  Did you ever notice that?  Those are the sorts of things that can really set one on edge.  But once one scrapes together a little something then hey presto emotional well-being suddenly becomes a lot easier to come by.  Indeed, after a while it becomes more a matter of maybe I’ll buy this or maybe not or maybe I don’t really need it or oh I’m just not really sure if I want that or not.  For most people I suspect getting a bit of additional money is very, very important at certain levels of relative economic power but becomes a lot less important at other levels.

I would suggest this result implies public policy should probably focus on getting as many people as possible to incomes approaching seventy-five thousand dollars.  I mean, it’s fine if some people go over, but in terms of overall happiness we’re probably not getting as much bang for the buck in those cases.  Of course, that’s not really how we typically think about economic policy in this country, is it?  Or let me put it this way, when was the last time you heard someone discussing the best approach to getting the most people possible to income levels around seventy-five thousand dollars?  No, our conversation about economic policy seems to be running on an entirely different track.  On the one hand we have plenty of people who want to just talk about total GNP and GDP and XYZ and whatnot with the implication it doesn’t really matter too much where it all goes because distributional issues either don’t really matter or have already been satisfactorily resolved.  Then we have the people who think the point of economic policy should be to ensure a handful of people can become enormously rich because in their estimation that’s what life is all about.  Those are the people who are so fascinated by metrics such as how many billionaires we produce compared to other countries.  People like me who would just like to live in a society where as many people as possible are happy don’t really have much to do with economic policy here in the US.  I suppose that explains why despite our relatively high third place ranking in terms of average net worth, which is just total wealth divided by total population, we basically stink in terms of median net worth, which is the wealth of the person exactly in the middle of our wealth distribution such that half the population has more and half less.  We’re not so bad in terms of average wealth because our economic policy wonks are concerned about total wealth creation.  We stink in terms of median wealth because our policy wonks don’t really care where the wealth goes.  Or maybe stink is too harsh a word.  I’m sure there are plenty of countries that manage to do an even worse job of looking after the little guy than we do.  Let’s just say we rank surprisingly low given our overall level of economic development.  Oh, you thought America was Number One?  Yeah, sure, we’re Number One right after Australia, France, Italy, United Kingdom, Japan, Switzerland, Finland, Norway, Singapore, Canada, Netherlands, New Zealand, Ireland, Spain, Denmark, Taiwan, Sweden, and Germany.  Yep.  The median citizen is better off in any of those countries than here in the US.

I suppose you know or can guess I put a lot of the blame for this unfortunate state of affairs squarely on conservatives and their ideological enablers the academic economists.  Why bring economists into it?  Because of their risible insistence on confining their attention to that subspecies of “utility” that has the curious quality of not being defined relative to a given individual but of being presumed to exist in some objective and interpersonally valid sense.  When one works with that particular definition of utility knowing two people are about as happy as they can be turns out to be irrelevant.  The real issue is thought to involve not how each person feels relative to how they might feel but how the feelings of one person compare to those of another.  In the twisted and confused ethical world of academic economics it’s not people who are important, it’s disembodied utility.  Forget about trying to make everyone as happy as possible given a particular level of resources.  With the type of utility economists talk about the socially optimal thing to do might very well be to sacrifice everyone else if doing so happened to suit the desires of some superconductor of utility.  I think it’s safe to say that’s a version of ethical utilitarianism only an academic economist could take seriously.

But do they take it seriously?  Yes, interesting question.  A well known feature of economic theorizing is that even though these types of interpersonal utility comparisons are presented as ethically relevant there is fortunately no accepted way to actually get the information one would need to make them!  In other words, it’s an ethical theory whose utter implausibility is saved by the fact it cannot be implemented anyway.  So why be interested in such a theory at all?  Well, as I have suggested many times before I suspect the answer is that economists don’t really have any sincere interest in that sort of utility.  They support it because it supplants and thus negates other more ethically relevant forms of utilitarianism that might get people thinking about distributional issues and get in the way of their policy prescriptions.  Why focus on a negation of philosophically serious utilitarianism?  Because one has ethical theories that are incompatible with serious utilitarianism one doesn’t care to discuss explicitly.  The academic focus on the peculiar sort of utility I just described is basically a rather elaborate way to shut down the social conversation about the important economic issues associated with the distribution of resources.  You know I’m always happy to discuss anything with anybody so the idea people may want to discuss distributional issues from different perspectives doesn’t bother me at all.  But you know what does?  Talking funny to prevent other people from discussing issues when discussing those issues could lead to a lot more happiness in this world and in some cases a lot fewer dead people as well.  That’s just irritating.  So let’s set aside academic economics and the conservative ideology it supports and discuss some real economic issues for once, shall we?

References

How much do you need to be happy?  Jeanne Sahadi.  CNN Money.  June 5, 2014.  http://money.cnn.com/2014/06/05/news/economy/how-much-income-to-be-happy/index.html?iid=HP_LN

America’s middle class: Poorer than you think.  Tami Luhby.  June 13, 2014.  CNN Money.  http://money.cnn.com/2014/06/11/news/economy/middle-class-wealth/index.html?hpt=hp_t2

Cost of Great Recession: 10,000 + lives.  Alanna Petroff.  CNN Money.  June 12, 2014.  http://money.cnn.com/2014/06/12/news/suicides-recession/index.html?iid=HP_LN