Friday, September 02, 2011

Liberal Economists

People like Paul Krugman and Robert Reich are generally regarded as serious economists, yet I find it odd that these economists don't realize how much their policy prescriptions are based on normative analysis (e.g., propositions which can't be objectively verified). For instance, they often harp on how we don't have a sufficiently progressive tax code so that the "rich" can be forced to "pay their fair share." Regardless if you agree with this statement or not, it's impossible to determine in any objective way what a "fair share" means. It's completely a matter of conjecture as to how much you'd like to soak the rich.

Another problem that liberal economists like to talk about is how the richest 1% are acquiring a larger percentage of the nation's total wealth. By itself, that statistic suggests more than it actually tells us about what's going on in the economy. Is it that the rich are hording their wealth? Or perhaps the value of their assets is stable, yet the other 99% are seeing their assets diminish in value at a greater rate. Or it could even be a case that the top 1% is actually engaging in more productive endevours than the top 1% of 20 years ago. By simply throwing around statistics irresponsibly, and not attempting to go into a more sophisticated analysis of how or why those statistics might be changing, it is merely an attempt to embitter their audience against the rich and to perpetuate class warfare.

It's hard to find a left-leaning economist who can actually offer entirely objective analysis of what are the maladies of the economy, or what the optimal policies to alleviate them would be. It always comes back to the normative stances implicit in their worldview: the richest among us are usually unjust and greedy (since they choose to be that rich in the first place) and the best economic policy is always to redistribute their wealth to the relatively impoverished (who don't choose to be that impoverished)-- and costs of doing so be damned!

The best economists out there know how to separate their moral sentiments from their policy suggestions and analysis. A goal of maximizing revenue need not have to take into considerations of what is "fair" or how to promote the maximum amount of freedom for the maximum amount of individuals. I don't see why more economists couldn't say, "well, you could do it like this if this is your goal, or you could do it like that if that is your goal." Such an economist should also be able to offer potential drawbacks to each type of policy which appeal to both left or right-wing world views. If you can at least see the other side as maybe having some legitimate considerations which shouldn't be immediately tossed aside, you do yourself and your point-of-view a great deal of service.

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