from David Morris:
> Consider the issue of inequality. “We economists can try to estimate the cost
> of redistribution—that is, the negative impact on efficiency that comes with
> attempts to achieve more equality,”writes Mankiw [my alleged guru]. “But in
> the end, picking the best point on the tradeoff between efficiency and
> equality comes from policy preferences about which we, as economist must be
> agnostic.”<
-- It's truly galling that idiots like Mankiw refer to "we economists"
as having a unified view. It's a version of the royal we. Those who
consider themselves to be the royalty of the NC school (Mankiw,
Feldstein, et al.) claim to speak for all economists as if there are
no disagreements with NC economics from other economists or even
_within_ NC economics. (For example, Krugman and Stiglitz are what I'd
call NC economists and they'd disagree heartily with the views of
Mankiw or Feldstein on many issues (including perhaps even those of
method). Of course, those of the Chicago school don't consider Krugman
or Stiglitz to be economists.)
-- So these folks "can try to estimate the cost of redistribution."
It's important to note what _kind_ of "redistribution" he's talking
about (and worries about), i.e., redistribution from the top 1% (or
their poorer allies of the top 5%) to the rest of us, likely as the
result of some government policy. He's not talking about the
real-world redistribution from the vast majority to the ultra-rich
that has occurred since 1979 or so. As far as I can tell, Mankiw has
no idea why the distribution of wealth and income has shifted so
radically to the right in recent decades: in standard NC economics,
the distribution of wealth is taken as "given," i.e., unexplained.
It's very clear that he doesn't see the wealth shift as a problem.
The NC school -- especially the right-wing version pushed by the
Mankiw types (which might represent a majority of professional
economists) -- has a world view that was likely first articulated by
John Locke: any change in the distribution of income and wealth that
is due to government policy is called "redistribution." On the other
hand, any change in the distribution of income and wealth that is due
to the workings of the so-called private sector ("civil society"?) are
not thought of as "redistribution" but instead a "natural" (so that
there's no call for NC economists to estimate its cost).
Following Locke, one's individually-owned property is "natural," but
the government is artificial and at best a necessary evil (even though
the former could not exist without the latter). The world outside of
government is presumed to approximate the "perfect market" (which
produces "natural" results such as the "natural" rate of unemployment
and "efficiency") except to the extent that outside agitators -- the
government -- mess it up. The unfettered market is what's needed!
Given the preexisting distribution of wealth and income, the free
market serves consumers to the greatest possible extent! four legs
good, two legs bad!
In his CAPITAL, Marx limned a completely different story of how an
unfettered market works. Unlike the NC vision, the distribution of
wealth is a "dependent variable" to be explained rather than to be
taken for granted. In his absolute general law of capitalist
accumulation, as I posted recently, those who own capital are able to
use the surplus-value they reap to accumulate more yet capital --
which allows them to reap more surplus-value, etc., as part of a
vicious circle; this is backed by the normal tendency of capitalism to
create and re-create unemployment while deskilling workers. Nowadays,
of course, the capitalists also use their government to aid their
accumulation of capital and power. Their lobbyists buy favors from the
government, which supinely provides them at rock-bottom cost.
-- In this NC view, there are benefits to "redistribution" (a higher
standard of living for Harvard janitors, etc.) and there are costs
(the alleged loss of efficiency because the world is presumed to be
efficient absent this kind of "redistribution"). How can economists
balance these? To Mankiw, "we, as [right-wing NC] economists must be
agnostic.”
In the standard NC view, the job of economists is to present the
existing trade-offs (e.g., "equity" vs. "efficiency" which translates
to "economic equality" vs. "what's good for those with money") to the
voters -- represented by the government. Then, the voters decide what
part of the trade-off is advantageous. As at a diner, "Marge" (the
government) hands us a menu that the economists have printed. Then we
say "Marge, we'll take a little more equity and pay for it with a
little loss of efficiency." Then the short-order cook whips up the
dish (using recipes written by economists) and we pay for it.
Mankiw is "agnostic" about the results of this voluntary transaction.
It's a matter of our choice, since we're the sovereign consumers and
voters. But he totally ignores the reality of politics. Given the
nature of a capitalist system (and reinforced by the rightward
wealth-shift since 1979 or so and the accompanying decline of the
opposition), concerning economic issues the government most represents
those with those with the most wealth. It's more like the picture
presented in Pohl and Kornbluth's 1952 _The Space Merchants_ in which
corporations, not real people, are represented in Congress ("we'll
fight this suit all the way up to the Chamber of Commerce!") One
dollar one vote!
In that case, the diner is shunned. Instead, the dollar-voters go to
the fancy gourmet restaurant. The waiter, Gregoire, hands them a menu
of equity vs. efficiency. Even though it's hard to see it in the
candle light, the patrons choose. "We'll take a maximum of
'efficiency' (what's good for those with money) and what do we care
about so-called 'equity' (sneer intended)? if we have extra cake at
the end of the meal, the unwashed masses can have some. Just don't let
them know that we're here."
--
Jim Devine / "In an ugly and unhappy world the richest man can
purchase nothing but ugliness and unhappiness." -- George Bernard Shaw
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