Wednesday, July 22, 2009

 

Yglesias: "It Depends What Your Definition of 'Justify' Is"

I am getting a little impatient with all of these self-defined "progressives" who won't admit their mistakes. (Obviously there are analogs of this habit in every movement; the progressives don't have a monopoly here.) We all got a chuckle over Paul Krugman ridiculing the very IDEA that he could have called for a housing bubble, and today we get to see Matt Yglesias laugh off Alex Tabarrok's clear busting of him.

Okay so here is the progression:

* On May 30, 2009 Yglesias wrote:
This goes back to a point I was making a while ago about how dangerous it is that the public discourse is so dominated by low-quality freelance philosophy done by people with PhDs in economics. I’m fairly certain that if Mankiw were to walk over to Emerson Hall he could find some folks (possibly T.M. Scanlon who I know sometimes reads this blog) who could explain to him that there’s little grounds for the belief that a commitment to utilitarianism is the main justification for redistributive taxation.

* Then on July 20, 2009 he wrote:
...the point here is that the marginal utility of money income declines as it grows. This is also a strong argument for believing that redistributing money from wealthy or high-income individuals to the poor or to public services will be welfare-enhancing.

Tabarrok pointed out the above contradictions, in a post titled, "Yglesias vs. Yglesias." Then Yglesias says today:
Contra Alex Tabarrok’s cute post here there’s nothing contradictory between pointing out that Greg Mankiw is wrong to imply that utilitarianism-based arguments are the only (or even the primary) arguments available for redistributive taxation and also to point out that considerations related to the declining marginal utility of money do, in fact, militate in favor of redistributive taxation.

Give me a break, Yglesias. Just say, "Heh, you got me there, Alex. At least I know there was a housing bubble."

Yes, it's logically possible that one could have pointed out that Mankiw was wrong, while simultaneously arguing that utilitarian considerations "militate in favor of" redistribution. (By the way, Yglesias, you're aware that many economists--and philosophers--think it's impossible to engage in interpersonal comparisons of utility, right?)

But that's not what you did. Here is a bigger quote from your July 20 post, after you summarize some of Will Wilkinson's objections to using income inequality as a basis for tax policy:
At the same time, the point here is that the marginal utility of money income declines as it grows. This is also a strong argument for believing that redistributing money from wealthy or high-income individuals to the poor or to public services will be welfare-enhancing. The difference, in welfare terms, between a Sub-Zero refrigerator and an Ikea refrigerator is much smaller than the difference in welfare terms between having health insurance and not having health insurance. So a surtax on high earners that goes to finance expansion of health coverage to the working poor is making people better off. In that case, when we look at statistics indicating skyrocketing income inequality we’re seeing evidence of inefficiency that can be rectified through the policy process.

The crude utilitarianism you mention here is the only justification you give for redistribution, to oppose to Wilkinson's critique. And you specifically say "the point here is".

So you're saying that "the point here" is something that isn't the main justification, a main justification that you failed to mention in the post when arguing for progressive taxes?

To repeat, it's theoretically possible that you didn't contradict yourself, but c'mon, Tabarrok busted you. Just admit it and move on. We all screw up from time to time. It's hard work pontificating on everything under the sun!



Comments:
Bob,

As an Austro-Krugmanian might reply to Yglesias:

"Um... marginal utility is calculated at an individual, not aggregate level. So, while it's true that growing income might result in decreasing marginal utility to an individual, it is not true that "aggregate utility" is decreasing as a result of concentrating income in the hands of particular individuals."

Man, Yglesias totally blew it. Can someone whose opinion means something (ie, a Keynesian with a PhD) point this out to our friend the violent redistributionist?
 
Bob,

An additional thought... how does Yglesias know that the poor would benefit MOST from having the surtax spent on health coverage for them, versus something else? Isn't it possible that they might benefit more from having it spent on, say... some throw rugs for their living room? Isn't that a conclusion they could come to?

In that case, why argue for a specific expense that the rich-taxes should be used for? Why not advocate for taxes on the rich to be distributed to the poor as cash payments, for them to use on whatever "necessities" they value most highly?
 
Another problem with the utilitarian argument is that if rich people are so greedy, would each dollar mean more to them, considering they are so greedy. After a rich person might want 1000 dollars more than a monk. Also they will be saving it and thus decrease interest rates for loans, good for poor people.
 
Taylor,

But then Yglesias's utility would be decreased because he wouldn't be able to tell the poor how to spend the redistribution. Sheesh!
 
"Why not advocate for taxes on the rich to be distributed to the poor as cash payments, for them to use on whatever "necessities" they value most highly?"

I think reasonable people can agree that basic protections -- such as health care access -- should be the first thing guaranteed through wealth redistribution.

The purpose is to benefit society as a whole, not just the individual.
 
Clint,

Are you serious?

No, I'm not joking, are you serious?

Let me get this straight... according to your logic:

1.) if I disagree that health care benefits (let's not use ridiculous words like "access") should be one of the first benefits granted of a welfare system, I am not "reasonable"
2.) extending health care benefits to individuals who currently don't have it, is a way to benefit "society" and not the individuals themselves?

Did you completely miss my point? Or even Yglesias's? Yglesias argued that healthcare, specifically, should be granted because it'll increase marginal utility. Marginal utility is decided at an individual, subjective level. So I countered that if Yglesias actually was concerned about increasing the marginal utility of "society as a whole" he should just grant cash benefits to those people he deems worthy of them, and let THEM decide what kind of expenditure would most increase their utility, and therefore (according to Yglesias) the utility of society as a whole.

If you argue against that logic, reasonable or not, you seem to be implying that there is an objective utility/welfare scale which you can refer to and thereby know that a decision of how to best allocate welfare resources to individuals can be made by you, for other individuals, better than they could allocate those resources themselves.

And if that's the case, then the elitism of the progressive orthodoxy should now be obvious to all.
 
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