The Problem with our Public Discourse

My piece is up at the American Thinker. A slice:

This political season has become especially emotion-driven. That may be understandable for the general public, for whom politics is neither a passion nor a preoccupation, but it is another matter when our “elite” who shape public opinion and whom we expect to elevate public discourse promote non-thinking.

Consider three examples. 

First is a leading editorialist who excoriated various Republicans for their support of Donald Trump, whom the author labels a “dangerous fascist:”

I am talking, for example, about Sen. Marco Rubio, who in the primary called Trump an "erratic individual" who must not be trusted with nuclear weapons -- and then endorsed him for president.

I am talking about Sen. Ted Cruz, who called Trump a "pathological liar" and "utterly amoral" -- and then endorsed him for president, even though Trump never apologized for threatening to "spill the beans" on Cruz's wife and suggesting Cruz's father was involved in the assassination of President John F. Kennedy.

Most of all, I'm talking about House Speaker Paul Ryan, a man whose pained, blue eyes suggest he desperately wants to cry for help. He's a man who runs around the country pathetically trying to pretend that Trump does not exist and that the key issue is his congressional caucus' "Better Way" agenda. And he's a man who, of his own free will, seeks to help Donald Trump become president.

One would think that a writer critiquing his opponents would demonstrate familiarity with their thinking. But here not even a cursory understanding of it is demonstrated. After providing nothing but a few obscure quotes from the primary season, he smears Messrs. Ryan, Rubio, and Cruz by concluding that their support of Trump is proof that “they love their careers more than they love America.”

To read the full piece, go here.

Freedom vs. Equality

My article on freedom and equality is up at The Federalist. A few snippets:

Modern politics is generally framed as a struggle between freedom and equality. But which is the greater end? Although both are important, in accepting either we’ve lowered our sights from the classical ideal of virtue. The modern mindset can be demonstrated by two examples: taxes and the minimum wage. Opponents of tax hikes often appeal to the right of individuals to keep the fruits of their own labor, while advocates argue the wealthy must “pay their fair share.”

The same applies to the minimum wage. Critics decry government criminalizing arrangements the parties involved have freely agreed to simply because it may not seem “fair” to an outsider, while supporters counter that everyone is entitled to a “living wage.” To be sure, freedom and equality are indispensable to our republic (although equality of opportunity as opposed to equality of outcome), but both fall short of the ideal of virtue.

Does Capitalism Cause Recessions?

Why do recessions occur? This question divides free market economists. After recently blogging on the classical conception of the business cycle, in which I described how “classical” economists believed that economic crashes are due to production errors, a commenter linked to an alternative perspective which suggests that recessions are the result of central banking. While this is true some of the time, it doesn’t explain why recessions plagued the economy before the introduction of the Federal Reserve (Fed) in 1913.

Is Classical Theory Irrelevant?

For the last 70 years, macroeconomics has become so entrenched within a demand-side framework that arguments that don’t operate within that paradigm are often derided as irrelevant.

A couple weeks ago I wrote a piece explaining classical business cycle theory and its denial of demand deficiency. Someone from a prominent think tank (not my former employer) messaged me, asserting that although he agreed classical theory is routinely misunderstood, he didn’t understand why it mattered:

It seems to me that the piece is really about …the fact that goods will command some price in the market - that demand for them will never literally reach zero – [which] is not a terribly interesting finding … and I would really like a clear explanation of why this matters...

Given the difficulty of discarding the macroeconomic lens that has prevailed since the 1930s, this misunderstanding and subsequent dismissal of the argument isn’t surprising. Virtually all modern theory is rooted in an “aggregate demand” paradigm—that is, demand management is understood as the key to a well-run economy. This is true for “Monetarists,” “Keynesians,” and even many free market variations, where disagreement has been reduced to whose model best achieves that end.

How Keynesian Economics Has Distorted Economic Thinking (Somewhat wonkish)

For the better part of a century, most economists have believed that recessions are caused by overall demand failure—total purchasing power dropping below the number of total goods on the market.

Part of the reason for the predominance of this thinking is that the man who popularized it, John Maynard Keynes, mischaracterized “classical” arguments in order to better refute them. Unfortunately, few are aware of the success these distortions have had on economic theory.

Keynes began his criticisms of the classical school by insisting that it offered no explanation for “involuntary unemployment”—or forced unemployment—and hence recessions:

Classical theory…is best regarded as a theory of distribution in conditions of full employment. So long as the classical postulates hold good, unemployment, which in the above sense involuntary, cannot occur… [emphasis added]

He then added to his criticism by accusing his opponents of fallaciously arguing that “supply creates demand,” which Keynes would repudiate:

What is economic mobility?

Tim wrote a thoughtful rebuttal to my posts on economic mobility, but it seems we’re at least partly talking past one another.

One of Tim’s central arguments is that some of the studies I highlighted miss the point he has in mind—whether “someone from a poor or lower-income family has the same or better chance of attaining such a position than in an earlier generation”—and instead reflect the fact that part-time high school and college workers rise to higher income brackets over time.

King for a Day, Reconsidered

A couple of weeks ago, I critiqued a number of David’s pieces on the topic of income inequality. In those pieces, David seemed to accept that income inequality had grown over time, but claimed that it was no big deal because people move up and down the income distribution over the course of their lives—what economists call ‘income mobility’. I pointed out that one of the main sources for David’s claims—a study conducted by the U.S. Treasury in 2007—seemed to 1) confirm the notion that income mobility is low in the U.S., yet still managed to 2) overstate the amount of income mobility we actually have. David promptly composed a follow-up post responding to the former but ignoring the latter, arguing that

A deeper look at economic mobility

I recently wrote several posts on the issue of income differences. My central argument is that, to meaningfully measure the economic gap, one must observe individuals and how they fare over time.

Regrettably, most studies instead take a snapshot of statistical categories in time—such as the “top one percent” and the “bottom 99 percent”. Problem is, categories are not people, which is why major studies that track individuals over time contradict the popular studies.

My counterpart Tim differs with me, and in a recent post he makes his case in large part by critiquing a study from the U.S. Treasury, which shows high income mobility. There are a few points he raises that are worth further reflection.

King for a Day

Over the past few months, David has posted several times on the topic of income inequality (for example, see here, here, and here), which he deems to be a non-issue. To support his case, a recurring point of his is that comparing percentiles of the income distribution—such as the ‘top one percent’ and the ‘bottom 99 percent’—is fallacious. In a recent column, David explains that

"The late economist Joseph Schumpeter compared income groups to hotel rooms: just as the former ranges from high to low, so the latter ranges from high-end to low-end. But the different categories fail to reflect who occupies them and whether occupants move to higher categories over time." 

In other words, if we have high income mobility—that is, lots of movement up and down the income distribution—then comparisons between different portions of the distribution are meaningless. But unfortunately, we don’t have high income mobility.