Arnold Kling  

Good for Whom?

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I blame Tyler Cowen for pointing me to this post by Matthew Iglesias.


one is constantly reading articles in the press condemning one European electorate or another for refusing to agree to "painful" reforms that are nonetheless "necessary." This example from The Economist is unusually egregious, but you see it all the time. Missing in these stories are important questions like "painful for whom?" and "why would you want the government to inflict pain on people?" And, of course, the reforms in question are never painful at all for, say, the people who own the publication you're reading or the people who own or manage the companies that advertise in that publication.

This is type M reasoning of the worst sort. Basically, you cannot argue for any sort of free-market policy without being accused of being a tool of Big Evil Capitalists out to screw Poor Oppressed Workers.

How about some type C reasoning? Who actually ends up screwed by anti-market policies?

Here is an everyday example--the proposal in Massachusetts to slap a $295 tax on businesses for every worker for whom they fail to provide health insurance. At a type M level, everyone was sure that this was an anti-business measure.

At a type C level, it would seem that as a first approximation the $295 tax would be a tax on labor. That is, in equilibrium, firms would reduce their willingness to pay for workers by $295 in response to this tax. Basic, freshman economics says that this tax (which Governor Romney ultimately vetoed) is anti-labor, not anti-business.

The question "good for whom?" is perfectly legitimate. But it has a legitimate, type C answer, based on general equilibrium analysis and empirical research.

The alternative way to answer the question of "good for whom" is to say, "Anything those evil right-wing elites advocate is bad for the less fortunate, while anything we morally-superior left-wing elites advocate is good for the less fortunate." The only thing that approach has going for it is that it is good for the left-wing elite's moral vanity.


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The author at EconWatch.com in a related article titled Good for Whom? writes:
    [Source: EconLog: Library of Economics and Liberty] quoted: (April 19, 2006 04:56 PM, by Arnold Kling) I blame Tyler Cowen for pointing me to this post by Matthew Iglesias. one is constantly reading articles in... [Tracked on April 20, 2006 11:35 AM]
COMMENTS (15 to date)
it is good for the left-wing elite's moral vanity

Which is all that counts, to them.

Matt McIntosh writes:

Amen, Arnold. I had approximately the same reaction. What follows is a copy of a personal communication by me, commenting on that post:

"... The reason [Yglesias] makes my skin crawl is not just the fact that he says things like this, but that he says them with a more clear-eyed self-awareness than most lefties. Yglesias is no dummy. He has a well-established habit of openly admitting the implications of his political positions -- watch as he rhapsodizes about sweet, sweet coercion, and unabashedly rails against the idea of meritocracy -- and a breathtakingly cynical understanding of how politics works. He's like a villain out of an Ayn Rand novel. Which makes me wonder if he really believes it when he says things like this or if he's just being a Straussian noble liar.

A large part of my optimism about public reason hinges on the belief that most people espousing political positions I think are completely wrongheaded do so in good faith, but simply don't appreciate the implications and assumptions of those positions and wouldn't like them if they were pointed out. But with the few like Yglesias that clearly do understand and accept these things at least to some respectible degree of depth... well it's like meeting an uber-Nietszchean egoist who openly endorses prudent predation. You just feel revulsed and make a mental note never to trust anything they do or say."

conchis writes:

So is Matt's spiel an example of the best or worst type M arguments?

Matt McIntosh writes:

I'm not sure if conchis is talking about me or Yglesias (damn this common name), but if it's me then I would disavow any suggestion that I'm making an argument at all. It's a purely personal observation. Yglesias is fully capable of making incisive type C arguments when he wants to (which is what makes this sort of nonsense all the more vexing coming from him), and when he does he deserves to be responded to in kind just like anyone else. But when a perfectly intelligent person like him decides to play in the Type M demagogue pool, I think one can be forgiven for wondering just what he thinks he's doing.

Barbar writes:

Oh come off it. Yglesias is not saying that economics is irrelevant in deciding policy disputes, he is saying that there are also issues of class and power involved.

For this to produce such a violent reaction in you, you need to believe that class and power are COMPLETELY irrelevant issues, and that even bringing them up is an atrocity.

I mean, please. Wouldn't the obvious reaction to his post be to point out an example of someone advocating a policy for the greater good that while honestly believing it has adverse effects for himself?

BTW, I always thought that the rational pursuit of self-interest was a crucial assumption in economic theory, and that only moralizing paternalistic liberals had a problem with that. Now I realize that the idea that people pursue their own interests is an evil Marxist trope, and libertarians take the obvious view that most people do not have any idea of what is good for them (in France).

Barbar writes:

Let me elaborate a little bit.

Consider the issue of the French and employee protections. Sure, you can do a type-C analysis and say, "Look, if the French weakened employee protections, GDP and employment would increase." Then you might write a column in The Economist saying, "Look, if the French weakened employee protections, it would be painful for them in the short run but good for them in the long run."

But this is actually making a normative judgment about what "the French" should want, and what would be "good" for them. The fact is, most French workers seem to prefer the employment protections. Often in economics the ruling assumption is that individuals are the best judges of their well-being. How do those who disagree with the French workers respond? By criticizing the mental states of these workers -- they are labelled lazy, socialist, selfish, short-sighted, whatever. Does this qualify as a good or bad example of "Type M" reasoning?

Or consider those liberals who rely on class distinctions to make policy decisions. (Unclear if Yglesias qualifies; much like Matt in this comment thread, he was just making an observation, not an argument about the merits of a policy.) When one says that they are motivated by moral vanity, isn't this Type M reasoning? What does their moral vanity have to do with whether they are right or wrong? Is the implication that "anything those leftists advocate is motivated by moral vanity, while anything advocating by right-wingers is derived from objective analysis?" Is the irony clear?

John T. Kennedy writes:

"That is, in equilibrium, firms would reduce their willingness to pay for workers by $295 in response to this tax."

That doen't hurt the firms?

"Basic, freshman economics says that this tax (which Governor Romney ultimately vetoed) is anti-labor, not anti-business."

What year do you realize that both parties bear the cost?

Arnold Kling writes:

Perhaps this will clarify my point:

If you are trying to predict the effect of economic policy A, advocated by elite E, on the income of group X, which method is better?

1. Use economic theory and empirical research to predict the most likely outcome. I call this a type C argument, because it focuses solely on the content of the policy and its consequences.

2. Predict that if group E is on the left and group X is low-income, then policy A benefits group X. I call this a type M argument, because it is based on imputations of the motives of group E.

I believe that method (1) is more reliable.

I readily admit to making a type M argument about the Left's predilection to using method (2). I believe that they choose method (2) because it protects their moral vanity.

Barbar writes:

Arnold,

I understood your substantive point -- and I imagine that as a libertarian, you must be frustrated by people dismissing free-market arguments by just saying "Oh, free-market policies are just advocated to benefit the rich." Those sort of arguments are intellectually lazy and vacuous in themselves. But I don't see Yglesias arguing that. He is pointing out that in addition to whatever economic arguments one might make, the fact that there are different and opposing interests in any policy dispute is relevant, and that often the press will obscure the conflicting interests by assuming identification with one party instead of another. This doesn't mean the press is wrong of course, but I don't see Yglesias concluding that anyway.

Any intro econ textbook will beat you over the head with the distinction between positive and normative conclusions. When you say that an economic policy is "good for France" (as opposed to "likely to increase employment") you are in normative territory. Is the observation that people making normative claims may not be as objective as they claim really that controversial?

john pertz writes:

Barbar said:

"Any intro econ textbook will beat you over the head with the distinction between positive and normative conclusions. When you say that an economic policy is "good for France" (as opposed to "likely to increase employment") you are in normative territory. Is the observation that people making normative claims may not be as objective as they claim really that controversial?"

I understand where you are coming from in your critique of Alan's disdain for the French rejection of the labor law. In your opinion we should not pass judgement as to what is ultimately good for the French voters because they are rational beings who are fully able to chose what is ultimatley best for them through voting. We dont live there so we dont know truly what is going on. Am I correct in understanding your reasoning? If I am then I would argue that Alan's point goes way beyond what you are saying. The reason that the French labor law is unjust is because a mass of people(the native French kids) have essentialy decided that a small minority(muslim immigrants) shall be without jobs. In this regard the protesting youths could be labeled as right wing since they are trying to maintain the established order by rebeling against the new labor law. The white native French youths have jobs so it is in there interest to protest a law which is against their short run best interest. On the other hand the minority immigrants are being opressed by the convservative French Youths, who are both a larger voting block and have more political capital because they are apart of the established order. This is why democracy is largely an unethical context for the creation of power structures because it is ultimately less volitional than markets. In this regard many aspects of our lives are bounded to the choices that we may not have made for ourselves but masses of people have simply decided for us.

dsquared writes:

Basic, freshman economics says that this tax (which Governor Romney ultimately vetoed) is anti-labor, not anti-business.

Arnold, "basic freshman economics" doesn't let you work out the incidence of a tax proposal. That's a hellishly difficult thing to do. Everything would depend on the marginal product of labour, the tightness of the labour market, the substitutability of labour for capital at the margin for the average firm and so on. It would be really quite unlikely that the entire incidence would be on labour.

Matthew's argument is that "it seems odd to suppose that the French people are prepared to riot in the streets in order to preserve something which is bad for them, but perfectly explicable that the Economist would write an editorial advocating policies that are good for readers of the Economist".

cure writes:

I agree with dsquared - you should not assume the incidence is borne by the worker. As he notes, the incidence depends on the elasticities of supply and demand. Then again, the claim that the entire tax is borne by employers is equally invalid.

Barbar writes:

The reason that the French labor law is unjust is because a mass of people(the native French kids) have essentialy decided that a small minority(muslim immigrants) shall be without jobs

This was not the argument the Economist was making. The Economist was saying that the French are being short-sighted by demanding labor protections. The idea is: the French should weaken labor protection (causing short-term pain) but this would lead to more flexible management which would lead to greater growth and productivity which would ulimately benefit the workers. If only the workers weren't so short-sighted.

Your particular argument actually highlights Yglesias's point, which is that when someone claims that a policy will be good for "us," we should pay very close attention to exactly whom "us" refers to. Arnold seems to dismiss Yglesias's point for exactly the sort of knee-jerk ideological reasons he complains about in his dismissal.

GT writes:

Arnold,

As others noted you seem to have misinterpreted what Yglesias is saying. Maybe we can add the type Y argument, those based on misunderstanding what the other said?

Paul N writes:

Wow, a $295 fee, rather than a nice, round $300. Did our fee assessors take a class in marketing? I vote for a $299.99 fee, or maybe better yet we should go Wal*Mart style, $297.52, to make businesses feel that we're screwing them over as little as we possibly can.

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