Arnold Kling  

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The Road to Health Care Serfdo... In Defense of Cato...

Will Wilkinson writes,


Average self-reported life satisfaction rose with GDP per capita over the last several decades in almost all wealthy liberal democracies, but not so much in the U.S. The idea that the unusual composition of U.S. government spending gives Americans unusually poor value for their tax dollars might help explain this.

He is commenting on David Henderson's essay, GDP fetishism.

Of course, "average self-reported life satisfaction" triggers my baloney sandwich detector. What Wilkinson is doing is putting a psuedo-scientific gloss on his personal opinion that the U.S. government spends money on things he does not like.

Having said that, could it indeed be the case that our government spends its money on much worse things than that of other countries? I find that plausible, but that may be because I know more about how our government spends money than how other governments spend money.

The main reason I find it plausible that our government spends money more stupidly than other countries is that we have such high ratios of spending per legislator and voters per legislator. My thinking is that in Sweden or Denmark if voters see stupid spending they can do something about it. Here, you really can't. The central government is way too remote, and the likelihood that a Congressperson will be punished by the voters because they do not like a particular program is very low. That probability is made lower by the fact that Congress tends to roll lots of spending into enormous bills, so nobody knows what is in them.

Really, if you wanted public opinion to act as a check on government stupidity, could you come up with a worse system than what ours has evolved into? Yes, I know, I know, I got the memo that says that the problem with our system is that the public is irrationally angry and what the politicians need is more leeway to Get Things Done. I just think that memo is 180 degrees off base.


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CATEGORIES: Political Economy




COMMENTS (14 to date)
Will Wilkinson writes:

Arnold, I understand measured skepticism about happiness surveys, but your skepticism seems knee-jerk, not measured. The surveys are relatively well-validated. They contain real information. I don't appreciate the idea that I was putting a baloney pseudo-science spin on my personal opinion. I was making a conjecture based on real patterns of empirical evidence. My speculation is at least as empirically well-grounded as most of your speculation about political economy, so I'd appreciate it if you could give me the benefit of the doubt about advancing an idea in good faith.

Also, I said nothing about our government spending money stupidly. I said it was spending an unusual amount on stuff, like the military, that benefits non-citizens if it benefits anyone at all. My point was not that this is stupid. My point was that this kind of spending makes it more likely that GDP stats are an especially poor proxy for national standards of living in the American case.

PrometheeFeu writes:

France has a constitutional rule that basically says: 1 issue per bill. So you can't write a bill about say puppy dogs, covering up say spending on oil drilling in your grandma's backyard. A good rule in my opinion which raises accountability.

Contemplationist writes:

Arnold

I think you're very mistaken about how much European peoples can do to change the direction of their own fiscal policies. The EU is much much farther a behemoth to the average European than the US federal government is to the average American. And 80% of legislation is now enacted by the EU, not member country parliaments.

mlb writes:

Or perhaps the US simply understates inflation with all our various adjustments and therefore overstates real GDP growth per capita. So much of the stats we rely on assume an accurate inflation measurement - feels understated to me.

I think all governments spend poorly.

Sean A writes:

Will'
"self reported satisfaction"? Are you under the belief that utility measurements amongst different individuals have any meaning? Happiness is a purely subjective concept which cannot be measured appropriately be measured within the same person from one time to another, let alone amongst different individuals. This is another excellent example of a study operating under the cloak of and economic labeling, though having absolutely nothing to do with it. Please, submit your research to a psychology journal; And for god's sake, don't try to inject this nonsense into policy aimed at coercive manipulation of behavior to achieve what you perceive to be some empirically decoded blueprint of a path toward universal happiness.

MernaMoose writes:

I for one thought this was a good post. I'm more than a little skeptical of the "Europeans are so much happier than Americans" line.

Which doesn't change the fact that the US government spends lots of money on stupid things, as all governments do. But inefficiencies are a natural part of any large institution. Deal with it.

OTOH, I still think we'd get at least better spending if the House was filled by appointment, something like jury duty. Make spending bills originate from a genuine representative group of We The People types (setting some kind of minimum educational level requirements for eligibility would be fine with me). Not these professional "who gives a crap as long as it gets me re-elected" politician types, we can be sure, will never tackle the hard problems in a rational manner.

And while we're at it, go back to making the Senate appointed by the states. To prevent the Fed from dumping unfunded liabilities on the states.

Of course people will find ways to game this system. But I'm hard pressed to see how it could be any worse than what we have, and it very likely would be better.

I have far more faith in a random sample of Americans, being concerned enough in the House to get some kind of reign on spending, than what we're getting now.

Jeremy, Alabama writes:

Perhaps, with the US paying the EU's defense tab, Europeans really are getting better value for their government dollar than Americans.

Nathan Smith writes:

Jeremy beat me to it but I'll make the obvious point, at greater length, with an introduction to it first. Cato libertarians are ferociously ignorant about all things foreign-policy-related, ignorant not in the sense of being unaware of facts but of refusing to be influenced by them, and their views are written off by serious people. What they really want to advocate is narrow selfishness-- we shouldn't care if Europeans are enslaved to Nazis or Iraqis to Saddam-- but since hardly anyone is immoral enough to be convinced by that argument, Cato libertarians pretend to think that America's defense of liberty worldwide doesn't benefit foreigners, either. To buttress this view, Catoites sometimes borrw anti-"imperialist" talking point from the left, but I don't think they're really dumb enough to believe them; it's just a smokescreen to try to persuade moral people to adopt immoral foreign policy. Cato libertarians *DO* sincerely think, on the other hand, that isolationism would serve the US's narrow self-interest. As far as that goes they are totally wrong, but sincere.

Now for the obvious point. US defense spending benefits not only the US but all of the West and much of the rest of the world. Western Europe and Japan in particular don't need to spend much to protect themselves and can channel more money into welfare programs instead. This does not imply that the robust foreign policy of the US is mistaken even from the point of view of narrow self-interest. It might be a classic "logic of collective action" case where everyone is rational, and the small exploit the big, but it's still in the big guy's interest to provide the public good.

That said, Arnold's "baloney sandwich" point is also a good one. I don't think Arnold calls into question Wilkinson's good faith, and nor do I, on this issue (unlike on foreign policy). The point is that if you ask a person to self-report their happiness on some arbitrary 10-point scale, it's not clear how the answer should be interpreted, let alone to what extent whatever it is that people are reporting is desirable. J.S. Mill's comment "Better Socrates dissatisfied than a pig satisfied" raises just one of the relevant issues. The insecurity that comes from living in a dynamic economy might make us report lower happiness but still give us richer lives.

And another big point. Children, I hear, often reduce reported happiness, so relatively fertile Americans might be less happy, in this sense, than their relatively barren European cousins. Of course, this is one case where I think it's clear that reported happiness as an indicator is missing a more important dimension of the satisfaction and meaning that people get out of life. But also, this implies that the American system is more sustainable. How happy will Europeans be as an aging and shrinking population culminates in creeping, inexorable fiscal catastrophe?

Philo writes:

The personal nature of this sentence puts it outside the bounds of proper controversy: "What Wilkinson is doing is putting a pseudo-scientific gloss on his personal opinion that the U.S. government spends money on things he does not like." Arnold owes Will an apology, which so far has not appeared (where is it?).

Of course, self-reports of happiness are suspect, but comparing the self-reports of roughly the same group of people over time tells us something about the trend of whatever people mean by 'happiness' (which is probably very close to what we have in mind). Drawing conclusions (tentatively) from such data is not "pseudo-science."

guthrie writes:

Wow... first Rauch, now Wilkinson... Arnold's been cranky lately!

Will Wilkinson writes:

Nathan: "Cato libertarians are ferociously ignorant about all things foreign-policy-related, ignorant not in the sense of being unaware of facts but of refusing to be influenced by them, and their views are written off by serious people."

I don't pretend to have any expertise in foreign or military policy, which was not in any case what my post about GDP as a proxy for welfare was about. Anyway, my Cato colleagues Malou Innocent, Justin Logan, and Chris Preble (among others) are some of the most best foreign policy minds in Washington, and "serious people" certainly do take them seriously. I encourage you to read their work some time.

Jeff writes:

Being written off by "serious people" is, at least as far as foreign policy goes, not exactly what I'd consider to be a mark of dishonor.

I don't think I need to recount the list of foreign policy blunders of the last 30-40 years or so, all of which were advocated and cheered for by our beloved foreign policy establishment, full of Serious People, as it is.

8 writes:

Taking the assumptions as legitimate, if you're aggregating "happiness" and relating it to government spending, then perhaps more Americans are strongly unhappy with big government than others are happy with it.

Are there other countries in the world where large swathes of the population consider the bulk of taxation (everything above the 15% or so of core government needs) to be theft and morally reprehensible?

67416 writes:

How can you measure someone's "life satisfaction" off of GDP per capita? "Life Satifaction" is not solely based on income. Personally what the government spends my tax dollars on doesn't make or break my life satisfaction. Though I would like to have lower taxes and more money to spend I am still satisfied with what I have.

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