David R. Henderson  

My Review of Robert Frank

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Ultimately, though, I find his case unconvincing. Moreover, his own reasoning leads to conclusions that even he finds distasteful, and he has yet to find a way out of those unfortunate conclusions. Frank often misstates the libertarian viewpoint, sometimes in ways that matter for his argument. Along the way he does make points--mainly tangential to his main argument--that are quite eloquently and logically argued. At the same time, he stumbles on a number of issues where he goes beyond his own expertise.
This is from my just-released review of Robert Frank's book, The Darwin Economy: Liberty, Competition, and the Common Good.

In one key part of my review, I point out that he has not taken up the challenge I posed to his view of the world in my 2007 article on his work:

What follows from this competition for positional goods? For Frank, it is a "progressive consumption tax"--that is, a tax on all income consumed with higher tax rates for higher amounts of consumption. Frank argues, as he did in earlier work, that such a tax would require "no real sacrifice" from wealthy people because they would maintain their relative positions and that's what matters to them. I find it implausible that the wealthy would not care about being made poorer, but there's an easy test, one I proposed in my 2007 article: let wealthy people, and only wealthy people, vote on the proposal to tax them more. If Frank is right that there is "no real sacrifice," then he would have to predict that well over 90 percent of wealthy people would vote for higher taxes on themselves. Yet Frank nowhere has proposed such a vote. It's strange that someone who even thinks about having elephant seals vote, understanding that--for obvious reasons--they can't, doesn't even consider letting people vote even though they can. Is it possible that Frank has real doubts about his own theory?

Two other highlights:
Frank states that "school quality is an inherently relative concept." In other words, what matters to parents, according to Frank, is not the absolute quality of the school, but how good it is relative to other schools. But if that's so, then one obvious way to save resources, so that people can have more non-positional goods, is for the government to spend less on schools. Just as a progressive consumption tax would, in Frank's view, make no rich people worse off, a 50 percent cut in school funding should make no students worse off. Yet Frank never considers cutting government spending on schools.

And:
In his reply to Friedman, Frank covers important new ground that I could not find in his book. He writes, "All available evidence suggests that positional concerns are largely local in nature." But if that's so, then, even within Frank's own framework in which relative position matters a lot, the solutions ought to be local, not nationwide. Oops, there goes the federal progressive consumption tax.


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COMMENTS (5 to date)
mark writes:

Thank you. I think his work is a great example of the extent to certain factors unrelated to intellectual rigor determine one's prominence in the social science industry and your review really highlights that aspect of his work.

Maxwell writes:
I find it implausible that the wealthy would not care about being made poorer, but there's an easy test, one I proposed in my 2007 article: let wealthy people, and only wealthy people, vote on the proposal to tax them more. If Frank is right that there is "no real sacrifice," then he would have to predict that well over 90 percent of wealthy people would vote for higher taxes on themselves. Yet Frank nowhere has proposed such a vote. It's strange that someone who even thinks about having elephant seals vote, understanding that--for obvious reasons--they can't, doesn't even consider letting people vote even though they can. Is it possible that Frank has real doubts about his own theory?

I think a test like this, aside from not being particularly "easy" to carry out, would not be conclusive as to whether higher taxes would constitute "no real sacrifice." My understanding of happiness research is that most people don't know what they want. This being the case, one can easily envision a scenario whereby rich people vote against this proposal, unaware that it would not affect their happiness.

For what it's worth, I am not in favor of higher taxes on high earners.

Floccina writes:

I do believe that 90%+ of the value from education beyond the 3rd grade is positional or relative AND I would support a 50% cut in government spending for educational. Only as a start though.

Eric Falkenstein writes:

to me the best argument against massive income redistribution is that status competition would transfer to other arenas. Schools and prison are relatively equal on material levels, but the status anxiety in these domains is surely greater than in 'real life.'

fundamentalist writes:

In the early days of parliaments in Europe only the wealthy voted because only they would pay the taxes. Of course, the early parliaments met only to decide how much in taxes to give the king for his war.

The US had limits on voting for a similar reason. Only those who paid taxes should vote. Progressive taxes were proposed several times in the 1800s and rejected on the grounds that it is immoral for the government to treat the rich differently than the less rich.

When senators were chosen by the states there was less of a chance of the poor and middle class ganging up on the rich.

Today, the poor and middle class tax the rich for their own benefit. But the rich get their revenge in campaign donations. The rich vote first with their dollars and limit the field for which the poor and middle class get to vote.

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