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Ferguson on Murray

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Niall Ferguson writes,


As Murray shows, there is a conservative solution to the problem of inequality. Scrap the failing welfare programs of the '30s and '60s before they bankrupt America. Ensure that everyone has a basic income. Then simplify the tax code to restore the incentives that used to exist for everyone to work hard. Finally, end the state monopolies in public education to launch a new era of school choice and competition.

I have not ready Murray yet, so I will not issue a judgment. But while I might favor these policy proposals, I think it is unlikely that they represent "a conservative solution to the problem of inequality." Inequality is an outcome that emerges from many factors. It would be brave to claim to have a solution.


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COMMENTS (16 to date)
Jonathan Bechtel writes:

I too believe those actions would have widespread benefits, but I think income inequality is here to stay.

The biggest reason inequality is so large....and why it will continue to get bigger...is that ideas can spread much faster now than they did in the past and it's a whole lot easier to make a billion dollars than ever before.

That's good for a lot of reasons, but not so good if you correlate gini coefficients with societal well being.

Nothing Niall Ferguson mentioned would slow that process down.

Ken B writes:

Perhaps NF is concentrating on the word 'problem'. he means a way to ameliorate the consequences of inequality that are generally seen as noxious, not to remove the inequality.

John S writes:

I think Ferguson's "conservative solution" is a solution to inequality in the same way as the "liberal solution" is. That is, it gives conservatives a way to signal that "we care about inequality."

Whether or not the policies have their desired effect--well, that's secondary.

Liberals and Ferguson would doubtless claim that their policies really would have a significant impact on inequality. But international trends in inequality demonstrate how little influence policy really has.

Jeff writes:

Well, "solution" is probably too strong a word for any social science problem, but nonetheless, all of those things seems like reasonable policy goals, no?

mike shupp writes:

There is something fascinating about modern conservatism's disdain for public education. Education is all about the "signalling", I gather. It's a way of showing off. No one really learns anything in collge or high school, it's a terrible waste of money and effort to pretend to teach, and the sooner we eliminate this nonsense, the better we will all be!

Gee. There's something here that I certainly failed to learn in school: with 6000 years of history recorded, there must have been many many nations which improved their liberty and wealth and general happiness by making major reductions in public education. But I'm so ignorant, I can't think of any!

Perhaps some better educated soul would give me a list of say ten to twenty nations (five nations? three?) which achieved such a happy reform. And could you also indicate where these countries "bottomed out" (at second-grade literacy level, for example, or fourth-grade or wherever), and how long this splendid condition lasted before liberals and teacher's unions ruined things? It'd be so helpful!

Ken B writes:

@Mike Shupp: Have you posted on the wrong thread? Ferguson says nothing about signalling and evinces a concern for the quality of education. His proposal is premised on the idea education is valuable.

mike shupp writes:

Ken B -- I'm in the right place. Let's consider Ferguson. He's concerned about inegalitarianism -- the nation's split into an affluent upper 5% and a lower class containing 85% of the populace, as sketched out in Charles Murray's book. One of his suggested cures is "Finally, end the state monopolies in public education to launch a new era of school choice and competition."

I don't know about you, but that doesn't strike me as a ringing affirmation of the glory of the one-size-fits-all style of public education which used to be common in American cities, or the locally supported public schools sprinkled all across the US from 1785 to the late 20th century. Ironically, the notion that such schools promoted egalitarian education used to be one of their claims to fame. Ferguson purports to desire more egalitarian fates for the rich and poor -- but the existing school system seems to be in the way.

Of course, that's elementary and high school. How about college? Since you're wondering where I got my language, let's reach out for Bryan Caplan -- today, in fact, at his post on "The Present Value of a Sheepskin."


"In reality, however, the typical year of education pays very little. Most of the financial reward of education comes from finishing degrees. Since diplomas used to be written on sheepskin, this finding is known as the "sheepskin effect." Researchers usually interpret sheepskin effects as signaling."

I'm not here to argue, I hasten to add. I'm quoting to demonstrate that economists seem to be coming dubious of the notion that education BY ITSELF is valuable for most people. You may want to use Google to search out some of the recent discussion at this blog and Tyler Cowen's dealing with the job prospects of STEM (science-Technology-Engineering-Mathematics) graduates and liberal arts graduates. Basically, programmers are valuable people, English and art history majors will be ... underemployed. Nobody NEEDS B.A.s with degrees in "communications skills" who have been introduced to Plato and Aquinas and Immanual Kant; they have no place in contemporary societiy; they should have gone to cosmetology school and learned something truly valuable, like cutting hair.

Elsewhere on the internet, one can find law professors blogging about the over abundence of law school grads, and a decent sprinkling of columns at Slate and Huffington Post and so on dealing with for-profit institutions like Phoenix University which seem ... skeptical. Again, I'm not disagreeing, I'm just saying once upon a time no one would have made such arguements.

I conclude from these and other observations that our American upper crust is turning against schemes for publicly-supported mass education that have distinguished America for the past three centuries. The unanswered question is whether the hostility is directed simply at ineffectual methods of education or at the notion of educating the lower class itself.

What's your take?

Richard Fazzone writes:

Wisest "Fergusonism" and most probable outcome:

"Somewhere between the extreme scenarios of social collapse (“coming apart”) and great awakening (coming round, perhaps) there lurks the mundane possibility that the United States could muddle along for quite some time with its current levels of social polarization."

What suggests otherwise?

mike shupp writes:

Richard -- "What suggests otherwise?"

The present moment is but fleeting. You've got this Occupy Whatever stuff going on, you've got a fair amount of screaming about whether middle and lower class living standards have improved sufficiently since the 1970's, you've got all this 99%-vs-1% talk. And that's surely tied to the state of the economy. Within the next decade, the economy should improve quite a bit, which will allieve much of the current unhappiness. Or it won't of course, and lots of people will be very unhappy, and that will shape a lot of legislation -- high level tax rates, as an example.

Obama's health care plan will work or it won't, and that's going to affect moods.

My suspicion is that the US freedom to act militarily around the world is going to be eroded considerably in the next ten years. Our army won't be as large, for one thing, and the willingness of other nations to ratify US interventions abroad may fall. Quite a few countries will probably throw brickbats at us as long as it's US policy that global warming is a myth. Etc. This is probably going to annoy both liberals and conservatives.

Politically... things are peculiarly bad right now. The current crop of Republican presidential hopefuls is ... less than awesome, in the eyes of most liberals. And a lot of Republicans seem to fear Obama as the single most dangerous man in the White House since FDR. By January 2013 or 2017, I'd hope some of this tension will die down.

So. We're at a real special moment.


Shayne Cook writes:

I've not read Murray yet either, but Ferguson references, " ... four social domains: family, work, local community, and faith" listed by Murray as having decayed, or completely disappeared, in lower class America. Not having read Murray, I can have no comment on his corrective recommendations.

But there is a common characteristic in all four of his listed "social domains" - they are all contracts, with inherent obligations as well as benefits. Family cohesion implies one can depend on family for support at times, in consideration of return of support for other family members at better times. Ditto, local community. Even the obligation of keeping one's house and yard in good repair improves the overall local neighborhood and property values - with an implied obligation for others in the neighborhood to do the same, for the same reason. Work is a contract - one supplies productive labor in consideration of an income.

When Federal (or State) government institutionalizes providing benefits - with NO inherent obligation to repay, either in-kind or in-service - it is supplanting the concept of the contract with the concept of the free-gratis grant. Unfortunately, only one side benefits from a free-gratis grant. Grants are merely wealth re-distribution. But both sides benefit from the engagement in and fulfillment of a contract. That is wealth creation.

To whatever extent a government engages in wealth re-distribution, it reinforces in the "grant" recipient that contractual obligations are not required or even desirable. And it supplants faith in family, community and work with "faith" in a "beneficent" government. "Long live the King!"

Shayne Cook writes:

Follow-up ...

A contemporary example of how insidious and pervasive the nature of wealth re-distribution has become, in terms of removing the notion of contractual obligation.

UnlearningEcon writes:

Slight digression, b one possible solution to inequality is an LVT, which everyone should be able to agree on as it falls entirely on unearned income (rent), which is a massive source of FIRE industry profits.

Floccina writes:

Mike Shupp on your last comment, why are you so negative? The USSR is gone making the world much safer. China and India are progressing rapidly. World wide income differentials are narrowing. The internet ipods etc. other than the great recession these are great days. The world seems safer than it has ever been.

On schooling I am not so negative on education as on schooling. Education is very valuable but it seems signaling has squeezed much out education in schools. As to no nation abandoning gov. schooling there has to be a first of everything. Schooling has been over sold as a cure to too many ills.

I think that we can agree that if everyone goes to school full time until they are 60 that would be too much schooling so the question is are we over schooled under schooled or schooled just enough. Most Democrats seem to believe that we are under schooled, I disagree.

mike shupp writes:

Floccina: It actually is hard to imagine a society which is "over educated." Consider that roughly 15 million Americans are without jobs, roughly half of them for more than a year. This is an enormous waste, and no one is quite sure how to cure the situation.

One thing we DO know is that if those unemployed people were better educated, or better skilled, that some of them, perhaps many or most of them, would find employment. A carpenter who learned plumbing might find a plubing job. A school teacher who learned Java programming might find a job in IT. A janitor who learned art history might wind up teaching in college. People would have more options, in other words, and that's usually beneficial. Of course, we can't require that people get additional education as a rule, but it would be nice if people who wanted to be better educated could actually get such education. It wouldn't be a cure-all for unemployment, but it would help.

This is NOT a notion held only by Democrats. Just about every economist in the country, Republican or Democrat or Socialist, would make the same argument. And this is the notion that Republicans in Congress point to when they argue that unemployment shouldn't be paid to people without high school degrees -- even to 60 year old people with long employment histories who don't have high school degrees. (Personally, I think that's unfair -- it used to be perfectly legal, after all, for people to drop out of school after 4th grade, or 8th grade, or 10th grade -- but no one is accusing me of being an economist.)

That's my first point. The second point is that, once upon a time, in a rich and distant nation named America, most educated people looked forward to a society which contained many many educated people. It was thought desirable, let's say, that cosmetologists might have some economic courses and read books on history or astronomy; that farmers should study business law and Latin, that the children of plumbers should go to college to become film directors, that the average attendee at a party or a PTA meeting should be knowledgeable enough to discuss foreign policy and politics, etc.

Settling for less is not something to be proud of. It's not a path to a better world.

Third point: education is a traditional path towards improving one's social status. We're starting to have problems with that in America. Some of us old fashioned types think poor people ought to have children who will become rich, and that the country betrays itself when when the children of the rich can count on becoming rich, and the children of the poor can count on becoming poor.

Fourth point: education signals, it has been asserted. And what exactly does it signal, what claim does it make, what precisely is so infuriating about that signal? Basically, it's a claim of status. The University of Iowa student with B average and an accounting degree is claiming to be somehow the social equal of a Harvard student with an A average majoring in philosophy. How AWFUL, How HORRID, How DISGUSTING. Clearly there's only so much prestige to spread about in society, and it's a waste to try to raise the social statusa of UI grads. Prestige should go only to important people -- to rulers, for example.

(I realize this may seem a bit extreme. The situation is that until about 1950, when the GI bill got roaring, college grads made up less than 10% of the working population, and these people essentually monopolized the professi0ns, corporate management, and all forms of intellectual life. And basically we're talking about white Christian males, with not many exceptions. And under these circumstances, an Iowa U degree looked pretty impressive in Iowa, almost as much as a Harvard degree in Boston. But this went out the window when 30 to 40% of high school grads went on to college.)

Essential point: restricting education (or restricting the prestige given to the educated) to "people who can best use it" is a step towards limiting education to "people who deserve it", and onwards to a society with a small group of "educated" leaders, giving orders to all the rest of us. I realize this is basically what I described as the case in 1950; I didn't claim that the 1950 situation was ideal.

Does any of this make sense?

Xerographica writes:

The Crooked Timber Liberal John Holbo recently posted this fascinating blog entry on Selling Votes.

I posted our ongoing discussion on my blog...Crooked Timber Liberals Do Not Advocate Selling Votes.

In our discussion we consider efficiency versus equality. To his extreme credit...he integrates the issue of "revealing intensity of preference" into his argument. For example...he asks why selling votes would be superior to a system where we would hold yoga positions for as long as possible in order to reveal the intensity of our preferences.

His argument is that, when it comes to voting, the amount of wealth that people have is as irrelevant as how well people can hold yoga positions. It wouldn't make sense to skew the outcome to the rich anymore than it would to skew the outcome to those proficient in yoga.

My counter argument is that, by selling his book on Amazon...Holbo is "voting" for Jeff Bezos. Therefore, selling votes is superior to the downward facing dog scheme because we all have "voted" for the people who can buy votes.

John Holbo's willingness to discuss issues of allocative efficiency is really exceptional among Crooked Timber Liberals and liberals in general. That's why it would be great if you could "vote" for his effort by linking to his blog entry on selling votes.

Would you be in favor of allowing people to sell their votes? Are there any reasonable arguments against it from a purely economic standpoint? If you agree that people should be allowed to sell their kidneys then does it automatically imply that you support their ability to sell their votes?

Andjuar Cedeno writes:

It requires bravery to claim that the status quo works in the United States not to submit common sense solutions. Social security works? The tax code works? The state monopoly in public education works? Common sense dictates that when a program does not work it requires change. We scrapped LBJ’s version of welfare over a decade ago and the world did not come to an end. Common sense dictates that the fiscal-political fiascos known as Social Security, Medicare, and Medicaid need to end. Europe’s current chaos provides an example of where we will end up. Imagine a tax system that does not require tremendous financial commitment to tax attorneys and accountants, or lead to companies to pursue gross inefficiencies complying with them. The horrendous slide of public education since its capture by teachers unions and tenure in the 1970’s speaks for itself.
It truly requires a brave soul to keep heading straight for the precipice clearly in view. It only requires common sense to eliminate clear problems.

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