Monday, March 18, 2013

Cowen on Economics and Egalitarianism


For good reason, a lot of people think of economists as not being particularly egalitarian. We see prominent economists and economics bloggers advocating non-egalitarian policies every day (intentionally - i.e., the "inequality doesn't matter" types, or uninentionally - i.e., the ones who think they are being egalitarian but whose policies suffer from unintended consequences). Cowen points out that the core of economics is fundamentally egalitarian and that historically economists have been on the forefront of social justice issues. Of course this doesn't always mean economists will always agree with other egalitarians on means or methods, but then again that's part of the value added of economists.

He gets into some applications at the end that I think are a little less carefully thought through. It's not that I'm so opposed to or concerned about the end results. I'm more or less an open borders guy (certainly compared to most of the country). I think there's probably some wisdom to prefering permanent residents to guest workers, probably some wisdom to checking people out, and probably something to speed-of-assimilation concerns that might prevent me from striking all of immigration law, but it doesn't keep me from feeling like I'm fundamentally in support of open borders.

So that's not the issue.

The issue is this idea that to be egalitarian you ought to - in this one institution of government - have a sort of global welfare function. This seems problematic to me, so long as we have national rather than global government (and I am an advocate of global government, so it's not that I'm opposed to the idea of governing with a global welfare function). I don't understand why this is necessary. People come together and make governments to serve common interests. Those interests are obviously going to extend globally, to the well-being of others. But it seems odd to think of an institutional creation of Americans being the servant of all in the world equally. If that made sense, then why do we spend so much money funding police departments in American cities? Wouldn't that money be better spent funding police forces in Baghdad? Why do we spend a dime of money on health care for senior citizens in America, who have spent decades earning American level wages and enjoying American level preventative care? Wouldn't all of Medicare's budget (if we had the sort of global welfare function Cowen seems to be proposing here) be better spent on children in Africa?

Cowen asserts there's something inherent in the way economists approach problems that leads to this global welfare function.

Can you name me a single person celebrating Cowen's take on immigration that wants to establish police departments in Baghdad or send he OASDI trust fund over to Africa?

So I think this is sloppy thinking on Cowen's part that offers a short cut to a policy answer that he likes. This is clearly not how egalitarians - economists or otherwise - think.

Why? Beause we know that collective action to solve local problems does not mean you're inegalitarian. Indeed, as Elinor Ostrom's work shows us often local solutions by local groups are the only way to solve a lot of our problems.

The other odd thing is why Cowen is so quick to talk this way about government when he probably wouldn't apply it to other institutions (firms, families, etc.). Again, like government these institutions obviously care about global concerns. The alternative to the global welfare function is not contempt for the world. But we recognize that firms serve a function in society by seeking profits (or perhaps market share), and that families serve a function in society by caring for a very narrow set of children and family members. We don't think of firms or families as non-egalitarian institutions because they don't operate on a global welfare function.

Why on earth would we think a nation-state is unegalitarian if it didn't?

And yet when it comes to the nation-state David Henderson describes Krugman of all people as being nationalistic for having the audacity to think that American welfare is relevant to American policy! This seems really unfair and unjustifiable to me.

As a final point - this commenter on David Henderson's post on Cowen has details on the claim that there are trillions of dollars worth of welfare gains to be gained from open borders... I haven't read the report but assuming he's not just making stuff up about it it sounds pretty tenuous. Don't believe every number you see tossed around. Like I said - I'm pretty much an open borders guy (although maybe not in a purist's sense of the word), and I think there are large gains to be had from liberal immigration (large gains that we're enjoying now from a relatively liberal immigration policy, I should add), but I'm not sure whether this particular claim holds up or not.

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