As my interests have evolved from economics to ethics and Christianity, I’ve decided to launch a new blog. It is called Gentle Respect - a gentle defense of a Christian worldview.
I’ll still talk about economics - the welfare state does not work - but the emphasis is changing.
Thanks for reading!
Robert Whaples surveys PhD members of the American Economic Association and finds substantial agreement on a wide range of policy issues. For example:
- 87.5 percent agree that “the U.S. should eliminate remaining tariffs and other barriers to trade.”
- 85.2 percent agree that “the U.S. should eliminate agricultural subsidies.”
- 85.3 percent agree that “the gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged.”
- 77.2 percent agree that “the best way to deal with Social Security’s long-term funding gap is to increase the normal retirement age.”
- 67.1 percent agree that “parents should be given educational vouchers which can be used at government-run or privately-run schools.”
- 65.0 percent agree that “the U.S. should increase energy taxes.”
And, finally, the topic that generates the most consensus:
- 90.1 percent disagree with the position that “the U.S. should restrict employers from outsourcing work to foreign countries.”
One issue that fails to generate consensus is the minimum wage: 37.7 percent want it increased, while 46.8 percent want it eliminated.
Hat tip: Greg Mankiw
The key issue is the elasticity of labor supply. Some economists do believe, as you suggest, that this elasticity is small and, as a result, that taxes aren’t very distortionary. Others believe that the elasticity is larger. Economist Ed Prescott has suggested that the main reason Europeans work less than Americans is the higher tax rates they face.
Think of it this way. Imagine that you are a painter deciding whether to accept another painting job this weekend. I am willing to pay you $500 for the work. It is possible that you would do the job for $500 but not for $300 (the amount you would keep after paying payroll taxes, federal income taxes, and state income taxes)? If you think that all workers make such decisions without regard to remuneration, then the assumption of inelastic labor supply is correct. In this case, taxes are not distortionary. But if some people respond to incentives and would do the job for $500 but not for $300, then that response is what makes taxes distortionary.
How Distortionary Are Taxes? from Greg Mankiw
Marriage is in decline across much of northern Europe, from Scandinavia to France, a pattern some sociologists describe as a “soft revolution” in European society — a generational shift away from Old World traditions and institutions toward a greater emphasis on personal independence.But French couples are abandoning the formality of marriage faster than most of their European neighbors and far more rapidly than their American counterparts
The increase in out-of-wedlock birthrates is even more dramatic: Last year, 59 percent of all first-born French children were born to unwed parents, most by choice, not chance. The numbers were not driven by single mothers, teenage mothers or poor mothers, but by couples from all social and economic backgrounds who chose parenthood without marriage vows.
Unless the life chances of children raised by single mothers suddenly improve, the explosive growth of the U.S. Hispanic population over the next couple of decades does not bode well for American social stability. Hispanic immigrants bring near–Third World levels of fertility to America, coupled with what were once thought to be First World levels of illegitimacy.
To grasp the reality behind those numbers, one need only talk to people working on the front lines of family breakdown. Social workers in Southern California, the national epicenter for illegal Hispanic immigrants and their progeny, are in despair over the epidemic of single parenting. Not only has illegitimacy become perfectly acceptable, they say, but so has the resort to welfare and social services to cope with it.
Dr. Ana Sanchez delivers babies at St. Joseph’s Hospital in the city of Orange, California, many of them to Hispanic teenagers. To her dismay, they view having a child at their age as normal. A recent patient just had her second baby at age 17; the baby’s father is in jail. But what is “most alarming,” Sanchez says, is that the “teens’ parents view having babies outside of marriage as normal, too. A lot of the grandmothers are single as well; they never married, or they had successive partners. So the mom sends the message to her daughter that it’s okay to have children out of wedlock.”.
The child of academics, raised in a liberal household and educated in the liberal arts, [Arthur C.] Brooks has written a book that concludes religious conservatives donate far more money than secular liberals to all sorts of charitable activities, irrespective of income.
…
The book’s basic findings are that conservatives who practice religion, live in traditional nuclear families and reject the notion that the government should engage in income redistribution are the most generous Americans, by any measure.
Conversely, secular liberals who believe fervently in government entitlement programs give far less to charity. They want everyone’s tax dollars to support charitable causes and are reluctant to write checks to those causes, even when governments don’t provide them with enough money.
Such an attitude, he writes, not only shortchanges the nonprofits but also diminishes the positive fallout of giving, including personal health, wealth and happiness for the donor and overall economic growth. All of this, he said, he backs up with statistical analysis.
“These are not the sort of conclusions I ever thought I would reach when I started looking at charitable giving in graduate school, 10 years ago,” he writes in the introduction. “I have to admit I probably would have hated what I have to say in this book.”
Still, he says it forcefully, pointing out that liberals give less than conservatives in every way imaginable, including volunteer hours and donated blood.
Depolarize Politics
No more debates about abstinence versus having twelve year old children put condoms on cucumbers. No more debates about school prayer. No more debates about back to basics education versus new-fangled experimentation. Everyone is happy. A whole realm of toxic, polarizing political debate will immediately and permanently drop off the political radar.
No more forcing Christians to buy a secular education for their children with their taxes. No more backlashes as well-meaning Christians then try to include a semblance of moral guidance with school prayer.
Cheap Housing
One reason to buy a house in a good neighborhood is to send your children to good quality public schools. Good schools are a powerful draw that can bring in many families - more than the local school system can handle. At this point the town faces a dilemma. They can raise taxes and build new schools, but no one likes higher taxes. Newcomers also bring the risk of watering down the quality of the education - particularly if they are lower on the socio-economic ladder than the current residents.
The other option is to shut out the newcomers. Town councils and land use boards become reluctant to zone for more housing. This keeps the taxes low and the school quality high. It also means that schools are a powerful constraint on the supply of housing (traffic is another important constraint - towns will not zone for more housing if the roads are too busy). First you get an anti-growth zoning board, then you get increasing prices as couples are forced to bid against each other for a limited supply of housing.
School choice and vouchers are the solution. They break the connection between school quality and neighborhood, thereby de-escalating the bidding war for houses. Parents could live in the “nice” parts of “bad” school districts and use their voucher to send their children to different public schools or to a private school.
School choice is typically a conservative issue, but The Two Income Trap makes the liberal case for school choice. Here is an interview with the authors by the liberal magazine ‘Mother Jones.’
Better Education For Minorities
I have yet to discuss whether school choice actually results in a better education. Studies have typically not found benefits, but there are a few reasons for this. The first is that the public schools in the district are used as control groups. But often competition forces them to clean up their act. Secondly, competition is an ongoing process that can take literally decades to unfold. It is only over the past 10 years or that SouthWest and JetBlue have become major players in the airline industry, but it was deregulated in 1978.
One bright spot in the studies is that school choice has benefited blacks. Drawing upon my wife’s experience as an inner city middle school teacher, I suspect I know the reason. Any teacher will tell you that there are a couple bad apples in every class that take up a disproportionate amount of their time. The problem students are even worse in the inner city schools. They are usually born out of wedlock - the number one cause of poverty and low achievement in education. Because of their unstable home life, their mothers are of little help for changing their behavior.
But most of the students in the inner cities want to learn. The single most important thing that would benefit them is to get them away from the problem students and the discipline cases. School choice lets them get into a positive educational environment where their friends and fellow students all want to learn.
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