Income Inequality Matters

by Roger Koppl

Income inequality matters. Let me say that again so you know I meant it: Income inequality matters. This statement may be surprising coming from a self-described “Austrian” economist and a “liberal” in the good old-fashioned pro-market sense. It shouldn’t be. It should be one of our issues. The surprise should be that we pro-market types have not spoken up more on this central issue, thereby letting it become associated almost exclusively with more or less “progressive” opinion.

This indifference to income distribution is all the more mysterious because pro-market thinkers generally support a theory of politics that tells us to watch out for ways the state can be used to create unjust privileges for some at the expense of others. We should expect the distribution of income to be skewed toward the politically powerful and away from the poor and politically weak. In a representative democracy “special interests” engage in “rent seeking” to get special favors. Those special favors enrich some at the expense of others. That’s what they are meant to do!

After the Fiscal Imbalance is Resolved: What Then?

by Mario Rizzo

Let us suppose that not only the immediate fiscal cliff problem is solved but also the long-run fiscal imbalance is corrected. What then? Presumably federal spending will then be on a sustainable trajectory which is able to cope with cost-of-living increases. Ordinary trend economic growth will already have been figured into the sustainability of the spending trajectory.

So what room is there for more spending without derailing the whole “solution?”  Consider that the contemporary federal government – executive and legislature – exists for the purpose of giving favors to various groups in exchange for electoral support.  Thus, even assuming the unlikely event that the long-term imbalance is resolved, how do we stay within the solution range?  After all, we did not get where we are by accident.

Only a real change in the philosophy (ideology) of government will work. The pragmatic solutions of those who do not challenge the welfare-warfare state, root and branch, are not enough. They are not “pragmatic” enough!

The Great Ideas of the Social Sciences

by Gene Callahan

Let’s take social science broadly, in the sense of German wissenschaft, so that The Republic and Politics and The Social Contract are social science. (I would contend that they are, in fact, often much more scientific than the latest regression study of how detergent use correlates with the suicide rate.)

So what, then, are the most important ideas ever put forward in social science? I’m not asking what are the best ideas, so the truth of them is only obliquely relevant: a very important idea may be largely false. (I think it still must contain some germ of truth, or it would have no plausibility.) Think of it this way: if you were teaching a course called “The Great Ideas of the Social Sciences,” what would you want to make sure you included?

Here’s my preliminary list. What have I left off? What have I mistakenly included?

Using Sortition to Achieve Campaign Finance Reform

by Gene Callahan

I was sitting in a session of the British Political Studies Association Conference today, listening to several speakers talk about sortition (using random selection in the political process) when I was struck by a way to employ it to achieve campaign finance reform without any restriction on donations or campaign length. So, I share:

We have a problem with money corrupting the political process, and part of that problem is how long our campaigns run. How can sortition ameliorate the problem?

The Just Distribution of Income and Wealth

by Mario Rizzo

There has been a lot of talk this year, and especially during the holiday season, about the inequities in the distribution of wealth and income. But most of what has been written is quite simple-minded, if the writers mean to convey something more than their own personal preferences for a different distribution.

I have no objection to passive expressions of preference. But I do have objection when people attempt to bolster their case for intervention by the state under the banner of distributive justice, morality, religion or whatever is supposed to evoke some objectivity.

How’s Your Compulsory Holiday Giving Coming Along?

by Mario Rizzo

I wish people would perform the following intellectual experiment. Find out how much in federal taxes you have paid in the past year. Don’t worry about making any distinctions between the various payroll taxes and the income tax. It all goes into the same pot in the final analysis.

Now assume that this amount is in an account and that you are not allowed to spend any of it on yourself or your immediate family. Nevertheless, you are given a choice about how to spend it. What would you spend it on? Now compare that with what the federal government spends on. How do they match up?

The Intellectual Disaster of American Conservatism (Liberalism)

by Mario Rizzo

I watched a rather good debate this morning on the ABC News program This Week. The participants were journalist George Will and Congressman Paul Ryan (on the “right”) and Congressman Barney Frank and former Labor Secretary Robert Reich (“on the ‘left”). You can watch it now or simply read the transcript. The topic for the debate was “There is too much government in my life.”

I thought the “right” handled the economic questions very well. I was especially impressed (because I don’t know him as well) by Paul Ryan’s knowledge and debating skill. But I kept wishing that George Will was in one of his libertarian moods because the “left” exposed some glaring inconsistencies on matters of social and military policy. For whatever reason, Will played the good conservative in the debate (perhaps to avoid causing splits on the “conservative” side of the debate).

I think the “left” (mainly Barney Frank) played an excellent card.

Thing 1 and Thing 2 Sit Down To Talk

by Roger Koppl

Right in the middle of the book, Thing 1 and Thing 2 sat down to talk about a controversial topic.  It might have been politics or religion.  It might have been economics or, perhaps, global warming.  I don’t know.  Anyway, it was a Very Important Topic.   Just like you and me, Thing 1 and Thing 2 think in models, though not necessarily mathematical models.  Thing 1 thinks about the Very Important Topic with Model A and Thing 2 thinks about the Very Important Topic with Model B.  These models are in their heads. 

Another step down the road to serfdom

by Roger Koppl

Peter Orszag, former director of the Office of Management and Budget, has written an article for The New Republic entitled “Too Much of a Good Thing: Why we need less democracy.”  “To solve the serious problems facing our country,” he says, “we need to minimize the harm from legislative inertia by relying more on automatic policies and depoliticized commissions for certain policy decisions. In other words, radical as it sounds, we need to counter the gridlock of our political institutions by making them a bit less democratic.”

Look to the Long Run

by Mario Rizzo

I have been away in France for almost two weeks. I missed the “earthquake” and Hurricane Irene for I which am very happy.

What being away reminds me is that if you follow the day-to-day news you can easily get bogged down in the small events — though they seem big and important at the time — and fail to see the bigger picture. Every little nervous twitch by the those in power becomes our daily obesession.

Blogs contribute to this because you must make your comment right away because the public attention moves to something else. But if there is any lesson to be learned from classical liberalism is that we ought to focus on the long run. It is really only the long run that we have any hope to change. Most of the propositions of economics apply to the long run — as Milton Friedman taught “fine tuning” is a fool’s errand. What we know about the institutions conducive to the free society and to prosperity apply mainly in the long run.

This the both the strength and the weeakness of the liberal doctrine. People demand short-run solutions but there are only long-run answers. This is why government needs to be constrained to a long-run focus. It is also why it can never be constrained permanently and why the struggle for economic progress and freedom is eternal.

“Enjoy” the daily news but don’t mistake it for something important. It generally is not.

Now which newspaper would hire me with that philosophy?