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First David Brooks writes a muddled column complaining about people who complain about economic inequality. (Eric Alterman provides links to the column and to several critical responses, including his own, here: http://mediamatters.org/altercation/200707300003). Now Nick Kristof gets in on the act. If the Times wants to shill for conservative economic views, it could at least get actual economists to do it. Kristof devoted half his column yesterday (http://select.nytimes.com/2007/07/30/opinion/30kristof.html?) to 'the best political book this year': Bryan Caplan's 'The Myth of the Rational Voter.' Caplan is an economist at George Mason, and, according to Kristof, thinks that American voters are not just ignorant but irrational, in that they, we, systematically vote in error and undermine our own interests. Again on Kristof's rendering, those errors come in four flavors: a suspicion of markets, a 'neo-Luddite' bias against the benefits of such things as corporate downsizing, an 'anti-foreign bias' against such things as free trade, and a pessimistic tendency to exaggerate economic problems. I hope Caplan's argument is more nuanced than this. It certainly can be, as it touches on issues that (as Kristof notes) have been plausibly studied in other fields. I would simply assume that it is more subtle, as any book glossed by an 800 word column should be, were it not for the fact that 'political books' often manage to sustain the superficiality of an op-ed column for hundreds of pages. So I'll withhold judgment on the book. But two points are sufficient to let some of the air out of Kristof's inflationary hype. First: overtures to free trade and free markets tend to be misleading. Very few of the people who call for these things actually mean the 'free' part. They mean 'freer, in certain respects,' and the relevant respects tend to benefit the entrenched interests that shape markets and trade in the real world (as opposed to the vacuum-sealed, abstract world in which markets and trade operate in economic models). The people who actually mean 'free' are worth taking seriously, and maybe Caplan is one of them. But the rest still face the question of when and how regulation should come into play. Which means that 'suspicion' in these areas is not irrational but essential. And second: the benefits of corporate downsizing, like the benefits of 'free' trade, are, for all but a few people, highly speculative, and perhaps merely notional. Think of the mid-career worker who gets downsized and told to 'reinvent' herself for the knowledge economy, or, more likely, told nothing but 'you're not needed here.' Is she irrational for failing to see a spike in her former employer's stock price as a benefit to her? Grant the best case scenario: the forces of creative destruction in the economy do increase productivity in a way that contributes to overall growth. There is plenty of reason to doubt that broad measures of economic well-being - like productivity and growth - tell us much about how normal people are faring. And even if the rising tide does lift all the boats, it will take the tide a while to rise. What does our downsized worker do in the meantime? Work cheerfully for minimum wage somewhere, content in the knowledge that her fate is so bound up with that of corporate elites that their gain really is her gain? All of that to say: the 'bias' against creative destruction is not in the least irrational, not least because it declines to conflate corporate interests with the interests of average, individual citizens. What Kristof and perhaps Caplan call a bias is a way of registering the pain that destruction causes. The political question, in a democracy, anyway, is not how to convince people to accept their fate as collateral damage, but how to soften the blows that economic forces operating on a national scale will inevitably land on normal people.

July 31, 2007 - Posted by Paul C. Taylor in Family Values

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