14
Nov
11

Effective isn’t fair, ctd

(Previously.)

Here’s Karl Smith on Don Boudreaux on Paul Krugman:

I bring this up for this particular excerpt:

What I take to be the Krugman/Keynes position is that the real threat to the free market comes from succumbing to policies that in practice don’t produce real gains for much of the electorate.

[…] For example, when median incomes were rising public support for free trade was high. As they began to stagnate and fall, it fell.

Thus the practical way to get support for free trade is to make sure that median income rises.

This might, for example, mean more aggressive monetary policy than you would otherwise support or more intense redistribution that you would otherwise support.

Suppose this correlation holds in general (but note that nobody’s actually demonstrated that).  Redistribution fucks with incentives and reduces efficiency.  But free trade improves efficiency by removing regulatory hurdles and expanding the set of choices within markets.  If increased redistribution leads to more enthusiasm for free trade, can the efficiency gains from the latter exceed the efficiency losses from the former?  If so, we should have more redistribution, even though it isn’t “fair” to take money at gunpoint from people who’ve earned it and give it to people who haven’t*.

——

* By which of course I mean the bureaucrats running the redistribution game.  Of course, a few cents on that redistributed dollar eventually end up in the hands of other people who haven’t earned them, but since the support for redistribution comes from the mean-spirited satisfaction of watching the successful get punished for their success I don’t think it matters much.

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2 Responses to “Effective isn’t fair, ctd”


  1. November 14, 2011 at 15:15

    I just realized it’s not entirely mean-spirited. The echoes of the evolutionary environment say that the rich will get all the stuff, especially the women.

    It certainly feels petty and mean from the inside, but it’s expressing a real survival concern.

    • November 14, 2011 at 15:27

      “Evolution made us petty and mean-spirited” is a cop-out if used as an excuse (which, I notice, you don’t), but yeah, I basically agree. While I’m on the subject: hatred of and violence against out-group members is probably an evolved trait too, and opposition to free trade is one of the last refuges for this sort of respectable racism.


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