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Yglesias vs Yglesias
This goes back to a point I was making a while ago about how dangerous it is that the public discourse is so dominated by low-quality freelance philosophy done by people with PhDs in economics. I’m fairly certain that if Mankiw were to walk over to Emerson Hall he could find some folks (possibly T.M. Scanlon who I know sometimes reads this blog) who could explain to him that there’s little grounds for the belief that a commitment to utilitarianism is the main justification for redistributive taxation.
...the point here is that the marginal utility of money income declines as it grows. This is also a strong argument for believing that redistributing money from wealthy or high-income individuals to the poor or to public services will be welfare-enhancing.
Posted by Alex Tabarrok on July 22, 2009 at 07:10 AM | Permalink
Comments
The existence of people with econ PhD's who dominate the public discourse with low-quality freelance philosophy doesn't imply that everyone with a PhD in econ dominates the public discourse with low-quality freelance philosophy, but nice try.
Posted by: ogmb at Jul 22, 2009 7:28:04 AM
What's really funny is that the argument doesn't even work, even if all of the premises (the diminishing marginal utility of money, the possibility of meaningful interpersonal utility comparisons, everyone has the same welfare function, no adverse incentive effects or public choice problems with implementation) are granted. The reason being that we live in a world where resources can be directed towards production as well as consumption - it is precisely the diminishing marginal utility of money which means that the rich have a higher marginal propensity to invest. Given that there is a link between growth and investment, it becomes far less clear that egalitarian redistribution will serve to maximize utility.
(the argument here is shamelessly taken, by the way, from a paper by David Schmidtz called Diminishing Marginal Utility and Egalitarian Redistribution.)
Posted by: Dan at Jul 22, 2009 7:28:39 AM
One of the techniques that infuriates me about Mankiw is when he links to banal conservative opinions without comment or when he excerpts and juxtaposes two articles that are supposed to disagree with each other, but don't really--again without comment. In this post, you are doing the same thing.
If you think there's a contradiction here, state it explicitly so at least I can disagree with you! I think you are claiming that Yglesias' observation that redistributive taxation is well-fare enhancing contradicts his statement that it is not the main reason for redistributive taxation. I don't see an inherent contradiction there.
But maybe that's not your point. I can't tell, because you haven't stated what your point is.
Posted by: MostlyAPragmatist at Jul 22, 2009 7:39:53 AM
Yglesias first says that utilitarianism isn't the main justification for redistributive taxation. The second post says that there's a strong case that income distribution is welfare enhancing...I don't see the contradiction, unless there's some evidence somewhere that Yglesias sees the welfare-enhancing argument as the best argument for redistribution. Maybe he does think that, I don't read his blog.
Posted by: Andrew at Jul 22, 2009 7:46:05 AM
Andrew and Mostly, what are the chances that Yglesias thought all along that utilitarian criteria provide "strong" justification for redistribution but decided to ding Mankiw because it's not the "main" justification? What are the chances that Yglesias is just confused?
Posted by: C at Jul 22, 2009 8:03:49 AM
What are the chances people who believe in redistribution don't understand return on capital?
Posted by: Andrew1 at Jul 22, 2009 8:08:48 AM
I don't really want to defend Yglesias's initial post, since I'm not sure he understood Mankiw's framework, but there's really no contradiction between thinking that the declining marginal utility of money gives a good argument for progressive taxation and rejecting utilitarianism. Utilitarianism is the doctrine that an action is right if and only if it maximizes utility. This gives rise to various unsavory consequences, such as that we ought to hang an innocent person to stop a riot, that we ought to chop up the homeless for their organs, and (Mankiw's example) we ought to tax the tall more than the short.
But one can deny that we ought to maximize utility even when it requires doing unjust deeds, and still believe that maximizing utility can give a good reason to do something. It's not true that you ought to kill someone in order to please your spouse, but it is true that pleasing your spouse can give you a good reason to do something. So, we might think (i think) that we shouldn't levy unjust taxes, but, given that side constraint, we should set up a taxation system that maximizes utility.
So, there shouldn't be higher taxes on Asian-Americans or the tall, even if that would maximize utility, but, given an array of permissible taxes, we should choose the one that maximizes utility. Since progressive taxation is morally permissible and maximizes utility, we ought to adopt it. That is, just because sometimes it's impermissible to levy a tax in order to maximize utility, doesn't mean it's always impermissible, or even never a good reason.
Why is it unjust to tax the tall more than the short? I'm not sure, but I think it is, and the intuition that it is is what made Mankiw's argument run. I think it's clear that what makes it unjust isn't that it maximizes utility (if it does).
Posted by: beamish at Jul 22, 2009 8:20:57 AM
If one rephrases the initial statement to read, how dangerous it is that the public discourse is so dominated by low-quality freelance economics done by people with bachelors degrees in philosophy , I'd happily agree.
Posted by: RW Rogers at Jul 22, 2009 8:23:12 AM
What are the chances that Yglesias is just confused?
Smaller than the chances that you are. The first statement says that those who advocate redistribution are not principally basing their argument on a utility calculus. The second statement claims that there is a utility-based argument to be made in favor of redistribution. There is no disconnect or contradiction between those statements.
Posted by: ogmb at Jul 22, 2009 8:23:57 AM
this is a simple application of the chain rule (he who owns the chains, makes the rules)
Posted by: babar at Jul 22, 2009 8:37:18 AM
Yglesias, along with many of the above comments, reflect a fallacy Ayn Rand called "context-dropping."
While "MostlyAPragmatist" is correct that, in absense of any context whatsoever, there is no inherent contradiction between Yglesias' two points, we must keep in mind that Mankiw and people like Mankiw believe that a commitment to utilitarianism is the primary argument that obliterates any call for redistributive taxation.
Hence we see that in Yglesias' first point, he sidesteps the argument that destroys is point of view by claiming that utilitarianism is beside the point. His second post/point is divorced from any of Mankiw's direct arguments against redistributive taxation, and so Yglesias no longer drops the context. He is then free to use utilitarian arguments IN FAVOR of redistributive taxation.
That's where the contradiction is.
See, the problem with philosophy these days (and economics, for that matter) is that people are better technicians than they are theoreticians. You can't pick and choose when utilitarianism applies to your arguments unless the name of your game is to simply divorce your current thoughts from your previous and future thoughts, remain totally inconsistent, and make whatever point serves your mental whims TODAY.
Rand, von Mises, et al were always disturbed by this kind of reasoning, but until Rand gave "context-dropping" a name, we were ill-equipped to identify the fallacy and explain what was wrong with it. Many of us see the problem, but still can't explain it, even though we know at a gut level that it's all wrong. Maybe that's why Tabarrok didn't include further commentary?
Posted by: Ryan at Jul 22, 2009 8:42:14 AM
It's really not that hard. In the first statement Yglesias derides economists as naive for thinking that utilitarianism is a good argument for redistribution. In the second, he gives a utilitarian argument for redistribution that he says is "strong." These two statements are certainly in tension!
Posted by: Paul at Jul 22, 2009 8:54:09 AM
Oh Good Lord.
Mankiw: "The moral and political philosophy used to justify such income redistribution is most often a form of Utilitarianism."
Yglesias: "Not so."
Posted by: ogmb at Jul 22, 2009 9:00:48 AM
Dang RW Rogers, you stole my joke!
And good catch Alex T.
Posted by: Bob Murphy at Jul 22, 2009 9:22:00 AM
I vote for no contridiction. First there is obviously no contridiction. Secondly I think the utilitarian argument Yglesias invokes is a different one from the arguments Mankiw targeted. Third there were plenty of practical considerations which made Mankiw's paper less than persuasive.
Posted by: Michael Foody at Jul 22, 2009 9:25:39 AM
ogmb, my wording cops to the possibility that Yglesias meant exactly what he said.
To those who have answered "high/low" to my question, do you have the feeling that "Yglesias is a fine, intellectually precise fellow, but I would hate to have a beer with him"?
Posted by: C at Jul 22, 2009 9:37:40 AM
There is a contradiction if Yglesias' "main justification" for redistributive taxation is that it is welfare-enhancing. Is it his main justification? Or secondary to his philosophical justifications? If so, I would like to hear them.
Posted by: Sam at Jul 22, 2009 9:45:06 AM
Someone needs to smack Yggy with the impossibility-of-interpersonal-utility-comparisons stick.
Posted by: Noah Yetter at Jul 22, 2009 9:53:34 AM
Ryan has it right.
"and make whatever point serves your mental whims TODAY." is the only way to see no contradiction.
RE:do you have the feeling that "Yglesias is a fine, intellectually precise fellow, but I would hate to have a beer with him"?
No, I'd have a beer with him, but I do wish he were more intellectually precise.
Posted by: Tom at Jul 22, 2009 10:07:10 AM
both of yglasias's comments were made in the past. the question is what does he believe _now_?
Posted by: babar at Jul 22, 2009 10:16:21 AM
I took the point to be that Yglesias complains about economists doing philosophy, but does economics with a philosophy BA.
Posted by: Simon at Jul 22, 2009 10:23:05 AM
Alex, by titling the post Yglesias vs. Yglesias you suggest the two points are in tension. Only on the surface.
In the first quote, he observes that there is little reason to believe that people support redistributive taxation for utilitarian reasons (and implies that the motivation must be elsewhere).
In the second quote, he offers a utilitarian argument for redistributive taxation.
No real tension here. One could could have other philosophical grounds for pursuing redistribution, but still believe the the most effective way to persuade people who don't share one's philosophy is to resort to utilitarian arguments.
In fact, it might embarrass Yglesias to realize that this is a very "Economics" way to argue.
Tastes in both pie and public policy differ, so you might not be inclined to like what I like. But, if I can persuade you that what I like will make everyone better off, then maybe we will jointly pursue it.
Posted by: Mike Giberson at Jul 22, 2009 10:28:02 AM
I really have to agree with ogmb, there's no contradiction. Most people don't justify progressive taxation with utiltiarianism, but he personally does.
I'm totally a Utilitarian too and I don't see the big deal people make of interpersonal comparisons of utility. People are just receptacles of experience, so you can turn interpersonal comparison into intrapersonal comparisons of utility just by imagining what it would be like if one person experienced both sides of the picture, perhaps by having their memory selectively wiped or something. Practically how to compare utility you have to make rough estimates and rules of thumb and you can't ever arrive at a precise calculation, but I don't think that's a problem. If something is good, it's good even if we don't know whether it's good or not. We can't abandon the truth just because it's hard.
Posted by: Anonymous at Jul 22, 2009 10:29:19 AM
Isn't the contradiction that "the public discourse is so dominated by low-quality freelance philosophy done by people with PhDs in economics", yet Yglesias is writing low-quality freelance economics with a PhD in nothing?
Posted by: Anonymous at Jul 22, 2009 10:42:43 AM
Where is the evidence that the marginal utility of money declines? Human behavior isn't very consistent with this view. We'd expect billionaires to not at all care about losing $1000, but that's not really what happens.
Posted by: Andy at Jul 22, 2009 10:44:17 AM
