Thursday, July 5, 2012
Socialism and Democracy
I am in Paris for a big alternative-economics shindig, and I just had a short conversation that reminded me about the heading of this post. Can the relationship between socialism and democracy be similar to the one between capitalism and democracy? Let me explain.
Capitalism is a resilient system, based on institutions of property and the operation of markets that are deeply rooted in capitalist societies. Capitalist countries can have governments that are led by socialists who denounce the operation of this system. They can pass a plethora of laws controlling prices or giving workers or renters more rights or even nationalizing a few prominent enterprises. When they are eventually voted out of office, as occurs to all governments in all democratic countries sooner or later, the system “springs back” to the extent that it was ever repressed: it continues to be fundamentally capitalist. Thus, a believer in the virtues of capitalism can be politically opposed to anti-capitalist parties but consent to their having periodic majorities.
Of course, this is what is possible, not what normally happens. In real life, strong supporters of capitalism tend to use all means at their disposal to suppress movements against it, up to and including imprisonment, assassination and exile. I don’t dispute this, but at a theoretical level it is not an oxymoron to be a democratic capitalist.
Now what about socialism? If socialism is understood to be a politically-organized arrangement in which the economy is under the control of state institutions, it cannot exist without government by socialists. This is known to socialists, of course, whose movements in support of left-wing governments often appeal to the need to “save socialism”. This imperative notwithstanding, socialists in democratic countries generally have a record of being relatively tolerant toward conservative parties. But the theoretical point remains: if socialism depends on who’s in power, it cannot be compatible with democracy.
Thus the only way one can be both a socialist and a democrat is to envision and support a version of socialism that is as deeply and nonpolitically rooted as capitalism is, a system that can survive bouts of right-wing government relatively unscathed. The term “democratic socialism” is fairly restrictive in the sort of socialism it can refer to.
Wednesday, July 4, 2012
Contributions through compulsion: 'The Market' in Australia
Admittedly, not all superannuation contributions made by workers in Australia are involuntary but the vast majority would be. There's been loss of wealth on the Australian stock market since 2010 by the way:
"...Super fund investments accounted for nearly 30 per cent of total market capitalisation of the ASX in the 2009-10 financial year. Super funds are the largest contributor to managed funds. As at the June quarter 2011, super funds accounted for around 70 per cent of all consolidated assets in managed funds..." *
"...Super fund investments accounted for nearly 30 per cent of total market capitalisation of the ASX in the 2009-10 financial year. Super funds are the largest contributor to managed funds. As at the June quarter 2011, super funds accounted for around 70 per cent of all consolidated assets in managed funds..." *
Speech to the Financial
Services Council Breakfast, Sydney
Australian Prime Minister,
Julia Gillard
WED 31 AUGUST 2011
http://www.pm.gov.au/press-office/speech-financial-services-council-breakfast-sydney
Tuesday, July 3, 2012
The cursed Chinese ‘savings’ glut
Richard Fidler with the Australian Broadcast Commission
interviewed Michael Casey, an economist who works for the Wall Street journal,
yesterday. [1]
Casey spoke about his belief that the underlying cause of
the Global Financial Crisis was the existence of a giant pool of money in China. He states that this money came into being
from the wages of the ‘floating population’ of workers who hold rural passports
and move to work in factories in the coastal cities. [2]
Casey says that these internal migrants are compelled to
save because they are denied access to basic services under Chinese law. And “they’re saving more than they need”, he
says, with this money ultimately being invested in US Treasury bonds that fund
the national and private debts of Americans.
The problems with this story are quite numerous. First, Casey informs his listener that
genuine wealth was being created in China through access to jobs and the
monetary savings that went with them. However, the first decade of the new
millennium witnessed global resource
wealth per capita actually decreasing at an alarming rate. Resources were said
to be declining at ~2% annually and population increasing at 1.4%. Therefore, per capita wealth was reported (in
2001) to be decreasing at 3.4%. [3] How, I wonder, did China manage to escape
global limits to growth?
Another question: how
much of this new so-called ‘wealth’ was actually ‘Chinese’ in nature? “Wal-Mart
[an American firm] is responsible for approximately 10 percent of the United
States' trade deficit with China” for instance.[4] There are many, many US firms in China
heavily involved in intra-corporate trade between China and America. In fact, the emergence of this giant pool of
money in China coincides with China becoming a member of the World Trade Organization
(WTO). The WTO, in turn, was “designed
to stimulate foreign direct investment and
the movement of factories around the
world, especially from the United States to low-wage locations such as
China and Mexico (Scott 2003).” [5]
So, just at the time the world’s depletion of energy and
other critical resources kicks in (on a scale it may never have done so before)
US factories move to China. US factories
then sell Chinese-made goods to the US and largely to their own retail outlets.
Michael Casey admits that China has accepted a regime that
sees millions of low-paid individuals living and working under painful
conditions, in order to find jobs for them.
Casey doesn’t mention, however, that China does not have sufficient
rural land available for the ‘rice bowl’ guarantee the Chinese Revolution granted.
Chinese expansion of exports under this
unfavorable WTO compact could be viewed as method to simply feed and clothe a
desperate nation. Chinese funding of US
debt might merely be the ‘tribute’ it pays to the world’s hegemonic power in
order to achieve this challenging task.
Han Suyin wrote in 1976 that China’s industrialization was
only made feasible by China’s “one great asset:
oil.”
“The fact that she is not only self-sufficient but will
become an oil exporter of magnitude, paying her way as she has done so far, without
running into debt, is also part of the strategy of plenty which is now being
put into action…” [6]
In 2005, China became a net energy importer.
What now for China?
Brenda Rosser. 3rd July 2012
REFERENCES:
[1] CONVERSATIONS
WITH RICHARD FIDLER.
Michael Casey interviewed
Broadcast date: Monday 2 July 2012
[2] Under Chinese law
personal legal identity is constructed on the basis of where you were born and
where you live. If you’re not living at
your place of birth you’re denied eligibility to services. So, when rural workers move away they are
denied services such as health care, social security, and education.
[3] 'Thermohaline feedback loops and Natural Capital' Tom
Sawyer Hopkins, Dept. MEAS, Box 8208, NCSU, Raleigh, North Carolina, 27695,
USA.
Sci.Mar., 65 (Supl. 2): 231-256. Scientia Marina 2001
A Marine Science Odyssey into the 21st Century.
J.M. Gili, J.L. Pretus and TT Packard (eds)
[4] Wal-Mart's 'China
Price'
By Joshua Holland, AlterNet. Posted November 7, 2005.
[5] U.S.-China Trade,
1989-2003 - Impact on jobs and industries,
nationally and state-by-state
A Research Report
Prepared for the U.S.-China Economic and Security Review Commission. By Dr. Robert E. Scott, Director of
International Programs, Economic Policy
Institute. January 2005
EPI Working Paper #270
http://epi.3cdn.net/c523ff01bec5bc1c25_7nm6i278j.pdf
[6] ‘Wind in the
Tower – MaoTsetung and the Chinese Revolution 1949-1975’, Han Suyin. 1976.
Pages 391, 392.
The Individual Mandate and A Bush 2007 Proposal
Greg Mankiw is reminding us of a post from over four years ago:
A mandate is only as effective as the penalty backing it up. No one, as far as I know, is ready to make failure to be insured a criminal act punishable by jail time. Instead, if a person fails to follow the mandate, he merely pays a penalty. So the mandate is really just a financial incentive to have insurance. To continue with this logic, consider two proposals: 1. A person is required to have health insurance. If a person is in violation, he pays a $1000 fine. The revenue from the fines is rebated lump-sum to all taxpayers. 2. A person is not required to have health insurance, but those with health insurance receive a $1000 tax credit. The cost of the tax credit is financed with a lump-sum tax on all tax payers. Notice that there is no economic difference between these two scenarios.He later noted similar logic from Len Burman, Jason Furman, and Roberton Williams in their review of a 2007 proposal from President Bush. While this review critiques the distributional consequences of the Bush proposal, which are different from the distributional consequences under the current law that was just found to be Constitutional in the opinion of Chief Justice Roberts and the four “liberal” justices, it is interesting that not only is ObamaCare = RomneyCare but as these authors note:
the administration’s proposal is very much like the Massachusetts mandate—in effect everyone would get a $7,500 or $15,000 deduction and the “punishment” for not getting health insurance would be to lose the deduction.Odd – I don’t recall conservatives as exercised over Bush’s proposal or Romney’s legislation.
Read It and Weep...
...with laughter. This is right up there with Matt Tabibi's take-down of Thomas Friedman: I give you Samir Chopra on David Brooks.
http://samirchopra.com/2012/06/26/david-brooks-went-to-a-springsteen-concert-and-all-i-got-was-this-stupid-op-ed/#comments
http://samirchopra.com/2012/06/26/david-brooks-went-to-a-springsteen-concert-and-all-i-got-was-this-stupid-op-ed/#comments
Monday, July 2, 2012
Visiting An Alpine Managed Grazing Commons That Inspired Elinor Ostrom
Two days ago I had the privilege to visit the Alp Bach Cooperation (Bergschaften) above Grindelwald, Switzerland in the Berne canton in a valley above Interlaken and across from Mounts Eiger, Monch, and Jungfrau, which was visited by the late Lin Ostrom in 2007, hosted by those hosting my group (participants in a conference on New Frontiers of Forest Economics, held at ETH in Zurich). Ironically, this was the day after her 92 year old husband, Vincent, died, following her death by a couple of weeks (for anybody not knowing it, she was the first, and so far only, woman to receive the econ Nobel). These alpine grazing commons were first written about academically by the late anthropologist, Robert Netting, between 1972 and 1976, and were among the first writings that Lin cited on managing the commons, which she first began studying in water management in LA in the 1960s and was her premier topic. Besides being absolutely visually spectacular, this was an extremely interesting visit.
Our hosts were Hans Schlunegger, secretary of the local Taleinungskommission, the body of 8 of these cooperatives that sets their rules in meetings of them about once a decade. Each of the cooperatives meets annually to deal with their own specific issues for the year. Dr. Schlunegger is an electrical engineer, retired from working for the Jungfrau railway. Our other host was Rudolf Zumstein, who is the Chief of the Forest Service for Eastern Bernese Oberland, which includes the forests of these 8 cooperatives in this Taleinungen. This particular cooperative consists of 120 "hearths" (households), who own land near the village of Grindelwald at about 1000 meters elevation, down in the valley. As one ascends one passes through land owned in common, first forests, and then higher up are the pastures, where 130 cattle are currently being grazed for this coop. The land is open to anyone to walk through or hang glide off from (an increasing use), although apparently there are some restrictions on hunting.
Rights to graze cattle are labeled as "kurechte," cow rights, and are allocated to the hearths. Traditionally the cattle are grazed in winter in the valley and then moved to the upper pasture in late spring through the summer. We got out at 1700 meters and walked down, being shown various things as we did so. Managing the grazing commons has traditionally been the more difficult matter than managing the forest, where members of the coop also have firewood rights to several trees per year for their hearths.
The coop dates to 1404, with Hans showing us a copy of the original agreement. This came about when the locals managed to gain ownership of the alp from a monastery in Interlaken further down. These are indeed feudal land ownership and management arrangements that have persisted into modern times, although with changes over the centuries, the last revision of the Taleinungen rules being in 2002. As late as the late 19th century there would sometimes be skirmishes even involving weapons over the grazing access, but more recently things have been peacefully managed, with monitoring being fairly easy. If anything, they would like to have more cattle grazing up there than they have now. Other animals have a ratio to the cow, with 2.5 goats equaling a cow for the kurechte calculations.
The forest was once able to be fully open access, but there was major deforestation during the 19th century, since replanted. Indeed, only 42% of yield is now harvested, generally done through careful cuts made laterally. The major value of the forest is really environmental "catchment," to prevent avalanches, rockslides, flooding, and so forth, although when wood is cut for timber, it gets sold. Although this coop does not have any of it, increasingly some of the coops in the Taleinungen are getting into tourism with restaurants and skiing and so forth. It was interesting to hear how Rudy discusses planned changes for the forest with coop leaders, these being done only after there is a mutual agreement.
What makes money on the pastures is Alp Chesse. The cows are large and shaggy and yellow. When we arrived at the pature, a herd of them came ambling over with their large cowbells clanging. Various people even patted them. I cannot resist noting in this system where cows are a standard of value that "capital" is from the Latin for a herd of cattle.
Needless to say, such arrangements have not been followed around the world for many commons resources, but I now understand much better how and why the late Lin Ostrom was so inspired by this particular ground-up example that must be labeled successful, despite all kinds of peculiar details involved with them.
Our hosts were Hans Schlunegger, secretary of the local Taleinungskommission, the body of 8 of these cooperatives that sets their rules in meetings of them about once a decade. Each of the cooperatives meets annually to deal with their own specific issues for the year. Dr. Schlunegger is an electrical engineer, retired from working for the Jungfrau railway. Our other host was Rudolf Zumstein, who is the Chief of the Forest Service for Eastern Bernese Oberland, which includes the forests of these 8 cooperatives in this Taleinungen. This particular cooperative consists of 120 "hearths" (households), who own land near the village of Grindelwald at about 1000 meters elevation, down in the valley. As one ascends one passes through land owned in common, first forests, and then higher up are the pastures, where 130 cattle are currently being grazed for this coop. The land is open to anyone to walk through or hang glide off from (an increasing use), although apparently there are some restrictions on hunting.
Rights to graze cattle are labeled as "kurechte," cow rights, and are allocated to the hearths. Traditionally the cattle are grazed in winter in the valley and then moved to the upper pasture in late spring through the summer. We got out at 1700 meters and walked down, being shown various things as we did so. Managing the grazing commons has traditionally been the more difficult matter than managing the forest, where members of the coop also have firewood rights to several trees per year for their hearths.
The coop dates to 1404, with Hans showing us a copy of the original agreement. This came about when the locals managed to gain ownership of the alp from a monastery in Interlaken further down. These are indeed feudal land ownership and management arrangements that have persisted into modern times, although with changes over the centuries, the last revision of the Taleinungen rules being in 2002. As late as the late 19th century there would sometimes be skirmishes even involving weapons over the grazing access, but more recently things have been peacefully managed, with monitoring being fairly easy. If anything, they would like to have more cattle grazing up there than they have now. Other animals have a ratio to the cow, with 2.5 goats equaling a cow for the kurechte calculations.
The forest was once able to be fully open access, but there was major deforestation during the 19th century, since replanted. Indeed, only 42% of yield is now harvested, generally done through careful cuts made laterally. The major value of the forest is really environmental "catchment," to prevent avalanches, rockslides, flooding, and so forth, although when wood is cut for timber, it gets sold. Although this coop does not have any of it, increasingly some of the coops in the Taleinungen are getting into tourism with restaurants and skiing and so forth. It was interesting to hear how Rudy discusses planned changes for the forest with coop leaders, these being done only after there is a mutual agreement.
What makes money on the pastures is Alp Chesse. The cows are large and shaggy and yellow. When we arrived at the pature, a herd of them came ambling over with their large cowbells clanging. Various people even patted them. I cannot resist noting in this system where cows are a standard of value that "capital" is from the Latin for a herd of cattle.
Needless to say, such arrangements have not been followed around the world for many commons resources, but I now understand much better how and why the late Lin Ostrom was so inspired by this particular ground-up example that must be labeled successful, despite all kinds of peculiar details involved with them.
Saturday, June 30, 2012
Private Debt Mutualization
So Germany has agreed to use the EU bailout funds for direct lending to banks in Spain and potentially other distressed countries. Not only that, the loans will not be senior: the EU can lose money on these deals just like anyone else. German officials have sworn they will never, ever accept debt mutualization, but they have just done this—but for private debt only. No solidarity around debts to finance schools, pensions or health care, but a joint checkbook to cover loans for property development in the Costa del Sol. Maybe my imagination is too limited, but I can’t think of an economic rationale for mutualizing one but not the other. What does this say about the political assumptions behind the latest attempt to patch the euro?
STELLA!
It’s interesting to find out that “hydraulic Keynesianism” was once really hydraulic, in the form of a Phillips water machine. I recommend that, if you are interested in this kind of modeling and don’t want to deal with real water and its tendency to squirt through loose valves, you can get the same effect through the use of STELLA, a software package that provides simple, intuitive modeling of dynamic systems. I’ve played around with it and can say that it’s wonderful fun. You could actually build an economics course around it—has anyone tried?
UPDATE: I guess the leaky valves are not a problem if, underneath, you have an effective liquidity trap....
UPDATE: I guess the leaky valves are not a problem if, underneath, you have an effective liquidity trap....
Microeconomics, Depedestalled
There has been a debate recently over whether and why macroeconomics is less scientific than its micro cousin. I will leave macro aside for now and say, as clearly as possible, that micro is about as counter-scientific as one can get. The problem is that utility theory, the idea that agents’ well-being can be measured by how much utility they have and that they go through life maximizing this ineffable U, is contrary to logic, evidence and the well-grounded findings of social sciences that actually study human decision-making close up.
Sen nailed the logic part decades ago. Behavioral economics refutes the empirical presumptions. Psychology, including its social and evolutionary branches, offers much more credible models.
Take away this utility maximization stuff and what’s left of micro? There’s lots of excellent econometric technique, of course, and much of the aggregate theory (at the level of markets) still stands, but the agent stuff is at best a distraction and welfare economics is a zombie. Conventional micro is propped upright only by the collective interest of its practitioners in preserving the value of their arcane skill set, and by ideological conviction.
Science it ain’t.
Thursday, June 28, 2012
Who created the ideology of a 'natural' market?
The ideology of a 'natural' market within large
modern industrial 'economies' was the central project of the Neoliberal
movement.
Neoliberalism (according to
one economic historian, at least) was launched in Paris in August 1938. At a colloquium to discuss the work of Walter
Lippmann. "It was a movement against
planning as a method of concentrating and deploying expert knowledge.
neoliberalism proposed an alternative ordering of knowledge, expertise, and
political technology that it named “the market.”... Its political challenge to
the Keynesian consensus got underway … with the founding of a think tank called
the Institute of Economic Affairs in London in 1955..."
See: http://cmes.hmdc.harvard.edu/files/Mitchell%20Paper.pdf
Tuesday, June 26, 2012
Monday, June 25, 2012
The assumption that markets are 'natural'
I've just begun to browse the pages of David Graeber's 2011 book entitled 'Debt - The First 5,000 Years'. Graeber is an anthropologist who makes no bones about the historical errors made by many economists on the evolution of markets and the use and nature of money.
On pages 44-45 Graeber writes:
"People continue to argue about whether an unfettered free market really will produced the results that [Adam] Smith said it would; but no one questions whether "the market" naturally exists....we simply assume that when valuable objects do change hands, it will normally be because two individuals have both decided they would gain a material advantage by swapping them. One interesting corollary is that, as a result, economists have come to see the very question of the presence or absence of money as not especially important, since money is just a commodity, chosen to facilitate exchange, and which we use to measure the value of other commodities. Otherwise it has no special qualities.
"....Call this the final apotheosis of economics as common sense. Money is unimportant. Economies - "real economies" - are really vast barter systems. The problem is that history shows that without money, such vast barter systems do not occur....It's money that had made it possible for us to imagine ourselves in the way economists encourage us to do: as a collection of individuals and nations whose main business is swapping things. It's also clear that the mere existence of money, in itself, is not enough to allow us to see the world this way. ...
"The missing element is in fact...the role of government policy..."
Graeber goes on to explain how government foster 'the market'. Laws, police, monetary policy, pegging the value of currency to precious metals, altering the amount of coins in circulation, regulating banks etc.
On page 49 Graeber asks a key question: "...what exactly was the point of extracting the gold, stamping one's picture on it, causing it to circulate among one's subjects - and then demanding that those same subjects give it back again?"
"This does seem a bit of a puzzle. But if money and markets do not emerge spontaneously, it actually makes perfect sense. Because this is the simplest and most efficient way to bring markets into being."
Money brings markets into being. Not the other way around, as most economists would have it. If this is true then Graeber's concluding thought has some authenticity: "Perhaps the world really does owe you a living."
On pages 44-45 Graeber writes:
"People continue to argue about whether an unfettered free market really will produced the results that [Adam] Smith said it would; but no one questions whether "the market" naturally exists....we simply assume that when valuable objects do change hands, it will normally be because two individuals have both decided they would gain a material advantage by swapping them. One interesting corollary is that, as a result, economists have come to see the very question of the presence or absence of money as not especially important, since money is just a commodity, chosen to facilitate exchange, and which we use to measure the value of other commodities. Otherwise it has no special qualities.
"....Call this the final apotheosis of economics as common sense. Money is unimportant. Economies - "real economies" - are really vast barter systems. The problem is that history shows that without money, such vast barter systems do not occur....It's money that had made it possible for us to imagine ourselves in the way economists encourage us to do: as a collection of individuals and nations whose main business is swapping things. It's also clear that the mere existence of money, in itself, is not enough to allow us to see the world this way. ...
"The missing element is in fact...the role of government policy..."
Graeber goes on to explain how government foster 'the market'. Laws, police, monetary policy, pegging the value of currency to precious metals, altering the amount of coins in circulation, regulating banks etc.
On page 49 Graeber asks a key question: "...what exactly was the point of extracting the gold, stamping one's picture on it, causing it to circulate among one's subjects - and then demanding that those same subjects give it back again?"
"This does seem a bit of a puzzle. But if money and markets do not emerge spontaneously, it actually makes perfect sense. Because this is the simplest and most efficient way to bring markets into being."
Money brings markets into being. Not the other way around, as most economists would have it. If this is true then Graeber's concluding thought has some authenticity: "Perhaps the world really does owe you a living."
Well-Meaning, But Entirely Missing the Point About Stuxnet and Flame
Mischa Glenny warns that the US is entering dangerous waters by conducting cyberwarfare against Iran. What if the tables are turned, and these weapons are used against the US?
Technical superiority is not written in stone, and the United States is arguably more dependent on networked computer systems than any other country in the world. Washington must halt the spiral toward an arms race, which, in the long term, it is not guaranteed to win.The reality, however, is that the US never worries about being the victims of its own weapons. When the US mined the harbors of Nicaragua during the Contra war, did it worry about explosives in San Francisco Bay? Today, when drones are launched to assassinate men who make the mistake of getting together in a house in Afghanistan or Yemen, whether to plan violence or celebrate a wedding, are there fears of retaliatory attacks on Super Bowl parties in Atlanta or Las Vegas? Trying to explain that US military hegemony means that we don’t have to think about what it would mean for others to do to us as we do to them is like trying to explain water to a fish.
And just to be clear: if Iran launches a cyberweapon as damaging to US security as our viruses were to them, we’ll kill a few thousand of them to show who’s boss. But there’s no need to even talk about it: they won’t and we won’t. It’s the sea we all swim in.
Sunday, June 24, 2012
The Reflexive Libertarianism of Mainstream Economists, as Applied to the Analysis of Conditional Cash Transfers
I haven’t been blogging at all in the last few weeks, and I shouldn’t be now, because I am racing deadlines to complete work on a forthcoming report on child labor for the ILO (International Labor Organization). In doing this, though, I’ve repeatedly come across the sort of economists’ tics that drive me crazy—and explain why I would never be at home in a mainstream economics program.
Consider the logic of conditional cash transfer (CCT) programs, which pay money to households in return for their agreement to make sure their kids attend school or receive health checkups. These have been roaring successes in just about every country that has adopted them: they reduce poverty, increase education and raise the living standards and future prospects of children. They are not without problems, of course, and I will discuss the shadows as well as the light in my report.
But back to the logic. If you are an economist, your first question is, why the conditionality? Why compel households to change the education and health decisions they make for their kids? Why not just give them the money and let them do whatever they want with it? You know the diagram: just giving away money has an income effect, allowing the households to migrate to a higher indifference curve, but imposing conditionality forces them to adhere to a particular threshold for education or health “goods” (substitution effect), which pushes them off their welfare-maximizing tangency and on to a low indifference curve. Economists go through many years of schooling in order to think this way reflexively.
If you are still an economist, you look for two kinds of answers. One is that there must a market failure somewhere. Maybe households are ill-informed. Maybe they don’t take into account the utility of children. Maybe there are spillover benefits to education and health not captured at the household level. Of course, if you are thinking along these lines, you will want evidence and not just speculation: show me the market failures. Quantify them.
The other answer is culture. Maybe the society in question is paternalistic toward poor people because it sees them as inferior, not capable of making their own decisions. Hence conditionality is either an expression of this prejudice or a sop to those who have it. When your core outlook is libertarian, every restriction on free choice looks like this.
Now suppose you aren’t an economist, or if you are you are an outlier. You don’t think the utility maximization model is remotely descriptive of how most people make most decisions, and you don’t think it is helpful to view education as essentially a consumer good. If you are like me, you think that most behavior is normative: people follow their crowd and largely do what the others do. Of course, on the margin you might do a bit more of this or less of that, but the general pattern is not something you decide on. You send kids to school not because you’ve given the matter thought and have decided that the present value of their future, educated earnings is greater than today’s opportunity cost, but because you and your kid are immersed in a sea of expectations about how much schooling is appropriate and how it reflects on both of you. (Even home-schoolers do not act in isolation; they are nearly always part of a subculture in which this is a normative option, and the way they go about it reflects these social influences.) Thinking this way makes you a strange economist, but a rather mainstream sociologist, social psychologist or historian.
The non-reflexive-libertarian view does not require a market failure or a taste for paternalism. It sees CCTs as policy initiatives to shift cultural norms regarding education and health. (And, no, trying to shift norms is no more paternalistic than choosing to not shift them. Welcome to the inevitability of politics.) Recipients of transfers can reasonably be asked to meet education and health conditions because child-rearing is recognized as socially necessary work, and it is equitable to pay people for it provided it is done in a way that meets societal expectations.
These things are much, much easier to understand if you don’t “think like an economist”.
Subscribe to:
Posts (Atom)