A Persian Cafe, Edward Lord Weeks

Thursday, 6 February 2014

A Pointless Dispute

Chris House, an economics professor at the University of Michigan and a blogger, writes a piece responding to Paul Krugman's occasional claims that "the facts have a well-known liberal bias", suggesting that it is more nuanced and that, in general within the sphere of economics, they have if anything a conservative bias.

Noah Smith, a colleague of House's and quite a famous blogger (as economics bloggers go), responds to this. He argues that the positions supported by the facts - which he agrees are broadly the same set of facts that House suggested they were - are in fact more centre-left positions.

Note that they have little to no disagreement over the economic facts or the policies implied by the facts - it's simply a he-said, she-said debate over which ideology actually advocates those positions. Frankly, this kind of argument is a waste of the time of intelligent people who could be doing far better things.

See also this.

Out of interest, who do I think best represents these facts? The professors/bloggers agree that:

  • taxing labour income reduces the supply of labour (a bit)
  • extending unemployment benefits encourages people to delay looking for a job (a bit)
  • taxation can reduce unemployment demand
  • excessive regulation seems to be correlated with reduced levels of business formation
  • union concentration has a detrimental effect on industries
  • an increased minimum wage will, to some extent, reduce employment
It's not really fair to put all leftists in the same category. So I'll say that honest leftists - generally in academia - tend to admit all of these, though in most cases grudgingly. Mainstream leftists - politicians, journalists and the great unwashed - in my experience are happy to deny all of these except the third. Perhaps too many of the leftists I know are Marxists and/or angry teenagers ("So you think more benefits makes people stay out of work? Why don't YOU try living on £50 a week?") but, at least as far as economics is concerned, I would happily describe the average leftist as an imbecile.

That said, rightists aren't necessarily better. Smith's charge is that, while all of the statements above (that is, bullet-pointed, not my diatribe) are true, people on the right exaggerate the strength of these effects and ignore the strides which have been made towards laissez-faire in recent decades, reducing the marginal social costs of these interventions.

Certainly there is exaggeration on the right, but I think there's less of it. Partly this is that I don't agree that all of these effects are small - in particular, excessive regulation has made the US about 75% worse off over the last 65 years - but Smith is a professor while I am a mere undergrad, so for the greater part I shall bow to his greater expertise. Perhaps it's also that I live in the UK, where the monopolist news provider is state-owned and is generally agreed to be left-wing (the deniers of this generally being of the far-left; the BBC, being firmly of the centre-left treats the far-left with more contempt than it does the centre-right). (NB. I'm probably suffering from Hostile Media Perception to at least some extent, I don't know how much to adjust for this or I would do so).

But the impression I get is that, for all the faults of the right, and there are many - science denial, protectionism, and paranoia in particular - they tend to be less stupid than the left in matters economic, and by a noticeable margin.

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