Irrelevant Relevance

The September Atlantic has an “economics” article, by Don Peck, Can the Middle Class Be Saved? As economics, it is a “scam” I see often, but want to complain about yet again. These articles combine two key features. First, they gain “relevance” via detailed discussions of problematic current trends. Such as:

The most important economic trend in the United States over the past couple of generations has been the ever more distinct sorting of Americans into winners and losers, and the slow hollowing-out of the middle class. … Wide-ranging social consequences of male economic problems [include:] … Women tend not to marry (or stay married to) jobless or economically insecure men—though they do have children with them. And those children usually struggle when, as typically happens, their parents separate and their lives are unsettled. … These sorts of social problems … have been seeping into the nonprofessional middle class.

Second, these articles offer “relevant” policy solutions to such problems:

We can adapt, but we have to start now. … [by] … Bigger tax breaks for private R&D spending, and a much lower corporate tax rate (and a simpler corporate tax code) overall. … A National Innovation Bank that would invest in, or lend to, innovative start-ups. … [For] new and emerging industries … our bias should be toward light regulation. … Redoubling our commitment to improving U.S. schools, to letting in a much larger number of creative, highly skilled immigrants each year. … We must press China on currency realignment, putting sanctions on the table if necessary. … Development of “career academies”—schools of 100 to 150 students, within larger high schools, offering a curriculum that mixes academic coursework with hands-on technical courses. … It is hard to imagine an adequate answer to the problems we face that doesn’t involve greater redistribution of wealth.

The key scam is: standard economic theory, the main authority implicitly invoked by such “economics” articles, offers little reason to think these trends of concern have much relevance to these policy proposals. Whether such proposals are good or bad ideas can depend on many relevant factors, but the exact values of these trends are not among those factors! If R&D tax credits are a good idea (economically), they are a good idea regardless of trends in median wages or divorce rates. If raising taxes on the rich is a good idea because, hey, we gotta tax someone, that is a good idea regardless of how well or poorly the rich have been doing lately. As I said before:

Which institutions will most increase economic welfare rarely depends much on the exact values of the sorts of parameters social scientists and the media track with such enthusiasm and concern. (more)

GD Star Rating
loading...
Tagged as: ,
Trackback URL:
  • Thomas Evans

    “The most important economic trend in the United States over the past couple of generations has been the ever more distinct sorting of Americans into winners and losers, and the slow hollowing-out of the middle class”

    Old news. Charles Murray predicted this almost 20 years ago (as had many before him). And he was right to suggest that it is indeed an IQ thing; increasing cognitive stratification is very much afoot, and the less-smart being left behind more than ever before.

    • http://religionsetspolitics.blogspot.com/ Joshua Zelinsky

      Thomas,the claim that this hollowing out is due to IQ seems to be empirically incorrect. First of all, IQ is only one variable that impacts income- there are many other variables http://www.aeaweb.org/articles.php?doi=10.1257/089533002760278686 . Second, there are diminishing marginal returns for IQ. Intelligence impacts income primarily in the lower and lower mid income brackets. In the high income brackets it doesn’t matter as much. So IQ does not account for this hollowing out.

  • nazgulnarsil

    is-ought

    Humans seem built to let it pass by with nary a raised eyebrow.

  • bobbeauchamp

    May it be that the problem is not with Mr. Peck’s logic but instead with the model Prof Hanson is using? The value of the parameters do not affect welfare only as long as the parameters are exogenous — it is clear that Mr. Peck’s utility function is dependent on the very parameters Prof. Hanson claims are irrelevant to welfare.

  • Dave

    I agree.The first lie is that this “problem ” is recent.I found some old VCR tapes where Mondale was running for president in 1984. He was saying the very same things about inequality,education and foreign competition and offered the same solutions,government programs paid for by redistribution.

    Well, has the government been doing nothing for these years since? Has it worked?

    We do have an untold increase in riches,toys and more TV channels that no one watches. None of this was due to Washington policies,as far as I know. I am constantly puzzled at the lack of good sense,especially the lack of perspective in the popular media.

  • arch1

    Robin, I didn’t follow the links (so my apologies if the answer lies there), but even accepting your assertion that the efficacy of the proposed policies is independent of the trend levels, what I see is consistent with someone proposing certain desirable policy changes at a time he thinks those changes will be particularly a) helpful (because they mitigate trends which are at especially painful levels now), b) likely to be entertained seriously (for same reason).

    Now, it’s possible that Don’s policies won’t help w/ his trends, or that those trend levels aren’t especially high right now, and he knows this. But until I see some indication that this is the case, I wouldn’t accuse him of more than opportunism in a possibly-good cause.

  • ThomasT

    Huh? Say economic theory tells you that a law forbidding self service gas stations would
    a) create jobs for gas station attendants
    b) raise gas prices.

    Whether this is a good or a bad policy depends entirely on your perception of the major problems in your polity. This idea of yours, that economics can tell you whether something is good or bad policy period, regardless of preferences or circumstances and thus can be “scientific and objective public policy” is pure hubris.

  • http://neweconomictheory.com/ Artem

    This is very true, however, I think the reason for such ‘scam’ is trying to justify the economic theory through promising solutions to current problems.

  • Pingback: Overcoming Bias : Trends Worth Tracking

  • Pingback: Overcoming Bias : Trends Don’t Inform Policy