Like Ross and Will Wilkinson, I think there’s a ton to be said for Edward Glaeser’s case for “small-government egalitarianism”, which would be worth reading in its entirety even if the only thing you took away from it was this quotation from Woodrow Wilson:
“If the government is to tell big business men how to run their business, then don’t you see that big business men have to get closer to the government even than they are now?”
(Concerning which, a case in point.) The central focus of this particular post is the logic of economic stimulus, and Glaeser argues – as he has argued before – that things like cuts in payroll taxes for working-class families would be much more egalitarian forms of fiscal stimulus than most of the kind of infrastructure spending that Tim Carney discussed in his main page article this morning. But Glaeser points out that this sort of logic extends to many other areas of policy-making, too:
Current American political discourse labels people as either anti-government or pro-equality, but wanting to help the poor should not require the abandonment of sensible skepticism about expanding the size of the state. Many of my favorite causes, like fighting land use regulations that make it hard to build affordable housing, aid the poor by reducing the size of government. In the wake of Hurricane Katrina, I also argued that it would be far better to give generous checks to the poor hurt by the storm than to spend billions rebuilding the city, because those rebuilding efforts would inevitably help connected contractors more than ordinary people.
It’s easy, I think, to gloss most of this as nothing but a shift in rhetoric: rather than making the case for tax cuts or the repeal of overly restrictive land use regulations as economically effective, conservatives and libertarians should do more to point out the ways in which such policies can benefit those who are most in need. But ultimately there’s more going on here than that: Glaeser is arguing that policies like the ones he’s advocating here are also the most effective way to benefit those in need, and so are a better form of egalitarianism than the standard “progressive” fare that is so often put forward by big-government liberals:
Libertarian progressivism distrusts big increases in government spending because that spending is likely to favor the privileged. Was the Interstate Highway System such a boon for the urban poor? Has rebuilding New Orleans done much for the displaced and disadvantaged of that city? Small-government egalitarianism suggests that direct transfers of federal money to the less fortunate offer a surer path toward a fairer America.
This seems about right to me. Like I said, it’s good stuff, and well worth reading in its entirety.
Elsewhere: Ryan Avent on why progressives should listen to Ed Glaeser’s views on housing policy.
Filed under: economics, government/law, libertarianism, taxation, urbanism
Do you think there’s some tension between the conservative critique of consumer culture and direct transfers of wealth to alleviate poverty? I suppose this should have gone in the suggestions box, but I think a discussion of how conservative cultural, aesthetic, and communal concerns intersect with straightforward libertarian economics would be pretty interesting.
So my response to this sort of argument is mixed. On the one hand, on many issues this libertarian perspective is correct, especially when it comes to land use regulations and urban planning. Matthew Yglesias, not a libertarian by any stretch of the imagination, has made this point eloquently over and over again.
But to a liberal such as myself, this feels incredibly suspicious (yes, that’s an emotion and no it isn’t a principled argument). It feels like a neo-con reassuring me that this time invading a foreign country really will make us all safer.
Historically speaking, the libertarian movement’s philosophical under pinnings have a strong Randian influence. By this I mean, a philosophy that argues for personal liberty in the context of ethical egoism.* This body of thought is hostile to paternalism of any kind (which is what progressivism is a variant of). From a libertarian’s perspective whether poor people are helped or harmed is an ancillary point that while nice is not the actual reason for advocating for small government.
Think about this way: Is there any issue related to poverty that you would support a massive increase in the size of the federal government in order to help the poor, ? If so, what issue and why?
Generally speaking, I’d expect a “progressive libertarian” to argue that this is a false choice. She’d argue that there’s no trade off between prosperity and personal liberty. That small government is the solution to poverty. However, if that is your response, then I don’t understand the purpose of pre-pending progressive to libertarian.
Unless progressive libertarians support some level and kind of paternalism in order to help the poor, then the label is nothing but semantics. Its just calling the same thing by a different name. I am not suggesting that you are doing that, but I am curious to see what paternalism, if any you would advocate for and why.
*This is a somewhat poor fit for paleo-libertarianism, but I think its an accurate of generalization of main stream libertarianism.
Will: It seems to me that so long as these wealth transfers are meant to aid people who actually need the money for life’s necessities, then the critique of consumer culture doesn’t really figure. The issues you raise, though, do seem to me to suggest some concerns for the standard view of economic stimulus as a way simply to get people to spend more money. But I’ll add your questions to my mental queue of blog-worthy topics.
Joseph: In what sense do the policies that Glaeser is proposing here not count as “paternalistic” on your way of understanding that term? It’s not, to be sure, a “massive increase in the size of the federal government”, but just a way to use economic policy to put jobs in the hands of those who most need them. Hence Wilkinson, having noted that big government “generally redounds especially to the benefit of the rich and connected”, writes:
Does this seem right to you? Wrong? If the latter, what do you think is missing from it?
Joseph:
What you identify are really several different strains of libertarianism. You are probably correct that the loudest voices arguing under the libertarian banner are overly-influenced by Rand.* But it’s worth noting that three of the most important intellectual influences on libertarianism – Adam Smith, Milton Friedman, and FA Hayek – all advocated for fairly robust social safety nets (although in vastly different forms from those that have historically been implemented). Unfortunately, my fellow libertarians have a terrible tendency to ignore this fact, instead advocating what Jim Henley (IIRC) has called “Hard Hayek” in which all government action is a step on the Road to Serfdom, a position Hayek never actually took and explicitly refuted. As for me personally, I’ve advocated for a significant expansion of Medicare, Medicaid, and SCHIP – provided that government interventions in other arenas of health care are scaled back in such a way as force health insurance companies to better serve individuals.
*I think Rand is essential to any strain of libertarianism, my own included, but I also think her Objectivism often got in the way of her realization of the meaning of her biggest insights.
Has anyone noticed that allowing the central gov’t to establish ’social safety nets’ has had the deleterious effect of empowering the regime, creating huge bureaucracies, and wasting tax monies while demoralizing the recipients of largesse.
Would it not be better to have the states act to supervise such social policies?
RC: That’s reasonable, though of course Glaeser’s case for restructuring the payroll tax is precisely meant to be a way to affect a sort of safety net without the centralization that you’re decrying here. And if the federal government is going to collect taxes, they may as well do it in ways that directly benefit the worse-off (as opposed to, as in the case of the way the payroll tax is presently set up, work in a way that is blatantly regressive), no?
JS: You’re arguing efficiency in which it’s difficult to be critical-and apparently difficult to achieve within the bureaucracy- and you’re also opening the income tax can of worms, which is illustrative of the myriad of problems surrounding the central gov’t. Are we not better served, in terms of liberty, to attempt to empower those political entities ‘closer’ to the people?
Robert is right. I believe I read this on Will Wilkinson’s blog: why are we not just writing big checks to the states and/or local levels where the recession has hit hardest, and watching what they do? Wouldn’t this maximize liberty while providing a wealth of empirical evidence?
To answer Will’s original question: one cannot be criticial of a consumption culture and economy, and subsequently support wealth redistribution with the intent to increase consumption practices. Don’t give a needle to the addict…
Robert: I’ve made the case for federalism before, so I certainly agree with the spirit of what you’re saying. But so long as the federal government continues to collect taxes to fund Social Security – and I think we can all agree that that’s not going to change any time soon – mightn’t they do that in the way that does the most to benefit those who are worst off? And if fixing the regressiveness in the payroll tax would also generate the sort of economic stimulus that pretty much everyone thinks we need, isn’t the idea a doubly good one?
Matt: You seem to be missing the point: the suggestion that “we” (i.e., the federal government – centralization alert!) give lump sums of money to the states was being proposed as an effective mode of infrastructure spending. The path that is being proposed here – which, to make it clear, Will pretty clearly thinks is a good one – simply takes that logic a step further, allowing the decisions about how money is spent to be made by individuals, and indeed by the individuals most in need of economic aid. As to the second part of what you say, I’ll just repeat myself: declining to take money out of the pockets of people with low incomes is not in itself an attempt to “increase consumption practices”.
I’m going to have to join Robert and Matt on this one. I think you agree as well but defer to the reality of central government. Or, probably more accurately that no matter what we say or think it’s not going to change soon. However, advocating tweaking the current system isn’t really going to change that much either. I doubt that Obama or anyone else in actual power is paying much heed to our conversations. Given that, I have to support getting the Feds out of social security and even direct taxation.
If the money is so much better spent by giving the poor some generous checks, why take it in the first place? Just cut the taxes and get the feds out of it completely. I’m sure all the smart poor people will spend the money very wisely and all the stupid ones will spend the money on frivolous luxuries.
Just be sure not to trust the rich do the same.
Am I missing something here? Are you saying that we should cut taxes? I’m not sure. I must be dense. I admit I haven’t read the Glaeser piece, but it sure sounds like cutting taxes is what’s being advocated here. And the nature of the conversation here makes it sound like it’s a, wow, new idea. Nah. You can’t be advocating cutting taxes, because I’m sure you have the feds involved somehow in deciding how that money ought to be spent.
Don’t you? Please tell me I’m wrong and correct my error.
JD: Huh? Yes, what’s being advocated here is cuts in payroll taxes for families in lower income brackets, since those individuals pay a disproportionate share of those taxes as it is. And so no, it’s not an especially new idea, though focusing on tax cuts for lower-income individuals would certainly constitute a change in strategy. Finally, Glaeser’s proposal to give out checks was limited to the case of post-Katrina New Orleans – perhaps you should just read the piece?
Even in the case of Katrina, I would still support sending the money to the State rather than the individual. If Louisiana then chose to deal out the money that would be fine. My main reasoning on this is not egalitarianism but to promote government oversight by constituents.
I know if the money were given to Washington State, it would be horribly misused. That’s because we have a one party State… most unhealthy. I can’t think of a way to turn this around without forcing people to take responsibility for their State Governments and without having a regional conservative party that is not forced to tow the national (Southern) party line.
But Pan: What better way is there to promote oversight than simply to let the constituents make the decisions themselves? To the extent that it was the homes and properties of individuals that were demolished during the Hurricane, shouldn’t it be those individuals, as opposed to whatever contractors the state in its infinite wisdom might decide to turn to, who are the direct recipients of aid? Certainly it would be appropriate to have some restrictions on how the money might be spent (e.g. on homes and legitimate household-related items), but beyond that, why should we think that the state can do a better job of directing reconstruction than the individuals whose futures are at stake?
None whatsoever. It’s certainly what I would encourage Louisiana to do.
However, I see the Feds and the Constitution in general as an agreement between States, not people. The people should run the State. If they can’t or won’t they should be accountable. This is part of a bigger question I’m having right now on civic responsibility. I can’t see how any government can be held responsible for anything they do, if there isn’t a price for the constituents for bad or irresponsible government.
JS: the problem facing ‘conservatives’ is that the GOP is, in large measure, quite as comfortable with Leviathan as the Democrats. We are and have been a quasi-socialist regime for a very long time and it appears that any movement toward republicanism will not be considered under an Obama administration.
Perhaps the only hope for a significant dialectic with the socialists is the establishment of a ‘third party,’ which may finally come to fruition in the wake of the forthcoming edicts of the Obama administration and public awareness of GOP complicity.
John Schwenkler:
Pardon me for being incredulous but all this friendly talk of redistribution in the same breath with cutting taxes and well…knowing that you live in Berkeley and all….it’s just very confusing for a simple person.
Dare I ask it then? Do you advocate cutting taxes for anyone other than those who don’t pay income tax AND who are poor?
If not, do you think that cutting payroll taxes on those who pay no income tax AND who are poor will somehow help the economy in any significant way?
If yes, do you think that those who command huge amounts of wealth AND are not greedy SOBs might have an even greater helpful effect on the economy?
I am not being snarky here, but for whatever reason, there seems to be a disconnect between your talk of redistribution and your talk of tax cuts. I really don’t think you can talk of the poor being wise and effective with their wealth while at the same time insisting that the wealthy should be told how to spend their money (ie, the government takes it and spreads it around as it sees fit)
When they can be appropriately offset by spending cuts, yes.
Yes, I do. Such people may not pay income taxes, but they do pay payroll taxes, and so putting that money back in their own hands is one way to get it back into the economy.
I’m not sure about “even greater” – what makes you think that this would be so?
When they can be appropriately offset by spending cuts, yes.
In other words, no, you don’t support cutting taxes for anyone other than those who don’t pay income tax AND who are poor. I’m taking it that supply-side economics doesn’t work for you.
Yes, I do. Such people may not pay income taxes, but they do pay payroll taxes, and so putting that money back in their own hands is one way to get it back into the economy.
Yes, but how would this help the economy?
I’m not sure about “even greater” – what makes you think that this would be so?
I’m just thinking that since maybe they’re commanding such huge sums of money AND since they’re not greedy SOBs, after they’ve satisfied all their earthly needs and wants, and since they might have a few millions left over, (after they spent $87,000 for that rug) they might go out and create some more jobs and some more wealth and more opportunities for invention and creativity, you know that whole Fountainhead thing.
And then there’s that other bunch of shlubs out there who own businesses and who directly feel the “punishment” of taxes and who if they are taxed a little less might actually be able to hire 1, 10, 100 people in their small business.
Your comment above is not reassuring. I think you are still rather comfortable with that redistributionist thing.
Umm, no. In other words, yes, I DO support cutting taxes for such people, SO LONG AS THE CUTS ARE OFFSET BY SPENDING CUTS (which I favor).
Up to a point. The Laffer Curve has two sides, you know.
Because … they’d spend the money?
Of the payroll tax, the decidedly non-redistributionist Arnold Kling writes:
That good enough for you?
And your comments above make you look like an ideologue who isn’t comfortable with anything that diverts in the slightest from supply-side orthodoxy.
I will respond further later, but you missed the point of challenging your support of tax cuts for the rich unless there are “appropriate spending cuts”.
YOU KNOW DAMN WELL THAT WILL NOT HAPPEN!!!
And in that case, I think it would be irresponsible to cut taxes on those the higher income brackets, except perhaps as a temporary measure geared to encouraging investment. The key point, though, is that those on the lower end should come first.
“I’m just thinking that since maybe they’re commanding such huge sums of money AND since they’re not greedy SOBs, after they’ve satisfied all their earthly needs and wants, and since they might have a few millions left over, (after they spent $87,000 for that rug) they might go out and create some more jobs and some more wealth and more opportunities for invention and creativity, you know that whole Fountainhead thing.”
Oh, this is precious, our own little twentieth century noble savage. You gave yourself away with the fountainhead reference. I never new that those folks went in for philanthropy beyond lip service. Here’s the deal the world will crashing down around your head and all you little Roarks can go and be great men in the ensuing madness. Then again, most of you have much higher opinions of yourselves than is warranted and will be swallowed hole by the Nietzschean masses. Nothing better than a little chaos to prove your actual Spencerian worth. Not likely to happen.
With great chuckles, I enjoyed: “I will respond further later, but you missed the point of challenging your support of tax cuts for the rich unless there are “appropriate spending cuts”.
YOU KNOW DAMN WELL THAT WILL NOT HAPPEN!!!.”
So, you want borrow and spend while you near do well frat boys enjoy government protection. Again not going to happen in the near future. Enjoy being chum for the mob. I will have no pity for you.
I’ll take John’s feeding the masses to avoid the plight of Jean Valjean before I take sides with the likes of you.
Pan: I think it may be worth creating a “Comment of the Week” feature, just for that.
Just fix my typos and spielling for me would you?
Up to a point. The Laffer Curve has two sides, you know.
And when we get anywhere near the side where we’ve cut too many taxes, how would we know? When there’s more going out than coming in? That’s not a reasonable measure in government. No one seems to care.
Oh. The idea of getting close to where taxes are too low? BWWWAAAHHHAAAAAA
Because … they’d spend the money?
So the poor spending the money would help, but the rich spending the money wouldn’t?
That good enough for you?
No. I’m not sure how the Arnold Kling quote applies to a small businessman getting a tax cut.???? You really confused me with that one.
And your comments above make you look like an ideologue who isn’t comfortable with anything that diverts in the slightest from supply-side orthodoxy.
Oh, please. Supply-side orthodoxy? To me, it means nothing more than the goose that laid the golden egg. Liberals will keep taking those golden eggs on the grounds of egalitarianism until they kill the goose. Obama actually said that very thing. In a George Stephanopoulos interview he suggested that even if taxes hurt the economy, it would be OK because it’s a matter of fairness.
I would happily divert from “supply-side orthodoxy” Can you suggest a better way? Maybe a “third way?”
Look. I appreciate the sentiment that we should cut taxes for those on the lower end first. That’s admirable. But, call it what you will, we have transferred trillions of dollars to the poor through the government already. You’re too young to even remember that the Great Society was supposed to end poverty as we know it. Well, it did. We have a more virulent poverty now than we did then. It’s called entitlement. And the notion, as Freddie deBoer suggested above, that there is moral equivalence between defense spending and entitlement spending has been destructive to one whole section of our culture.
Whoa. I just saw Pan’s comment. I think I pushed a button. So it was the fountainhead remark that tipped you off? How perceptive of you. And you know, I doubt that your chuckles were really all that great.
Oh, and by the way, when the mob comes–that is, the haves vs. the have nots–you might be unpleasantly surprised to find out which side you’re on.
No, they were really good chuckles. I love Randians.
I have no delusions about the mob or which way the wind blows (do you think the mob will be lead by have nots?). I’ve tried to keep my family diversified across three countries and two continents. I expect the worst.
I’ve tried to keep my family diversified across three countries and two continents.
How’s that working out? Is that like a hedge fund family? Haven’t you heard that a house divided against itself cannot stand? Are your relatives in the other countries part of the haves in that country? If they’re the haves in that country they’re probably still have nots relative to this country, so they’ll be attacking you. If they’re still the haves in that country, then they probably have too much and should, to be fair, give up enough to become one of the have nots. Either way, they’ll be attacking you. You’re right to expect the worst. You’re screwed.
But then, so am I. Barack’s my president, Pelosi’s the speaker and Harry “this war is lost” Reid is the majority leader. And they all think we’re the have nots.
That seems to be a reasonable measure to me, though of course it’s not the only one.
No, but the poor need it more.
Kling’s point was that in times like these, reducing the payroll tax would make it possible for employers to hire more workers.
That’s what I meant to be suggesting in this post, actually.
Anyway, I’m done with this back-and-forth, though of course I’ll leave it open in case others want to jump in. But come again, and Marx bless.
You know, in all seriousness, I’m not a Randian. I’ve never read Ayn Rand. I am no Fountainhead. I’ve had to accept that. I have also learned to accept the fact that not everyone is even capable of being a Fountainhead. It’s just a small percentage of people who will have wide influence through their contribution to this country and to the world. The rest of us are just the worker bees, who live our daily lives anonymously. It’s not fair, but that’s the fact. I detect in Pan’s last comments the green monster of envy for those who have more. I suspect there is some of that in all of us. However, it’s dangerous if you don’t recognize it.
The Democrats have built their whole platform around envy. The rallying cry is “No tax cuts for the rich.” Well, we know what happens when you go to the high tax side of the Laffer Curve. Atlas Shrugs. He just takes his money and buys another $87,000 rug. It ain’t fair. It’s a damned horrible situation. In fact, America is the worst possible place in all the world, capitalism is the worst economic system we could devise and democracy is the worst possible form of government ever conceived.
Except for all the rest.
That’s what I meant to be suggesting in this post, actually.
So that’s it? A payroll tax cut? OK. Let’s get Barack. And maybe Barney Frank. Pelosi will love it. Can we guarantee no rich folks get it?
No, that’s not “it”. It’s just one example of a broader approach, which the post by Glaeser put itself forward as outlining.
But like I said, I’m done here.
How’s that working out?
It works great. I live in Seattle and Vancouver. We’re currently looking for a small farm in the BC interior.
My wife’s family is from a small inbred fjord in Northern Norway. Though I love Caribou, the sausage isn’t really to my taste and the beer sucks. It would do in a pinch, it’s in the middle of nowhere.
And in that case, I think it would be irresponsible to cut taxes on those the higher income brackets, except perhaps as a temporary measure geared to encouraging investment. The key point, though, is that those on the lower end should come first.
I think that there is an argument that can be made against short-term payroll tax cuts in combination with the large stimulus that is planned, for exactly the same reasons that one would support cuts.
There is a dangerous risk here that the deflationary nature of the market has overshot it’s bottom, and that tax cuts/rebates along with $1 trillion in stimulus will present us with mass inflation within the next decade. As any Paulian/Austrian would note, the inflation tax mostly impacts the poorest among us, in the same way that payroll taxes disproportionately impact them.
To combat this, as I have mentioned elswhere on this site, it may be time for the Fed to implement certain forms of consumptions taxes, whether on luxury items, energy, or all domestic goods. Additionally, it may be time for us to abandon some “free-trade” platforms and evaluate the feasability of import tariffs.
All options need to be on the table here, and my fear is that both the new President and his opponents are sticking too closely to standard fiscal policies. I have never met a tax policy that I like, but there are some that make more sense than others. A freeze on the payroll tax, in combination with a federal gas tax, may be a better option than just a payroll tax cut.
I think that those are all good points, Matt – in particular, I take it that as a rule tax cuts are supposed to have to be permanent or at least rather long-term in order to have a significant stimulatory effect. And one possibility, of course, would be to have the offsetting increases in taxes on consumption or carbon emissions not go into effect until a few years down the line, though perhaps it would be unreasonable to assume that this would actually happen.
On trade, I’m too attached to the economic consensus to think that tariffs would be a good idea: wouldn’t they just increase the cost of goods, a measure which once again would affect the poorest most adversely of all? And re: inflation, one possibility that was brought up in the U of C panel that I linked to yesterday at The American Scene was to use monetary policy to increase the total money pool but then vacuum it all back in once it had had its effect; I’m not well-informed enough to understand the details of how it’s supposed to work, but I take it that the basic idea is similar to the policies that Milton Friedman argued were most effective in getting us out of the Great Depression. This would NOT, however, go over very well with the “Paulian/Austrian” crowd. :)
John: Yes, I too am attached to the economic consensus on trade policy, which is why I would only mention a revision of tariff policy in the presence of massive stimulatory fiscal policy, including a dramatic increase in the money supply. However in a global slowdown, taxing other countries’ goods may not be such a hot idea…
You make a great point on Friedman though. He would aslo argue that the best cost-benefit, in terms of spending, is achieved when we spend our own money on ourselves. Conversely, the worst cost-benefit is achieved when somebody spends someone else’s money on someone else. So how do we acheive the best cost-benefit for the struggling citizen AND the tax payer (this is, to my mind, the great “libertarian-progressive” conundrum).
It is in this spirit (and the spirit of this thread) that I would argue for some forms of consumption taxes to offset the cut/elimination of payroll taxes for the poorest. At some point we are going to have to realize that consumption and monetary policy got us into this mess. Stimulating the former by fiddling with the latter, alas, is exactly the type of status quo that the current CEO of the US said he wasn’t going to bring. It may also bring about worse conditions than our current deflationary situation.
I to am not advanced enough in central economic planning theory to understand exactly how the Fed will “vacuum” back all the printed money (super high interest rates would be my first guess). I lean Paulian in this regard, so it’s easy for me to be pessimistic. If we can’t circumvent funny-money monetary policy, let’s at least try to balance the books as best we can.