Price indices are calculated by weighting changes in prices for each good by how much of the average person's income is used to purchase that good. So yes, education and medical care will be accounted for for the majority of people. You're right about women entering the workforce though.
No, zero sum games are an inherent wash in the economy. What determines the prosperity of a nation is its capacity to produce goods and services. Moving income from some other part of society to the middle class doesn't affect the production capabilities of a society so it can't effect that society's net output.
That's a simplified version of course, incentives might be affected depending on how the redistribution was performed. But most redistribution is at least slightly inefficient so the effect on growth would be if anything negative. That's not true of all possible policies of course, but I'll be leaving that for another post.
It's a bit of both. There's some service involved so to that extent it's a legitimate job, but if you're paying more for the job than it's worth to you, the difference is welfare+lying.
What I said was that there are two kinds of government job making:
1) Pure make-work jobs, which are just welfare + lying.
2) Employment through promoting economic growth, but pity-charity liberalism already advocates growth.
I certainly believe that economic growth is possible, but I think government has much less control over it than most people believe (note - less is not none).
How then does bottom-up liberalism seek to boost up incomes? I'm certainly interested to hear the alternatives, after all we could use some good news on this front.
1) There's no money in management pay. Sure, individual executives are very highly paid, but there are so few of them in a firm that their total compensation doesn't add up to much.
2) What rate of increase? Returns to capital are pretty much constant, adjusting for inflation (outside of bubbles). And it's not so much that it's bad as it's impossible. If you lower return to capital in an industry, the capital flows somewhere else. The demand for labour in the industry falls and either wages or employment fall to compensate. That's not a game you can win.
3) This effect is fictional, it doesn't happen. Higher middle-class incomes mean lower incomes for someone else (in this specific case, we're talking zero-sum). Increases in prosperity come from increases in productivity, and productivity isn't changing here. Ford's saying was pure rhetoric - he paid so well because he wanted to be very selective in who he hired.
As for your real-world examples, both Germany and 1940s USA are poorer than the modern US, so I don't see your point. Besides which there are something in the order of 150 confounding variables that might explain the difference in prosperity between two different countries / points in time, so you claim is of little value, unless you've done a massive amount of macroeconometric research to back it up.
This is a very thought-provoking piece Erik, and I think it touches on some of my concerns with how the left approaches income inequality. I'll sleep on it, and post my take in the morning.
I'm not a liberal (at least not your kind), but I'd turn up to hear you out. I may not agree with much of what you say, but I find you well worth reading.
I think this is a serious problem with seniority-based pay and back-loaded benefits. It chains people into a career they may have no aptitude or taste for.
That's a good example. The reason why it's so important to articulate your goals is so that you can design interventions targeting those goals. If someone takes the step of articulating points 1-4 as goals of the education system they will quickly realise they need to find another instrument to deal with those specific objectives.
Because writing good policy is a skill all by itself. There are a number of traps you can fall into in making policy, that you are less likely to fall into if you are experienced in the policy making process.
In my experience policy written by subject matter experts tends to be too narrowly focused, and has too little thinking put into the side-effects of the policy on areas outside the scope of the expert's expertise.
In short, subject matter experts as policy analysts act too much like Adam Smith's Man of System to be good policy analysts. Subject matter expertise is very useful of course, but it's only a part of the process.
Before we can discuss the Education System, we must discuss its goals and rationale. Every attempt to broach this discussion, historically, from Dewey until today, uncorks a Bottle o’ Pandemonium.
I strongly agree with this. The first step of the policy development process is: Articulate your goals (ultimately in a sufficiently explicit way that you can measure progress against them). The failure to do this pretty much guarantees failure, how can you succeed when you don't even know what success looks like?
They really don't. Policy is developed by people who are experts in developing policy. Subject matter experts are important as an information source, but in my experience subject matter expertise is of little use in writing good policy.
Madison definitely has a point, and I think the parliamentary system would be stronger if it had more countervailing powers. It seems to me that judicial review in particular could be integrated without damaging the integrity of the system.
I don't know if the fact he's not a schemer make him Stark-like. I think it's just that he's too impulsive to scheme. If he wants somethign he just takes it, if that gets him into trouble he falls back on his sword. Sure things might go wrong and kill him, but I don't think he cares much.
That is a concern. Of course I don't think there's any reason you couldn't have American style judicial review with a parliamentary system, but for historical reasons it's never really happened.
*Comment archive for non-registered commenters assembled by email address as provided.
On “Labour and the American Middle Class”
Price indices are calculated by weighting changes in prices for each good by how much of the average person's income is used to purchase that good. So yes, education and medical care will be accounted for for the majority of people. You're right about women entering the workforce though.
"
That is the problem with religious-based ethics, they're completely irrelevant to non-believers.
"
No, zero sum games are an inherent wash in the economy. What determines the prosperity of a nation is its capacity to produce goods and services. Moving income from some other part of society to the middle class doesn't affect the production capabilities of a society so it can't effect that society's net output.
That's a simplified version of course, incentives might be affected depending on how the redistribution was performed. But most redistribution is at least slightly inefficient so the effect on growth would be if anything negative. That's not true of all possible policies of course, but I'll be leaving that for another post.
"
It's a bit of both. There's some service involved so to that extent it's a legitimate job, but if you're paying more for the job than it's worth to you, the difference is welfare+lying.
"
Yes, that makes a lot of sense. I think I had my terminology mixed up.
"
The figures I cited above are inflation-adjusted, so cost of living increases are already accounted for.
"
What I said was that there are two kinds of government job making:
1) Pure make-work jobs, which are just welfare + lying.
2) Employment through promoting economic growth, but pity-charity liberalism already advocates growth.
I certainly believe that economic growth is possible, but I think government has much less control over it than most people believe (note - less is not none).
"
How then does bottom-up liberalism seek to boost up incomes? I'm certainly interested to hear the alternatives, after all we could use some good news on this front.
"
1) There's no money in management pay. Sure, individual executives are very highly paid, but there are so few of them in a firm that their total compensation doesn't add up to much.
2) What rate of increase? Returns to capital are pretty much constant, adjusting for inflation (outside of bubbles). And it's not so much that it's bad as it's impossible. If you lower return to capital in an industry, the capital flows somewhere else. The demand for labour in the industry falls and either wages or employment fall to compensate. That's not a game you can win.
3) This effect is fictional, it doesn't happen. Higher middle-class incomes mean lower incomes for someone else (in this specific case, we're talking zero-sum). Increases in prosperity come from increases in productivity, and productivity isn't changing here. Ford's saying was pure rhetoric - he paid so well because he wanted to be very selective in who he hired.
As for your real-world examples, both Germany and 1940s USA are poorer than the modern US, so I don't see your point. Besides which there are something in the order of 150 confounding variables that might explain the difference in prosperity between two different countries / points in time, so you claim is of little value, unless you've done a massive amount of macroeconometric research to back it up.
On “On Bottom-Up Liberalism & Pity-Charity Liberalism”
This is a very thought-provoking piece Erik, and I think it touches on some of my concerns with how the left approaches income inequality. I'll sleep on it, and post my take in the morning.
"
Um, are American workers actually getting poorer? This graph rather suggests they aren't.
On “One more blog, for good measure”
I'm not a liberal (at least not your kind), but I'd turn up to hear you out. I may not agree with much of what you say, but I find you well worth reading.
On “The use of knowledge in our educational system”
The problem there is the political process, it's not that the wrong people are giving advice, its that the wrong people are making decisions.
"
I think this is a serious problem with seniority-based pay and back-loaded benefits. It chains people into a career they may have no aptitude or taste for.
"
That's a good example. The reason why it's so important to articulate your goals is so that you can design interventions targeting those goals. If someone takes the step of articulating points 1-4 as goals of the education system they will quickly realise they need to find another instrument to deal with those specific objectives.
"
Because writing good policy is a skill all by itself. There are a number of traps you can fall into in making policy, that you are less likely to fall into if you are experienced in the policy making process.
In my experience policy written by subject matter experts tends to be too narrowly focused, and has too little thinking put into the side-effects of the policy on areas outside the scope of the expert's expertise.
In short, subject matter experts as policy analysts act too much like Adam Smith's Man of System to be good policy analysts. Subject matter expertise is very useful of course, but it's only a part of the process.
"
I strongly agree with this. The first step of the policy development process is: Articulate your goals (ultimately in a sufficiently explicit way that you can measure progress against them). The failure to do this pretty much guarantees failure, how can you succeed when you don't even know what success looks like?
"
They really don't. Policy is developed by people who are experts in developing policy. Subject matter experts are important as an information source, but in my experience subject matter expertise is of little use in writing good policy.
"
In this context most capable would need to be interpreted as "most capable at teaching".
On “Game of Thrones Bookclub – Week Three Spoiler Thread”
That's the best part, Cersei is too busy sparring with Margery. She won't even see Sansa coming.
On “Parliaments and Republics”
Madison definitely has a point, and I think the parliamentary system would be stronger if it had more countervailing powers. It seems to me that judicial review in particular could be integrated without damaging the integrity of the system.
On “Game of Thrones Bookclub (Week Three)”
Arya's more than a little feral so I can see how she wouldn't appeal to everyone.
On “Game of Thrones Bookclub – Week Three Spoiler Thread”
I feel similarly, he's too much of a Magnificent Bastard for me to hate him.
"
I don't know if the fact he's not a schemer make him Stark-like. I think it's just that he's too impulsive to scheme. If he wants somethign he just takes it, if that gets him into trouble he falls back on his sword. Sure things might go wrong and kill him, but I don't think he cares much.
On “Parliaments and Republics”
That is a concern. Of course I don't think there's any reason you couldn't have American style judicial review with a parliamentary system, but for historical reasons it's never really happened.
*Comment archive for non-registered commenters assembled by email address as provided.