Not Hard Enough, Apparently

It was an interesting juxtaposition to read Blinder immediately after Barro, partially because Blinder wrote Hard Heads, Soft Hearts a few years before Barro wrote Getting It Right, but more because of the fact that both (like most academics, I would imagine) thinly veil their political tendencies behind a façade of “objective economics” or universally appealing principles. Blinder inserts his political leaning (Democratic) in his presumptively desirable principles of equity and efficiency; by claiming that the poor are “inherently needier than the rich,” Blinder skips past his assumptions of what constitutes need and how resources ought to be distributed in the first place. Sustenance, clothing and shelter may be three things most would find necessary, but beyond that, need is extremely difficult to define if you’re not a politician standing for election. As such, our hard heads have problems rationally determining how to implement what our soft hearts desire. Sadly, further inherent inconsistencies exist in such a “simple” principle; such sentiments also bear a strong resemblance to the Marxian maxim, “from each according to his ability, to each according to his need.” Blinder, not a fan of rational expectations anyway, tends to discount some of the worst psychological effects of macroeconomic policy. For example, Charles Murray’s thesis in Losing Ground (that the Welfare state caused further regression into poverty by incentivizing single mothers to stay unmarried and out of work) might apply to several policies of income redistribution. Of course, Blinder has no visible problems with Welfare, Medicare, and Social Security (the holy trinity of the Welfare state), even though he later decries programs that take the hypothetical $10 from 25 million people and give 100,000 people $1,000 each. This is not to say that the Welfare state bears similar proportions, but the action is essentially the same: one group of people subsidizes another group of people by government mandate. Blinder’s purpose in using such an example is to show that government solutions often pander to special interests; however, it also demonstrates how government solutions unnecessarily pander to the people as well. Take the 2001 Bush tax cuts, for example: everyone currently paying taxes in America stood to gain from the bill at the expense of future generations of Americans who would have to foot the bill (if we lived in a semi-Ricardian world, anyway). Such policies provide reasonable counterexamples to Blinder’s explanation that parochial politics is all to blame; even presidents have constituencies: living, taxpaying Americans. However, the process of such pandering does have immense negative economic repercussions as Blinder points out.

Blinder attributes problems in most policies to poor or unintelligent policy design, products of a political system presently incapable of sufficiently sophisticated economic policy. In this sense, Blinder is right; since Aristotle, observers have noted the failures of democracy in achieving a just or stable system of redistributive justice. As Blinder goes on to show, these failures can be traced to the Constitution itself, which establishes a geographically-defined representative democracy. Blinder then poses the idea of random representation as a supposedly more equitable hypothetical, but admits that this destroys the concept of actual representation and would lead to near uniformity in politicians. While Blinder puts stock in the idea of linkage as a potential solution, this solution relies on individual politicians to establish the links themselves, rather than mechanisms, as all good economists would prefer. Some institutional changes that might make the legislature less dominated by “ignorance, ideology, and interest groups” include the use of more bipartisan committees, such as BRAC (Base Realignment And Closure), which Congress found to be the only way to vote to stop outdated military bases from hemorrhaging funds. Another possibility would be to increase some of the secrecy of Congress, making it more independent of interest group lobbyists. By closing markup sessions of bills, congressmen would be able to edit legislation without having special interests watching their investments, ensuring their influence on policy formulation.

Blinder’s discussion of the possibilities of the hard head, soft heart combination are absurdly simplistic, given that he’s suggesting using a hard head to parse out the efficacy or desirability one’s soft-hearted emotions. For one thing, he essentially claims that the Democrats have gotten the “ends” right, while the Republicans have a good grasp on the “means” (even though this is promptly mitigated by his examples of political stupidity). Perhaps Blinder is simply wrong about a lot of his unexplained assertions. Perhaps justice in income redistribution is irreconcilable with democracies or, more contentiously, justice in general. Perhaps Blinder’s metaphor of the rich man absentmindedly losing a $100 bill and not noticing does not correspond to the reality of taxation (where, as Barro shows, people vehemently resist attempts by the government to extract resources for social programs and spending). Perhaps reality does match Blinder’s specific exception to the legitimacy of his example: perhaps the government does act as a pickpocket. Perhaps the problem is with equity itself. Blinder says, “Conservatives must come to accept the principle of equity and realize that intelligently designed policies that promote equality need not interfere unduly with efficiency,” as though efficiency were the only grounds to reject such a principle. Perhaps conservatives simply believe that the people who generate money have a right to dispense with it as they please, or that a rich person may use their money to achieve a greater social or personal good than the government could. There’s also the possibility that some prefer the value of freedom to the value of equality. In short, nothing is as non-controversial as Blinder attempts to describe it, provided your head is hard enough.