This part of the election cycle is the most interesting. People are turning ideas over in their minds, imagining what they want in a more open-ended way than general elections allow, and you even have the chance to change party affiliation to vote in a more interesting primary, if you choose (but don't forget that local elections are more gerrymandered, and so local primaries are more important than local elections).
In a huge nation, you'll have an absurd abundance of different values. Everyone is seeking happiness in their own way, and want different things from the institutions they deal with. Everyone wants a bigger slice of the pie, and some people want it so bad they're willing to try and get it without working (a big no-no, in my books, but to each their own). And as much as we all like to shame big corporations that are looking for handouts, it's basically everyone (except, ya know, people that think the government shouldn't give out money to anyone). But in the scramble for everyone to put their hands out and beg for more government money, most people skip straight over a deep analysis of the most important part: making America capable of satisfying even more people's preferences?
First, you'd want individuals to get better at delighting others, and then you'd want even more people putting in the time to do so. This maps onto (essentially) productivity and employment numbers, and GDP is a great measure of their combined total (while under-counting a lot of stuff we'd never have any chance of valuing appropriately anyway).
The Things We Choose To Care About
Of course, people pay lip service to economic issues. But it's so lazy, you can tell they don't actually care. If people were just richer, they can use that to achieve their goals – that's what money is for. There's a huge amount of private land conservation in America, and money is the only way to get there. Kickstarter spends more money on art than the NEA – if you want beauty in the world, you won't buy hardly any of it with legislation. You want a beautiful church or mosque – the state won't help you. You need money, and the economy where spending that money buys you useful stuff. If you want revitalized inner cities, the politicians don't even pretend they have the answer – money, and investment, is the only way to help the most desperate Americans. So why do we keep pretending money is just sort of there, not doing anything, without much use or moral weight? Why do people only seem to sort of care about the economy?
I don't know. Maybe some of this is a personal bias of mine – when I care about something, I learn about it. I know it's weird to read textbooks as an adult, but there are TV shows that educate about the economy (like the fantastic Free to Choose, or the Foundation for Economic Education's YouTube page). It's not hard to learn the basics in a low-effort way, and if you're willing to put in a smidge more effort, Marginal Revolution University is out there. You don't even need to be literate to learn most of the important stuff.
But we don't get educated discussion, not even from people who wish to lead the largest institution in the world. We ought to expect better of them, and (if you vote) you can incentivise better behavior. Let's look at a view of the policies I see spoken about the most, and how they might be improved.
The quinessential example of bad economics in the public sphere today surrounds the trade war. The biggest problems can be summarized on a T-shirt, but the dysfunction of the conversation extends past a sub-optimal policy.
It can be frustrating to point out how impossible the standard Trumpian view of tariffs is. The whole point is to change the behavior of American consumers. To make them buy American, it makes current foreign suppliers so much more expensive the business relationship falls apart. The whole point is to make things more expensive for Americans. That's the mechanism of action.
How much does this protect American industry? Maybe some negative amount. It makes American businesses unable to compete on the global stage by exposing them to artificially weak competition. If you want America to be less able to compete with China, this is how you'd do it. If you want America to remain the world's most influential superpower, you'd want American companies to be absolute dominating machines of economic productivity, that don't need to be coddled by some bureaucrat.
Of course, people talk about American jobs, but if jobs require tariffs, they will always be fragile, and only service local markets. American companies should serve the whole world. Closing ourselves off will shrink a company's addressable market to (a wealthy) 5% of the world. If you want America to be great, we could have customers beyond that – but we'll only earn them when we have to, and protecting companies from stepping up to the world stage does more harm than good.
And then there's the stuff on the T-shirt. All of that is correct, of course, and we shouldn't sacrifice the massive net benefits from trade for almost anything. This is how you get the pie bigger. You toss that out, what does it matter what kind of share you're getting?
Universal Basic Income, technically Based in this Universe
Look, a lot of very smart people have supported a UBI. I think this is a systematic error of the quintessentially technocratic type.
Why support UBI over e.g. the modern welfare state? It's simpler to administer? But administration costs aren't really a huge concern, when you look at the cost of the program. Because it avoids bad incentives? So does the Earned Income Tax Credit, and it does that much, much more efficiently. At the end of the day, it's a program attempting to help people who's jobs have been lost to automation and trade, but is perfectly unfocused on that task. There is almost no program that couldn't outdo it on its own standard for intervention.
But boy howdy, do I get nervous about talking to people about how bad this policy is. I even wrote a whole blog post with crypto-UBI-opposition, trying to explain the lens I was using for evaluating the government program without naming it explicitly. There are few ideas so poorly thought out but beloved by the intellectual caste these days.
But the problems with UBI extend past the cost and waste – the process involves no talk about what you buy with money, or making a country more capable of delighting people. Those are the important parts! Instead, UBI advocates tend to argue that they can make more money move around like magic. But money is nothing, except how you get people to give you your way. If you diminish the capacity for Americans to be of service to each other (by having them drop out of the job market, with their needs supported by a UBI), there's no way that equation balances. I guess in Andrew Yang's ideal scenario we have skyrocketing inequality to compensate? Some small group of people would have almost all the money, be insanely useful to everyone else, and that's how the whole system is better, even though more people aren't being useful to others at all. It's unclear to me why he even thinks that might work, and outright bizarre that he thinks it would be popular. I've got no problem with inequality, really, but at least I get that it's not something other people like.
Joe Biden is correct in pointing out a group of people... aren't... a number? Was that a confusion people were having?
He says that being middle class is actual a set of values, so, I suppose he supports the moral growth of being bourgeois. I guess I sort of agree? I value thrift, hard work, and delayed gratification, and think those values are what enables investment in the economy. I think if more Americans exhibited those values, they too would be winners in the economy.
But I don't want to jump on board with Biden's strange dislike of numbers. Econometrics helps us know when we are doing things that might be good! There is a reason we gather those numbers. And there's the craven politics of not giving a shit about poor people implicit in his focus on middle-class prosperity. There's always going to be richer and poorer Americans. Strong policy should say, if America gets wealthy, it lifts all boats. Not in a day, but in a generation. Saying that anyone can be middle class isn't a prescription for economic growth, it's a cop out from making a system where everyone prospers.
There are two approaches (or, categories of approaches): (1) try and fix it, and set everything right, or (2) help people get through a changed climate.
Can you imagine the arrogance of assuming we could even manage (1)? We've changed the planet so much that it's probably not possible to even determine all the ways we've altered the climate. And unless you want to massively depopulate humanity, some of those changes (like the invention of modern urban areas) are going to be permanent. How could you possibly untangle all of those effects?
Some part of your approach is to just help people through. Wealthy countries are unlikely to suffer nearly as much as poorer countries. When we talk about climate refugees, we aren't talking about people fleeing Manhattan. We are talking about the global poor. The rich have known (for centuries) how to operate a civilization below sea level. And if you pay very close attention, you'll notice it doesn't require that much wealth. This is something we can do. But if you see a lack of resources, that's something we can address. Certainly on the time scales climate change occurs on. We have generations.
Why not talk about how to get wealthier? Isn't that a necessary prerequisite to fighting the longer term impacts of human life? And if we know that mitigation is a critical element of every workable policy, why not incorporate that in a serious way?
Instead, we get people advocating massive market disruption. Who knows what strange costs something like that will entail? Jay Inslee doesn't. It's impossible to know what useful other things Americans could be doing. That's why we let people organize on their own. Once you force people to dump money at a problem (with a tax-and-spend economic policy), you can be assured the money is spent on something less useful.
So, this is a bit strange, and happens so often I'm not sure who to use as an avatar of it. Let's use Kamala Harris, because her website contains literally no more specific policy than just generally opposing business.
California has successful industry X? Smack them down!
I'm honestly not sure which little guy she's standing up for. California is made better by their specialized industries. That's where people work. I'm glad they could take whatever weak punishment she doled out. But it seems strange people would want to smack around the golden goose. If they do something bad, of course they should be punished under existing laws. But given that these people are never super clear on precisely what those rules are, and how they were broken, I'm going to assume they don't care. They just want to see them hurt.
Jobs for all
I think it's important to notice when someone makes a good argument you disagree with. There's plenty of opportunity to do that, and we should all be honest about wanting different things, having different values, approaches, skepticisms, and principles. Honestly, good arguments I disagree with are pretty common.
For instance, take this one, from Slate Star Codex. He discusses, in his usual depth, precisely why universal jobs guarantees are a strictly worse idea than universal basic income. That's a good argument.
I disagree that UBI is a good policy claim, obviously. And I disagree with the whole framing that we ought to care which of two real stinkers is a better idea.
But he's right. If someone is disruptive and unreliable, they can't demand to participate in a workplace. If they do, nothing will get produced. Universal jobs guarantees really suck, particularly when something similar – a universal entreprenuer guarantee – is at least plausible. You can go start a company. Clean houses. Prepare food. Do yard work. Run your own small little operation. If you think adults are too good for lemonade stands, you've got an insane idea of what a legally-required-to-employ-the-infirm government job would be.
Not every institution is elite. And I think even elite institutions might be a poor investment. I'm not crazy about handouts to certain industries, particularly when I get the sense they are major institutional backers of the political party directing funding to them. Colleges are super liberal, so this sets off tons of alarms for me.
Luckily, an excellent discussion of the core of this problem was already done, years ago, by Slate Star Codex. Go here. Read it. Then return.
You'll notice he mentions a certain political candidate. More and more candidates support this policy, despite it having relatively obvious and terrible consequences.
Plus, being a plumber is probably a better job than making websites. You definitely get a better sense of accomplishment, and your work is more valued by people in emergencies. Similar money, similar prestige (high and low respectively). Probably less corporate BS. Hard to tell how they compare in aggregate. It's definitely better than going to law school, last time I checked. So why focus on the more academic areas of training? Why not just allow people to sign on as apprentices without e.g. minimum wages laws saying it's illegal to get on-the-job training in important fields for the fair price?
Can we all agree about whether very wealthy people are able to choose the jurisdiction of their business in a way that prevents all coercive negative-sum demands made on them? Plenty of big companies are American, because we can provide a solid legal framework with reasonable taxes. But if our offer isn't compelling, people will choose to incorporate elsewhere, like Hong Kong. It's not hard.
At least, if that's all true, then we wouldn't expect much benefit from dramatically raising corporate taxes, or mega-millionaire taxes. Not unless we want to close off the American economy to the world, retreat from having the global reserve currency, destroy a huge percentage of modern supply chains that produce almost all complex goods, all for that marginal tax payout.
I mean, look, I don't think Bernie Sanders cares about the economy. Not really. He doesn't seem to be particularly well educated about it. But that's a huge price to pay. And it seems weirdly punative.
Why be so specific about taking people's money if it's not even entirely clear what you'd spend it on? Warren seems to be using it as a way to justify like ten different policies, but she could only use it to fund (maybe) one. There just isn't that much money to be made in taxing people that make over a million dollars a year – there aren't many of them. Even if they didn't reorganize their income to choose more favorable jurisdictions, it'd hardly pay for any single policy of choice. And something like a massive expansion of Medicare? It wouldn't come even close to paying for it.
But I guess people hate billionaires. I've never met one. But I met someone with hundreds of millions of dollars and they seemed basically normal and kind. I'm not sure why the average American views them as so massively different.
The Future of Humanity
The strength of the American economy over the next generation will likely have a substantial influence on the dignity and civil rights of people in 2100. Will people be afraid of the Chinese government, afraid of offending them, afraid of the consequences of speaking their mind, of seeing what's right and wrong and saying so? Will China's ascent to power build a roadmap for autocracies and brutal suppression? Will the world fill with dictatorships in attempts to capture the upside of liberalism – wealth – without the burden of sharing power?
China's power exists within the context of competing interests and systems. The United States (and probably the UK and her old colonies – post-Brexit we might call this the Five Eyes Alliance?), the EU, China, Japan, South Korea, India, South America. Any of them, strong enough to move the world in some way or another, if they have something they want. An ideal world would see those options broaden, so everyone can find a government that suits them without risking poverty or desperation – nor a swift extradition for political retaliation.
I was excited about the African trade deal, but a true new world power would be better, and they ought to upgrade quick before they become a client state to China.
I think when we talk about successful economies, we ought to reference how important that is to the people in the country. The German economy is big, sure, but also, it's something that's actually valued there. It might persuade someone to support a policy. Germany has a big economy, that's good. But that's just an effect. Policies were chosen because The Economy is Big in Germany. It's a priority. And it used to be a priority in America.
But less and less so.
The Economy is Big in China, though.