Must-Read: Mark Thoma: The Politics of Economics and ‘Very Serious People’

Must-Read: Why is it always the people who work hard to mark their beliefs to market–like Mark Thoma–who are hesitant and worry that their political priors are contaminating their assessment of what policies actually work? Why is it that it is those whose policy views have no contact with reality are those who never think of marking their beliefs their market?

Mark Thoma: The Politics of Economics and ‘Very Serious People’: “There is one government intervention that Democrats often promote that has always been harder for me to justify based upon economics…

…the redistribution of income and wealth. I was one of those people who believed in leveling an extremely uneven playing field, and then letting the chips fall where they may. So long as everyone has an equal chance at success, there is nothing to worry about. But over time, my view has shifted. We should still do all we can to equalize opportunity, but redistribution cannot be avoided. First, there is growing evidence that once inequality passes a critical threshold, it becomes a drag on economic growth. So there is an efficiency argument for redistributing income. Second, it isn’t possible to equalize opportunity without some a priori redistribution. The wealthy have inherent social and economic advantages that perpetuate inequality across generations, and I see no way to solve that without some degree of redistribution through high inheritance taxes or other means.

Third, technological change may doom some households to a meager existence. No matter how hard they try, no matter how much education or retraining they receive, they won’t be able to find jobs that have been taken over by machines and digital technology. That is not their fault, it is an outcome of the economic system itself, and some type of social insurance that augments their income is appropriate in such a case.

I have no doubt that political considerations motivate the views and policy proposals of some economists, particularly, though far from exclusively, those outside of academia. I also have no doubt that my political views influence me in ways that I am unaware of…. But I hope that, to the extent possible, my political views on economic issues are informed by solid theoretical and empirical results. And when the economics and politics are at odds, as they often are on issues such as free trade and immigration, the economics must prevail.

July 29, 2015

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