One of the first things I do each morning is to check EconLog for any new insights from Arnold, Bryan, or David that might have arrived overnight. This morning’s discoveries – both from Bryan Caplan – are simply too good not to share.
“Economic growth seems like an extremely good thing. But growth could have undesirable side effects so severe that growth is actually bad.” This position is totally reasonable – and totally uninteresting. Could? Could?! If something seems extremely good, you need a let more than “coulds” to counter it. Indeed, you need strong evidence that side effects of the seemingly-extremely good-thing are on balance extremely bad.
I tell my students that time is too short to worry about what’s merely possible. Nearly everything that is possible will never occur. The range of the possible is enormously larger than is the range of the plausible; the range of the plausible is larger than is the range of the probable; and the range of the probable is bigger than what (if we’re speaking of the past) has actually occurred or (if we’re speaking of the future) what will actually occur.
Part of what separates good thinkers (including those who are formal scholars) from poor thinkers is their wisdom in sensing what is relevant enough for analysis. Beyond an exposure to history and wide reading, I know of no recipe for instilling such wisdom. And I realize that if you lack such wisdom you necessarily lack the ability to understand that you lack such wisdom. We all think we have that wisdom; we all understand – correctly – that not everyone does have that wisdom.
(BTW, I do not mean here to suggest that Ken Rogoff lacks such wisdom. I emphatically believe that he does not lack it. While I agree with Bryan and Will that Rogoff hits a sour note in discussing the tradeoffs involved in economic growth, what struck me in Bryan’s post is his general point that “could” is uninteresting – uninteresting, I add, except to thinkers whose cleverness overwhelms their wisdom.)
The second gem today from Bryan is his post entitled “How Egalitarianism Increases Inequality.” This post highlights the fact that good economists understand that money is not all that matters – or, put differently, highlights the point that David Friedman makes that “everything can be measured in [DB: or, traded-off against] anything.” This insight from Bryan is spot-on – and it suggests yet another agreeable consequence of norms and rhetoric that applaud bourgeois virtues and, hence, give dignity to the bourgeoisie:
Imagine people become more egalitarian, to the point where they heap scorn on the rich and successful. What is the effect on inequality? By the previous logic, the effect is directly counter-productive. The more you scorn rich people, the more people you scare away from high-income professions. The more you scare away, the lower their supply. And the lower their supply, the higher their income!
Lesson: If you really want a materially more equal society, stop beating up on the 1%. Do a complete 180. Smile upon them. Admire them. Praise them. Sing songs about how much good they do for the world. The direct result will be to raise their status. But the indirect result will be to pique the envy of status-conscious people, increasing the competition among the top 1%, and thereby moderating income inequality.