Now, I don’t intend this as any kind of snide, anti-theory, or anti-technique comment, but when there is a clash between simple, validated observations and complicated regressions, no matter how state of the art the latter may be, I don’t always side with the regressions.
[Arindrajit] Dube’s paper [with pro-minimum-wage empirical findings], econometrically speaking, is a clear advance over Sabia and Burkhauser. But Dube pays little heed to integrating econometric results with common sense facts and observations about the economy. As Bryan Caplan has stated, the knowledge and judicious invocation of simple facts about the economy is one of the most underrated skills in professional economics.
Over at EconLog, Scott Sumner writes wisely and well about income inequality – and, specifically, about why there would still be income inequality even if there were no economic inequality. (I have one, genuinely small, nit to pick with Scott’s post. I’ll likely pick that nit soon in a future post.) Here’s a slice from Scott’s post (emphasis added):
[W]e really ought to be looking at the present value of wage income, or the present value of consumption. In that case capital income would not count. I don’t think I need to convince anyone that capital income hugely distorts the numbers of the top one percent.
David Boaz helps to remind us how unimaginably (to us) difficult life was for ordinary people just a few generations ago. David’s mention of life in 17th- and early-18th-century Scotland reminds me of this description by Thomas Babington Macaulay of life then in the Scottish highlands:
His [the typical 17th-century highland Scot's] lodging would sometimes have been in a hut of which every nook would have swarmed with vermin. He would have inhaled an atmosphere thick with peat smoke, and foul with a hundred noisome exhalations…. His couch would have been the bare earth, dry or wet as the weather might be; and from that couch he would have risen half poisoned with stench, half blind with the reek of turf, and half mad with the itch. [Thomas Babington Macaulay, The History of England, Vol. 3 (Philadelphia: John C. Winston Co., n.d.), p. 279.]
The Freeman interviews Anne Wortham. A slice from Wortham:
Throughout the twentieth century blacks have had the opportunity to present their demand for civil rights in a way that would move Americans and their government toward a greater appreciation for individual rights. However, in every instance, black and white civil rights advocates have reinterpreted the Constitution as protecting group rights to justify and expand the welfare state. Rather than liberating blacks from their dependency on the state that began with the New Deal, and respecting them by insisting that they take responsibility for their freedom, civil rights leaders, politicians, and the American people proceeded to expand New Deal policies with Great Society policies that have cultivated the American people’s expectation that the costs of an individual’s risky behavior will be borne not by the individual but by a pool of people—by taxpayers in general, by “the rich” in particular, by society at large.