Berry College econ professor Frank Stephenson sent the following to me by e-mail. I here share it with you in full with Frank’s kind permission.
I recently had firsthand exposure to what is, I think, one of the less well-known benefits of immigration. My mother, who lives in rural North Carolina, was hospitalized with a severe illness. Her doctors (alas she had to be seen by several) were like a United Nations of medicine. As best I could tell, she had immigrant doctors from west Africa (not sure what country), China, and Bangladesh. She also had a doctor of Persian/Iranian origin, though his lack of an accent suggested he might not be first generation. My mother and other residents in her area are better off because of this medical talent from abroad. While lots of attention about immigration is focused on low skilled migrants and high tech workers, medicine is another area in which Americans receive great benefits from people coming here.
It’s foolish and economically uninformed for a person to cut himself or herself off from access to the ideas and efforts of other people. And it’s foolish and uninformed to do so whether the person who cuts himself or herself off from the ideas and efforts of other people does so individually or in league with other, similarly misled individuals.
Here’s a letter to the Washington Post:
Michael Gerson mocks Sen. Rand Paul’s “belief in a minimal state” in part because, in Mr. Gerson’s estimation, such a state would be “incapable of addressing poverty and stalled mobility.” (“Rand Paul is no Jack Kemp,” Aug. 19). What a curious argument given that the very poverty and stalled mobility that Mr. Gerson laments and claims to be incurable in a society with a minimal state actually exist with our current engorged state - a state that for 80 years now has operated New Deal programs, and for 50 years now has practiced Great Society social engineering.
Whatever its merits or demerits, a minimal state is unlikely to have less success at reducing poverty and increasing mobility than is displayed by the intrusive and gargantuan state that Mr. Gerson seems keen to protect.
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
Note that while I do not believe that poverty and economic mobility are as dire today in America as most “Progressives” insist (again, a curious insistence by “Progressives,” given that it seems to be an indictment of their very own economic and policy notions), I read Gerson as saying that such problems do exist today, and are rather dire. Note also that I believe that the quality of life of all Americans would be even higher were Leviathan to be trimmed down greatly to something that could legitimately be called a “minimal state” – and the more minimal, the better.
… is from page 235 of Matt Ridley’s 2010 book, The Rational Optimist; (I’m re-reading Matt’s book in preparation for a new class that I’m teaching this Fall semester at GMU; the class is entitled “Economics of Sustainability”):
Suppose you had said to my hypothetical family of 1800, eating their gristly stew in front of a log fire, that in two centuries their descendants would need to fetch no logs or water, and carry out no sewage, because water, gas, and a magic form of invisible power called electricity would come into their home through pipes and wires. They would jump at the chance to have such a home, but they would warily ask ho they could possibly afford it. Suppose that you then told them that to earn such a home, they need only ensure that father and mother both have to go to work for eight hours in an office, travelling roughly forty minutes each way in a horseless carriage, and that the children need not work at all, but should go to school to be sure of getting such jobs when they start to work at twenty. They would be more than dumbfounded; they would be delirious with excitement.
My colleague Bryan Caplan follows up yesterday’s important post with this equally important one today. (Note that among the sources of the problem that Bryan identifies is the anthropomorphization of groups of people, such as society or “the nation” or “the rich.”)
I was tempted to include a mention of this EconLog blog post by my colleague Bryan Caplan in my next “Some Links” post. But Bryan’s post is so good that I want to highlight it now, without delay. Read the entire thing; it’s superb,
Writing in the Financial Times, Deirdre McCloskey contrasts equality with improvements in the quality of life of the poor. A slice:
In relative terms, the poorest people in the developed economies and billions in the poor countries have been the biggest beneficiaries. The rich became richer, true. But the poor have gas heating, cars, smallpox vaccinations, indoor plumbing, cheap travel, rights for women, low child mortality, adequate nutrition, taller bodies, doubled life expectancy, schooling for their kids, newspapers, a vote, a shot at university and respect.
Never had anything similar happened, not in the glory of Greece or the grandeur of Rome, not in ancient Egypt or medieval China. What I call The Great Enrichment is the main fact and finding of economic history.
Yet you will have heard that our big problem is inequality, and that we must make men and women all equal. No, we should not—at least, not if we want to lift up the poor.
(Note: I disagree with a point that Deirdre makes elsewhere in her excellent op-ed – namely, Deirdre’s endorsement of heavy inheritance taxation as a desirable policy. I’m sure that Deirdre seldom encounters people who are less trusting than she is of exercises of government power, but I am indeed one of those rare people. [On the question of heavy inheritance taxation - a policy also favored by my late colleague Jim Buchanan - see Gary Anderson's and Pamela Brown's splendid 1985 paper, "Heir Pollution."])
Todd Zywicki, a GMU colleague from over in the law school, explores the happy influence of Bruno Leoni on F.A. Hayek.
Speaking of Todd, he’s one of the authors of this new book, from Oxford University Press, on consumer credit (which I’ve just ordered).
My brilliant and creative colleagues at the Mercatus Center offer this tool to measure the burden of regulations promulgated by Uncle Sam.
Here’s Shikha Dalmia on ‘the libertarian moment’ and its scoffers.
Here’s Jerry Jordan reflecting on Hayek and sound money.
Finally, Matt Zwolinski – using sound economic reasoning – reflects on the morality of payday lending.
Responding to this recent post, the great Indur Goklany sent the following to me by e-mail. I post it in full with Indur’s kind permission. (A short note from me follows.)
I would say that what matters most is not “living standards” but “quality of life”, and either matters more than income/wealth. [I recognize that "quality of life" is a subjective measure and, therefore, less amenable to quantitative analysis than "living standards", which can, for the most part, be measured indirectly. In my lexicon, the term “well-being” embraces both “living standards” and “quality of life”.] For the vast majority neither income nor wealth are ends in themselves; but they are desired because they provide them the wherewithal to afford a higher living standard and, more importantly, a higher “quality of life” [which I would equate to having the ability to live their own dreams rather than someone else's, no matter how well-intentioned that person or person's might be].
You may be interested in my take on this, summarized in The Globalization of Human Well-Being. Its Executive Summary goes as follows:
“Controversy over globalization has focused mainly on whether it exacerbates income inequality between the rich and the poor. But, as opponents of globalization frequently note, human well-being is not synonymous with wealth. The central issue, therefore, is not whether income gaps are growing but whether globalization advances well-being and, if inequalities in well-being have expanded, whether that is because the rich have advanced at the expense of the poor.”
More direct measures of human well-being than per capita income include freedom from hunger, mortality rates, child labor, education, access to safe water, and life expectancy. Those indicators generally advance with wealth, because wealth helps create and provide the means to improve them. In turn, those improvements can stimulate economic growth by creating conditions conducive to technological change and increasing productivity. Thus, wealth, technological change, and well-being reinforce each other in a virtuous cycle of progress.
During the last half century, as wealth and technological change advanced worldwide, so did the well-being of the vast majority of the world’s population. Today’s average person lives longer and is healthier, more educated, less hungry, and less likely to have children in the work-force. Moreover, gaps in these critical measures of well-being between the rich countries and the middle- or low-income groups have generally shrunk dramatically since the mid-1900s irrespective of trends in income inequality. However, where those gaps have shrunk the least or even expanded recently, the problem is not too much globalization but too little.
The rich are not better off because they have taken something away from the poor; rather, the poor are better off because they benefit from the technologies developed by the rich, and their situation would have improved further had they been better able to capture the benefits of globalization. A certain level of global inequality may even benefit the poor as rich countries develop and invest in more expensive medicines and technologies that then become affordable to the poor.” [Emphasis added by Indur.]
… is from page 82 of the 1976 Vol. II (“The Mirage of Social Justice”) of F.A. Hayek’s Law, Legislation, and Liberty:
The great problem is whether this new demand for equality does not conflict with the equality of the rules of conduct which government must enforce on all in a free society. There is, of course, a great difference between government treating all citizens according to the same rules in all the activities it undertakes for other purposes, and government doing what is required in order to place the different citizens in equal (or less unequal) material positions. Indeed, there may arise a sharp conflict between these two aims. Since people will differ in many attributes which government cannot alter, to secure for them the same material position would require that government treat them very differently.
We are forever being warned by enthusiasts for forcible ‘redistribution’ of monetary incomes or wealth that great differences among individuals or families in financial earnings or holdings will lead to destructive social unrest.
There are several problems with this warning. Here are just two. First, those who issue this warning seldom, if ever, distinguish between historical epochs in which the quality of life of even the poorest members of society are improving over time, and conditions in which the quality of life of even the poorest are not improving. Historical instances, prior to the industrial revolution, of political revolts of the have-nots are not so obviously applicable to today’s world in which the size of the real economic pie is expanding practically without cessation and the quality of life of even the poorest members of society is improving over time.
Second, fans of forcible ‘redistribution’ – while worrying publicly and theatrically over the potential social unrest unleashed by financial inequality – are quiet and sanguine about the potential for social unrest unleashed by power inequality. If it is so worrisome that the Jones’s increasingly large financial holdings relative to those of the Smiths will spark revolutionary anger in the Smiths, why is it not at least as worrisome if the Joneses accumulate increasingly greater political power relative to that the Smiths? If the Smiths – regardless of the trend of their absolute quality of life – will be propelled by their human nature into violent revolt against the financially successful Joneses, why will the Joneses – regardless of the trend in their absolute quality of life – not be propelled by their human nature into violent revolt against the politically successful Smiths?
In short, if large differences in monetary incomes and wealth are likely to spark revolution, why will not the inevitable differences in the way that governments must treat people in order to make them more materially equal not spark revolution? As I assess matters, the latter differences are far more likely than are the former to give rise to revolutionary anger.
Rand Paul speaks out eloquently, in Time, against the militarization of the police throughout the United States.
Glenn Greenwald also writes against this horror. (HT Walter Grinder)
The tragic events in Ferguson, MO, supply an excellent reason for those of you who haven’t yet bought, read, and studied Radley Balko’s Rise of the Warrior Cop to do so.
Now for some better news (here from Matt Ridley).
George Will – rightly – is not upset by corporations acting to keep their tax bills as low as possible. A slice:
This is the progressive premise in action: Because government provides infrastructure (roads, etc.) affecting everyone, and because government-dispensed money flows everywhere, everything is beholden to the government, and more or less belongs to the government, and should be subordinated to its preferences, which always are for more control of the nation’s wealth.
And Will’s conclusion:
This illustrates the grandstanding frivolity of the political class. It legislates into existence incentives for what it considers perverse behavior, and then waxes indignant when businesses respond sensibly to the incentives.
The Tax Foundation’s Alan Cole explains why income data is a poor measure of economic inequality.
Hopefully, Wal-Martcare might save us from many of the ill-consequences of Obamacare.
… is from page 218 of Matt Ridley’s superb 2010 book, The Rational Optimist:
Even farm labourers’ income rose during the industrial revolution. As for inequality, in terms of both physical stature and number of surviving children, the gap narrowed between the richest and the poorest during industrialisation. That could not have happened if economic inequality increased.
This particular historical point is important; the general point that it makes is even more so. Throughout the margins of my heavily marked-up copy of Thomas Piketty’s Capital in the Twenty-First Century I scribbled the words “get real.” By this phrase I do not (mostly) mean ‘gimme a break’; rather, this phrase is a shorthand way of suggesting that the monetary figures that parade throughout Piketty’s volume often mask trends in real living standards.
What matters, ultimately, is not how much $$$$ or €€€€ or ££££ or ¥¥¥¥ someone (or some statistical category of someones) earns or has stashed away absolutely, or relatively to how much $$$$ or €€€€ or ££££ or ¥¥¥¥ other people earn or have stashed away. What matters is how well people live according to their own lights and preferences. If the great majority of people, and especially the poor, are living better and better lives – or at least have access to a greater supply of goods, services, and leisure that they can use to live better lives – that fact is powerful evidence that the economy is working well. And that evidence remains relevant and powerful regardless of whatever is happening to the (to use Piketty’s term) “evolutions” of monetary incomes and monetary wealth.
Note that I am not saying that there is no positive connection between monetary income (or wealth) and real living standards. But I am saying that trends in the former are often misleading about trends in the latter. And I’m saying also that only the latter matters.