Sometimes it’s best to just cut your losses after making a silly mistake. Matt Bruenig has decided to double down on some deeply flawed arguments, which I criticized in an earlier post. He begins by showing that he knows nothing about my blog, and ends by demonstrating that he knows nothing about my views on libertarianism. But let’s focus on the middle part:
The primary thrust of Sumner’s post is to say that, because I do not have a libertarian-wired brain (read: smart brain), it doesn’t occur to me that poverty-reducing transfer programs can have dynamic effects that also affect the market poverty rate. Although Sumner’s psychoanalysis is creative, it sadly misses the mark. Here I am in 2013, with my progressive-wired brain, somehow getting my head around the idea of dynamic effects that heretofore only libertarians have understood:
So I tried to give him the benefit of the doubt, by assuming that he merely overlooked dynamic effects problem, just as one of my professors at Wisconsin did when I pointed out the mistake back in 1974. But Bruenig now says he knew about the problem, and still made the deeply silly claim that income minus transfers is a good proxy for what market incomes would look like in an economy without welfare. (BTW, he later quotes me suggesting that a libertarian brain did not mean smart brain, so his aside here is puzzling, unless you assume he doesn’t care about accuracy.)
So if welfare didn’t exist the millions of poor people who live off of welfare would do what? One possibility is that the poor would do what they actually did before the welfare state was created, they’d work much harder than the rich. Don’t the progressives always tell us that in the bad old days the rich aristocrats did little work, and the poor worked extremely long hours, because they had to do so to survive? In Bruenig’s view the people who currently have no income, and live off of welfare, would continue to have no income if welfare was cut off. And how exactly would they survive? And why would they behave differently from the way the American poor actually did behave before the welfare state? No answer is provided. And don’t progressives always tell us that in the bad old days workers had no Social Security, and usually worked until they dropped dead? Is that argument also no longer valid?
Using market poverty (sometimes called pre-tax, pre-transfer poverty) as a comparator for disposable income poverty (sometimes called post-tax, post-transfer poverty) is extremely common in comparative welfare state literature, which I am sure Sumner has no familiarity with. It’s not used because the economists and economic sociologists who operate in that field have never realized that dynamic effects are possible. It’s used because it’s the best measure available to capture the effect of transfers on poverty and cross-country comparisons do not reveal high-transfer countries to have higher market income poverty rates than low-transfer countries (even though their disposable income poverty rates differ dramatically).
So now he tries to smear the reputation of other progressive economists, by claiming that they are also in denial about the importance of dynamic effects. As far as poverty rates among high transfer countries, does anyone seriously believe the Nordic countries are a good comparison for the US, or even for Portugal? Algan and Cahuc have showed that the welfare state is endogenous, and that it is more generous in places where dynamic effects are weaker. So Bruenig’s cross sectional argument proves nothing. Time series effects and common sense are enough to show how absurd it is to assume that the welfare does not significantly affect reported market income. (Another problem with Bruenig’s claim is that people on welfare may have unreported income.)
The War on Poverty, as you probably know, was a massive smashing success. From 1967 to 2012, the disposable income poverty rate fell from 26% to 16%, a decline of 38.5%. During that same period, the market income poverty rate increased from 27% to 29%. Over the course of those years, transfer programs reduced poverty by a total of 1.2 billion people-years.
You’ve got to love the precision of the 1.2 billion people-years, and the optimism of his post title “Cutting Poverty is Super Easy.”
But nonetheless doubts creep in. After all, 45 years is a long time. What happened to the well-being of the poor in the 45 years before the highly successful “War on Poverty?” Obviously the data Bruenig cites don’t have much persuasive power unless the poor made much less progress before the War on Poverty. After all, if the War on Poverty were a “smashing success,” then you’d expect the lives of the poor to improve more rapidly than the general improvement you see in any growing economy. But here’s my problem. For years the progressives have been bombarding me with exactly the opposite argument, that poverty fell very rapidly from 1922 to 1967, but that the gains of lower income people slowed sharply after the 1960s. So which is it? How do we know that poverty didn’t fall just as rapidly before the war on poverty, say from 36% to 26%? No data is given for the previous 45 years. As far as “market income poverty” rising after 1967, that’s exactly what the conservatives would have predicted in 1967, and it’s exactly the effect the left would have denied in 1967. The left would have predicted that civil rights gains and improvement in access to education in the 1960s would increase the market incomes of the poor. But now evidence of bad “dynamic effects” is twisted into evidence of the success of the War on Poverty! The view seems to be “Look at the huge increase of in the number of the poor who don’t work at all—and imagine how much worse off they’d be without all that welfare!!” And we are supposed to take this argument seriously? You have to give progressives some points for creativity. They can turn data that looks like a sow’s ear into a silk purse.
At the end he tries to bait me into a debate over philosophy with some outlandish comments that he thinks will be provocative:
Second, libertarian brains desperately crave the feeling that they are super-logical and super-rational and that other brains don’t get it. Which is funny because libertarian political philosophy is the most logically incoherent political philosophy, perhaps ever. Lastly, libertarian brains generally (Nozick excepted) fail to realize that property is theft, which it is.
It’s fun to be “misunderestimated” by a deep philosopher like Bruenig. Especially by someone who thinks words “really mean” something, rather than that the meaning is merely socially constructed. So I’ll take the bait. I agree that property is theft. Or at least I’m willing to grant permission to Bruenig to define words however he wishes. So what next? Property is theft, where to we go from there? That’s easy, we start thinking about what sort of theft to allow, and what sort to make illegal. Let’s ban theft that reduces aggregate utility, and legalize theft that raises aggregate utility. After all, words are just words, what matters is meaning. So here’s my suggestion:
1. We ban bad theft like burglary, slavery, and intellectual property rights for business practices.
2. We legalize good theft like the privatization of Chinese and Cambodian communes, which prevented millions from starving to death. Or stealing from the super rich with a progressive consumption tax and giving the money to low wage workers.
I wonder how Bruenig feels about theft? Does he oppose all theft, or does he agree with utilitarian libertarians like me?
PS. I forgot to mention that he completely mischaracterizes my views on wealth inequality. For instance here:
One of the more glaring versions of this creep is his armchair commenting on wealth inequality. Again and again, he has called wealth inequality data “nonsense on stilts” because it ignores the fact that wealth inequality is just a life-cycle phenomenon. This is straightforwardly false, but to know it’s false, you have to actually be familiar with the wealth data and ambitious enough to run some age-controlled wealth inequality calculations. Sumner is neither of those things.
Bruenig mischaracterizes my views in the post he links to in multiple ways. I discuss the life cycle problem in the context of income, not wealth, and clearly explain that it’s not the only factor involved in inequality, which everyone agrees is true. So what precisely is he objecting to?