They believe that raising tax rates and a large increase in state direction of economic activity will reduce rent-seeking and cronyism. I assert the opposite, which is the rather traditional conclusion of the vast literature on public choice as well as obvious experience. If I were trying to be polite, I might say it’s an interesting new theory to be debated and investigated. But I’m not, and it isn’t. It is the cream on the cake of amateur ad-hoc assertions of cause-and-effect relationships in human affairs, changing the sign of everything we know.
There are some good thoughts in the piece, but there is too much ranting and too much asymmetric insight (believing that you know why your opponents hold their views better than they do themselves). When you engage in asymmetric insight, you are encroaching on Krugman’s turf. Best to stay out of there.
I think that the phenomenon of inequality is a poster child for what Jim Manzi calls “causal density.” Picture a causal relationship diagram with inequality in a circle in the center and arrows leading in and out from other circles.
There would be many arrows pointing to the inequality circle, representing possible causes. Some of them are bad things, like effective rent-seeking by wealthy people. Some of them are good things, like globalization, which reduces global inequality even as it increases inequality within counties.
There would be many arrows pointing out of the circle, representing possible effects. Some of them are bad things, like greater concentration of political power. Some of them are good things, like more saving. Note that I talk of these as possible effects, not necessarily actual effects.
Going directly at inequality by confiscatory taxation means you give up on trying to differentiate good from bad and just hope that you do more good than harm. In the context of causal density, this strikes me as a case of blind hope. For purposes of public policy, I think it is more likely better to focus on promoting the good things and thwarting the bad things. And if you say that you are not sure how to promote the good things and thwart the bad things, then I fail to see how you can be confident that confiscatory taxation will be beneficial.
Cochrane’s blog post is adapted from remarks he gave at a conference in honor of Gary Becker. John Taylor summarizes the conference.
Yeah, I think 90% of the essay is spot on, but that said, there are plenty of progressives out there who are legitimately concerned that the returns to skilled labor are falling, thanks to technological innovation, and that therefore the amount of human capital required to attain stable, long-term employment that would facilitate family formation is increasing and thus moving further out of reach for more and more people.
I rather agree that this is a problem, actually, but I suspect that a lot of activists of various stripes seize on this and turn it into “inequality” more generally so that it can be better used as a club for leftists to bludgeon anyone they don’t like with. In other words, Cochrane is assigning cynical motives to everyone on the left when that clearly isn’t the case. That said, the same people who have legitimate concerns about economic opportunity will also invoke the inequality rhetoric to cynically bash the Koch Brothers in other contexts, too.
I agree with most of your post, although I don’t understand why you say that Cochrane’s piece has too much ranting. To be sure, Cochrane’s style of prose is different from yours, and specifically I would say that he writes with more passion. But what’s wrong with that? You compare him to Krugman, and I agree that the comparison is valid in some respects. But I don’t find anything wrong with Krugman’s style either, even though I often disagree with his perspective
Two (or is it three) very brilliant comments in this short post:
“there is too much ranting and too much asymmetric insight (believing that you know why your opponents hold their views better than they do themselves)”
If only all of the hot air wasted on “asymmetric insight” could be channeled productively…
“Going directly at inequality by confiscatory taxation means you give up on trying to differentiate good from bad and just hope that you do more good than harm…
…And if you say that you are not sure how to promote the good things and thwart the bad things, then I fail to see how you can be confident that confiscatory taxation will be beneficial.”
This is exactly what those of us who are on the left and concerned about inequality should be thinking about.