Matt Nolan

QOTD: John Roemer on Equality of Opportunity

/3 Comments/in , /by

Unrelated note:  I am not around too much atm, so as you may have noticed I am not replying to comments at the moment.  I intend to catch up on the comments I missed later in the week, so please still comment.  Things are a tad busy is all 😉

From the start of his book “Equality of Opportunity” comes the following quote from John Roemer.  Note that the two poles, non-discrimination and leveling the playing field, are described earlier in the book.  Also, equality of opportunity isn’t necessarily the only principle of distributive justice.  However, taking these as given we have:

Among citizens of any advanced democracy, we find individuals who hold a spectrum of views with respect to what is required for equal opportunity, from the nondiscrimination view at one pole to pervasive social provision to correct for all manner of disadvantage at the other.

Common to all these views, however, is the precept that the equal-opportunity principle, at some point, holds the individual accountable for the achievement of the advantage in question, whether that advantage be a level of educational achievement, health, employment status, income, or the economist’s utility or welfare.

Thus there is, in the notion of equality of opportunity, a “before” and an “after”: before the competition starts opportunities must be equalized, by social intervention if need be, but after it begins, individuals are on their own.  The different views of equality of opportunity can be categorized according to where they place the starting gate which separates “before” from “after”.

Read more

Matt Nolan

Quote of the Day: Kolm on inequality

/12 Comments/in , /by

One of the forefathers of modern income inequality analysis, Serge-Christophe Kolm, started one of his most famous papers (REPEC) in the following way:

Many people consider the reduction of economic inequalites as a basic aim of society. Such ideas are, however, largely nonoperational, sterile, and even meaningless, as long as what is called inequality is not stated with precision. This is so because, as well appear below, different measures of inequality give widely different, and even opposite, results. Such policy which diminishes some apparently reasonable measure increases other ones.

This is no small point.  While it is nice for us to bang on about “reducing inequalities”, it is nothing more than empty platitudes if we aren’t willing to discuss the trade-offs associated with individual policies.

Also, let’s not forget this quote:

Few concepts are as meaninglessly used as that of inequality.

But this is not because he thinks analysing issues of social justice don’t matter – in fact it is the complete opposite!  He believes that multi-dimensional ethical issues deserve careful and specific analysis, rather than being thrown into one broad, and close to meaningless, term.

Like exchange rates, productivity, GDP, and inflation, inequality is a broad macro(social/economic) term that can be used as a touch stone to go on to think about other real issues.  But it should not be allowed to become more important than these issues, and an understanding of the trade-offs that do exist when we go to make policy choices.

jamesz

QOTD: Mark Carney

/2 Comments/in /by

On being challenged over an evasive answer in a Committee hearing, Carney quips:

I didn’t get to my position by being overly precise when I didn’t need to be.

Yet bloggers spend much of their time proffering opinions on questions nobody is asking.

Matt Nolan

QOTD: Delong on targets and the ‘great stagnation’

/in , , , /by

Golden passage from Brad Delong.  For once I’m going to put up a quote and not add my thoughts – as they’d just get in the way:

The focus on real GDP growth and its possible–or likely–slowing is a setup to panic us into making policy decisions we really do not want to make. The “great stagnation” literature as it is currently constituted seems to me at least to guide our attention in the wrong direction–and to quite possibly stampede us into making policy decisions we really would not want to make if we thought more deeply and calmly. The chain of logic is that measures to reduce inequality have a cost in terms of reducing the growth rate of the economy–that the bucket of redistribution is, in the terms of Arthur Okun’s Equality and Efficiency: The Big Tradeoff, a leaky bucket–and that when growth is slower we can no longer afford to engage in redistribution. This seems to me to be the wrong way to conceptualize it: the evidence that the bucket is leaky is weak–or, rather, there are many buckets, some very leaky, some not leaky at all, some anti-leaky–and in any event whether we should tradeoff potential growth for other objectives is not something the depends on how fast growth is. Policies that make sense if underlying GDP per worker growth is 3% probably still make sense if underlying GDP per worker growth is 1%. Policies that don’t make sense if underlying GDP per worker growth is 1% probably still don’t make sense if underlying GDP per worker growth is 3%.

But my aim here is simply to lay down a marker as far as point is concerned: to enjoin you not to get stampeded into going someplace you really do not want to go.

 

Shamubeel Eaqub

Creative destruction: Discworld style

/17 Comments/in , , , /by

Ok, so I am a geek. That should come as no surprise to anyone. One of my favourite book series is Discworld by by Terry Pratchett.

The latest book, Raising Steam, has a nice description of creative destruction: Read more

Matt Nolan

Quote of the day: Uskali Maki on economics

/6 Comments/in , , , /by

From the prelude to ‘Fact and Fiction in Economics‘ comes the following gem by Maki:

“Is economics a respectful and useful reality-oriented discipline or just an intellectual game that economists play in their sandbox filled with toy models?”

Variants of these questions fly around all the time. Why are economists making unrealistic assumptions? Why won’t they just assage to “common sense” about the situation? Why are they making the ‘wrong’ choice in some trade-off between looking at the real world and narrative and/or mathmatical beauty?

These questions sound appealing, but in many ways they are often misspecified – not pointless, but without enough content to actually be answerable. As Maki says:

Read more