
When Value Judgments Masquerade as Science - donohoe
http://economix.blogs.nytimes.com/2010/08/27/when-value-judgments-masquerade-as-science/?src=twr
======
Retric
This blogger _appears to have_ an extremely superficial understanding of
economics. Economists have no problems talking about economic efficiency when
a few benefit at the cost of many. Corruption and Monopoly's are both
economically harmful for similar reasons and both been studied for a long
time.

Edit: Based on his credentials I suspect he is simply assuming his audience is
both ignorant and biased.

~~~
MichaelSalib
_Economists have no problems talking about economic efficiency when a few
benefit at the cost of many._

I'm not sure you got his point. If the government imposed a tax that cost 1
million people $1K each and gave Bill Gates $1 billion, that policy would have
neutral efficiency. In terms of efficiency, there is no rational basis for
objecting to that policy. So economists who justify their normative claims by
talking about efficiency do have a serious problem talking about policies
whereby a few benefit at the cost of many when those policies have small or
zero deadweight losses.

~~~
Retric
That's a straw man argument.

If you tax 1 million people for $1K each and gave Bill Gates $1 _.5_ billion
or a $1 Billion -> _$1.5K_ per person then both of those increase efficiency.

But you say "how can taxes do that?" And the answer is normally taxes don't
result in wealth creation, however policy's can both create wealth and destroy
it. Breaking up AT&T dramatically lowered most people’s phone bills in the US.
For a direct contrast you can look at Mexico where high phone bills directly
resulted in one of the largest fortunes in the world and a huge loss to the
Mexican economy at the same time.

~~~
Confusion

      That's a straw man argument.
    

The argument doesn't exaggerate anything. It strictly adheres to the Kaldor-
Hicks criterion and shows that it can be used to justify all kinds of immoral
policies because, as the OT states, it doesn't take into account 'who Jack and
Jill are'.

If you use the Kaldor-Hicks criterion to claim something is _good_ , you are
implicitly assuming the good of the collective is the good of all and imbuing
your argument with morals. As MichaelSalib's example shows, those morals can
have consequences many others consider immoral, which is exactly what the OT
argues.

~~~
Retric
All taxes have dead weight costs. Thus, suggesting something which is
objectionable on efficiency grounds is ok on efficiency grounds is wrong.

More directly to the point, saying X does not cause an objection means little.
Perpetual motion machines don't break the laws of gravity that does not mean
you can build one.

And even more directly, saying X is independent of Y so we should do X because
of Y is irrational.

PS: I have 4k karma to burn, if you want to down mod me on ideological grounds
feel free. However, if you really believe I am wrong please try and create a
rational argument as to why.

~~~
ynniv
_if you really believe I am wrong please try and create a rational argument as
to why_

Your comments in this thread have been haphazard and difficult to follow. You
are correct that taxes have deadweight, but no one is arguing this point and
it has little relevance to the overall discussion. You started off by
attacking the author without providing a compelling argument of his
ineptitude. Maybe you are tired or stressed? I suspect that you are being
downmodded for being noisy and shallow, not wrong.

~~~
Retric
I say: "Economists have no problems talking about economic efficiency when a
few benefit at the cost of many." However, for clarity _many_ means society at
large including them.

Vs his argument: _I distinguished in last week’s post between changes in
public policies (reallocations of economic welfare) that make some people feel
better off and none feel worse off and those that make some people feel better
off but others feel worse off._ _The first type of policy can unambiguously be
said to enhance social welfare. But no such claim can be made for the second_

He ignores magnitude of change. His actual argument is if any one person is
worse off then it's not an economic argument. So, if one person lost 1$ and 1
billion people gained 1 billion dollars then according to his argument it's
outside the scope of economics.

And yes that is his argument. He disagrees with: _the Kaldor-Hicks criterion
and the efficiency criterion amount to the same thing. When Jack gains $10 and
Jill loses $5, social gains increase by $5, so the policy is a good one. When
Jack gains $10 and Jill loses $15, there is a deadweight loss of $5, so the
policy is bad_ Because: _Evidently, on the Kaldor-Hicks criterion one need not
know who Jack and Jill are, nor anything about their economic circumstances._

Edit: There is actually a lot of research into both corruption and monopoly's
and the negative effects both have on an economy. Farm subsidies are another
example of a harmful policy that benefits a few people which has been well
researched.

PS: Yea, I am tired, but I this guy is so out there I can't help but wonder if
it's some sort of parody that I am missing.

~~~
silverlake
> this guy is so out there I can't help but wonder if it's some sort of parody
> that I am missing.

I think you wildly misunderstood Reinhardt's simplification to express a
simple opinion. Unfortunately, your writing is very unclear and difficult to
follow.

Since I'm waiting for the delivery guy to bring dinner, I'll add my dim
understanding of Reinhardt's post. Landsburg writes, "When Jack gains $10 and
Jill loses $5, social gains increase by $5, so the policy is a good one."
Reinhardt disagree that this is _always_ "good". Society must make a value
judgement about Jill's loses: if it's her last $5, is the policy still good?
And if Jack is a billionaire, would that $10 gain offset Jill's suffering?

He's not saying that economists _never_ think about this problem. He's saying
that economists often will make a policy recommendation (lower tax on capital,
higher tax on income) that presumably raises social welfare, while skipping
over the ethical issues (higher tax on the poor, lower tax on the rich).

We want to pump $10 billion into the economy now. Should we give tax rebates
as a % of taxes paid (more to rich, less to poor)? Or should we cut the
payroll tax by a few thousand dollars (same for everyone, but more meaningful
for poor)? The result is the same ($10B), but Reinhardt says there's a value
judgement in the choice. This issue pops up everywhere, particularly in health
care.

