Tuesday, January 28, 2014

Policies are for identifying outsiders

A paper by Jeremy Greenwood, Nezih Guner, Georgi Kocharkov, and Cezar Santos outlines the overwhelming importance of assortive mating and female labor participation as causes of measured income inequality. (HT: Tyler Cowen).  Comparing 2005 to 1960, they find that a very large cause of inequality is the trend for women to become more educated and to enter the labor force, and to marry men who have similar earning power.  Essentially, they find that if you eliminate these cultural changes, the measured increases in inequality would disappear.

I have previously posted about how a large amount of household income variance is related to the number of earners in the household, and how much of the shift in inequality and median income levels is a result of having more one-earner and zero-earner households.

But, I think that the paper cited above is a great example to use to look at the implicit function of political policies.  Here are two lists of possible solutions to the inequality issue:

List A:
More progressive taxation
Wage controls
Restrictions and mandates on employers

List B:
Restrictions on mate selection
Forced birth control or adoption for unmarried parents
Return to 1960 level of female education
Return to 1960 level of female labor force participation
Restrictions on number of earners per household
Forced marriages

I suspect that you have a sour reaction to list B.  I know I do.  I think we could all agree, though, that the List B solutions would, for the most part, have a very direct and potent effect on measured inequality.  We could argue that some of those policies might not work so well in practice.  But, some of them, if they were really implemented, would clearly improve measured household inequality.

Your reaction to List A is probably very positive compared to List B.  These are commonly proposed solutions, and, in fact, they are solutions that have been implemented, at some scale.  We could also argue that these policies don't usually work as well in practice as they do in theory, but a reasonable argument can be made that they can be somewhat effective at creating marginal improvements in measured inequality.

If we only had one goal, though - to reduce inequality - and no set of principles limiting our solutions, List B would be overwhelmingly more direct and effective.

A Presumption of Rights

Bryan Caplan recently commented on the tendency for public policy to be implemented indirectly.  His conclusion is that citizens would see the moral trade-offs of policies more clearly if they were imposed directly, so policies are implemented through businesses and other focused agencies in order to obfuscate the moral and financial costs to the average citizen.

But, I think we need to take this a step farther than Bryan did.  My sour reaction to List B could be self-interested, but I feel just as strongly about opposing the specific limits on female personal development as I do about the other List B proposals.  I don't think self-interest is as operative here as is simply a basic notion of inalienable rights.  You just can't prevent people from becoming educated or marrying whom they choose.  Full stop.

So, there are two overriding influences on our policy constraints.  Regarding List B, there is no plausible social outcome that would be bad enough for us to implement these policies.  Regarding List A, there are a range of social outcomes that might plausibly lead to support for these proposals.  In fact, going back to the paper's starting point in 1960, considering the complexity of social development, we could expect with some certainty that between then and now, some list of problems would arise that would lead reasonable people to call for these policies as a solution.

We can see that the inevitability of List A comes not from its effectiveness, but from its philosophical availability.  Support for these policies is not a product of a search for solutions so much as it is an identification of social agents who can be reliably coerced without triggering a universal response of outrage.  It's an identification of non-affiliates - factional outsiders - a stand against bourgeois dignity.  This posture is a deep and foundational human tendency.

In Practice

I will close with a specific example of this process at work.  Last year, the New Mexico Supreme Court ruled that a photography business could be forced to photograph a gay wedding.  I would love to live in a country where discrimination of all types wasn't common.  But, note what solutions to this problem are not on the table.  You can still refuse to hire a gay photographer.  You can refuse to work for a gay photographer.  It seems obvious to me that more damage is done because of those two perfectly legal sources of discrimination than because gay couples might have a few less photographers to choose from when they marry.

Note also, that the photographer argued her case based on free speech.  The right of freedom of association, if you happen to be engaged in lowly, filthy commerce, is so out of favor in the Land of the Free, that it would damage your case to assert it.

That ruling was explicitly about the expansion of civil rights.  But, more accurately, it was about precisely the opposite.

(edit:  Please read the above paragraph carefully.  I do not support bigotry.  My point is that there are large areas in our personal lives where we demand the right to be bigots.  We don't say this explicitly.  But, in marriage, for instance, while a consensus of the population is against blatantly bigoted controls on marriage, we all take for granted that our own personal decisions can be as idiosyncratic and prejudiced as we like.  We would stand for no less.  I am attempting to make this distinction between our personal expectations and the controls we accept on commercial decisions explicit, so that we can think through the prejudices embedded in our own principles.)

Pride and Prejudice

Jane Austen didn't become famous by writing novels about aspirational young women winning the right to entrust their business ventures to the workers their hearts chose.  But talk about assortive mating!  Imagine the emotional reaction you would have to a Jane Austen story if the characters were as prejudiced with the hiring practices of their estates as they were in choosing their mates.  That sort of discrimination would have been a black mark, and it would lessen our fondness for the characters.  But, how we delight when they marry well.

Outrage and coercion are not about solutions.  They are about identifying outsiders and activities that we exempt from the protection of our principles.

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