John David Duke Jr. wrote an article saying that scientists are merely dispassionate fact miners:
Should it ever be discovered that a Scientist, especially a Social Scientist, has lost his dispassion, or has even willfully departed from the Scientific Method, anywhere along the process, beginning with descending into the Data mine, extracting Facts, examining the Facts, and then snapping the Facts to The Truth, then let the dispassionate peers of that Scientist immediately banish him from Science
Although Duke couches his argument in absolutes, I interpret his article as advocating a set of cultural norms that scientists should adhere to, rather than a description of how things are. What should grown up scientists tell baby scientists about their role in society? Should they waste time talking about rhetoric, or biases, or hermeneutics? Hell no. Those things will just confuse the poor dears and subvert their unadulterated pursuit of Truth.
The culture of Science is a fragile flower. Humans are not inherently scientifically minded. The beast within thrashes against the Chains of Reason. We always want to form groups of like minded individuals, defer to authority, play status games, tout our own importance and greatness. We are humans, but we are playing at being more, and in order to achieve it, we need to tell ourselves lies about what we are doing. The Noble Lie of Science is that there are no Noble Lies. That there is Truth and there is Ignorance and you’re either on one side or the other. That’s why the “banish him from Science” line is so important. Ironically, positing the existence of dangerous questions is the most dangerous question of all. As a wise man once said, blessed is the mind too small for doubt.
There is a lot of misinformation and unrealistic expectations about basic incomes/negative income taxes/universal incomes/guaranteed national incomes (I will call it basic income in this article, but all the terms above are equivalent). Basic income is not magical, nor is it radically different than other welfare programs.
How is it different from normal welfare?
The fundamental difference between a basic income and normal welfare is that basic income does not try to control the decisions of the poor. Basic income is not conditional. It does not stop if a recipient does not look for a job, is not disabled, gets a part time job, decides to spend the day writing, painting, or getting drunk. It consists of cash, allowing the poor to spend money how they see fit rather than trying to force them to buy particular things, such as healthy food or crappy apartments. Instead of getting food stamps, the equivalent money could be spent on food, or anything else the poor person wants.
It’s no surprise that basic incomes are popular among libertarians and left wing liberals. Libertarians don’t want the government to control anyone’s behavior, and left wing liberals don’t view poverty as being primarily a problem of poor people’s behavior.
The disadvantage is that the poor make politically unpopular and often short-sighted decisions. The poor drink more, have more children out of wedlock, are more likely to be unemployed, drop out of high school, take payday loans, buy lotto tickets, and a host of other behaviors that are not prudent. Causality runs both ways: poverty causes bad decisions and bad decisions cause poverty.
What welfare program places no behavioral requirements whatsoever on its recipients? Social Security. It’s the exception that proves the rule. People don’t think of senior citizens as inherently immoral and they are high status. Furthermore, they aren’t expected to be productive, so their immoral behavior doesn’t affect society as much. Thus, Social Security recipients are not drug tested, they don’t have behavioral requirements (such as job searching), and they have no restrictions placed on them as to what they are allowed to spend the money on.
I investigated the cost of basic income and find that it would be affordable (but very expensive) at around $500 per person per month. That’s about half the poverty line, so it wouldn’t end poverty, but it would eliminate severe poverty and deprivation. Yes, it’s an expensive program. Yes, it would require the government to cut other spending, especially other welfare spending. It would not totally destroy the budget or have any other apocalyptic effects.
Health care is the wild card of American poverty. America has a uniquely bad health care system that is neither free market nor government. It’s got the worst traits of both systems, with uneven coverage, high prices, lack of information, lack of incentives, lack of competition, slowed innovation (relative to free market), and financial traps for the poor. Basic income would not address this problem. No plausible level of basic income would allow people to afford decent health care without major reforms or some other medical welfare program.
Many articles argue that a basic income would dramatically reduce employment, but a basic income wouldn’t necessarily discourage working any more than our current system. There are two factors to consider: substitution and an income effects.
As people get richer, they usually chose to work less. For example, if someone won the lottery, it wouldn’t be unreasonable for them to quit their jobs. However, basic income would probably be at or below the poverty line, so such a life would be quite austere.
The people leaving the labor force for such a lifestyle would be those with very low earnings potential or a high disutility of work. For society, having a large number of people who don’t earn much quit the labor force does not reduce total production or tax revenue very much. At higher incomes, quitting to take a basic income would not be an attractive proposition.
A lump sum transfer does not affect marginal incentives, however the basic income needs to be paid for by taxation. There’s no way a society can give everyone a net amount of money, since that money has to come from somewhere. Therefore, on average, just like any other welfare system, the amount of money received will be slightly negative (because of costs of redistribution/administration). In practice, those who are poorer than average will get money, and those who are richer than average will pay money. It is likely that if a basic income were enacted, the government wouldn’t transfer income to everyone, but instead would transfer it only to people whose income fell below a certain point. Otherwise, you’d just wind up giving people money and taking it right back. As Social Security is a sort of “basic income for the old”, they would probably not get any additional money.
Under our current tax/welfare system, the poor often face higher marginal tax rates than the rich. Let’s say there’s a welfare program that gives you a benefit worth $2000, but you have to earn less than $10,000 per year to get it. If you make $9999, you have a huge incentive not to work a few extra hours and lose that benefit. If you add up all benefits like this across federal and local programs, there are some areas where the poor are marginally taxed at almost 100% of additional income.
Even if a basic income were taxed back at a high rate, as long as it replaced welfare programs with higher marginal tax rates, the net effect would be to lower marginal tax rates on the poor and get rid of poverty traps.
An action is moral if there are no better alternatives to it.
Economists espouse the idea of opportunity cost. Life consists of choices. Those choics are between various options, and picking one means not picking all the others. The best option not chosen is the opportunity cost. For moral decisions, there is also an opportunity cost.
Unfortunately, it is all too common to encounter a non-profit organization that does not use its donations wisely. Giving to them anyway is considered morally good by most systems of moral philosophy. However, economists might argue that you are failing to get the most charitable value for your money and thus it is actually wrong to give to those sorts of organizations.
Economists are often accused of playing devil’s advocate. That’s somewhat correct and somewhat incorrect. Economists have the ability to look at difficult situations critically and really ask what the best option is. Non-economists try to opt out of the situation entirely, but that’s not a real option. As the great philosopher Geddy Lee once said “If you chose not to decide, you still have made a choice.” Outlawing difficult choices simply means people in those situations have to pick one option instead of getting to chose themselves.
Examples of subjects where economist morality is better than common sense morality:
Child labor laws
Job creation on wasteful projects/broken windows – Ironically justified by economics
1. What is economics? Brief. Explain why it’s important, key questions asked, method of thinking.
2. Economic history – agriculture, industrial revolution, population + wealth increases of the 20th century, Gapminder. Show the incredible journey humanity has had in the last 200 years.
3. Human Action, Choice, opportunity cost, decision making
4. Supply and demand:
How are prices determined
How competition works
Prices as information and incentives
5. Market coordination – Technology as specialization, Markets in Everything, Markets as evolution
6. Unintended consequences – broken window, economics in one lesson
Price controls, the effect of regulation on markets
7. Political economy – People have incentives to reduce supply to increase profits. Petition of the candlemakers, other political stories. Bootleggers and Baptists
8. Basics of game theory – PD, repeated games, signalling, commitment, reputation, etc
9. Basics of industrial organization
Chapters 1-3 TWoN
Economics in One Lesson
Petition of the Candlemakers, What is Seen and what is not seen
Cartoon Introduction to Economics, Yoram Bauman
Economic Naturalist, Robert Frank
The Use of Knowledge in Society
Theory of the Firm, Problem of Social Costs, Coase