I like economics a lot. Every time a new issue of The Quarterly Journal of Economics (my favorite journal right now--AER is a strong second)comes out, I am very excited.
Yet I am a liberal. I think incentives are important (I support Welfare Reform and School Choice), but I also think that all working people should be able to live at a reasonably decent living standard (so I also support a generous EITC and minimum wage), and that we as a society as a whole should provide all manner of social insurance, including Social Security and universal health care. I therefore find myself disappointed when smart people like Kenneth Rogoff and Anne Krueger support McCain's economic policies--particularly since I took a class in graduate school from Rogoff and had the same dissertation adviser as Krueger.
But while I learned a lot from Rogoff, it struck me when I was a student that there was a fundamental difference between us (beyond the fact that he is an order of magnitude smarter than I), a difference that hit home when he lectured on his political business cycle work. While I think economics helps give us powerful insights into how humans behave, I think he believes that economics by itself explains how humans behave. And while I think that random shocks (such as being born smart, or in the United States) are at least as important as individual effort in determining our fate in life, I think he believes the converse.
We as a society do want to encourage effort, because it leaves us all better off. But as the recent natural disasters in Burma, China, and, yes, New Orleans have shown, we never will have anything like complete control of our lives. Those of us who have gotten good draws should have some empathy for those that haven't.
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This brings us back to the issue of how much our "values" are influenced by our own situation in life. These may not always be the ones we would have chosen behind a veil of ignorance. Income inequality may be a lot more tolerable to those who are in the upper portion of the distribution. One rhetorical question I ask my students when discussing equity concepts is: suppose before you were born, you didn't know whether you would be born on the rich or the poor side of the border, and God asked you whether or not you would prefer that there be a wall preventing those on the poor side from crossing over to the rich side to seek a better life, what would you answer? The idea of walling out illegal immigrants is popular among many Americans, but when the question is framed this way, they are much more likely to answer that they would not want a wall after all.
Marc, I hope you give credit to John Rawls.
This is a nice blog. I like it!
Amen. I remember being in Tijuana and thinking that, there on the street with me, were people who were at least as smart, much harder working, and with little hope of ever having as comfortable a life as I have. I had the same feeling a decade earlier in the Bahamas. Accidents of birth tend to separate outcomes in ways that are, essentially, random.
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