Sunday, March 12, 2006


An Economist Duel

Russell Roberts and Heather Boushey duel it out over the issue of "inequality" in the United States. It is on the Wall Street Journal Blog.

Here is one of Roberts' comments:

Russell writes: My example of the billionaire wasn't to refute the existence of inequality. It was to address your claim that we stand on the verge of a social crisis. In America, the differences between the average family and the upper crust are less palpable and less important than they are in South America or Africa or the Middle East, where the elites often do oppress the rest of society.

Are the differences that remain in America a social crisis? To answer that question, you need some idea of what causes inequality.

Starting in the early 1970s, the divorce rate exploded in America, creating an enormous increase in households headed by women and an increase in the percentage of women in the workplace. Though the gap has decreased over time, women earn less than men. So more women working means more measured inequality. Should we have made divorce more difficult or made it harder for women to work? Both would have reduced measured inequality.

Since the 1980s, immigration has increased greatly. Immigrants, when they first arrive, earn less than the Americans already here, bringing down measured average wages and increasing measured inequality. Should we ban immigration to reduce inequality measured within the borders of the U.S.?

Immigration to America is thriving because people come here poor but do not stay poor. Those people who come want a better life and they find it here. They are less concerned than you are about how much better others are doing.

I want people to get ahead. You seem concerned about people getting ahead of others. But by definition, not everyone can move ahead of everyone else into higher percentiles. That's like everyone being above average.

In recent decades, the lives of both the rich and the poor have improved. But if the rich get richer, fewer poor people can move into the upper quintiles. Do you want to keep people from getting rich in order to reduce measured inequality?

Statistics that cite how few people move from the bottom quintile into the top quintile mask the improvements in the lives of the poor I mentioned in my first post. Yes, as you point out, college is more expensive, but college enrollment is at an all-time high, reaching 38% among the college-age population in 2004. Yes, health care is more expensive, but life expectancy is at an all-time high as well. Poor people are less likely to be insured than rich people, but my guess is that poor people receive dramatically better health care today than they did 30 years ago.

The real social problems in America are barriers to getting ahead that need not be there. The biggest handicap the poor face in America is a government-run school system that does an atrocious job educating their children.

Finishing high school and better yet, finishing college are still remarkably good investments. If we want to help the poor in America, we would do well to get the government out of providing education where it has done such an abysmal job. Improving education in America by allowing more competition would go a long way toward improving the lives of the poor.

It's a thing of beauty

More on this subject.

Check out this discussion of the topic:

I dunno. I was actually a little disappointed with Russ. I think he made a good point about Heather misusing some research, but his own posts were very weak on evidence but very long on conjecture and assertion.

The entire conversation could be summed up this way:
Heather: "I have a statistic..."
Russ: "I have a problem with it..."

I think Russ is very right to point out the problems with empirical measurement (it is very difficult and we need to make sure we use our data correctly). But he needs to take it a step further and show why some of her stats (like median income in 1975 compared to today) are inappropriate and not just why they could be. In a "what-if-world" lots of things COULD be going on, but not all of them actually are.

Furthermore, when he makes claims, like the one in his last post that families from 1975 are surely doing better today, he needs to back them up with evidence. When he doesn't it makes it look like he's afraid his own data will also be less than perfect.
I know what you mean. She kept going over the statistics and he kept telling her that there were problems with this and that. His lack of empirical evidence (at least on this blog) does not take away from his argument though. He specifically points out why she can not use what she uses. While going over her flaws, he does not give statistics of his own, except on one of the later posts.

I could simply be that he felt it was an exercise in futility, since whatever measures he would give her, would not be enough (or just like handing her ammunition). He just points out the logical flaws in the inequality arguments and in the variety of attempts to define it. I thought it was a good logical retort, but it far from finishes the debate.

Besides, I think her basic “inequality” measures only serve as fodder for politicians and not as scientific measures.

On a side note, the governmental data that she cites as so important has numerous flaws of its own. I would never trust it if I didn't have to.
Well, if Russ' position was simply "inequality is difficult to measure", I would agree.

But Russ wants to go beyond this and make positve aruments about equality in America. He wants to say inequality in America is unimportant AND that the lives of the "poor" are getting better.

These are simply unfounded assertions until he backs them up with evidence. The only evidence he did provide were anecdotal impressions.

Now that isn't to say he's not right (personally, I believe the lives of the poor in America are getting better, though I'm not confident enough to say inequality doesn't matter), but without supporting evidence he doesn't have arguments--he only has "interesting fodder for cocktail conversations".
Well, that was the impression I got from the reading. He was pointing out the flaws of the data and a warning of the use of this type of data:

Attempts to alter the level of inequality as if it were the temperature in the house that can be adjusted by a thermostat are unlikely to result in the intended result of a more just society.

Additionally, he contends that unless there are some sorts of institutions systematically lead/cause this inequality, then something should be done. If there is nothing illegal going on, why does ownership of wealth or making income become illegal. He questions the pursuit of this type of readjustment.

Lastly, he keeps going back to the perspective of immigrants that would, better than most, understand the opportunities available to them and the ability to "climb the ladder" here in the United States.

And although it might be anecdotal most of the time, his logical quips reveal the fallacies inherent in these measures and the futility of forced "equality" legislation.
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