Matt Nolan

Will Wilkinson on discussing inequality with those who won’t define it

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I really like this rant by Will Wilkinson, it reminds me of the sort of thing I wish I could write when I’m annoyed.

I’ll be honest, a lot of people out there talking about “let’s tackle inequality” aren’t actually interested in social justice, policy, the poor, or anything that matters – they are interested in looking cool to their friends and fitting into their “in-group”.  Running into these people and trying to discuss policy trade-offs is about as much fun as when, after breaking my leg, my teacher at primary school kept lifting me up to try to get me to stand because “it didn’t look broken” (Note:  She was a lovely teacher, it was just a particularly sore experience).  Here is the opener of his piece:

I’m tired of arguing about inequality. It’s frustrating. It’s unproductive. Nobody is really interested in the analytical arbitrariness and moral insidiousness of measuring intra-national economic inequality. Nobody is really interested in the fact that multiple mechanisms–some good, same bad, some neutral–can produce the same level of measured inequality, rendering the level of inequality, taken in isolation, completely useless as a barometer of social or economic justice. Nobody really cares. Because many different combinations of causes can produce the same level of inequality, it’s not so clear that high inequality, as such, can reliably cause anything. The consequences of inequality depend on the mechanisms driving inequality. Nobody cares.

Now, there is some disagreement from me here. Read more

Matt Nolan

Policy and heterogeneity: A point

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Via Geoff Simmons came this interesting post about new health policy in New Zealand.  This isn’t my area of expertise, but I found the post really insightful – I’d definitely recommend it as a read.

However, a small part of the post did spark my imagination, and will lead me to write on a loosely related, but important issue.

In the post, when talking about potential issues with the new scheme, the author says:

We hear echoes of the Bolger-led Government adoption of social capital in the late 1990s. Remember that? It placed social problems and their solution-generation with ‘communities’. There is a worthy role for this type of policy in a wider package, but it can also be used as a distancing policy to shield a government and the state from its responsibilities (e.g. on welfare benefits), deflecting the blame and responsibility for solutions to the level of communities.

This is a fair point, words like “community” and “opportunity” are often used by politicians on the right to avoid action.  However, politicians on the left are just as eager to push inappropriate policy at a national level by dismissing these claims.  In truth, the relative importance of “community”/”opportunity” as opposed to nationwide determination of policy depends on our assumption about how different people are – to whip out some jargon, we need an idea about how heterogeneous individuals are with regards to the issue we are looking at.

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Matt Nolan

What does it mean to have “many models”

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Dani Rodrik has been arguing that the mistake many economists, and non-economists, make is to look for “one right model” – when in truth economics is a form of craft, where you have a multitude of models and need to know what is appropriate in different circumstances (ht Economist’s View).

To anyone who has studied microeconomics, or applied microeconomics, to any level this wouldn’t be surprising.  Furthermore, it would be seen as the common view of many economists.  This may seem incredibly weird to non-economists – especially since many economists and non-economists share the view that there is an ‘objective reality’, and therefore this single reality seems like it should be described by one ‘super model’.  But let me explain.

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Matt Nolan

Absolute minimums and relative poverty

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Recently we discussed the idea of the equity-efficiency trade-off in very broad terms.  As we noted, in order to discuss such a concept we need to think about a series of issues about groups.  Some of these are easier to conceptualise than others – one of the simplest (albeit not simple) is poverty.

Now anti-poverty policy has had a long, and varying, history.  And as this video from Marginal Revolution discusses, many of the principles that we now argue about society has been debating for a long time.

Furthermore sometimes people talk as if poverty has been conquered – and in an “absolute poverty sense” the data seems to back this.

However, although poverty is an “absolute” concept, it isn’t so much about absolute income – as absolute deprivation in terms of capabilities (which includes the ability to function within society, and self-worth in a community).

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Matt Nolan

Productivity Commission on NZ vs Aussie productivity

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Recently I’ve been talking a bundle about inequality in incomes, and fitting it within an idea of “equity”.  However, as we’ve chatted about, policy choices often involve conceptualising an equity vs efficiency trade-off.  A fundamental part of how we understand where we are in relation to this trade-off, especially with reference to “efficiency”, comes from thinking about productivity.

With this in mind, the Productivity Commission has been thinking about New Zealand’s productivity performance.  And given that along many characteristics New Zealand and Australia are similar they have decided that looking into the productivity gap between these countries helps us to understand this issue.  This led them to release a working paper titled “Investigating New Zealand-Australia productivity differences:  New comparisons at industry level” on their main site (links can be found here).

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Matt Nolan

National chooses “sexy” movie protectionism

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Bah, I come back from a conference to this.  Film subsides/protectionism is back in vogue I see.  Not happy with just spending other people’s money to get to go to functions about the new Avatar movies, our politicians have decided to increase the amount of other people’s money they will give to all people who decide they feel like filming here.

From Dragoliz’s deviantart

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