Michael’s commentary on "sorting the issues" is
representative of what I consider to be a positive and productive approach to
our activity. Specifically:
MICHAEL: Responding to the discussion over the weekend, it seems we have a
couple of
stumbling points but also perhaps some possible avenues of
progress:
KEITH: Yes, except that I would be less cautious in my optimism.
MICHAEL: So we don't have a very good way to measure General Welfare - this
is probably at the root of many of the disagreements between economists,
political scientists, sociologists, lawyers and ideologues. Is it possible to
develop agreed-upon measures amongst ourselves?
KEITH: I am confident that we can, but I believe we can go further than that.
I believe we can craft a concept of what we want to achieve in a way that
captures the interest of a significant political constituency. Michael has
demonstrated this in his commentary and in the supporting attachment. My
reaction to Alan’s "sorting of the issues" is not intended to be
a negative evaluation on the potential contribution of economics to the
ownership campaign. The intent instead is to discourage two pernicious patterns
of thought which are often encountered. One of them goes like this:
"Economists have endorsed my policy proposal. Since economics is the
science of improving material welfare, my proposal must have the power and
reliability equivalent of a Saturn rocket, and any government which resists it
is the enemy of truth, light and humanity." The other is more like this:
"Economists have dumped on my proposal, and I can’t understand their
reasoning. Therefore economics must be a crock, and we need a new
paradigm–a wholesale reconstruction of economic theory built around my
vision of social process and my policy proposal." Both of these attitudes,
in my opinion, are quite profoundly wrong.
MICHAEL ON SHANN (Paraphrasing by me): If investors have a free choice in
selecting Shann’s time limited approach to tax-supported share ownership,
then the point of contention with Kelso seems to disappear. It must be a fair
market exchange and the proposition reduces to a matter of putting the policy in
place.
KEITH: If I have interpreted this with reasonable accuracy, it is fully
consistent with political-economic orthodoxy and a scrupulous economist would be
bound to acknowledge it as legitimate–assuming that the policy was
democratically enacted.
MICHAEL: The question then segues into the issue of whether broadening
capital
ownership makes sense from a general welfare maximizing point of view
(which
of course depends on how we measure general welfare) and ultimately
from a
political/social policy POV.
KEITH: The near impossibility of establishing an improvement in general
welfare means that we must rely on making a case for the policy proposal that
falls somewhere short of "scientific truth" or "revelation from
God". We are left with ordinary rational discourse, supported by whatever
technical knowledge, data or statistical research tools we are able to bring to
bear in testing our conjectures and resolving our disagreements. Thus I come to
substantial agreement with Michael’s observation of a week or two ago,
that the distinction I made between economists and non-economists doesn’t
really exist. Not all the way, however, for I frequently encounter people who
refuse to accept economic reasoning as ordinary rational discourse--with a
little bit of extra attention paid to particular themes. If there be persons who
believe that economists can’t be engaged in rational discussion because
they have the "‘wrong paradigm" then I think the distinction
between economists and non-economists is still a live one.
MICHAEL: ...[I]f we want to judge policy (or general welfare) by what we have
created with
democratic governments in the 20th century then income security
should be a large measure of it. (I've attached a short essay addressing this
perspective.) Basically, if we look at US Federal budget expenditures by
function we see that... almost 75% of spending is on social insurance and income
security programs. The remaining 25% is devoted to national military security.
This suggests that modern democratic govts can be better characterized as
national social insurance pools - something I call the Insurance State.
Now, is economic security better provided for by national redistributive
pools or micro-based asset ownership and diversification? Probably a mix of
both, as they are complements. This perspective ties the micro-based ownership
issue to the macro-policy agenda. If we're going to spend all our public monies
on income security, why not do it most effectively? Also, the concern... that
capital ownership would promote a large group of coupon-clipping
drones
ignores the fact (subjective judgment?) that it is relative wealth
that matters and that most
people would need and want the dual incomes from
productive capital and labor to maintain their relative economic status. They
are now just more secure...
KEITH: Good arguments all, and important for establishing a political
constituency for broadened capital ownership. Not "scientific proof"
of increased general welfare, however, but that is neither possible nor required
in making a case for the ethics of ownership.
Keith
Wilde
Canada Pension Plan