Yglesias vs Yglesias

by on July 22, 2009 at 7:10 am in Uncategorized | Permalink

Matt Yglesias May 30, 09:

This goes back to a point I was making a while ago about how dangerous it is that the public discourse is so dominated by low-quality freelance philosophy done by people with PhDs in economics. I’m fairly certain that if Mankiw were to walk over to Emerson Hall he could find some folks (possibly T.M. Scanlon who I know sometimes reads this blog) who could explain to him that there’s little grounds for the belief that a commitment to utilitarianism is the main justification for redistributive taxation.

Matt Yglesias July 20, 09:

…the point here is that the marginal utility of money income declines as it grows. This is also a strong argument for believing that redistributing money from wealthy or high-income individuals to the poor or to public services will be welfare-enhancing.

1 ogmb July 22, 2009 at 7:28 am

The existence of people with econ PhD’s who dominate the public discourse with low-quality freelance philosophy doesn’t imply that everyone with a PhD in econ dominates the public discourse with low-quality freelance philosophy, but nice try.

2 MostlyAPragmatist July 22, 2009 at 7:39 am

One of the techniques that infuriates me about Mankiw is when he links to banal conservative opinions without comment or when he excerpts and juxtaposes two articles that are supposed to disagree with each other, but don’t really–again without comment. In this post, you are doing the same thing.

If you think there’s a contradiction here, state it explicitly so at least I can disagree with you! I think you are claiming that Yglesias’ observation that redistributive taxation is well-fare enhancing contradicts his statement that it is not the main reason for redistributive taxation. I don’t see an inherent contradiction there.

But maybe that’s not your point. I can’t tell, because you haven’t stated what your point is.

3 C July 22, 2009 at 8:03 am

Andrew and Mostly, what are the chances that Yglesias thought all along that utilitarian criteria provide “strong” justification for redistribution but decided to ding Mankiw because it’s not the “main” justification? What are the chances that Yglesias is just confused?

4 beamish July 22, 2009 at 8:20 am

I don’t really want to defend Yglesias’s initial post, since I’m not sure he understood Mankiw’s framework, but there’s really no contradiction between thinking that the declining marginal utility of money gives a good argument for progressive taxation and rejecting utilitarianism. Utilitarianism is the doctrine that an action is right if and only if it maximizes utility. This gives rise to various unsavory consequences, such as that we ought to hang an innocent person to stop a riot, that we ought to chop up the homeless for their organs, and (Mankiw’s example) we ought to tax the tall more than the short.

But one can deny that we ought to maximize utility even when it requires doing unjust deeds, and still believe that maximizing utility can give a good reason to do something. It’s not true that you ought to kill someone in order to please your spouse, but it is true that pleasing your spouse can give you a good reason to do something. So, we might think (i think) that we shouldn’t levy unjust taxes, but, given that side constraint, we should set up a taxation system that maximizes utility.

So, there shouldn’t be higher taxes on Asian-Americans or the tall, even if that would maximize utility, but, given an array of permissible taxes, we should choose the one that maximizes utility. Since progressive taxation is morally permissible and maximizes utility, we ought to adopt it. That is, just because sometimes it’s impermissible to levy a tax in order to maximize utility, doesn’t mean it’s always impermissible, or even never a good reason.

Why is it unjust to tax the tall more than the short? I’m not sure, but I think it is, and the intuition that it is is what made Mankiw’s argument run. I think it’s clear that what makes it unjust isn’t that it maximizes utility (if it does).

5 ogmb July 22, 2009 at 8:23 am

What are the chances that Yglesias is just confused?

Smaller than the chances that you are. The first statement says that those who advocate redistribution are not principally basing their argument on a utility calculus. The second statement claims that there is a utility-based argument to be made in favor of redistribution. There is no disconnect or contradiction between those statements.

6 Ryan July 22, 2009 at 8:42 am

Yglesias, along with many of the above comments, reflect a fallacy Ayn Rand called “context-dropping.”

While “MostlyAPragmatist” is correct that, in absense of any context whatsoever, there is no inherent contradiction between Yglesias’ two points, we must keep in mind that Mankiw and people like Mankiw believe that a commitment to utilitarianism is the primary argument that obliterates any call for redistributive taxation.

Hence we see that in Yglesias’ first point, he sidesteps the argument that destroys is point of view by claiming that utilitarianism is beside the point. His second post/point is divorced from any of Mankiw’s direct arguments against redistributive taxation, and so Yglesias no longer drops the context. He is then free to use utilitarian arguments IN FAVOR of redistributive taxation.

That’s where the contradiction is.

See, the problem with philosophy these days (and economics, for that matter) is that people are better technicians than they are theoreticians. You can’t pick and choose when utilitarianism applies to your arguments unless the name of your game is to simply divorce your current thoughts from your previous and future thoughts, remain totally inconsistent, and make whatever point serves your mental whims TODAY.

Rand, von Mises, et al were always disturbed by this kind of reasoning, but until Rand gave “context-dropping” a name, we were ill-equipped to identify the fallacy and explain what was wrong with it. Many of us see the problem, but still can’t explain it, even though we know at a gut level that it’s all wrong. Maybe that’s why Tabarrok didn’t include further commentary?

7 ogmb July 22, 2009 at 9:00 am

Oh Good Lord.

Mankiw: “The moral and political philosophy used to justify such income redistribution is most often a form of Utilitarianism.”
Yglesias: “Not so.”

8 Michael Foody July 22, 2009 at 9:25 am

I vote for no contridiction. First there is obviously no contridiction. Secondly I think the utilitarian argument Yglesias invokes is a different one from the arguments Mankiw targeted. Third there were plenty of practical considerations which made Mankiw’s paper less than persuasive.

9 Sam July 22, 2009 at 9:45 am

There is a contradiction if Yglesias’ “main justification” for redistributive taxation is that it is welfare-enhancing. Is it his main justification? Or secondary to his philosophical justifications? If so, I would like to hear them.

10 Tom July 22, 2009 at 10:07 am

Ryan has it right.
“and make whatever point serves your mental whims TODAY.” is the only way to see no contradiction.

RE:do you have the feeling that “Yglesias is a fine, intellectually precise fellow, but I would hate to have a beer with him”?

No, I’d have a beer with him, but I do wish he were more intellectually precise.

11 Simon July 22, 2009 at 10:23 am

I took the point to be that Yglesias complains about economists doing philosophy, but does economics with a philosophy BA.

12 Anonymous July 22, 2009 at 10:29 am

I really have to agree with ogmb, there’s no contradiction. Most people don’t justify progressive taxation with utiltiarianism, but he personally does.

I’m totally a Utilitarian too and I don’t see the big deal people make of interpersonal comparisons of utility. People are just receptacles of experience, so you can turn interpersonal comparison into intrapersonal comparisons of utility just by imagining what it would be like if one person experienced both sides of the picture, perhaps by having their memory selectively wiped or something. Practically how to compare utility you have to make rough estimates and rules of thumb and you can’t ever arrive at a precise calculation, but I don’t think that’s a problem. If something is good, it’s good even if we don’t know whether it’s good or not. We can’t abandon the truth just because it’s hard.

13 Andy July 22, 2009 at 10:44 am

Where is the evidence that the marginal utility of money declines? Human behavior isn’t very consistent with this view. We’d expect billionaires to not at all care about losing $1000, but that’s not really what happens.

14 Rob July 22, 2009 at 10:53 am

Why is this so hard for some of you – just click the links.

Mankiw said: if utilitarianism justifies redistribution, then utilitarianism justifies a height tax.

Yglesias responds: utilitarianism is not the justification for redistribution, thus a height tax is not justified

Yglesias later says: utilitarianism justifies redistribution

I agree with the above commentator who presumes that Yglesias just doesn’t understand what he’s talking about

15 C July 22, 2009 at 10:58 am

I remain fascinated that many of you wish to rescue Yglesias’s logic at the expense of his character. I had assumed that Yglesias was a nice guy who wouldn’t call someone a dangerous moral philosopher for being factually incorrect about the frequency of use of some argument, but might say something like that if he had a substantial problem with someone’s actual philosophical position. Several people are insisting that I assumed too much: Yglesias, they say, is actually a logically consistent but extremely prickly guy. Good show.

16 Mike July 22, 2009 at 11:13 am

Andy, see prospect theory.

The psychological difference between $1,001,000 and $1,000,000 is smaller than the difference between $0 and $1,000.

17 Mike July 22, 2009 at 11:21 am

Also, does anyone not think that Mankiw’s point about imposing a height tax is a bit of a cheap shot in and of itself? I might have this wrong, but he seems to dismiss all of utilitarian thinking with an absurd extrapolation.

Does he really think arguments that call upon utilitarian principles shouldn’t be taken seriously unless the arguer also believes in height taxes? Most likely not, he’s just being smug.

Difference is, political bloggers have a lot more smugness leeways than Harvard professors.

18 C July 22, 2009 at 11:32 am

“Does he really think arguments that call upon utilitarian principles shouldn’t be taken seriously unless the arguer also believes in height taxes?”

Sure, else the support for redistribution starts to look like “because we can” instead of “because there is a defensible philosophical principle that says we should”.

19 Lance July 22, 2009 at 12:00 pm

I see this mainly as Yglesias engaging in the opposite of what he accuses Mankiw of: a low-grade version of something that is not his specialty.

Mankiw was engaging in “low-grade” philosophic-waxing, and he has a PhD in economics.

Whilst, Yglesias is engaging in “low-grade” economic analysis (saying diminishing marginal utility of income supports redistribution policy as welfare maximizing), when he has an AB in Philosophy, as opposed to an economics degree.

Didn’t Leon Walras posit a similar claim?

20 josh July 22, 2009 at 12:17 pm

“Only on the surface”

Ha!

21 mulp July 22, 2009 at 12:32 pm

“This is also a strong argument for believing that redistributing money from wealthy or high-income individuals to the poor or to public services will be welfare-enhancing.”

I agree with this after finding that tax cuts cut employment growth and that tax hikes increase employment growth with high correlation.

Or to put it another way, if cutting taxes increase the general welfare as economists use the term, the present economy would be booming because we have had the longest stream of unending tax cuts since the 1920s.

And the tax cuts in the past decade have consistently favored the wealthy, all with the excuse that letting the wealthy keep their money would result in them investing wisely in things that would be more productive for everyone than government would.

The end of the Hoover administration marked the era of tax hikes that grew the economy and employment until the tax cuts before the economy had resumed growth after demobilization. The tax cuts in the 50s were to adjust for inflation which was being regulated with a rather heavy Fed and fiscal policy. There were no real tax cuts in the 60s – the JFK tax cut that LBJ signed was actually a tax hike because it changed rates and reduced deductions. And LBJ hiked taxes in 1968 leading to the booming 1969 economy.

Reagan pushed through a tax cut at at time when growth was slow and caused a steep fall in real employment, that was ended when he started agreeing to tax hikes and signed tax hike after tax hike. Then a period of tax cuts led to the recession which Bush then ended with tax hikes, and that Clinton extended with his tax hike. leading to the highest rate of employment since at least WWII.

So, unless you consider the economy today better than it was eight years ago, doing as Adam Smith advised, taxing the wealthy is good for the general welfare of all, including the wealthy.

22 sherparick July 22, 2009 at 12:58 pm

Not very nice Tyler, taking Matt out of context from what was a tongue in cheek post.

Remember “Do unto others as you would have them do unto you.” And I assume you prefer not to have your quotes twisted out context.

“Height Taxes and Utilitarianism

“How should a height tax treat the super-duper tall? (wikimedia)
Contra Alex Tabarrok’s cute post here there’s nothing contradictory between pointing out that Greg Mankiw is wrong to imply that utilitarianism-based arguments are the only (or even the primary) arguments available for redistributive taxation and also to point out that considerations related to the declining marginal utility of money do, in fact, militate in favor of redistributive taxation.

For example “Allah forbids it† is not the only reason one might decline an offer of whiskey at breakfast. Indeed, “Allah forbids it† is, for most people, not going to be an important consideration. But of course many people are observant Muslims. And insofar as you are going to be an observant Muslim, Islam will count as a good reason to avoid whiskey at breakfast.”

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25 Finnsense July 22, 2009 at 2:41 pm

I don’t think Yglesias is contradicting himself technically but it’s fair enough to raise an eyebrow. If he chides Mankiw for arguments that show utilitarianism is not a good foundation for supporting redistribution, it does rather take the sting out of his arguments if he himself uses utilitarian bases. Clearly, whatever most people take the best arguement for redistribution to be, Yglesias himself rather likes the utilitarian one – so he needs to respond to Mankiw’s argument – which isn’t actually very good. Economics Phds really should stick to economics.

26 sidereal July 22, 2009 at 3:01 pm

“What I’m hearing from his defenders”

What I’m hearing is a bunch of chimps throwing poo at each other.

Go take a walk outside with your kids and/or parents. It will enhance your well-being 10 times as much as this conversation.

27 dm July 22, 2009 at 3:14 pm

I don’t think I agree that Yglesias is carrying out half-baked economic analysis. He is trying to prioritize what utilities to care about, which in much more philosophy than economics. Clearly, if we let economists decide how to run things, we would have taxes on tall people. To an economist, this is the only end of the utilitarian argument, as it maximizes the sum of utility.

A philosopher’s perspective would avoid this by making some sort of fairness argument, one presumes. I’m on his side that Mankiw is stepping outside his territory with the height-tax nonsense.

28 Eric July 22, 2009 at 3:45 pm

It is not inconsistent to disagree with someone (1) because you disagree with their assumptions and (2) to point out flaws in their arguments given their assumptions.

29 Steve Verdon July 22, 2009 at 4:40 pm

I love all the Yglesias defenders their argument boils down to:

There is no tension, because while Yglesias is making a completely utilitarian argument in favor of income redistribution, that isn’t really why he believes in income redistribution. What are his reasons? Well…we…uhhh….hmmm…oh look something shiny.

Fail.

30 Tom July 22, 2009 at 6:18 pm

Shorter Matt Yglesias: Context only matters when I tell you it does. There, perfect consistency.

Alternatively, Yglesias thinks what he thinks he thinks and rationalizes as he goes along. He thinks a height tax is a bad idea? Fine, there are reasons for redistribution other than utilitarianism. He approves progressive taxation? It’s utility-enhancing! It’s the sort of muddle headedness that makes me think back, unhappily, to my college days.

31 Yancey Ward July 22, 2009 at 11:59 pm

Yglesias suffers from a common problem- having never thought particularly deeply about what and why he believes in certain philosophies. Such people find it impossible to be internally consistent in their arguments because they have never taken the time, or even seen the need, to determine whether or not their beliefs are consistent between themselves. Such people never question themselves, and will bob and weave when questioned by others about those beliefs.

32 Andrew July 23, 2009 at 6:26 am

Perhaps everyone is either utilitarian or stupid, but one has to define what is meant by the term.

For example, if you forcibly take money from the rich and give it to the poor you change the system for those funds from a rich customer to poor customers. We get more Big Macs and fewer boats. More poor people are happy, in the short-run, but fewer people have a business relationship with the only people who can teach them something about accumulating wealth over a lifetime. A year from now, they will still be eating Big Macs, assuming the rich guys are still working, and getting the same utility over a lunch-time.

33 a July 23, 2009 at 7:35 am

C’mon guys, the main philosophical arguments for redistribution are based on notions of fairness, justice, and equality. Utilitarianism also provides some justification, but it’s not, except of course if you’re a utilitarian (and almost by definition, this is an if and only if), the main philosophical one.

Here’s what Mankiw says in his original post: “The moral and political philosophy used to justify such income redistribution is most often a form of Utilitarianism. For example, the work on optimal tax theory by Emmanuel Saez, the most recent winner of the John Bates Clark award, is essentially Utilitarian in its approach.” I think, if one wants to be charitable to Mankiw, that there is an ellipsis here and Mankiw really means “the moral and political philosophy used *by economists* to justify such income redistribution.” Otherwise it just makes no sense to use, as an example of a justifier of income redistribution, Saez over, say (to pick a random example), Rawls. Economists here can best determine whether Mankiw’s assertion, as I’ve rewritten it, is correct. You can take the ellipsis as symbolic of how Mankiw’s unconscious works, or you can take it as a simple mistake. But I don’t think you can defend it as written, and the poster trying to play “Gotcha” with Yglesias, is IMHO in error.

“I’m totally a Utilitarian too and I don’t see the big deal people make of interpersonal comparisons of utility. People are just receptacles of experience, so you can turn interpersonal comparison into intrapersonal comparisons of utility just by imagining what it would be like if one person experienced both sides of the picture, perhaps by having their memory selectively wiped or something.”

Selective memory wiping, no big deal? C’mon, that’s a pretty big counterfactual you would need to base a theory on – so big, that I doubt it turns out to be very useful.

34 Brandon Berg July 23, 2009 at 12:59 pm

I think it’s dangerous that public discourse is so dominated by journalists with little knowledge of either economics or philosophy.

35 Patrick C July 23, 2009 at 10:58 pm

Redistributive taxation is about maximizing justice not maximizing utility.

In fact, unless you adhere to a consequential theory of justice, like Rawl’s “A Theory of Justice”, all this crap about returns on capital is inconsequential.(excuse the pun).

I’m pretty certain that Yglesias would agree with me.

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Yglesias first says that utilitarianism isn’t the main justification for redistributive taxation. The second post says that there’s a strong case that income distribution is welfare enhancing…I don’t see the contradiction, unless there’s some evidence somewhere that Yglesias sees the welfare-enhancing argument as the best argument for redistribution. Maybe he does think that, I don’t read his blog.

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