Social Planners Do Not Exist

Enrico Spolaore on his friend, co-author, and mentor Alberto Alesina:

I first met Alberto thirty years ago at Harvard, where he had received his Ph.D. in Economics in 1986, and had returned as faculty, after a couple of years at Carnegie-Mellon. He was already deservedly famous. In 1988, The Economist had presciently picked him as one of the decade’s eight best young economists, as he was transforming the way we approach macroeconomics and economic policy by explicitly bringing politics into the analysis. In his influential contribution to the NBER Macroeconomics Annual 1988, he had forcefully stated that “social planners do not exist.” Economists should not just assume that governments would implement optimal policies (presumably following the economists’ own  recommendations). Instead, we should strive to understand actual policies as resulting from the strategic interactions of partisan politicians with each other and with the public, and often leading to socially inefficient outcomes.

Exactly right. Alesina was one of the most important scholars extending and integrating public choice, especially to macroeconomic questions.

Comments

'Instead, we should strive to understand actual policies as resulting from the strategic interactions of partisan politicians with each other and with the public, and often leading to socially inefficient outcomes.' An economist like Dean Baker, then.

Except for the public choice description.

Easily understood in the US context.

Our public choice since the founding has been the tension between the House and Senate. Almost all of public choice can be boiled down to that interaction. And it is a real market, an over the counter market, true, but a real market anyway.

My only suggestion is to make it a real market. The way to eliminate pork barrels it to price it via a market between Senate and House for each budget period. The two bodies agree on some large amount to be passed our to state capitals in equal amounts. Do this and everything improves across the board.

I can tell right away that public choice adherents are stuck in their priors. If they had no priors they would have discovered this obvious fact in history a long time ago.

I can tell from reading synopsis of public choice then none of the adherents have figured our this tension between House and Senate, even though it has been the major theme since the founding.

Is that the original divide? Note that this same Alberto Alesina was lead author on Why Doesn’t the United States Have
a European-Style Welfare State? (PDF)

Interesting to see how that paper has aged.

European tax systems are now less progressive than in the US. Social spending is now substantially larger than it was in the US as % of GDP

Also props for immediate Culture War trolling

While I despise the poster he does effectively demonstrate how all issues have become culture war issues. He is also an effective demonstration of the tribal nature of the culture war.

I wish we could have an ignore feature on the site. But in the end that just shows a lack of discipline on my part.

Maybe you should both wrap your heads around why MR actually likes Alberto Alesina.

And as an aside, I don't despise anyone. I hope everybody will find humility and wisdom in the end.

...you are just as much of a 'culture warrior' as he is.

In this crowd I'm a "culture warrior" if I think it's okay for a federal government to own a post office.

Never about 'Public Choice'.
Mis-named title, should be: "Social Planners Do Not Exist, they're just called Social Influencers" The People don't want choice they want to be on the winning side.

This is performance art by Alex, whose contribution to the current farce has been a series of plans that have no chance of being implemented by any political entity, anywhere.

Well that is mean and stupid of you to say.

Yet the performance art description is still accurate.

It's Over cannot read the news or between the lines. What do you think Operation Warp Speed is?

What do you think Operation Warp Speed is? - A joke that some people are taking seriously. Live long and prosper.

"Economists should not just assume that governments would implement optimal policies (presumably following the economists’ own recommendations)"

Yesterday Los Angeles reported its worst day ever for new COVID cases.

I think it's fair to say no one actually wanted that. But as your piece says, we don't always get optimal policy.

BTW, for stark contrast, New Zealand Now Has Just 1 Active COVID-19 Case.

I'm sure it is easier, when you are isolated at the bottom of the world, but I think we should take on doing things that are hard .. and right.

From the link - Los Angeles County officials Saturday reported the largest one day total of coronavirus cases since the pandemic began, confirming another 2,112 cases of COVID-19 and 48 additional deaths, bringing the county's totals to 53,651 cases and 2,338 fatalities.

Officials said the large number was due in part to a backlog of test results being processed and also a new lab beginning to report results.

You are saying you like the spin more than the numbers?

I bet you aren't one to always make your bed with "officials say .."

The article explicitly lays out why it is the largest single one day total. Which is not the same as saying it is an accurate depiction of new infections on that day. This is one of the difficulties in dealing with the numbers, as if a single day total is particularly meaningful in charting the course of the pandemic. Just assigning the backlog to the correct day would likely remove the most total cases in one day peak, for example.

America is clearly unable to deal with the virus, but this is not a sterling example of things getting dramatically worse in LA right now.

You are bad at critical reading. To help you in the future, this is the sentence:

"Officials said the large number was due in part to a backlog of test results being processed and also a new lab beginning to report results."

A lot of potential CYA and wiggle room in that highlighted phrase.

And anyway, it doesn't matter at all to the 7 day rolling average, where the rubber meets the road.

Not only potential CYA and wiggle room, but actual factual information.

You seem to think you are arguing with someone who id defending the idiotic response of the U.S. to the pandemic, where the disease is clearly beyond the ability of American government to stop from spreading. Of course it is obvious that the U.S. will face serious problems with transmission for the foreseeable future.

And that a country like Greece will remain as unappealing as necessary to keep Americans from visiting in the near to middle term.

I bet you love ads that tell you they can achieve "as much as" on anything.

By the way, as an independent data set, down here in Orange County we are also seeing trends higher as of May 30.

Note that OC hospitalizations trend higher. That's bad.

Note that Orange County and state political leaders go on about how good of a job they are doing. Meanwhile, they do not demand that civil service workers wear the masks they have been given. They continue to support the false information that masks don't protect the people while demanding that healthcare workers use masks.

All the countries that have control over this virus use masks on a massive scale.

Orange County, California, has always had an interesting poltics.

The paper of record at the time, The OC Register, opposed fluoride in drinking water. Too communist.

Current Mood: (a) sad for America, (b) over-paying for things on Amazon so that I don't have to go to the store.

And shoot, ordering from Amazon is not without risk for others.

https://slashdot.org/story/20/05/30/0217211/eight-amazon-workers-have-now-died-from-covid-19

Amazon kills its workers! Let the riots begin.

Not really. What I meant was, did these workers die because of Amazon, or did they happen to work at Amazon (by their own choice, I assume), and they died (of, or with, covid, supposedly)?

The policies that have came out of Congress during the pandemic cannot be described as "optimal policies". They came out of the Senate, with the House a minor participant, policies that seem designed to produce the worst possible outcome, hastily conceived and adopted in a panic driven Senate in fear of Republicans losing both the Senate and the White House as a result of the health and economic crisis unfolding. One, the Medical Leave Act, which would saddle employers with up to 14 weeks of paid leave, served as an incentive for employers to furlough employees rather than run the risk of being saddled with extended paid leave just as revenues were collapsing due to the approaching lockdown. The other policy, PPP loans to employers intended to induce employers to keep employees on the payroll, is a ticking time bomb, the provision requiring employers to spend the loan proceeds within 60 days in order for the "loan" to be forgiven a virtual cliff, rapidly approaching. Is it any wonder that the president was so hell-bent on re-opening the economy sooner than advised, the casualties from falling over the cliff likely dooming his re-election chances. Alesina is best known for supporting austerity during the great recession, but austerity was only half of Alesina's concern, the other half excessive, and rising, inequality, the debt being incurred all but eliminating the possibility of any policies that might mitigate inequality. Then there's the Fed, whose extraordinary monetary policies may have saved stock prices from collapse, but without any plan to deal with unemployment at depression levels, all but guaranteeing a continuing rise in inequality and social and economic instability, making the Fed's victory lap all the more unseemly, especially during the past few days as America burns. Politics and economics cannot be separated. And bad politics makes for bad economic policies.

@It's Over

+1

"Alesina was one of the most important scholars..." --- which means he wrote unneeded papers for other unnecessay 'scholars' to read ... with no effect or improvement of the real world.

Take for instance the boom and bust cycle in California. If public choice were real we would see a bunch of good research on why California is boom or bust, while Texas is not. We would have research on why New York always recovers faster in recession.

The only person who ever looked closely at this topic was Jerry Brown. I find zero work from real economists on this, almost all of them stymied by priors.

Menzie has started to get some good ideas, he is looking at coherent and incoherent conditions between the state. But I expect him to stop working when his priors are violated. I expect no better from any other economists. Yet state scale issues are and have been the fundamental drivers of public choice for 250 years.

I did find some good work on referendums by a social scientist who measured the create of learning for referendum. But regular public choice economists tend to dismiss that.

As far as information overload, that is mainly a result of scale issues again,. In a large states we are subject to large bureaucracies, not in small states. But in the end, the bicameral nature of the Congress causes us to align our priors on a single two party line.

I*t is not just the social planners are are wrong, the public choice theorists also treat the states like 50 little Hoovers. That is horribly wrong, and once the economists understands the state skew problem they get real smart real fast, but they violate their prior4s.

Please tell me, who is Menzie?

I might add that public choice will not work in the USA, as a theory. It has one flaw, the founders created the instability to keep public choice theorists and other Godots out of government. They didn't want a bunch of flat earthers doing social planning, which was the intent of public choice theory, no less than the other side and their flat earthers. No center, no public choice theory, no social planners of any type. So they split the center, forcing the whole to always be on the move from policy to policy. And it is easy to fix, a little Coase, a little read of the Constitution, a true understanding of pork and state scale, and good teachers of US history, of which we have few.

But, even so, pork works, it keeps the wheels turning and the best we can do is make it a bit more efficient.

"Economists should not just assume that governments would implement optimal policies (presumably following the economists’ own recommendations). Instead, we should strive to understand actual policies as resulting from the strategic interactions of partisan politicians with each other and with the public, and often leading to socially inefficient outcomes."

Yet, Brazil was able to implement what many experts describe as a quasi-optimal strategy to deal with the coronavirus. Maybe we should demand more from our so-called leaders.

"Economists should not just assume that governments would implement optimal policies (presumably following the economists’ own recommendations). Instead, we should strive to understand actual policies as resulting from the strategic interactions of partisan politicians with each other and with the public, and often leading to socially inefficient outcomes."

PS. Except for regulators. Regulators only interact with themselves.

It's interesting how Alex's interests seem to have changed.

https://marginalrevolution.com/marginalrevolution/2020/04/when-will-the-riots-begin.html/protest

Doonesbury today is going off on the lockdown protestors. Remarkably bad timing.

who have no experience with our government agencies ignore
"The Federal Bureaucracy: The Fourth Branch of Government"
A short but informative introduction to the subject, for example,

"What is more remarkable about this growing "fourth-branch of government" is its ability to avoid being held accountable to the American voter as opposed to the elected positions held within Congress and the presidency."

https://www.theodysseyonline.com/federal-bureaucracy-fourth-branch-government

I'm struggling with the premise that any elected official is being held accountable.

I went over to the site, it's some sort of weird combination of clickbait and trash. I am clearly not the target demo.

its possible that social planners didn't exist in 1988 but in 2020 there
are bigly bucketfuls of sociologists writing speech codes for the rest of us.
sociologists writing speech codes is and always will be the sine qua non of social planning

"Economists should not just assume that governments would implement optimal policies (presumably following the economists’ own recommendations)."

I'm not aware of many economist making that assumption about politicians. Does that imply that they should not make recommendations for optimal or at least ameliorative policies?

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