The inconsistencies between Clausing 1.0 and Clausing 2.0 are indicative of an economics profession that has eschewed its own humble insights.
In my last post, I discussed why one should care about economic mobility for the poor rather than income equality. The basic point is that we should care how well the poor are doing rather than their relative position compared to the rich. If we can increase the wealth of the poor by $100, we should do so even if that involves giving the rich an extra $200.
So why do some people on the left focus on income equality rather than mobility for the poor. One possibility is that focusing on income equality allows them to argue directly for the result that they like – equality. If they had to discuss whether certain institutions, such as free market institutions, helped the poor, it would at best make their arguments messier and at worst sometimes support free markets. It is safer and simpler to argue for income equality and implicitly assume that money provided to the rich is always taken out of the pockets of the poor.
But this explanation simply moves us back a step: why don’t these people on the left care enough about the poor to focus on their situation, even at the risk of allowing these “argument costs.” There are several possibilities.
First, some on the left might simply dislike free market institutions. Therefore, they don’t want to acknowledge that these institutions might help the poor. And it is easier to do this by focusing on equality, which avoids the issue of helping the poor through inequality. Thus, consciously or subconsciously, the left may dislike free market institutions more than care about helping the poor.
This may sound pretty unattractive, but it is a common enough aspect of political arguments. A similar charge is levelled against the right by libertarian Ronald Bailey. He suggests that because people on the right fear the government regulation that climate change would justify, they don’t accept the science on climate change. My point is not to endorse Bailey’s charge, but to show that this possible mistake of the left involves a familiar psychological tendency.
Second, some on the left might believe that free market institutions do not actually work to improve the condition of the poor and therefore can be ignored by a focus on economic equality. Put differently, since inequality cannot help the poor, one should just focus on equality. While this may explain why the left focus on inequality, it does not justify it. It would be better if the left just made the longer argument that economic mobility for the poor is the relevant value and free markets don’t serve that value.
Finally, some on the left might simply be attracted to the ideal of equality. There is something intuitively appealing about the idea, even if one doesn’t’ think it withstands scrutiny. Thus, they favor the ideal of equality more than improving the condition of the poor. And, of course, a combination of these explanations may be at work.
Of course, even if the left did focus on the condition of the poor, that would not necessarily change their end position. John Rawls’s difference principle, for example, famously argues that inequalities that benefit the rich can be justified if they benefit the poor. But Rawls hardly supports free market institutions. The main way he avoids them is by arguing that free market institutions do not actually help the poor. But, of course, Rawls was a philosopher who had no special expertise about such matters. The late economist James Buchanan made the opposite claim. Of course, economists are all over the map on this issue.