‘Tis the season of gift-giving—and of mainstream economists demonstrating that they don’t understand the gift.
Their argument (made by, among others, Joel Waldfogel) is that purchasing gifts for others represents an inefficient transaction because the giver can’t possibly know the preferences of the recipient. Better to give them money, argues the neoclassical economist, and let them buy their own presents. What Wadfogel and other neoclassical economists don’t understand is the ethical moment of the gift, which is a product of the uncertainty created by the reciprocity associated with the gift. More generally, they miss the important ethical moments of economic theory itself, the idea that, because every theory of exchange is necessarily indeterminate, ethical decisions need to be made about how to carry out the analysis.
The gift is just one among many different examples of how ethical moments—and therefore politics—arise in the midst of the Second Great Depression.
There is, of course, the example of Ebenezer Scrooge [ht: ja], who is not only a miserly consumer and a harsh employer but also an abusive “man of business.”
Scrooge wrapped himself in the comforting rhetoric of “man of business” as a self-justification for his actions. A lot of other misanthropes and predators over time have used “man of business” as justification for their actions, so the acid in the term stings.
We also have the example of corporations, which can be occupied in the name of democracy.
In one important sense, the workers inside every corporation already occupy it. They are the majority inside every corporation, while the board of directors comprises one small minority and the major shareholders another. If the workers occupied the corporation in the different sense of democratizing it, they would transform corporate capitalist enterprises into democratic, workers’ self-directed enterprises.
Faculty members can seize the opportunity and rediscover the ethics of addressing important social issues from their students.
Faculty need to listen to young people in order to try to understand the problems they face and how, as academics, they might be unknowingly complicit in reproducing such problems. They also need to begin a conversation with young people and among other faculty about how they can become a force for democratic change.
Ron Paul has crossed a different ethical line in the name of politics.
The white supremacists, survivalists and anti-Zionists who have rallied behind his candidacy have not exactly been warmly welcomed. “I wouldn’t be happy with that,” Mr. Paul said in an interview Friday when asked about getting help from volunteers with anti-Jewish or antiblack views.
But he did not disavow their support. “If they want to endorse me, they’re endorsing what I do or say — it has nothing to do with endorsing what they say,” said Mr. Paul, who is now running strong in Iowa for the Republican nomination.
Some of the worst economic ideas ever, which were gifts to the 1 percent masquerading as sound economic analysis, gained support in 2011.
At the top of the list for sheer scandalous insensitivity are Herman Cain’s and New Gingrich’s tax plans for America. Cain and Gingrich are both flat tax advocates. . .
Cain’s plan might take in as much money as is now taken in by the federal government. But Gingrich’s plan wins the gold medal: his plan is both regressive and a gigantic revenue loser. His flat tax is 15 percent on incomes, with plenty of deductions like the one for mortgage interest still intact. He would eliminate taxes on capital gains and dividends. Those who earn more than $1 million would make out like bandits, saving an average of more than $600,000 a year, while those earning $50,000 a year would save about $1,000. Meanwhile, the government would forego about $1 trillion in annual revenues by 2015.
An argument can be made for a progressive tax structure not only on the basis of fairness but also efficiency.
Requiring the rich to pay a larger share allows us to have more goods and services than we would have with a more equal tax structure – we can make everyone better off – and this improves economic efficiency.
The fact that there is no one-to-one relationship between inequality and growth does not suggest, at least on my view, that “inequality is the result of the institutional and political structure, not the dynamics of the economy.”
Finally, all it takes is one sentence to debunk the Great Vacation narrative of unemployment.
If the labor demand curve slopes down, then a fall in labor supply should be accompanied by an increase in wages; since wages fell or stagnated in the Great Recession and have grown only slowly ever since, unemployment is not being caused by a decrease in labor supply.
Mainstream economists may think they’re offering a gift to the world but it has been destroyed by a taking: the punishments meted out by more than 4 years of the Second Great Depression.