April 13, 2017

jk Changes his mind

Bernie 2020! No, no, no. But I am going to abandon my tepid support for "mincome" or Basic Guaranteed Income.

Because I am a well-read, independent thinker Tyler Cowen presents a compelling case. His latest "Conversations with Tyler" actually sees him interviewed by Patrick Collison, CEO of Stripe. Collision agreed to do the show only if he were the interviewer and Tyler the interviewee. He lacks Cowen's pacing skills but presents some very good questions.

I recommend the entire interview. There is some very fair support for and criticism of President Trump, a legitimate concern that Facebook is Pareto-positive but might prevent the next Led Zeppelin (~1:10:00), a serious and jk affirming evaluation of the longevity of two party system in America (1:26:30). And he is asked about the guaranteed income. Two times.

Cowen -- like me -- is captivated by the economic efficiency of the guaranteed income. But he tells a tale of the dark days of 2008. The best thing for the country, says Cowen, would have been to pay down people's mortgages. "All Economists knew this." And yet it was politically unfeasible. Because the neighbor who was paying his mortgage would not sit tight while the neighbor who was more prodigal ("The recklessness of their own ways destroyed them all" -- Homer) was bailed out. People may have hated bailing out the banks, but that was politically superior to bailing out foolish consumers.

Cowen says it might be a great idea in Canada or New Zealand. But the welfare/relief policy is "an advertisement for the immigrants we are recruiting." And we "need to hang out the sign that says 'Life is Hard.'" That dynamism is more important to our future than avoiding distortions in markets or foolish marginal incentives.

I don't think I was ever an enthusiastic supporter, but the efficiency, transparency, and lack of distortion intrigued me. This is a devastating blow that aligns with the freedom and rights-based arguments I received from my sagacious blog brothers and sisters.

Economics and Markets Posted by John Kranz at April 13, 2017 3:57 PM

Glad to hear it. I gave a fair look too and concluded the perverse incentive was just too strong.

Instead of "mincome" how about we discuss "maxtax?"

Posted by: johngalt at April 13, 2017 10:31 PM

JK, can you unzip this statement for me? I can't tell if this is a positive thing or not, and I'm curious about FB....

Facebook is Pareto-positive

Posted by: nanobrewer at April 14, 2017 8:29 AM

@jg -- ilikeit. @nb -- As always, be cautious about using my terminology on the final exam. I'm saying that it adds more value in total than it subtracts. (Like I blather on about foreign trade; it makes "us all" wealthier, but if Uncle Grievous loses his jib at the Carrier plant...)

In another "Conversations with Tyler (Rabbi Wolpe perhaps? That is an awesome one.) the question comes up "If you had a time machine, would you take antidepressants to Vincent Van Gogh?"

Cowen admits there is some chance that would have extended his life and we'd have a dozen more masterpieces. But I think we all feel, down deep, that he'd get a job at the Post Office, live a long and happy life -- and we'd have zero Van Gogh masterpieces. I have fought this with Clapton's "Layla" and Coleridge's "Kubla Khan."

Giving the weird kids who would start and support "the next Led Zeppelin" the social outlets of Facebook concerns Cowen. (Cowen is a Twitter Guy, he studies Facebook as an outsider.)

There -- did I make it worse enough for ya?

Posted by: jk at April 14, 2017 10:23 AM

Think about it: Why does government tax individuals without limit? Why is there a "minimum alternative tax" but no "maximum you've-done-enough-for-your-country tax?" The relationship between the current income tax system and "from each according to his ability" is too cozy for a country as great as the USA.

Posted by: johngalt at April 14, 2017 11:16 AM | What do you think? [4]