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Published On: Thu, Feb 23rd, 2012

Stereotypes and Interpersonal Utility Comparisons: This is economics?

One of my criticisms of Paul Krugman is that he really has abandoned economics while claiming that he is analyzing things from an economic point of view, and he does it again in his latest NYT column. First, he engages in crude stereotypes (which is typical of the NYT writers in general), and second, he then uses what one learns on the first day in graduate microeconomics: one cannot legitimately use interpersonal utility comparisons.

A prominent economist told me once that he worked with Krugman at a previous employer before, he added, that Krugman “went insane,” and at one time the man did real economic analysis. Unfortunately, once he found that he could make a lot more money being a political operative, Krugman abandoned the fundamentals of economics such as the Law of Scarcity and the Law of Opportunity Cost and decided to push the view that governments via the printing press can do magic things and create wealth from green paper.

In the recent column, he makes the observation that long ago appeared on Lew Rockwell’s blog, that many of the “Red States” actually receive more government income transfers than do many of the “Blue States.” (Anthony Gregory had this excellent piece in 2010.) Krugman writes:

Many readers of The Times were, therefore, surprised to learn, from an excellent article published last weekend, that the regions of America most hooked on Mr. Santorum’s narcotic — the regions in which government programs account for the largest share of personal income — are precisely the regions electing those severe conservatives. Wasn’t Red America supposed to be the land of traditional values, where people don’t eat Thai food and don’t rely on handouts?

The article made its case with maps showing the distribution of dependency, but you get the same story from a more formal comparison. Aaron Carroll of Indiana University tells us that in 2010, residents of the 10 states Gallup ranks as “most conservative” received 21.2 percent of their income in government transfers, while the number for the 10 most liberal states was only 17.1 percent.

Thus, this hardly is news for libertarians even if Krugman wants us to believe that he has made a new discovery. Unfortunately, in trying to explain it, he engages in the kind of stereotyping that he would condemn in other people.

(Having gone to high school with two prominent NYT people, I can tell you that if they are typical of what inhabits the Times building, these are people who operate on the most superficial of levels, depending upon templates for opinions all the while looking down on the Great Unwashed around them. Yes, that is a stereotype, but the NYT editorial page is full of such snobbishness.)

First, Krugman blames those evil Christians:

…there is Thomas Frank’s thesis in his book “What’s the Matter With Kansas?”: working-class Americans are induced to vote against their own interests by the G.O.P.’s exploitation of social issues. And it’s true that, for example, Americans who regularly attend church are much more likely to vote Republican, at any given level of income, than those who don’t.

Of course, I had no idea that Democrats ever avoided “social issues” in their politics. Being that I am employed at a university where nearly all faculty members are liberal Democrats, I find it a bit ironic that people who are obsessed with all aspects of politicizing and codifying the Sexual Revolution would accuse others of having a fetish with “social issues.”

Then it gets even more interesting:

Still, as Columbia University’s Andrew Gelman points out, the really striking red-blue voting divide is among the affluent: High-income residents of red states are overwhelmingly Republican; high-income residents of blue states only mildly more Republican than their poorer neighbors. Like Mr. Frank, Mr. Gelman invokes social issues, but in the opposite direction. Affluent voters in the Northeast tend to be social liberals who would benefit from tax cuts but are repelled by things like the G.O.P.’s war on contraception.

Krugman, you see, believes that income levels just happen and offers no insight at all as to the difference between the wealth of places like Texas and the blue-blood wealth of the Northeast. To him, income apparently is just income.

When I was doing research for a paper that I later had published inPublic Choice, I studied different income and ethnic groups in all of the congressional districts in the USA. (I spent about eight hours a day for a month hand-loading data into a spreadsheet, which was time-consuming but ultimately enlightening about the voting patterns of people in these groups.)

I found that a lot of people in the wealthy suburbs of cities like Dallas and Houston voted Republican, while people in the wealthy suburbs of northeastern cities tended to support Democrats. However, it was not the income levels that were intriguing, but rather the fact that this was the classic confrontation of “old money” versus “new money.” The northeastern wealth tends to consist of the “old money” of bygone eras, and the “trust fund” babies, while as wealthy as the business executives in Dallas, vote heavily Democratic.

Having gone to school with “trust fund” babies, I can see the difference quite clearly between the two groups. The “trust fund” liberals were much more likely to drink heavily and have an aversion to work altogether. They also tended to look down on people from the middle class, regarding them as suckers and idiots.

The “new money” wealthy in the southern states, however, tend to be people who had begun life either being poor or middle class and who earned their wealth through their jobs. They were more likely to go to church (and when they did, they were more likely to be Baptists than Episcopalians), and they were much more likely to have come out of a public school setting than were the “trust fund” blue bloods, who went to exclusive private schools.

The other high-income people likely to vote Democratic are secular Jews, and many of them have been dominant in industries like the mass media or on Wall Street. They are likely to be strong supporters of abortion rights and gay rights, and it is understandable why they would find a home with the Democrats.

“Old money” Democrats also are the ones who are more likely to fill the ranks of environmentalists and other groups that wish to use the state to remake society in their own image. As William Tucker once wrote, these are people who have a wonderful vision for others, but don’t plan to be part of the Brave New World they are creating for those people they consider to be their inferiors.

Interestingly, a lot of entrepreneurs on the West Coast are more liberal in their social values, and are likely to support Democrats. Google is a prime example, as the vast majority of its political contributions go to Democrats. From what I can see, they support Democrats not so much because they believe in the Welfare State, but rather because they tend to be much more comfortable with the Sexual Revolution than most conservative Republicans.

As for interpersonal utility comparisons, Krugman gives us this gem:

Modern Republicans are very, very conservative; you might even (if you were Mitt Romney) say, severely conservative. Political scientists who use Congressional votes to measure such things find that the current G.O.P. majority is the most conservative since 1879, which is as far back as their estimates go.

How anyone can compare political attitudes today with those of more than a century ago, or to say that people are more “conservative” than they were in 1879 just makes no sense at all. People in 1879 would not have put up with the police state that exists today and certainly would not support how governments today confiscate much greater percentages of wealth than they did back then.

For example, New Yorkers for years resisted having police issued firearms because they feared police would act like an “occupying army,” yet today we see conservatives tending to support the police state. (For that matter, Krugman also supports police state measures in his unwavering support of the TSA and other entities, along with his belief that governments should be free to know everything about our personal finances.)

As I see things, it is impossible to compare voters today with voters of yesterday, as today’s “conservatives” would support governmental actions that even hardline statists of 1879 would have rejected. Krugman is comparing apples and oranges at best and giving political babble at worst.

Now to agree on something with Krugman. He writes:

The message I take from all this is that pundits who describe America as a fundamentally conservative country are wrong. Yes, voters sent some severe conservatives to Washington. But those voters would be both shocked and angry if such politicians actually imposed their small-government agenda.

That is correct as far as it goes, but Krugman also forgets that Ron Paul, who is the only candidate with a true “small-government agenda,” also is most feared by the Republican hierarchy. Contra Krugman, most Republicans hardly fit into a “small-government agenda” category.

Check out the “Krugman in Wonderland” posts here on DOB – click here


William L. Anderson is an author and an associate professor of economics at Frostburg State University in Maryland. He is also an adjunct scholar with the Mackinac Center for Public Policy as well as for the Ludwig von Mises Institute in Alabama.

Read more at “Krugman-in-Wonderland”

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About the Author

- William L. Anderson is an author and an associate professor of economics at Frostburg State University in Maryland. He is also an adjunct scholar with the Mackinac Center for Public Policy as well as for the Ludwig von Mises Institute in Alabama.

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