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The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

Brief Note on Larry Bartels



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Larry Bartels has responded to Will Wilkinson’s remarks on Unequal Democracy, and I found myself simultaneously surprised, impressed, and disappointed by Bartels’s post. I was surprised and impressed by his remarks on the public ignorance and its implications, and I was disappointed by his brief discussion of policy at the end of the post:

Wilkinson complains that I offer “surprisingly little discussion of the way specific policy initiatives might help or harm the poor and middle classes.” I agree that “we need policies that will actually work”–and that affluent voters (and politicians!) may be “more interested in signaling concern for the welfare of the poor … than in actually getting down to the business of finding out what would really improve it.” But alas, I am not a policy analyst, and determining what policies will actually work is not my comparative advantage.

This is admirably humble of Bartels, but he continues:

I chose the specific policies I focused on–the Bush tax cuts, estate tax repeal, and the minimum wage–in part because their implications for “the welfare of the poor” seem comparatively straightforward. Armies of economists have spent decades studying the effects of minimum wage laws. My reading of the evidence suggests that, for politically relevant wage levels, the negative effects on employment are small and the positive effects on the incomes of the working poor are substantial. Of course, the work I cited to that effect by David Card and Alan Krueger and David Lee may be unpersuasive to Wilkinson; but in that case, how likely is it that “some evidence” of my own would convince him “that the minimum wage actually helps”?

The debate has moved on since Card and Krueger, as I noted a year ago. Bartels is essentially throwing up his hands at the unfolding debate, on the implicit assumption that Will and others like him can’t be convinced. I can’t speak for Will, but the evidence as I understand it suggests that increases in the minimum wage can prove far more harmful to workers on the margins of the economic mainstream than, say, wage subsidies. 

 

The economic literature on the effects of taxes is equally voluminous, and here too I have had to leave the heavy lifting to others. In any case, not even enthusiastic proponents of estate tax repeal pretend that it would bolster the well-being of the poor; rather, they argue that restricting the liberty of rich kids to inherit their parents’ millions would be fundamentally unjust.

Of course, I agree with Wilkinson that much government spending does little or nothing specifically for poor people. But would a trillion dollars in tax revenue really help disadvantaged families in Chicago and Miami? In a country where “fiscal responsibility” means paying for new nutrition programs by cutting the budget for food stamps, I’ll go with “yes.”

This raises many questions. Consider the sharp variation in the cost-effectiveness of public spending across the advanced market democracies and the efficiency impact of the estate tax as opposed to ridding the tax code of various tax credits that are skewed towards affluent households. Reforming public sector compensation schemes and work rules might significantly improve public sector productivity, effectively raising revenue that can be devoted to new nutrition programs. Eliminating the state and local tax deduction and reforming the mortgage interest tax credit would enhance efficiency and raise vastly more revenue than any viable estate tax. I’d love to know why these approaches are so rarely discussed. One wonders if celebrated political scientist Larry Bartels can help us answer this question!



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