Paul Krugman offers an actually interesting correction to my Appalachia report: Whereas I had argued that the declining economy of Owsley County, Ky., has resulted in high unemployment, welfare dependency, and lost population, Professor Krugman points out that what really has happened is that the declining economy of Owsley County, Ky., has resulted in high unemployment, welfare dependency, and lost population. Given that Professor Krugman and I hold irreconcilably opposed worldviews, one of us has to be wrong, and I am man enough to admit that it’s me.
That being said, my views and those of the recipient of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel are perhaps not as far removed from one another as it seems. Professor Krugman writes:
Oh, and about the soda: things like that will happen when you try to provide aid in kind to very poor people. Give an only moderately poor person food stamps, and she’ll probably be willing to use all of it on food. Give a very poor person, with hardly any other source of income, food stamps and she’ll try to convert part of it into cash to be spent on other things. This doesn’t say that they’re getting too much help; it just says that they’re pretty desperate across the board, not just in their food budget.
Of the many useful services that Professor Krugman provides, explaining to me that which I just saw with my own eyes is surely the most valuable. As I have written before, even if we take into account the fact that the entire socioeconomic spectrum is thickly sprinkled with people who are not especially bright or notably responsible, most poor people are probably in a better position to judge for themselves whether they need an extra $1 in food or an extra $1 in gas or an extra $1 applied to their utility or insurance bills than is a remote bureaucracy. Jonah makes a similar point in his argument for creating an opt-in UBI as an alternative to the conventional welfare package.
Where I part company with Professor Krugman is in his understanding of why poor people are poor.
The problem isn’t that we’re becoming a nation of takers; it’s the fact that we’re becoming a nation that doesn’t offer enough economic opportunity to the bottom half, or maybe even the bottom 80 percent, of its citizens.
Professor Krugman and those who share his orientation see the bottom half, and maybe even the bottom 80 percent, of citizens as passive participants in economic life, not people who do things but people to whom things are done, the direct object in Lenin’s summary of politics: “Who? Whom?” And from the point of view of the policymaking class — not just the progressive perches at Princeton but the policymaking class in general — it is easy to see the great majority of the American public as something like dogs exhibiting various degrees of ruliness while waiting for table scraps. People cannot be expected to live. It is up to “the nation” to “offer” them life.
For those of Professor Krugman’s persuasion, that usually means taking wealth from politically disfavored holders of it and transferring it to the politically favored, with the permanent class of professional welfare administrators charging a transaction fee in the process, a portion of which is laundered through their unions into campaign contributions, virtually all of which go to Democrats. That may sound cynical, but those are the mechanics of the process.
In the case of Owsley County, Ky., the sum of federal direct payments to individuals and grants amounts to an average of just over $23,000 per household. That is, for comparison, substantially more than the median household income of $19,624. Even with the considerable resources commanded by the government of these United States, there are real limitations on what can be done for people through the conventional welfare array.
The real question is whether we are going to think of poor people as pets. If we do not think that they are dogs begging for scraps — if we believe them to be fully human – then we have to account for the choices people make. Much of what I saw in Appalachia I have seen in rural Texas and interior California, or looking out my window in the South Bronx. But the intellectual isolation of the ruling class can on occasion approach the absolute, which is why we have all these morally titillating debates about affirmative action at top-tier law schools while barely a third of black and Hispanic boys in New York graduate from high school in four years. The objects of public policy are an abstraction, which is why in the case of poor Appalachia our friend Professor Krugman, charts and all, sees less than he imagines himself to have seen.