Monday, March 10, 2014

Should We Ban The Use Of The "Middle Class"?

Paul Krugman tells us that a conservative politician who was one of GOP candidates in the 2012 presidential election cycle is so upset about "class warfare" in the US that he wants to forbid the use of the term "middle class".  He is probably correct to worry about the use of that term.  The Democratic Party has decided that it makes sense to defend the middle class in America and it may be an effective tactic. 

The rest of the Krugman post defends the use of income redistribution to moderate the impact of income inequality.  One of the major arguments against income redistribution comes from economic theory which suggests that it distorts the labor market.  The rich won't work as hard if they get taxed and the unemployed have less of an incentive to find a job.  Krugman cites an IMF study which shows that income redistribution may cause some people to work less hard but it does not have a negative impact on economic growth. 

The economic research on the effects of income redistribution on economic growth reported by the IMF is helpful for those, like Krugman, who support income redistribution.  On the other hand, the economics profession, as a whole, tends to avoid the topic of income redistribution.  The profession takes the position that market determines the distribution of income and economists have no expertise in morals or the concept of fairness.  Those judgements are not a part of the positive science of economics.  In other words, economics is like the natural sciences.  It stands outside of politics and moral philosophy.  This assumes that the economy is part of nature, and that political philosophy and moral judgements have nothing to do with the 'science" of economics.  That's a pity because it is false, and also because economic data should be used to help us to understand how the creature that we have created really works.  If the thing that we have created does not work as we would like it to work, the profession should help us to make it work to better serve our purposes.

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