Monday, October 20, 2008

Chairwoman Palin?

I've resisted the urge to write about the McCain campaign's latest silliness, the whole Obama's-a-socialist-because-of-his-"spread-the-wealth-around"-comment. But I can't help myself. Two points:

  1. The definition of socialism to which most economists, poli sci types, etc, adhere is that socialism is that form of economic organization in which the state controls the means of production.

  2. While there are some examples of this sort of thing in just about any market-based economy (geez, the government controls the military!), the idea that redistribution per se implies socialism is ridiculous. Hell, the second welfare theorem states that in a perfectly competitive economy (I bet that got the attention of all those neoclassical macro fans!), you can get to any desired  (Pareto) efficient allocation with laissez-faire marginal tax policy and the right set of lump-sum...wait for it...redistributions! I guess in current parlance you might call that socialism the Arrow-DeBreu complete-markets way.

    More seriously, I challenge anyone to find me an example of an extant national economy of a non-failed state that has no government involvement. You can't do it, because even in the most laissez-faire-loving polity, someone has to protect property rights, and lump-sum taxes aren't feasible in the real world.

    A further point on redistribution is that it is effected not only via tax policy, but also via spending policies. It makes no sense to denounce as socialism refundable tax credits but not, say, government-funded refinancing of underwater mortgages at below-market rates. I could go on.

So the real questions for a mixed economy like ours, and like those in Europe to choose one example, is not whether there is redistribution as a result of government's activities, but how much there is and who benefits.

Now that we have all of that stuff out of the way, I'd like to flag this excellent point by TPM Media's Eric Kleefeld:
Palin: We Shouldn't Experiment With Socialism
Sarah Palin derided Barack Obama's and Joe Biden's tax policies yesterday, telling a rally in New Mexico, "Friends, now is no time to experiment with socialism." Note: Sarah Palin is the governor of a state that practices collective ownership of oil and other natural resources, and equally distributes the state's cut of the revenues to every citizen.
It's been amusing to watch the denunciations of Obama's economic plans by conservatives (e.g., the 90 economists who call themselves 100 economists supporting McCain). You get the usual stuff -- taxes bad, spending bad, defies economic reason, Obama=socialism, etc. Yet Sarah Palin's government fuel-injected popularity somehow has escaped comment.

What would a real free-market fan do if s/he were running Alaska? I think it's pretty clear: auction off all oil rights to the highest bidder (the specific form of auction would be important in practice, but that's a side point for my purposes). The proceeds could then be distributed however Alaskans see fit. One possibility would be to hold them in a trust whose investment income could be used to pay for future state operations. Another possibility would be to simply write checks to all Alaskans immediately following the auction. There are serious distributional questions involved in these and any other approaches to distributing revenues, and I don't mean to take a position on those issues here.

If I were an Alaska resident, I would want to see my state government regulate the use of these resources in a way that protected health, safety, and environment. So I wouldn't stop at the auction: I would also enact sensible regulations concerning the extraction of oil, use of the land, etc. I recognize that others would disagree, which is fine, because this, too, is a side point.

The one thing that is absolutely not debatable is that a serious laissez-faire type would not want the government making year-to-year operational decisions about Alaska's oil resources. Apparently, though, Governor (Chairwoman?) Palin disagrees.

4 comments:

Anonymous said...

Capitalism "a tax cut for me"

Socialism "a tax cut for you"

Heidi Hartmann said...

Am enjoying reading these posts. Would like to call your attention to a forthcoming report from the Economists' Policy Group on Women's Issues which will rate Obama and McCain on 10 issues of importance to women. Is there a way to get this report up on your blog when it is released (tentatively set for 1pm on October 23)?

Heidi Hartmann (heidi1677atmac.com)

PrestoPundit said...

This is ignorant and dishonest stuff.

This statement:

"The definition of socialism to which most economists, poli sci types, etc, adhere is that socialism is that form of economic organization in which the state controls the means of production."

is laughable. Hayek destroyed what he called "hot socialism" with his book on _Collectivist Economic Planning_. But Hayek pointed out that the death of "central planning" socialism didn't mean the death of other forms of socialism, forms of socialism that didn't require complete and absolute state control of the means of production. And when it comes to comparative economic systems, Hayek really wrote the modern book on the subject, defining what was possible and what was not possible in the domain of "socialism".

So this definition of "socialism" is just crap. We aren't 19th century Marxists here, with a 19th century Marxist's Twilight Zone fantasy about what "socialism" is and could be.

To insist that the use of the word "socialism" has to conform to this bizarre and impossible 19th century Marxist fantasy is infantile and anti-intellectual. And it's obviously contrary to actual linguistic practice.

So cut the crap and the parsing of words. Socialists across the years have been for a whole vast array of different things, requiring more government and more control and less individual freedom. All sorts of things have been advocated as "socialist" by socialists, across the years.

And "spreading the wealth" has been a signature trope.

So again, enough ignorance and dishonesty.

I can hardly take any more of it.

David said...

prestopundit:

Your entire point centers around an appeal to authority fallacy involving Friedrich Hayek. I don't think it's reasonable to expect staunch opponents of socialism to be able to accurately and honestly define socialism without their own biases being reflected in the definition...do you?

Socialism is government ownership of the means of production. Wealth redistribution is not inherently socialist. Hell, capitalism redistributes wealth itself: from the laborers to the capitalists.