That was a very illuminating read. While I would in the past have agreed that I want smaller or less government I would not have thought to neatly categorise the offerings. Many times I have been told anarchy is best and all services should be via the free market. This is kind of silly, we need arbiters and keepers of title deeds at least and most will agree to this.
I contend that no government leads to wild west and rule by force or threat of force. I don't want that so I am in favour of SOME government. As you describe it is difficult to determine exactly which bits are good when more and which bits are kind of pathological if they increase.
I would be delighted if you would have a look at the difference between UNCONDITIONAL Basic Income and UNIVERSAL Basic income and why one may save humanity by making people able to choose what services they WANT and the other is a slave yoke that will eventually or deliberately morph into a draconian social credit system akin to means tested benefit programs with benefit traps, coercion, big brothering and forced loyalty.
I would love it if there was a strong enough case for UNIVERSAL Basic Income that could be sold to everyone so that it would actually happen. A situation where all national income is filtered through the electorate FIRST and then the government budget is clawed back with a flat tax rate from all earned income from any method but taxed ONLY ONCE.
Your suggestion is interesting, too; I hadn't heard the distinction between "Unconditional" and "Universal" basic incomes. I will have to look into that more. Universal basic income is one of those ideas that I can see being really good, if, and perhaps only if, it really does replace all other government social programs. If one could pull that off, it would be a great efficiency gain potentially.
I haven't looked into the current thought on those issues in a while, not since my dissertation. I should get back into that...
The UNIVERSAL tag just means everyone will be FORCED to take it and it will be made conditional because it is easy to sell the idea of a lazy person on a couch drinking his benefits away so incremental conditions will be applied such as vaccine status, party membership, social media conformance, CO2 footprint, diet choices and so on, because it CAN.
The moment it becomes equal to a "Resident Adult Citizen Dividend" = "UNCONDITIONAL Basic Income" it is no longer a benefit for being unemployed, it is a RIGHT and EVERYONE can get it (you must be allowed to opt out or divert it to a charity) and then there is no longer the same stigma for a poor person to receive it as the rich also get it. The rich cannot say the unemployed should not get it because they and everyone gets it.
The idea is that the value that a nation earns (or raises a loan for) BELONGS to the people and they should be allowed to spend it at face value at least once. This point I never hear made by anyone yet might be the fairness test that can make it happen.
Everything that comes into the state coffers must enter circulation via the UBI, the state can then use personal taxes to pay for the country. This way the special interests and subsidies loose power and have to be removed and the people are allowed to vote with their income. If they want more food they spend on food, if they want more opera they spend on the arts. Everything optional should be decided by the recipients. If the elite want opera and no more subsidy then ticket prices go up or opera turns off, why must the poor who cannot afford to travel to opera pay for massive investment. It is only art if you experience it, otherwise it is simply a hidden tax that is a targeted subsidy. I wrote a bit on this topic on my stack.
As for replacing all government programs. You don't have to replace or eliminate them. Keep them in place but appreciate that the means tested ones may only trigger with temporary refugees which is less than unemployed and pensioned. The number of cases for a regular citizen would fall to almost zero unless there are special cases and there is then manpower and energy to take care of those programs, divided families living in different towns and needing extra commuter fares for children, special cases will exist, just much fewer and amounts may be less if the UBI covers a breadline income without having to apply or beg or grovel.
I am in Finland and the situation here is demeaning at best and often terrifying if you find yourself as an edge case. One unemployed person had to pay back over a years jobseekers benefits (about EUR650/month) because he occasionally sold hand carved juniper wood guitar plectrums at the market for EUR20-50 per month and was classified retroactively as an entrepreneur and not eligible.
There is no reliable way to soft start yourself off of jobseekers benefits with micro enterprise in Finland unless you know you will show profit in 4 months (there is a trial period should you register for it when you can receive benefits while starting self employment).
The family unit you describe is one of the best of all governments: Benevolent Dictatorship.
Some thoughts:
"More diversity leads to more demand for punitive legislation over behavior, but less supply, and supply tends to dominate. This tends towards smaller government with more diversity, but the regulatory side might dominate the personal side and go the other direction."
It tends towards larger government initially as demands are attempted to be met (and then given lip-service as the government instead meets it's own expanding demands), and then in collapse, which leads to much smaller government.
"More diversity leads to less demand for social services sometimes, and it could go either way on supply. Possibly smaller government with more diversity (although it might feel bigger.)"
I know of no examples where more diversity leads to less demand for social services under any conditions. I know of several (USA and Sweden come to mind) where it has resulted in more demand. This also demonstrates against your second sentence.
"Possibly the size of the polity makes supplying everything easier, either through ready cash or ability to hide what you are doing. This drives towards larger government."
I would say only the ability to hide what you are doing, until it collapses.
"In multiracial societies, you don't vote in accordance with your economic interests and social interests, you vote in accordance with race and religion." -Lee Kuan Yew
"I know of several (USA and Sweden come to mind) where it has resulted in more demand."
Do you have an example in mind of specific arguments for more social services based on diversity of population? (Preferably pre-2010... the very recent trend of making extra sacrifices for marginal groups feels like an end point, not a beginning, to me.) Typically I have seen people use diversity as an argument against more social services, or the existence of social services as an argument against increasing diversity. Usually the model is something like "they come over here and don't work and just collect welfare" etc. In Sweden in particular the different norms around when and how long it is ok to collect state benefits seems to be driving change in how that is done, although maybe it is being overwhelmed by other change.
Those other changes are important too. I feel like you are ignoring the "all else equal" issue a bit when talking about the USA especially. I suspect that an increasing cultural norm of "just borrow billions of dollars to pay for all the promises and deals for our friends" among governments is going to grow the state more than diversity changes move the needle.
"Typically I have seen people use diversity as an argument against more social services, or the existence of social services as an argument against increasing diversity."
Two sides of the same coin, IMO.
"I suspect that an increasing cultural norm of "just borrow billions of dollars to pay for all the promises and deals for our friends" among governments is going to grow the state more than diversity changes move the needle."
It's not borrowing, it's literally stealing from future generations.
Diversity is encouraged because they reliably vote for more services, and more diversity (that is, more of them). Recall the quote from Lee Kuan Yew.
Ahh, see you are conflating "demand for government services" in the sense of "We want to create more" and the sense of "more use of existing services". The distinction between those two is why I argue support for those services, or more of those services, breaks down with more diversity: people start getting annoyed that one group makes higher use than another, and becomes bothered by the notion of supporting the other.
I also note that you are defining diversity differently than I am. Your "they" seems to imply "non-US citizens, or possibly other minority groups." I am talking diversity in a broad general sense, such as might obtain if say the number of Amish in the USA were suddenly increase to 25% of the population. That wouldn't lead to more voting for more services, despite increasing diversity in the sense of the number of different groups that are a large portion of the population.
Regarding Lee Juan Yew, I think he is correct except in his assumption that most people in the absence of ethnic or racial diversity vote their own interest. In general the evidence points to people voting group interest over personal interest in nearly all cases. Which is counter intuitive to be sure, but apparently is pretty universal.
"Ahh, see you are conflating "demand for government services" in the sense of "We want to create more" and the sense of "more use of existing services". The distinction between those two is why I argue support for those services, or more of those services, breaks down with more diversity: people start getting annoyed that one group makes higher use than another, and becomes bothered by the notion of supporting the other."
It's not a conflation, it's an observation. As one group is perceived to get more, other groups will sense this as unfair and demand more. This is hardwired into the primate brain.
Researchers “…demonstrated that monkeys trained to give a token to a human experimenter in exchange for a piece of cucumber would start refusing to participate when they witnessed another monkey receiving a tastier grape for the same effort. The monkeys were particularly upset when grapes were given to another monkey for no effort at all, sometimes throwing the (formerly satisfactory) cucumber in protest.” https://www.youtube.com/watch?v=meiU6TxysCg
While that is an individual example, I will hold it's true for groups as well.
The Amish are a very bad example to use for this, as they are generally self-sufficient and would use little to no services.
Scrolling down this article you can find a chart that breaks it out by race:
And yet importing those groups would lower demand and increase diversity. Again, you are focusing on the specific US and Western Europe experience and not generalizing.
With the primate example, you are misapplying the example. The monkey's do not get to decide whether to spend resources to get fruit handed to them; there is simply food appearing, and they would like more, please. Under a king who arbitrarily hands out favors your example would obtain.
Under a representative government, where public spending is somewhat related to public desires, the example splits off. Voters can, and do, argue for reduced social services, both in the number and nature and extent of spending, if they believe the costs outweigh the benefits. If Group A see their wealth being taken to pay for Group B, they are going to tend to resent it more than if Group A sees their wealth taken to pay for Group A. Humans being human will split larger groups into smaller, but the more salient the differences the more resentment. Not perfectly in all cases, but it seems hard to argue that those on the American right, for instance, are saying "There is a lot of welfare abuse among minorities, so I think we should expand welfare to pay me more." Near as I can tell, the argument goes the other way.
"And yet importing those groups would lower demand and increase diversity."
No. Those groups would reduce diversity, because they would increase the relative number of Europeans, which are nearly identical to the USA's largest demographic. You would also get more South Asians, but proportionately less of all the other groups, so it would be a net loss of diversity.
To the larger point: The statistics clearly show that with increased diversity, you get increased demand for services. This is because the USA is still majority European stock, which uses (and clearly wants) welfare at lower rates than immigrants, with the exception of South Asians. This is not disputable, unless you can dispute the methodology of the study (not likely IMO as I believe it came from census data).
Now, even if you "max out" diversity (make European stock and South Asian stock equal in percentages to the rest), you still get more demand: Because the groups that want services outnumber the ones that don't want services 5:2.
Your counterargument on the monkeys unfortunately fails, because *they clearly know* the that the food isn't "magically appearing", they see that researcher is being unfair, and then they *literally throw the cucumber in disgust at the researcher*.
TTBOMK the only voters that consistently vote for reduced social services are natives. Even South Asians tend to vote for more services, even if they use them at the lowest rates.
Many thanks for this response. Very thoughtful and I agree with many of the points.
I know you are (justifiably) sceptical of modelling but this is an instance where some algebra and some clearly specified assumptions would really help!
Specifically the missing ingredient is price. We are discussing quantity of government action, we have demand, we have supply, but no clearly specified 'price'.
If you have read Caplan's 'Myth of the Rational Voter' he would argue that on the demand side there really is no meaningful price because individual voters have no influence, so they can indulge their whims at no cost. But then again maybe this is one of the things that differs between societies? In some societies people have greater care for others and for the future and are more responsible in their politics?
What is the price on the supply side then? If I am a politician facing demands for specific regulation, say for social media platforms. What is the price I am facing for not doing this?
Merry Christmas to you and your family, I look forward to more discussions in the new year.
PS your assumption was correct, I am not a dog ......
Yea, the price aspect is really tricky, and I think even defining it is going to be a mess.
From the demand side, there is the simple whim as you put it. Vote to forgive college debt! Why not? Then there are those who do think about what it costs, and so they have closer to a standard cost/benefit approach. Then for punitive legislation you also have people who think of things like "Well, I don't like X myself, but I know some people who like X, and I don't think they should be punished for it." That gets to the fundamental element of demand, but also to cost as they see their friend getting punished.
On the supply side you have cost in raw dollars, very relevant for the residual claimant king or fiscally constrained government. You also have the political costs, in the sense that getting a large portion of your populace angry could get you unelected, or dangling from a tree.
I think this is the key weakness in thinking of politics as a market: everything is barter, and there is no single dominant currency, and the buyers are on average lunatics because they don't have much control over what they actually get so they don't care to be sensible. Politics as exchange is useful, but it suffers from most of our economics student intuitions and modeling methods depending heavily on a fairly modern arena of exchange to make things tractable. When you lose that "everything is in units of dollars" convenience, things get really hard really fast, probably to the point where an agent based model with Lancastrian utility functions are necessary.
Merry Christmas to your and yours as well! I am well pleased to have a fellow economist to kick ideas around with here!
(Ok, so not a dog... but Merry Christmas, not Happy Christmas? Now I am wondering if you are a native Brit... the game is afoot! :D)
I am behind in my substack reading and responding, so please accept this belated thank-you to you and the Doc for putting a lot of effort into your well-written responses to my poorly worded initial question.
Often the term 'small gov't' really means a centralized weak gov't, not localized gov't with actual power over their own territory, assets and laws. Pardon me if you already answered this--I got distracted in the middle of reading so there was a break in between--which do you mean?
I hope you were counting me in those 60% of women economists for small gov't that you know. I think that you read my post on The Caret System where I compare the economic system I used for my kids to my economic model for small gov'ts. I think my household was very similar to yours (including the three girls if I'm remembering correctly). But I got stuck on what the consequences are when the rules of the benevolent dictator aren't followed. Physical force is frowned upon and psychological manipulation (I'm so disappointed in you) has limited utility, in my experience.
UBI might be compared to an allowance that every kid gets, along with free room & board, healthcare, education, transportation, energy & utilities. You can't very well take the latter seven away from your kids or make them earn them. So that extra for luxuries is something that I used as incentives (which matter!)
In the same way, a fair system would curb wealth monopoly and provide dividends (like UBI) that can only be spent freely after they're earned by providing those basics to each other. If everyone gets UBI, who provides the goods and services that UBI buys? Do those people get more stuff and better houses? Rather than looking at this as a consumer, I think an economist has to develop a plan for the production side because the money is worthless if no one's making or growing or doing.
Disappointed in psychological manipulation? Typically behavior that gets dad angry gets you a stern talking to and some time in the corner. Are you saying I should use more psychological manipulation?
I did mean to address the question of large vs small government in the scope vs scale vs range aspect, but forgot, thanks for reminding me! I would say that to the extent that a government is involved in your private decisions, it is a "big" government, although when its dictates and strictures are largely what you would prefer anyway it feels a lot smaller. Likewise if you can leave easy. The feeling of big government that results from a large government range (covering a large area) stems from inevitable mismatches across cultural areas' preferences, not necessarily from the area covered itself. I think that a government in a small geographic area but with large powers would very much limit the ability of its citizens to interact with outsiders, as well as limiting its ability to accept outsiders. More importantly, it probably opens itself to tyranny more quickly, as the norm of invasive rule is already established and now people are just arguing over what rules.
UBI has a lot of strange problems, you are right. The only way to do it successfully I think is to actually have a standard of living that is naturally pretty unequal, such that people could live on UBI but definitely wouldn't want to for any length of time. There needs to be very strong incentives to keep people producing and not just getting used to a UBI standard of living. Although, as the number of people producing drops the standard of living a UBI could provide would necessarily drop as well, so that might help ameliorate that aspect.
haha, I'm not disappointed in YOU but there was a time when everything I said to my oldest daughter was some version of "I'm so disappointed in you." It seemed like I was always scolding and warning and inventing new consequences. In the meantime, I was barely noticing that her younger sister was doing everything she could to please me while I was preoccupied with the one who was a defiant 'problem.' (These dynamics later switched).
When I developed our 'point system' I could have simple rules (if I need to tell you a third time, I'll have to take a point, representing a unit she'd earned with a variable exchange rate depending on how it's spent.) After being consistent with it for a little while, I hardly ever needed to. And I could stop expressing my concern that she wasn't listening and just be consistently encouraging. At this point in their lives (24, 28, 30) I think I can finally say with confidence that it worked. But your system is working for you, so that's great!
I don't see a way that my system, which distributes decisions to the lowest level possible, can lead to tyranny. It's really a system of anarchy in the original sense of 'without rulers.' But I'd be curious to get your thoughts on how you think it could, and how that could be prevented: https://thirdparadigm.substack.com/p/the-caret-system. I appreciate the conversation!
That was a very illuminating read. While I would in the past have agreed that I want smaller or less government I would not have thought to neatly categorise the offerings. Many times I have been told anarchy is best and all services should be via the free market. This is kind of silly, we need arbiters and keepers of title deeds at least and most will agree to this.
I contend that no government leads to wild west and rule by force or threat of force. I don't want that so I am in favour of SOME government. As you describe it is difficult to determine exactly which bits are good when more and which bits are kind of pathological if they increase.
I would be delighted if you would have a look at the difference between UNCONDITIONAL Basic Income and UNIVERSAL Basic income and why one may save humanity by making people able to choose what services they WANT and the other is a slave yoke that will eventually or deliberately morph into a draconian social credit system akin to means tested benefit programs with benefit traps, coercion, big brothering and forced loyalty.
I would love it if there was a strong enough case for UNIVERSAL Basic Income that could be sold to everyone so that it would actually happen. A situation where all national income is filtered through the electorate FIRST and then the government budget is clawed back with a flat tax rate from all earned income from any method but taxed ONLY ONCE.
Glad you enjoyed the article, long as it was :)
Your suggestion is interesting, too; I hadn't heard the distinction between "Unconditional" and "Universal" basic incomes. I will have to look into that more. Universal basic income is one of those ideas that I can see being really good, if, and perhaps only if, it really does replace all other government social programs. If one could pull that off, it would be a great efficiency gain potentially.
I haven't looked into the current thought on those issues in a while, not since my dissertation. I should get back into that...
The UNIVERSAL tag just means everyone will be FORCED to take it and it will be made conditional because it is easy to sell the idea of a lazy person on a couch drinking his benefits away so incremental conditions will be applied such as vaccine status, party membership, social media conformance, CO2 footprint, diet choices and so on, because it CAN.
The moment it becomes equal to a "Resident Adult Citizen Dividend" = "UNCONDITIONAL Basic Income" it is no longer a benefit for being unemployed, it is a RIGHT and EVERYONE can get it (you must be allowed to opt out or divert it to a charity) and then there is no longer the same stigma for a poor person to receive it as the rich also get it. The rich cannot say the unemployed should not get it because they and everyone gets it.
The idea is that the value that a nation earns (or raises a loan for) BELONGS to the people and they should be allowed to spend it at face value at least once. This point I never hear made by anyone yet might be the fairness test that can make it happen.
Everything that comes into the state coffers must enter circulation via the UBI, the state can then use personal taxes to pay for the country. This way the special interests and subsidies loose power and have to be removed and the people are allowed to vote with their income. If they want more food they spend on food, if they want more opera they spend on the arts. Everything optional should be decided by the recipients. If the elite want opera and no more subsidy then ticket prices go up or opera turns off, why must the poor who cannot afford to travel to opera pay for massive investment. It is only art if you experience it, otherwise it is simply a hidden tax that is a targeted subsidy. I wrote a bit on this topic on my stack.
We can't afford healthcare for white American children because we need to be bombing someone else's for the love of Jesus and Israel . . .
https://www.youtube.com/watch?v=6nfD0qJE0lA
As for replacing all government programs. You don't have to replace or eliminate them. Keep them in place but appreciate that the means tested ones may only trigger with temporary refugees which is less than unemployed and pensioned. The number of cases for a regular citizen would fall to almost zero unless there are special cases and there is then manpower and energy to take care of those programs, divided families living in different towns and needing extra commuter fares for children, special cases will exist, just much fewer and amounts may be less if the UBI covers a breadline income without having to apply or beg or grovel.
I am in Finland and the situation here is demeaning at best and often terrifying if you find yourself as an edge case. One unemployed person had to pay back over a years jobseekers benefits (about EUR650/month) because he occasionally sold hand carved juniper wood guitar plectrums at the market for EUR20-50 per month and was classified retroactively as an entrepreneur and not eligible.
There is no reliable way to soft start yourself off of jobseekers benefits with micro enterprise in Finland unless you know you will show profit in 4 months (there is a trial period should you register for it when you can receive benefits while starting self employment).
The family unit you describe is one of the best of all governments: Benevolent Dictatorship.
Some thoughts:
"More diversity leads to more demand for punitive legislation over behavior, but less supply, and supply tends to dominate. This tends towards smaller government with more diversity, but the regulatory side might dominate the personal side and go the other direction."
It tends towards larger government initially as demands are attempted to be met (and then given lip-service as the government instead meets it's own expanding demands), and then in collapse, which leads to much smaller government.
"More diversity leads to less demand for social services sometimes, and it could go either way on supply. Possibly smaller government with more diversity (although it might feel bigger.)"
I know of no examples where more diversity leads to less demand for social services under any conditions. I know of several (USA and Sweden come to mind) where it has resulted in more demand. This also demonstrates against your second sentence.
"Possibly the size of the polity makes supplying everything easier, either through ready cash or ability to hide what you are doing. This drives towards larger government."
I would say only the ability to hide what you are doing, until it collapses.
"In multiracial societies, you don't vote in accordance with your economic interests and social interests, you vote in accordance with race and religion." -Lee Kuan Yew
https://www.spiegel.de/international/spiegel/spiegel-interview-with-singapore-s-lee-kuan-yew-it-s-stupid-to-be-afraid-a-369128.html
“Governing a large country is like frying a small fish. You spoil it with too much poking.” -Lao Tsu (600 BCE)
https://www.libertarianism.org/topics/lao-tzu-c-600-bc
"I know of several (USA and Sweden come to mind) where it has resulted in more demand."
Do you have an example in mind of specific arguments for more social services based on diversity of population? (Preferably pre-2010... the very recent trend of making extra sacrifices for marginal groups feels like an end point, not a beginning, to me.) Typically I have seen people use diversity as an argument against more social services, or the existence of social services as an argument against increasing diversity. Usually the model is something like "they come over here and don't work and just collect welfare" etc. In Sweden in particular the different norms around when and how long it is ok to collect state benefits seems to be driving change in how that is done, although maybe it is being overwhelmed by other change.
Those other changes are important too. I feel like you are ignoring the "all else equal" issue a bit when talking about the USA especially. I suspect that an increasing cultural norm of "just borrow billions of dollars to pay for all the promises and deals for our friends" among governments is going to grow the state more than diversity changes move the needle.
Pick one:
https://search.brave.com/search?q=immigrants+use+welfare+at+higher+rates+than+natives&source=desktop
"Typically I have seen people use diversity as an argument against more social services, or the existence of social services as an argument against increasing diversity."
Two sides of the same coin, IMO.
"I suspect that an increasing cultural norm of "just borrow billions of dollars to pay for all the promises and deals for our friends" among governments is going to grow the state more than diversity changes move the needle."
It's not borrowing, it's literally stealing from future generations.
Diversity is encouraged because they reliably vote for more services, and more diversity (that is, more of them). Recall the quote from Lee Kuan Yew.
Ahh, see you are conflating "demand for government services" in the sense of "We want to create more" and the sense of "more use of existing services". The distinction between those two is why I argue support for those services, or more of those services, breaks down with more diversity: people start getting annoyed that one group makes higher use than another, and becomes bothered by the notion of supporting the other.
I also note that you are defining diversity differently than I am. Your "they" seems to imply "non-US citizens, or possibly other minority groups." I am talking diversity in a broad general sense, such as might obtain if say the number of Amish in the USA were suddenly increase to 25% of the population. That wouldn't lead to more voting for more services, despite increasing diversity in the sense of the number of different groups that are a large portion of the population.
Regarding Lee Juan Yew, I think he is correct except in his assumption that most people in the absence of ethnic or racial diversity vote their own interest. In general the evidence points to people voting group interest over personal interest in nearly all cases. Which is counter intuitive to be sure, but apparently is pretty universal.
"Ahh, see you are conflating "demand for government services" in the sense of "We want to create more" and the sense of "more use of existing services". The distinction between those two is why I argue support for those services, or more of those services, breaks down with more diversity: people start getting annoyed that one group makes higher use than another, and becomes bothered by the notion of supporting the other."
It's not a conflation, it's an observation. As one group is perceived to get more, other groups will sense this as unfair and demand more. This is hardwired into the primate brain.
Researchers “…demonstrated that monkeys trained to give a token to a human experimenter in exchange for a piece of cucumber would start refusing to participate when they witnessed another monkey receiving a tastier grape for the same effort. The monkeys were particularly upset when grapes were given to another monkey for no effort at all, sometimes throwing the (formerly satisfactory) cucumber in protest.” https://www.youtube.com/watch?v=meiU6TxysCg
While that is an individual example, I will hold it's true for groups as well.
The Amish are a very bad example to use for this, as they are generally self-sufficient and would use little to no services.
Scrolling down this article you can find a chart that breaks it out by race:
https://cis.org/Report/Welfare-Use-Immigrant-and-Native-Households
It's pretty clear that importing anyone other than South Asians and Europeans will result in increased use/demand of social services.
And yet importing those groups would lower demand and increase diversity. Again, you are focusing on the specific US and Western Europe experience and not generalizing.
With the primate example, you are misapplying the example. The monkey's do not get to decide whether to spend resources to get fruit handed to them; there is simply food appearing, and they would like more, please. Under a king who arbitrarily hands out favors your example would obtain.
Under a representative government, where public spending is somewhat related to public desires, the example splits off. Voters can, and do, argue for reduced social services, both in the number and nature and extent of spending, if they believe the costs outweigh the benefits. If Group A see their wealth being taken to pay for Group B, they are going to tend to resent it more than if Group A sees their wealth taken to pay for Group A. Humans being human will split larger groups into smaller, but the more salient the differences the more resentment. Not perfectly in all cases, but it seems hard to argue that those on the American right, for instance, are saying "There is a lot of welfare abuse among minorities, so I think we should expand welfare to pay me more." Near as I can tell, the argument goes the other way.
"And yet importing those groups would lower demand and increase diversity."
No. Those groups would reduce diversity, because they would increase the relative number of Europeans, which are nearly identical to the USA's largest demographic. You would also get more South Asians, but proportionately less of all the other groups, so it would be a net loss of diversity.
To the larger point: The statistics clearly show that with increased diversity, you get increased demand for services. This is because the USA is still majority European stock, which uses (and clearly wants) welfare at lower rates than immigrants, with the exception of South Asians. This is not disputable, unless you can dispute the methodology of the study (not likely IMO as I believe it came from census data).
Now, even if you "max out" diversity (make European stock and South Asian stock equal in percentages to the rest), you still get more demand: Because the groups that want services outnumber the ones that don't want services 5:2.
Your counterargument on the monkeys unfortunately fails, because *they clearly know* the that the food isn't "magically appearing", they see that researcher is being unfair, and then they *literally throw the cucumber in disgust at the researcher*.
TTBOMK the only voters that consistently vote for reduced social services are natives. Even South Asians tend to vote for more services, even if they use them at the lowest rates.
Many thanks for this response. Very thoughtful and I agree with many of the points.
I know you are (justifiably) sceptical of modelling but this is an instance where some algebra and some clearly specified assumptions would really help!
Specifically the missing ingredient is price. We are discussing quantity of government action, we have demand, we have supply, but no clearly specified 'price'.
If you have read Caplan's 'Myth of the Rational Voter' he would argue that on the demand side there really is no meaningful price because individual voters have no influence, so they can indulge their whims at no cost. But then again maybe this is one of the things that differs between societies? In some societies people have greater care for others and for the future and are more responsible in their politics?
What is the price on the supply side then? If I am a politician facing demands for specific regulation, say for social media platforms. What is the price I am facing for not doing this?
Merry Christmas to you and your family, I look forward to more discussions in the new year.
PS your assumption was correct, I am not a dog ......
Yea, the price aspect is really tricky, and I think even defining it is going to be a mess.
From the demand side, there is the simple whim as you put it. Vote to forgive college debt! Why not? Then there are those who do think about what it costs, and so they have closer to a standard cost/benefit approach. Then for punitive legislation you also have people who think of things like "Well, I don't like X myself, but I know some people who like X, and I don't think they should be punished for it." That gets to the fundamental element of demand, but also to cost as they see their friend getting punished.
On the supply side you have cost in raw dollars, very relevant for the residual claimant king or fiscally constrained government. You also have the political costs, in the sense that getting a large portion of your populace angry could get you unelected, or dangling from a tree.
I think this is the key weakness in thinking of politics as a market: everything is barter, and there is no single dominant currency, and the buyers are on average lunatics because they don't have much control over what they actually get so they don't care to be sensible. Politics as exchange is useful, but it suffers from most of our economics student intuitions and modeling methods depending heavily on a fairly modern arena of exchange to make things tractable. When you lose that "everything is in units of dollars" convenience, things get really hard really fast, probably to the point where an agent based model with Lancastrian utility functions are necessary.
Merry Christmas to your and yours as well! I am well pleased to have a fellow economist to kick ideas around with here!
(Ok, so not a dog... but Merry Christmas, not Happy Christmas? Now I am wondering if you are a native Brit... the game is afoot! :D)
I am behind in my substack reading and responding, so please accept this belated thank-you to you and the Doc for putting a lot of effort into your well-written responses to my poorly worded initial question.
No problem at all, and I know how you feel, I have 5 articles open at this very moment!
Me too, and I'm at work!
To add to my other comment, Arnold Klong discusses some very similar issues in his latest post in case you didn't see it: https://arnoldkling.substack.com/p/government-does-not-stay-limited/comments
Often the term 'small gov't' really means a centralized weak gov't, not localized gov't with actual power over their own territory, assets and laws. Pardon me if you already answered this--I got distracted in the middle of reading so there was a break in between--which do you mean?
I hope you were counting me in those 60% of women economists for small gov't that you know. I think that you read my post on The Caret System where I compare the economic system I used for my kids to my economic model for small gov'ts. I think my household was very similar to yours (including the three girls if I'm remembering correctly). But I got stuck on what the consequences are when the rules of the benevolent dictator aren't followed. Physical force is frowned upon and psychological manipulation (I'm so disappointed in you) has limited utility, in my experience.
UBI might be compared to an allowance that every kid gets, along with free room & board, healthcare, education, transportation, energy & utilities. You can't very well take the latter seven away from your kids or make them earn them. So that extra for luxuries is something that I used as incentives (which matter!)
In the same way, a fair system would curb wealth monopoly and provide dividends (like UBI) that can only be spent freely after they're earned by providing those basics to each other. If everyone gets UBI, who provides the goods and services that UBI buys? Do those people get more stuff and better houses? Rather than looking at this as a consumer, I think an economist has to develop a plan for the production side because the money is worthless if no one's making or growing or doing.
Disappointed in psychological manipulation? Typically behavior that gets dad angry gets you a stern talking to and some time in the corner. Are you saying I should use more psychological manipulation?
I did mean to address the question of large vs small government in the scope vs scale vs range aspect, but forgot, thanks for reminding me! I would say that to the extent that a government is involved in your private decisions, it is a "big" government, although when its dictates and strictures are largely what you would prefer anyway it feels a lot smaller. Likewise if you can leave easy. The feeling of big government that results from a large government range (covering a large area) stems from inevitable mismatches across cultural areas' preferences, not necessarily from the area covered itself. I think that a government in a small geographic area but with large powers would very much limit the ability of its citizens to interact with outsiders, as well as limiting its ability to accept outsiders. More importantly, it probably opens itself to tyranny more quickly, as the norm of invasive rule is already established and now people are just arguing over what rules.
UBI has a lot of strange problems, you are right. The only way to do it successfully I think is to actually have a standard of living that is naturally pretty unequal, such that people could live on UBI but definitely wouldn't want to for any length of time. There needs to be very strong incentives to keep people producing and not just getting used to a UBI standard of living. Although, as the number of people producing drops the standard of living a UBI could provide would necessarily drop as well, so that might help ameliorate that aspect.
haha, I'm not disappointed in YOU but there was a time when everything I said to my oldest daughter was some version of "I'm so disappointed in you." It seemed like I was always scolding and warning and inventing new consequences. In the meantime, I was barely noticing that her younger sister was doing everything she could to please me while I was preoccupied with the one who was a defiant 'problem.' (These dynamics later switched).
When I developed our 'point system' I could have simple rules (if I need to tell you a third time, I'll have to take a point, representing a unit she'd earned with a variable exchange rate depending on how it's spent.) After being consistent with it for a little while, I hardly ever needed to. And I could stop expressing my concern that she wasn't listening and just be consistently encouraging. At this point in their lives (24, 28, 30) I think I can finally say with confidence that it worked. But your system is working for you, so that's great!
I don't see a way that my system, which distributes decisions to the lowest level possible, can lead to tyranny. It's really a system of anarchy in the original sense of 'without rulers.' But I'd be curious to get your thoughts on how you think it could, and how that could be prevented: https://thirdparadigm.substack.com/p/the-caret-system. I appreciate the conversation!