Paul Krugman, on the way to a rather funny punchline, takes an off-handed swipe at the irrational person-on-the-street. Apparently, Americans can’t decide how they want to make ends meet. They don’t want to cut spending and they don’t want to increase taxes. Krugman himself knows better. He is not worried about current deficits, but in the long run he thinks a VAT (a version of a sales tax, which he admits would be regressive but is not particularly concerned about this) would be the way to go.
This position is a classic noblesse oblige maneuver. While ostensibly attacking those other elite members – those who have no sense of social duty – Krugman is effectively asserting that policy should not be set by the irrational masses. And, sometime in the not too distant future, regressive taxes would be the solution.
Even a cursory look at Krugman’s case reveals how weak it is. To begin with, despite the constant drumming in elite media about deficits, the public places deficit reduction at a very distant second to “economy and jobs” as the top priorities on the public agenda. Where is Krugman’s praise for the public for supporting what he considers as being the correct economic policy?
Secondly, the data he cites shows that as of 2011, a large part of the public is ready to cut the “defense” budget and that support for this cut has grown dramatically over the last two years. Far from being irrational, then, the public is taking the most rational position conceivable: the U.S. military budget is about 55% of the entire discretionary budget, so that is where the money is. Furthermore, this huge budget enables the U.S. to pursue two unpopular wars (1, 2). What could be a better place to cut?
Third, about those taxes: people do not favor “taxes on businesses”, “sales taxes” (Krugman’s favorite), or “personal income taxes”, but they do support, consistently, and as Krugman himself knew back in December, increased taxes on the rich. Again, far from being irrational, then, the public is taking the most rational position conceivable: taxing the rich is effective because the that is where the money is. Furthermore, all that money is being used to tilt the government ever more in favor of the rich. What could be a better target for a tax raise?
Thus, Krugman’s facile argument is transparently faulty. It is a sad testimony as to the intellectual and moral state of the American establishment elite (in fact, of Western establishment elite) that Krugman is actually among the best specimens that elite can offer.
Interestingly, there is more to be said on this topic. The public’s policy choices as reflected by opinion polls, despite being obviously better than what either elite faction offers, can, of course, be expected to be severely under-informed and hurriedly considered. A representative decision-making body could be expected to make more informed and reasoned decisions. A preview – just a preview – of such a decision making process is provided by the Program for Public Consultation: American Public Shows How it Would Cut the Budget Deficit. Makes for illuminating reading – one of those opportunities to learn something new that the big shot Nobel prize-winning economist appreciates so:
A new study finds that when average Americans are presented the federal budget in some detail, most are able to dramatically reduce the budget deficit and resolve the Social Security shortfall.
In December the Chairs of the President’s Fiscal Commission released their proposal for addressing the budget deficit and the projected shortfalls for Social Security and Medicare. This new study shows how the American public would deal with these challenges.
Through a combination of spending cuts and tax increases, on average, respondents cut the discretionary budget deficit projected for 2015 by seventy percent. Six in ten solved the problem of the projected Social Security shortfall through adjustments in payroll taxes, premiums, and benefits. The projected Medicare shortfall was also dramatically reduced.
The study was conducted by the Program for Public Consultation (PPC), affiliated with the School of Public Policy at the University of Maryland, and fielded by Knowledge Networks. Unlike conventional polls PPC consults with the public by first presenting respondents with information on policy issues and a range of options for addressing them.
As an aside, the Program for Public Consultation study also puts to shame Fishkin’s Deliberative Polls(tm). The decision canvas is much grander, organizer control of the setup is much looser, no consent was requested from governing elites, and the results are at least as informed and informative. This is the area which experiments in sortition-based government should be exploring.