• Print
  • TWEET

Economics & Humanity

In response to:

What Kind of Country Do We Want? from the June 11, 2020 issue

To the Editors:

Marilynne Robinson’s essay “What Kind of Country Do We Want?” [NYR, June 11] is great on rhetoric as it pushes most of the emotional buttons, but is uninformed and incoherent. Because it is a long article, I will only mention a few areas of concern.

Here is a quote from the first page: “The global economic order has meant that the poor will remain poor.” On the contrary, the global economic order (freer trade between countries and less government control of the economy) has meant that hundreds of millions of the poorest of the poor, those in China and India, have escaped (extreme) poverty, and tens of millions if not more have moved into the middle class in the last few decades.

Most of the article is devoted to criticizing cost-benefit analysis. Consider the following quotes: “The cult of cost/benefit—of the profit motive made granular, cellular—not only trivializes but also attacks whatever resists its terms.” “This theory has all the power among us of an ideology, though it lacks any account of past or future, any vision of ultimate human well-being.” I wish that I had the talent to write such sentences. Unfortunately, these statements are the opposite of what cost-benefit analysis actually tries to do.

Let me first illustrate with a recent proposal by Janet Yellen and supported by 3,500 economists (economics being the intellectual source of cost-benefit analysis). This proposal argued for a carbon tax, which would shift energy production to more costly methods of producing energy and reduce present consumption for the benefit of future generations. At the same time, the proposal suggested that the proceeds of the tax go to those with low income. Simply put, the cost-benefit analysis argued that the benefit to future generations outweighed the cost to the present generation. Note that contrary to the above quotes, future well-being is taken into account and there is no discussion of profit.

In the context of the above paragraph, Robinson’s support of the Yellow Vest movement in France is ironic because the spark that set off the Yellow Vest movement was that individuals (not all of them poor) were angry that they would have to pay more for their gasoline and diesel. It appears that the Yellow Vests were not interested in future generations, but the cost to themselves.

Robinson is in favor of raising the minimum wage and attributes numerous benefits that would be forthcoming. Unfortunately, because she does not believe in cost-benefit analysis, she does not consider the possibility that there might be costs to unskilled workers from raising the minimum wage, for example, fewer unskilled workers might be employed when the minimum wage is increased. If wages were to go up to the level that Robinson would like, the price of fast food, house cleaners, and other commodities and services provided by low-paid service workers would go up, and the purchases of these commodities and services by middle-class people would go down, in turn resulting in lower employment for the least skilled. The mere fact that she does not even consider such a possibility is the problem here and in much of the rest of her article when she only considers one side of a complicated situation.

I suggest that novelists should not write essays on economics and that economists should not write essays on literature.

Donald Wittman
Professor of Economics
University of California at Santa Cruz
Santa Cruz, California

Marilynne Robinson replies:

First, Donald Wittman describes developments under the economic system he defends that, on their face, are just the opposite of what we have seen happening in America. Our middle class has been contracting, and poverty among us has been increasing. (I must stipulate that he and I are both speaking in terms of the status quo ante, the world before the pandemic. For him this means he may be claiming ameliorations that, to the extent they were real, are vanishing globally. For me it means that the criticisms I make of the newly old order are made in the hope that we can create a more humane order in its place, one that will do less violence to those emotional buttons he mentions.) In our present state of uncertainty, the model of past practice amounts to no more than a theory about the consequences of continuing in the course pursued until a few months ago, assuming that to continue in it will be possible. Important decisions will be made on the basis of discussions like this one. So we need some definitions.

He speaks of millions rescued from “(extreme) poverty”—to enjoy the comforts of unmodified poverty, presumably. Those parentheses are his. Let us assume that the improvements he describes are real and meaningful, weighed against environmental and other costs. Whether these changes would be sustainable as the American economy, so long the engine of the world economy, is dismantled is another question. So many variables have been added to the situation that the old answers, whether yes or no, are now strictly hypothetical. We do know and can say with confidence that issues of social justice in this country, economic in their origins and their effects, have grown worse. The pandemic underscores the injustices that have been tolerated among us on the theory that economics should make civil and moral choices for us, or, more precisely, should obviate them.

In our present limbo, when so little can be known about future demand for energy, Janet Yellen’s proposal for a carbon tax showering benefits on the poor and on posterity looks a little dreamy. It is telling that no actual policy is cited to show that these admirable impulses have yielded anything more substantive than 3,500 signatures. As for the Yellow Vests, an economist should know that the cost of fuel affects the cost of all kinds of goods and services as well as of commuting and personal travel. As rural economies thin out, the need for diesel and gasoline increases, which for people in marginal circumstances introduces an urgency that is not captured by the term “self-interest.”

Who has not heard, ad nauseam, the argument that a higher minimum wage would exclude the unskilled from employment? This is a pure instance of the exploitation of poverty. The idea is that these people should work in order to work, with something like subsistence as a side benefit. They should do this to subsidize the “job creators” who would not survive the real cost of doing business. But we all know that low-income people spend because they need things. With a little discretionary income, they buy things that strengthen local economies. Macroeconomics is notoriously indifferent to the local, but it is the basis of effectively, equitably distributed wealth.