1/A few people have noticed me tweeting a lot more about racial/cultural issues in the last two years, and less about the nuts and bolts of economics. Well, let me explain why.
2/Basically, I think the most important things in econ policy are institutions, public goods provision, and redistribution.
Essentially none of these things work right if people don't have a shared sense of national identity.
Essentially none of these things work right if people don't have a shared sense of national identity.
3/Without a shared sense of identity, public goods provision falters: nber.org/papers/w20504
And redistribution falters:
scholar.harvard.edu/files/alesina/…
And institutions degrade.
And redistribution falters:
scholar.harvard.edu/files/alesina/…
And institutions degrade.
4/Let's make this a little more concrete.
In America, we have had under-investment and political dysfunction for decades because a significant chunk of white Americans don't want to pay for stuff that benefits black Americans.
In America, we have had under-investment and political dysfunction for decades because a significant chunk of white Americans don't want to pay for stuff that benefits black Americans.
5/Now, Trump has made a bad problem even worse by turning most of that subset of white people against immigrants, Hispanics, Asians, Middle Easterners, etc.
6/This means that economists can write optimal tax models and do minimum wage studies all day long, but the people in power are not listening. They're not going to listen. bloomberg.com/view/articles/…
7/They're not going to listen because ethnic divisions (a polite euphemism for "racism") have made Republicans care much less about repairing roads and bridges, funding science, providing quality education, helping the poor, and tons of other stuff that makes a nation work.
8/Even free-market policies are stymied by identity issues.
9/Econ - or at least, the policy-focused part of econ - is about recommending optimal policies to leaders who will take your advice.
If no one takes your advice because racism trumps economic interests, policy econ is *useless*.
If no one takes your advice because racism trumps economic interests, policy econ is *useless*.
10/Economists are not specialists in identity issues. They cannot solve America's racial problems.
But I believe they can help, by doing empirical work on the subject.
But I believe they can help, by doing empirical work on the subject.
11/Economists tend to be good, careful empiricists. And they're also pretty good at publicizing their results and getting people to listen.
So it's time for economists to think more about solving the problem of racial division.
So it's time for economists to think more about solving the problem of racial division.
12/In any case, you can't think productively about economic policy in America today without thinking about identity, race, and the divisions that afflict us.
It's not what economists were trained to think about, but here we are. (end)
It's not what economists were trained to think about, but here we are. (end)
