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On Bernie Sanders, Spray Deodorants, Innovation, and Child Poverty
In my new The Week column, I look at the Bernie Sanders charge — one also leveled by Elizabeth Warren — that the US economy is an immoral, rigged game. (A funny thing to say, I think, about an economy that produces more billionaire entrepreneurs than any other large, advanced economy.) Another stellar effort by me, of course. Yet on second thought, I sort of wish I had focused on this bit of odd economic analysis by socialist Sanders:
You don’t necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers when children are hungry in this country. I don’t think the media appreciates the kind of stress that ordinary Americans are working on.
The WaPo’s Jim Tankersley writes that the “literal implication of that last sentence is that there some kind of a national trade-off between antiperspirant/Air Jordan variety and food for children.” Which of course is silly. Demos’ Matt Bruenig thinks there is a deeper point that Tankersley misses: “Whenever someone argues that we should distribute the national income more evenly so as to reduce poverty and inequality (as Sanders does), the very first thing someone says in response is that doing so will reduce growth and innovation. Sanders is mocking this argument, saying he’d gladly cut poverty and inequality even if it meant a reduction in superficial product innovation.”
Again, I am not sure why you would have to micromanage product innovation to reduce child poverty. You could just fatten the Earned Income Tax Credit, for instance, and pay for it by limiting high-end tax expenditures like mortgage interest and health exclusion. But, of course, what this is really about is Scandinavia. Isn’t it always? Bruenig:
It’s harder to know exactly who is the “most innovative,” but to the extent that people try to create such measures, these countries always do quite well. In the most recent iteration of the Global Innovation Index, Sweden (3rd) and Finland (4th) rank ahead of the US (6th) while Denmark (8th) and Norway (14th) are nearby. If entrepreneurship is what gets you excited, then note that, in the years for which there is comparable data, Finland, Sweden, and Denmark have higher enterprise birth rates (percent of companies in a year that are start ups) than the US, though Norway has a lower rate. So, despite a tax level double ours and very generous welfare benefits, these egalitarian countries do not suffer for growth, innovation or entrepreneurship. Although Bernie is amusingly (and reasonably) skeptical of the value of the innovation that high poverty and inequality is supposed to bring us, it’s also true that you can have high levels of innovation and egalitarianism at the same time.
For a different view, here are economists Daron Acemoglu, James Robinson, and Thierry Verdier from their paper “Can’t We All Be More Like Scandinavians?”:
We cannot all be like the Scandinavians, because Scandinavian capitalism depends in part on the knowledge spillovers created by the more cutthroat American capitalism. … Some countries will opt for a type of cutthroat capitalism that generates greater inequality and more innovation and will become the technology leaders, while others will free-ride on the cutthroat incentives of the leaders and choose a more cuddly form of capitalism.
And the 90% top tax rate that doesn’t seem to both Sanders is a lot higher than what they have in Scandinavia these days. More on the Scandinavia issue in my post, “On the left’s dream of turning America into Scandinavia.” It’s also worth noting that some economists see innovation as driving consumer demand, not the other way around. From economist Rick Szostak ( via Ashwin Parameswaran):
While in the short run government spending and investment have a role to play, in the long run it is per capita consumption that must rise in order for increases in per capita output to be sustained…..the reason that we consume many times more than our great-grandparents is not to be found for the most part in our consumption of greater quantities of the same items which they purchased…The bulk of the increase in consumption expenditures, however, has gone towards goods and services those not-too-distant forebears had never heard of, or could not dream of affording….Would we as a society of consumers/workers have striven as hard to achieve our present incomes if our consumption bundle had only deepened rather than widened? Hardly. It should be clear to all that the tremendous increase in per capita consumption in the past century would not have been possible if not for the introduction of a wide range of different products. Consumers do not consume a composite good X. Rather, they consume a variety of goods, and at some point run into a steeply declining marginal utility from each. As writers as diverse as Galbraith and Marshall have noted, if declining marginal utility exists with respect to each good it holds over the whole basket of goods as well…..The simple fact is that, in the absence of the creation of new goods, aggregate demand can be highly inelastic, and thus falling prices will have little effect on output.
Published in Economics
Insert jokes about malodorous hippies here.
But seriously, this is nothing new. Opposition to corporate-made hygiene products has long been a staple of the Social Justice crowd. I’ve know a few who, on principle, refused to use any form of soap.
“Water is good enough. Soap is merely a Proctor & Gamble conspiracy.”
Is he going to be derailed by that rape fantasy article he wrote in the 70’s that just surfaced?
You can’t be a lady’s champion when you claim she secretly wants to be raped by 3 men, can you?
Does anyone know what types of deodorant were used, if any, in the former Soviet Union? Other than tobacco smoke and vodka?
The best thing government can do to help feed hungry children is to eliminate all of the anti-family policies and laws that have been installed in the past 60 years, starting with the unintended consequences brought on by Johnson’s great society.
Sanders and other socialists really do have the mental capacity of an 8 yr old when it comes to economic policies. Attempts at Utopia = Dystopia.
The rape fantasies Al Franken wrote in the 80s didn’t derail his campaign so I doubt Bernie will face any consequences.
I have to be around Russians during certain times at work. Liberalization has not introduced hygiene to their culture.
Tommy. Please. He’s a lefty’s lefty. The rape thing was … Um. … Satire. That’s it. Satire. Nobody on that side of the aisle is going to give it a second thought. Becauce his politics are correct, everythinh else about him is presumptively fair, and just.
The thing about what Bernie said about kids in America going hungry is that it just isn’t true. When they calculate ‘poverty’ in America they exclude government benefits. Including benefits, the number of American children ‘living in poverty’ is vanishingly small. You’d think they would celebrate the success of the anti-poverty programs. But since enough is never enough, they keep on banging the drum for more.
Are you saying that Russians are involved in moving our military missles?
You’re probably right. Times have changed.
Gary Hart couldn’t be President because a girl sat on his lap.
Good grief.
No, we have treaties with that require certain interactions. I’ve driven with the windows down in the middle of winter. The smell of tobacco and vodka would have been a major upgrade.
Why do they always think they can regulate innovation? As if inventing another “unnecessary” deodorant and figuring out a way to feed everyone for a penny a year are somehow interchangeable innovations.
What is discovered isn’t exactly what you set out to discover in most cases, and some discovery is pure accident (some of these are also revolutionary, like x-rays and penicillin). Less innovation is always bad for these reasons. Even if most of it is gimmicky and banal it may break major ground in another field.
Maybe some innovation in deodorant propellant turns out to be an amazing pesticide which makes food significantly cheaper, or something.
And about your tax rates, 90% rate on what? Income? Not many people make enough income-wise to hit the top brackets anyway.
Most income the rich earn they earn in the form of accumulated capital and dividends, on which there is a flat tax, and plenty of ways to defer taxes in this realm. If the brackets changed much you’d just see behavioral changes to mitigate the effects anyway.
Your Pander-Style Kung Fu is weak Bernie. I’ll bet you don’t even Socialist.
For a different view, here are economists Daron Acemoglu, James Robinson, and Thierry Verdier from their paper “Can’t We All Be More Like Scandinavians?”:
As soon as I see the words “cutthroat capitalism,” I tune out. These are not real economists.
Just as an FYI. Its not that the far left thinks they can regulate innovation. That is not their point at all. They see this as an example of the basic ‘inhumanity’ of capitalism. In the socialist paradise (which is coming any day now) resources would be allocated to feeding the population before worrying about something as trivial as deodorant…forget 23 varieties.
To the leftist ear this sounds like wisdom. The thing they forget is that because of the production of those 23 different deodorants tens of thousands of people earn a living for themselves and their families, pay taxes, contribute to charity etc.
Easy to knock Bernie Sanders’ ideas, you don’t need a degree in finance or economics to ridicule him. But what’s with the above quote? Knock socialism so you can promote socialism lite?
Isn’t this more: wacky Democrat proposes outrageous new policy, Republican counters with ” I know how to reduce child poverty, here’s my *socialist lite* proposal that actually makes sense.” Democrats agree after Republican makes a couple more concessions. Bigger EITC, “child poverty” remains. Rinse, repeat. That’s how we got here.
So wait. Employing people causes poverty?
Is the American economy immoral? Some of it. Is it rigged? Definitely some of it is. Are the opportunities for common people less than they once were as a result of the modern economy? To some degree.
Does that mean Socialism is a better way? Hell no. Better a game where only a part is rigged than the whole game being fixed.
Look at most people using EBT cards, and then tell me they’re starving. Lack of food is not a problem the poor have had for a long, long time.
OK, I admit, analysis paralysis can be a bit stressful. It might be less stressful to choose spray deodorants if there were only 5 brands rather than 23. Maybe this means you’re stuck with brands that don’t work too well for you – but at least you’re saved from the stress of a surfeit of choices.
Thanks, Bernie Sanders!
Isn’t there an old joke about an incumbent (male) politician who is a sure thing for re-election unless “caught in bed with a dead girl or a live boy”?
I imagine that even a “live boy” wouldn’t do it nowadays.
We can’t be like Scandinavians because we’re not Scandinavians.
We are a large, diverse country, which is why single-payer in the US isn’t Canada’s health care, it’s the VA. In general, you shouldn’t directly compare country policies.
You look to other countries to get an idea at the effects of trends, not specific policies. You do not ask “what is Norway’s income tax system, so we can find out what that tax system will do to the US”. You ask “what happens when countries change their income tax system, so we can get an idea for how such changes might affect the US”.
So the true question here is: Looking at all countries, can we make any predictions about the relationship between increases in welfare spending and their effects on innovation?
“You don’t necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers when children are hungry in this country. I don’t think the media appreciates the kind of stress that ordinary Americans are working on.”
You don’t need selfies of me trying those 23 kinds, Sanders, but you’re going to get them
Great post, Troy! I think it is interesting that Bernie Sanders’ idea (if you can call it that) that we can do with less variety of deodorant and that that asceticism on our part will translate into more food for starving children doesn’t leave everyone thinking: “what the hell are you *talking* about?!?!”
Somehow, in some way, to some people it seems obvious that if we only forgo wider choices in consumer goods that means that fewer children will starve. Why is that?
I think it is basically that the free market is subtle. The conservative argument is subtle. It is not the case that some people are impoverished *because* other people are wealthy.
JPeth should be tremendously flattered ;-)
There was a psycologist on a TED talk saying that choice makes us unhappy, and the salad dressing aisles were just the worst because how could someone choose between 151 different salad dressing options? If you pick the wrong one and you don’t like it, you will be unhappy.
Apparently this guy hasn’t watched every single ted talk ev-ar. Information has a price, and we can fail fast and fail often until you succeed.
1.) Salad Dressing is cheap, as such the price of information is cheap.
2.) The goal is to not pick THE BEST salad dressing, its to pick one that you will put on your salad for the coming shopping interval.
If you do buy one and don’t like it, know you know you don’t like it or even that kind.
;-)