Tuesday, September 11, 2012

Tuesday Morning Links

This and that for your Tuesday reading.

- Don Lenihan responds to Allan Gregg's recent critique of Canadian politics, featuring this on the connection that ought to exist between ideology and policy:
First, the fact that a policy is based on ideological conviction does not mean it is opposed to reason. According to Gregg, “to follow a course based on dogma or ideology, it becomes necessary to remove science and reason.” I disagree. As I wrote a few weeks ago, each of us has only a limited knowledge of the society around us. An ideology is a system of beliefs about the world that provides us with a bigger picture by giving us a story about our society as a whole. This story helps us interpret our experience and develop political views.

The story may be a left- or right-leaning one; and it will certainly generate convictions. But it doesn’t follow that these are either blind or irrational, even though they are often inconclusive. Take the right-wing view that robust social programs create dependency. While not everyone believes this, lots of very reasonable people do and lots of good policies have been based on it.

The lesson is that ideology can be — and often is — a legitimate source of policy. 
- Meanwhile, the Cons' push to make policy based on the least information possible continues abroad, with the sudden move to cut all ties with Iran serving as the latest example. Brian Stewart tries to explain why they might "embrace surprise and bafflement" as their foreign policy cornerstones, while Andrew Coyne points out a conspicuous lack of a reasonable explanation so far and Doug Saunders notes that the effect is to utterly negate Canada's ability to influence Iran from here on in.

- But let's acknowledge that the Cons are at least consistent in their efforts to suppress information: having imposed total communication control over all the levers of government under their direct influence, they're now trying to make sure supposedly independent institutions like the Auditor General are equally unable to communicate anything but Con-approved talking points.

- Finally, Alexander Stille writes about the connection between wealth inequality (particularly when it comes to inheritances) and economic stagnation - featuring an explanation as to why the status-seeking wealthy may see their interests served by tough times for society at large:
Joseph Stiglitz, the Nobel Prize-winning economist, also believes that low growth and inequality are interconnected, but he believes that the causal arrow moves in the opposite direction. As he put it in a recent interview, "I think it's inequality that's causing low growth." In his new book The Price of Inequality, he writes that, "Politics have shaped the market, and shaped it in ways that advantage the top at the expense of the rest." Rent-seeking, the ability of entrenched elites to allocate resources to themselves and smother opportunity for others, invariably leads to a less competitive market and lower growth.
But, according to Ilyana Kuziemko, an economist at Princeton University, there is also evidence that low growth does indeed increase inequality. Public-opinion data and experimental research indicate that people (or at least Americans) become less favorable to income redistribution during economic hard times. Gallup polls, for example, show support in the US for reducing inequality falling from 68% to 57% during the current recession, despite all of the public rhetoric — and evidence — that the top 1% of income earners have captured almost all of the gains from economic growth in recent years.

Curiously, hard times may actually trigger among the economy's losers a psychological mechanism known as "last-place aversion." Experimental economists have found that subjects asked to play distribution games become much less generous toward those below them when they are in second-to-last place. They would rather distribute money to those above them on the totem pole than help those at the bottom to surpass them.
Thus, a slow-growth/high-inequality economy may become a self-perpetuating cycle.

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