Month: February 2020

Everything Matches

Posted on by jabittan
Tyler Cowen is worried about our matching technology. We have algorithms which tell us what TV shows to watch, which books to read, what wine to drink, and what shoes to wear. We can be matched with romantic partners and music, and very often our matching gives us exactly what we wanted and were hoping for. But, in the eyes of Cowen, all this matching has a dark side. It can make us complacent and can lead to greater segregation between people with different backgrounds, experiences, and interests.

 

In his book The Complacent Class Cowen writes, “Better matching for all its pleasures and virtues, is also in some regards uncomfortably close to the concept of more segregation … Very often we match to what we already like, or what is already like us. Matching brings many new and varied delights into our lives, but in a lot of spheres, the like-to-like effects of matching outweigh the ability of matching to shake us up. That is partly why matching can make us so happy.”

 

We like matching. We like knowing that other people like us already like the restaurant we are going to, or the show that is on tv, or the song that is about to play. We like when things are similar to what we already know. It reduces our cognitive burden and eliminates the stress of picking something and spending money on something we ultimately do not like. We are all risk averse to losing money, and hate the feeling of sunk costs. Matching makes us happy by making decisions more simple and helping us avoid the feeling of loss. It reduces our worries and in many instances, such as auto-playing shows online, we don’t even have to make a decision at all.

 

At the same time, matching technology reduces the chances for us to find something new. Up-and-coming artists with a new take on an old style can have trouble breaking through if the algorithms don’t match them with our tastes. We might miss out on great new content because our matching technology put us in a certain silo. When we reduce opportunities for new experiences, we stagnate, leading to the complacency that Cowen feared as we lose a belief that we could be something better than what we are and currently have.

 

A further downside to the matching technology we use is the potential for extreme segregation. If we really like one sport, then we can be pushed ever further into the specifics of that sport. Our algorithms can provide more and more specific content, advertisements, and connections to that single sport, eliminating things unrelated to the sport from our orbit. As we get further along, we might find that all the people we interact with are also obsessed with our particular team from one particular sport, and we will lose some ability to be with people who are not also living in the same bubble.

 

The sports example is a relatively harmless side of segregation, but it can be worse. Racial, political, and religious segregation are also possible with our matching technology. As we burrow down in our own communities, in real life or online, we may alienate those who do not look, think, and hold the same preferences that we do, leading to situations where we cannot have meaningful interactions with diverse people. This type of segregation is not healthy in a democracy because it makes shared visions and understandings of society and culture impossible across different isolated bubbles.

 

Our matching might make us happy and reduce our cognitive load, but it certainly comes with dangerous downsides. We can embrace the matching technology we have, but we should also be aware of what can happen if we let it make too many decisions in our lives. We should also find ways, times, and spaces where we can get beyond the matching to try something new and experience something beyond our typical bubble.

Stagnation

Posted on by jabittan
Tyler Cowen’s book The Complacent Class challenged my thinking on a moral level that I had not expected. He argues in the book that it is morally imperative that we make efforts to increase global GDP and encourage economic productivity and development because it will raise living standards and improve people’s lives at a level that individual interventions cannot. After reading his book and listening to him discuss his ideas, I think he is correct, and I think his concerns about a lack of innovation and a general stagnation in the United States has a solid foundation.

 

In the book, Cowen writes about his main area of focus and consideration regarding progress and development. He writes, “The ultimate measure of technological progress is not the number of gadgets we own, but rather how much better are lives are.” Complacency, in Cowen’s view, doesn’t care if our lives are getting any better. Complacency says that what we have satisfices. We are not really maximizing our lives along any particular dimension, but we are generally content with the status quo, and not pushing new frontiers. To Cowen, this is a dangerous place to find ourselves.

 

“The income of the median or typical American household is down since 2000, and unless wage gains are very strong in the next few years,” writes Cowen, “this country essentially will have gone twenty years with wage stagnation or near wage stagnation for median earners.”

 

Stagnation might not just be bad, it might be a moral failure. If we can improve the standards of living for people across the globe, free up time, increase productivity and efficiency, we can help lift more people out of destitute poverty. Increases in technology can bring increases in living standards that help people get away from indoor wood-fire cooking, access healthy drinking water, and generally avoid unsanitary conditions that lead to preventable health conditions. Increasing productivity and global GDP might just be the best way to help reduce suffering across the planet.

 

The statistics on stagnation suggest that we are not moving forward but instead sitting where we are in a state of complacency. Stagnation likely describes part of the opioid crisis and the anti-immigrant sentiment that fuels right-wing government coalitions across the globe. Stagnation projects a fixed pie that we all get a small share of. Each slice is just enough for us to be content, but any dreams of enlarging the pie are gone. This is Cowen’s fear, and the statistics on wage stagnation seem to suggest that it is the reality we are facing in our country today, and that complacency could have dramatic impacts for global development and the lives of billions of people beyond the borders of the United States.

Chaos and Innovation

Posted on by jabittan
The last few weeks I have been thinking quite a bit about chain restaurants. At some point in the recent past, I started to really dislike your typical chain restaurant. Perhaps my wife and I were gifted too many gift cards to Darden Restaurants, but I find myself feeling slightly disdainful toward chains and longing for the uniqueness of small locally owned restaurants. I’ve had trouble keeping chain restaurants off my mind, and I have been asking why they become so popular, why people get so excited when they spread, and why they have such staying power.

 

In his book The Complacent Class, George Mason economist Tyler Cowen offers an answer. He describes chains as being popular because they make the choices easier for the consumer. They standardize their products and environments, making decisions for consumers easy and automatic. They are also easily recognizable and expensive chains can be a simple way to signal wealth. Their products and services in general probably won’t blow anyone away, but things will always be predictably decent.

 

Cowen offers this as an explanation for why chains dominate markets, but also cautions against this market domination. He writes:

 

“As chain stores rise, there is also a loss of dynamism, competition, and market entry for new ideas and products. Keep in mind that today’s major chain was once a small individual store on a street somewhere. A bit more economic chaos, even if it is inconvenient in the short run, actually tends to be correlated with higher rates of innovation.”

 

When you go to a chain restaurant, you can be pretty confident that you will get a decent meal. You can be sure that the menu won’t have anything too strange on it, so you can almost throw a dart and select something generally in line with your usual tastes.

 

Go to a street corner food vendor, a locally owned ethnic restaurant, or that fusion joint that recently popped up, and the guarantee that you will know what you want to order is gone. Ordering is more difficult and you won’t have the certainty that you will enjoy whatever you order. This is great if you want something unique and new, but if you don’t feel like making more tough choices at the end of the day, this is another obstacle to a full belly.

 

The problem, however, with chain restaurants is that once they become dominant, and once they have a menu where everything generally appeals to the median customer’s pallet, there is little incentive for new innovations in the food space. Marginal gains won’t be found in new menu items and unique flavors, but rather in smaller portions and new ways of cutting costs or managing the supply chain. We might get some efficiency gains in this model, but the innovation has nothing to do with the product or service we receive, it is entirely focused on further back-end standardization.

 

We may all be happy and get what we want from this type of model, but we might also be foregoing greater gains from new innovations to the actual products and services themselves. More competition between restaurants might lead to even more new fusion joints, and we might get to experience new irresistible flavors that far surpass the standardized food options at chain restaurants.  It may be chaotic and hard to sort through at times, but settling for easy products and services might make us worse off in the end than if we made more of an effort to find something interesting and excellent.

To Wear a Sweater or Not?

Posted on by jabittan
There is a story that I hear from time to time in different contexts. Depending on the context, it is framed as either positive or negative, with different ideas about what our future holds and how we should behave. The story manages to hit political and social identities, aspirations and fears for the future, and concerns over self-sufficiency and parochialism. The story is about a president who encouraged us to wear sweaters during the winter.

 

I’ll start off with the negative view, one perspective of which Tyler Cowen expresses in his book The Complacent Class. He writes, “Jimmy Carter put on a sweater and urged Americans to turn down the thermostat, representing a new era of lowered aspirations. In other words, the American response to economic adversity was to seek to restore comfort more than dynamism, and Americans pushed their culture in this direction all the more in the 1980s.”

 

Cowen’s critique is that as a response to inflation and oil insecurity from foreign oil dependence, Carter suggested we accept limitations and lower expectations. Our president at the time did not encouraging Americans to find new ways to make the world the way they want it. I think this critique is fair. Instead of imagining that the world could be better, that we could be comfortably warm and energy independent through new technology, the story suggest we should just deal with some level of discomfort.

 

I’ve heard others reflect on this story in a similar way. They criticize Carter for a defeatist attitude and for thinking small. People don’t like the parochial feeling of having an elitist person tell them to be tougher and to put on another layer rather than be comfortable but use more resources. Its easy to understand why someone might have the mindset that they deserve to run the heat, even if it is wasteful, because they worked hard to be comfortable and they can afford it.

 

I also think there is value to having our top political leaders signal that we can be more and that we can use science, technology, innovations, and a sense of purpose to make the world a better place. Perhaps encouraging us to keep the thermostats where they were, but also encouraging us to, as the line from the movie The Martian says, “science the shit out of this” would have landed us in a better place than where we are now.

 

But on the other hand, perhaps Carter was right. I have heard people praise Carter for being honest and realistic with the American public. I have heard people criticize Reagan, Carter’s successor, as being an out of touch elitist wearing a suit 24/7. I think people today desire a president like Carter who would signal that they were more in touch with America by turning down the temperature in the White House, making a personal sacrifice themselves before asking others to do the same.

 

Carter’s statement that we need to conserve resources and think critically suggest that we should not just use resources in a wanton fashion. This is a sentiment that climate activists today are trying to mainstream, and perhaps if we had listened more carefully to Carter, we could have shifted our technology to be more green, less resource demanding, and less polluting. After all, who are we to decide that the world should perfectly suit us for every moment of our existence? Isn’t a little discomfort OK, and isn’t it a good thing for us to recognize that the world doesn’t revolve around us? Is it better if we turn the thermostat down, put on a sweater, and pull out a board game to play with friends and family rather than crank up the heat and stare at our screens?

 

My takeaway from this story almost has nothing to do with the story itself. Whether we decide Carter was right probably has more to do with who we want to be, who we want the world to see us as, and what is in our self-interest than it does with whether we truly believe his attitude reflected and encouraged complacency. My takeaway is that events happen in this world, and we attach stories and meanings to the events that can be understood in different ways depending on our background and context. The narrative we create and attach to an event matters, and it shapes what we see, what we believe, and in some ways how we feel about the things that happen in the world. Think deeply about your goals, what you want to achieve, and how a narrative can help you reach those goals, and you will find the ways to tie that narrative into an event. At the same time, watch for how others do the same thing, and when you have discussions with others and want to change their mind, be cognizant of the narratives at play before you go about throwing statistics and facts at someone. Maybe a new narrative will be more effective than a bunch of economics and math.

Segregation of Trust and Opportunity

Posted on by jabittan
“Very often the United States deals with its problems by sending them away to a different part of the country or a different part of town or, saddest of all, by sending them to jail,” writes Tyler Cowen in The Complacent Class. Cowen addresses our problems of segregation and incarceration in his book and looks at the strange reality in the United States where we have several booming metropolitan economies across the country and regions with high trust, cooperation, and philanthropy, but nevertheless we lead the world in the number of people incarcerated. Cowen sees our incarceration problem and this split between productivity and apparent moral/social failure as a consequence of American complacency in our modern age.

 

He writes, “Alexis de Tocqueville originally visited the United States to study its prison system, noting that [i]n no country is criminal justice administered with more mildness than in the United States. That has not been the case for some time.” We arrest a large number of people, many of whom have had high exposures to lead, have mental illnesses that have not been diagnosed, or have been implicated in implicit bias. Rather than confronting difficult realities and striving to improve society for those of us who are the worst off, there are some senses in which we have chosen to jail those of us who fall short rather than striving toward a better society.

 

“Cooperation is very often furthered by segregating those who do not fit in. That creates some superclusters of cooperation among the quality cooperators and a fair amount of chaos and dysfunctionality elsewhere.”

 

Complacency is taking the challenges and the hard parts of life and society and putting them in a box. We take the people who have failed, those who were not brought along through progress and development (often due to explicit exclusion), and set them aside. We physically locate them in prisons, run away from them to suburbs, or push them out of the downtown spaces we want to revitalize. Rather than working with these individuals and figuring out how we can help them connect with our globalized economy to find a way to be productive and engaged in the world, we shut them out and ignore them.

 

Cowen complains that we have lost a sense of betterment. We don’t believe we can solve big problems anymore, and instead of trying, we burrow into our own niches and push aside those who don’t fit with the narrow vision we want to realize. To get beyond this complacency requires inclusionary thinking that asks big questions about making the world better for everyone as opposed to just making ourselves better. Complacency segregates and ignores while the ambition we need to jump-start productivity acknowledges, innovates, and includes.

Why Tyler Cowen is Worried About Segregation and Selectionism

Posted on by jabittan
Tyler Cowen’s book The Complacent Class could have been called The Catered Class, and he takes a critical look at the ways we settle for simplicity and comfort in our lives rather than strive for greatness. In the book, Cowen makes the argument that the American Middle-Class (but really all of American culture) has become complacent in our approaches to life, relationships, careers, entertainment, and more. He suggest that we are seeing a slowdown in our economic advances and in productivity because we are creating tools that make us more complacent as opposed to creating tools that fuel an ambition to grow and make the world something better than what we can imagine right now. What is worse, these complacent tools cater to our desires for homogeneity, make inaction easier than action, deplete our sense of agency, and have serious long-term consequences.

 

Much of our technology today includes an algorithm to help us select more of things that we have already selected in the past. Amazon tells us to buy shoes that are similar to the shoes we previously bought, TV streaming services auto-play the next episode of the show we just watched or start a new show that is similar to the last, real estate sites help us navigate to neighborhoods based on our preferences and the characteristics of other buyers like us. These algorithms make us complacent.

 

Rather than take a chance with a title we have never heard of, we are directed to a show or book that people like us also buy if they have similar consumption patterns. Rather than try something new, Amazon pops up with available purchase options for the same things we have always had. Instead of wandering into and exploring new parts of town (maybe this isn’t so different than having a human being show you a part of town based on your race) we scope out the perfect house in the perfect neighborhood online. We have in some ways given our decision-making abilities to machines and a result is that we are actually becoming more segregated today than we have been in the past. We don’t have to interact with people who are not like us, don’t have to experience something new if we want to avoid it, and don’t have to see headlines that don’t correspond with what we want to believe.

 

Cowen writes about the dangers of this segregation in his book, “Segregation has yet another negative consequence: It leads to more intense sorting along political lines, so that both Democrats and Republicans will be more likely to live in communities of politically like-minded individuals. That would lead to more polarization in Congress and to some extent governmental gridlock.”

 

With technology that sorts us so efficiently, we become complacent and are catered to by our devices. This allows us to become more narrow minded as our catered news sources, entertainment options, and food delivery reinforce the idea that complacency is the ideal standard that everyone else should live up to. The idea that we would actively participate in making the world a better place has disappeared behind the veil that the world should be catered to our desires. Rather than working to understand things that are different from our own preferences and rather than working with others to create a world that actually improves our happiness and well-being, we prefer a world that tells us we are special and delivers the safe and comfortable things we want directly to our homes. Our complacency is catered to us, and it has serious consequences as we segregate ourselves and our interests, and as we give up a willingness to dream big about the possibilities of the world.

Providing Meaningful Integration Opportunities for Our Youth

Posted on by jabittan
In The Complacent Class, Tyler Cowen writes about a decline in people moving in the United States. Rates of people moving across state lines, from one city to another, or even just across town seem to be on the decline. People seem to be less willing to take risks and put themselves in new places. As a result, we have fewer people from diverse backgrounds meeting each other and getting to know each other. For children, this means they are more likely to grow up around other children like themselves, and are not as likely experience different cultures, communities, and families. They are not likely to meet other kids from different racial, socioeconomic status (SES), and cultural backgrounds.

 

Cowen identifies one counterexample to this trend in his book, but notes that it is more of a temporary departure from the trend rather than a clear reversal. Writing about young college educated couples, Cowen describes a movement back toward cities, often living in artistic neighborhoods with interesting homes and fun opportunities to engage with city life. This gives cities new life and creates pockets of diversity, but only until the children of these young couples reach school age.

 

“When they have children and it is time to send the kids to school, they often move to the suburbs, or to a more expensive part of the same city, or to a different city altogether. The integration is a kind of temporary experiment in white lives, to be reversed once the next generation comes along. It is good that so many people are willing to make this temporary experiment but bad that it doesn’t have greater staying power or turn into a means of integrating young children.”

 

I have not spent a lot of time focused on housing policy or urban planning, but I think part of Cowen’s lament can be explained by a failure in both areas. I currently live toward the outskirts of Reno, Nevada, and live in a rather diverse neighborhood. Our home prices are not as out of control as other areas in Reno, and as a result we have a racially diverse set of people in our small out of the way neighborhood. However, it is hard to get to where we live. There are a only few main streets which all get very backed-up with traffic. We also don’t have a good park in our neighborhood, lack good sidewalks, and don’t have a lot of street lights. These factors diminish the attractiveness of the neighborhood and reduce the sense of (or opportunity for) community among the homeowners and renters here.

 

My wife and I are looking to move to part of town that is more accessible and easier for our work commutes. We hope to have a place with nice sidewalks for walking the dog and some open spaces for picnics or more dog activities. We have been looking into parts of town with higher home prices, which will likely result in us living in a more appealing, yet less diverse part of the city.

 

The failure of housing and urban policy is in the way we set up neighborhoods to encourage homogeneity. I understand from a housing developer that it is easier to have 3 or 4 relatively similar track-homes, however this creates a neighborhood where all the residents will have roughly the same income. Lower income individuals who cannot afford one of the houses will be pushed to less desirable neighborhoods and those who can afford to buy into the homogeneity will do so. Repeat this process enough times and you end up with the type of segregation Cowen described in the quote above.

 

I don’t want to approach the issue by saying that we will all benefit by making our neighborhoods more diverse. I don’t want to just accept that this is how things are and that “not-in-my-backyard” (NIMBY) sentiments are too strong for us to make changes. Instead, I want to be able to start a conversation that encourages us to live up to our belief that everyone deserves an equal opportunity.

 

Right now, there are children in my neighborhood who face a long commute if they want to be socially engaged with sports, music, or other extracurricular activities. These kids don’t have great places to go to play outside, and don’t have opportunities to connect with people near them to build connections to help them later in life. As a contrast to their experiences, I grew up in a neighborhood with ample space to play outside and be active, and I had neighbors who had connections that have helped me. If we truly believe in the idea of equality of opportunity, we need to find better ways to integrate young children and reverse the failures of our housing and urban development policies. These children deserve opportunities to maximize their lives and shouldn’t be locked out of opportunity simply because they grow up in parts of a city that don’t offer the same access to resources as children in other parts of the city.

A Glitch in Voting With Our Feet

Posted on by jabittan
In the United States, we hold on to terrific myths about the power of the individual. We celebrate (mostly) entrepreneurs like Elon Musk who bring us new technologies and cool cars, and we have magazines focused entirely on major business leaders whose insight and innovation power our most successful companies. We believe that individuals hold the power to change the world, and we believe that giving people freedom will lead to rational decisions on the part of individuals to find the best outcome for our country.

 

An idea that pops out of this myth is the idea of voting with our feet. The term refers to people making a decision to go someplace else, to chose something else, and to literally move ourselves with our feet to a different option. We might vote with our feet when we move from one city to another, or when we leave one store to shop at another, or quite literally in some state caucuses when we walk from one side of a room to another to support a different political candidate. We believe that our individual choices and where we chose to shop and how we chose to vote will really make a difference in the world.

 

This is only partially true, and only sometimes has the positive outcomes we hope for. In many instances, our individual choices are just not enough to overcome structural factors which entrench the status quo. Sometimes we vote with our feet, but really move from one option provided by a company to another, without really making a difference in the bottom line of the company we are voting for or against with our feet (think of moving from Facebook to Instagram, which is still owned by Facebook). Voting with our feet can also have very negative consequences, such as entrenching segregation without having anyone who is clearly to blame.

 

In The Complacent Class Tyler Cowen writes about the ways in which our society is becoming more segregated through the use of voting with our feet. Across the country we see people move into “nicer” neighborhoods which creates a level of economic, racial, and political segregation that should (I would argue) raise moral concerns. About the issue Cowen writes, “The self-selection process is running its course, and how people are voting with their feet often differs from which is coming out of their mouths.”

 

Many people who believe that schools and communities should be more diverse are moving to areas with less diversity. They are not consciously choosing to live in more or less segregated areas, but they are voting with their feet to leave areas of worse economic condition but greater diversity in favor of more economically sound and culturally homogeneous regions.

 

This works because we empower the individual in our society and don’t want to do anything to limit the power of the individual’s choice. Segregation is a result of the power to vote with our feet, but it is also the dismantlement of the myth of the individual. The rational individual is not making individual choices that make the world a better place. Instead, the individual is working on feelings that lead to a desire for greater similarity between themselves and their neighbors, ultimately creating a worsening system of segregation. They are following cultural and structural factors which push us to want ever larger houses in ever more expensive neighborhoods, recreating segregation that often created pockets of towns that are so different economically and culturally. We should learn from this example that our individual choices are both not sufficient to bring about the best outcomes for our society and planet, and that simultaneously our individual choices can have a serious power to shape the world for better or worse. We must think first about the systems that structure our decisions, and then think about how we can make the most of our choices for positive, rather than negative outcomes.

Where You Live (& Are Born) Matters

Posted on by jabittan
Raj Chetty, a Harvard researcher, has done some pretty interesting work that shows that the zip code you are born into can have a huge impact on how much money you earn over the course of your life. Down to the neighborhood level, where you live, the people around you, and the connections you happen to make in life can be major determining factors in what job you take, what college your children attend, and how well off you end up financially speaking. We don’t like to address this very often, but we recognize that it is true, and we have seen increased segregation as we try to separate ourselves from living next to undesirable people and places.

 

In his book The Complacent Class: The Self-Defeating Quest for the American Dream, Tyler Cowen writes, “in 1970, only about 15 percent of families lived in neighborhoods that were unambiguously affluent or poor. By 2007, 31 percent of American families were living in such neighborhoods.” We are moving in directions where we separate ourselves from people who are not like us in terms of socioeconomic status (SES). Today, relative to 30 to 50 years ago, we are less likely to interact with someone who is very poor if we are rich. We are less likely to know anyone who does not share a generally similar SES, and we are far less likely to have any meaningful interactions with someone from a different SES. Cowen continues, “for where you live, income matters more than ever before, as can be shown by a simple perusal of the apartment ads for most of America’s leading cities.” 

 

This segregation by home value and SES has some obvious consequences, such as schools becoming more segregated by income and race and skyrocketing home prices in some regions of town coupled with deterioration and disinvestment of other regions. However, as the research from Chetty shows, there are other, less obvious consequences from our SES segregation. Where you live influences the opportunities available to you and your children.

 

We like to think that it is our own effort, talent, and hard work which determines how much money we make and where we end up financially and in terms of the home we are able to buy. Since talent, intelligence, and work ethic are evenly distributed on a genetic level, we would expect that everyone could achieve the same ends regardless of where they happened to be born. Instead, we see huge disparities by zip codes and neighborhoods in terms of ultimate SES. Our segregation is leading to situations where those who are born in wealthy areas are able to make valuable connections, learn the unwritten rules of networking to getting ahead, and receive visible reminders of what can be achieved through hard work and perseverance. Certainly people from the lowest SES background can still network and can still see the benefits of hard work, but research also suggest that when people from the lowest SES don’t have any interactions with people who are economically well off and successful in their careers, they do worse.

 

Cowen argues that our segregation by SES is making us a less robust society. Partially because we are leaving other people out, but also because it narrows the world for all of us (not just those in low SES neighborhoods) and stymies innovation, development, and progress. We are comfortable in neighborhoods with people who have a similar background and SES to our own, but this does not help us better understand the world, does not help us advocate for and support policy which might help us and others, and does not help us identify and encourage the top talent born in our country. Our complacency as we all search for our own individual American dream is crippling the American dream that we share as a nation by segregating us into complacent bubbles.

On Redistribution

Posted on by jabittan
In the United States people hate the idea of redistribution. I was remarking the other day while reading a political science journal article that American culture operates with a background sense that using public policy to improve ones economic fortunes is illegitimate. The only legitimate way, in American culture, to improve ones economic standing is through hard work in the traditional labor market.

 

This is one contributing factor to why redistribution is viewed so negatively in our country. To be seen as deserving, one has to be seen as hardworking, and hardworking and economically successful are tied in the way we think about people in our country. We use a heuristic to tell ourselves that rich people are hard working and that poor people are lazy because it is easier than considering the alternative, and it also confirms to how we want the world to work, at least if we are relatively well off or see ourselves as becoming more financially successful in the future. We want to believe that our good economic standing and future earnings potential reflect our own industriousness and not just a set of favorable circumstances beyond our control.

 

In their book The New Localism, Bruce Katz and Jeremy Nowak look at our behavior around redistribution and consider how it fits with the framework for local action that they develop. Redistribution is an area where they find an interesting split between the role of federal and local governments.

 

“Major redistributive policies, such as the earned income tax credit, are best pursued at the federal level. Federal redistribution is more effective than more local efforts because the federal government has a larger pool of income from which to draw and there is less capacity to opt out. Federal redistribution is largely people based. State redistribution is generally linked to providing support for public goods in jurisdictions with taxing capacity disadvantages.”

 

I find it really interesting to think that the federal government’s redistribution programs are more people-based than local programs, but I think I understand why that might be. At the local level, we become upset when we see a person in our community who is accepting some form of assistance from the government while simultaneously driving a new car or leaving a nail salon. In some way, when we see an actual person who is benefiting from a redistributive program and using their resources in a way we find inappropriate given what we judge their priorities to be, we feel cheated. We feel that the economic assistance provided to them should have been spent on other local pressing problems rather than on supporting someone who using the financial aid unwisely. This makes local adoption of redistributive programs for individuals more challenging. At a national level, the quote from Katz and Nowak seems to suggest, we likely won’t recall as many of these hyper-local context examples, or just won’t be as aware of the aid, and won’t be as keen to notice the effects of a redistributive policy.

 

Another local level wrinkle that influences the policy appraoches from Katz and Nowak’s quote is that we don’t want to live in a city or region that is known for its slums. Those of us who are affluent enough will likely make efforts to avoid local trailer home regions and find ways around the lower socioeconomic parts of town. We won’t want to acknowledge these regions because they make our entire community look worse, especially from the outside or when commented on by national media. These pressures may make us more willing to have government take action to “clean-up” these economically depressed regions. We see a personal benefit to ourselves in having our city invest more in economically weak regions. We don’t see the same personal benefit from redistributive programs that help other individuals.