When Politics Is Impervious to Facts

(Bloomberg Opinion) -- One way to classify someone’s political views is to look at which policies they want to see enacted into law. So a Democrat or progressive might support an expansion of public health care, whereas a Republican or conservative is more likely to favor tax cuts. But there is another way of thinking about politics: according to which policies a person wishes could work.

It is a subtle distinction, but important. Think of it as the difference between practical politics and political ideals. Sometimes you might favor or oppose a policy because of its impact — and sometimes you might regardless of its impact.

For instance, should the government ban assault weapons? One way to answer that question would be to look at whether the previous, now-expired ban worked. But opinions differ. So another way of answering the question is to ask whether you wish such a ban could work.

I have not studied the empirical literature, but I do hope that at least some of the proposed gun limitations can be made to stick, just as I hope that the ban on private nuclear weapons ownership can be enforced. It simply seems like the right place to put one’s sympathies. Others hope that gun control does not work, because they are comfortable with the idea of an America that allows widespread ownership of powerful weapons.

These wishes are not primarily judgments of fact. Nevertheless they are more important than whatever I end up deciding about the regression coefficients in the research papers. Gifted politicians have long known that their profession is often more about hope than empirical judgment. Maybe it’s time for policy analysts to recognize the same.

Another example: Many people, myself included, believe that the current political atmosphere creates a backlash against immigration from distant cultures, disrupting a nation’s politics for the worse. But there are two conclusions one can reach from this observation. One, favored by many populists, is to cackle with glee and see a confirmation for the anti-immigration viewpoint. The alternative is to wish society could absorb outsiders more willingly, and then work to help make this happen. That leaves room for liberal attitudes even if the real world denies most of the scope for actual liberal reforms.

What makes anti-immigrant populism so disturbing is not necessarily that it gives voice to this backlash against immigrants, which is undeniable. It is the absence of hope for a better world to come.

Sometimes the dimension of hope leads not toward socialistic utopianism, but in economically conservative or libertarian directions. I do not favor increasing the minimum wage to $15, because I believe it would put many people out of work. But do I wish it would work — that it could redistribute income without much damaging job prospects? The answer is still — probably not.

If the demand for labor did not respond very much to price, a corresponding logic would imply that the labor market can absorb many more immigrants, or women, only with big declines in overall wages (that is a less obvious but still true implication of an inelastic demand for labor). I don’t wish for the world to work that way, and in fact I don’t think it does. I am rooting for a world in which price signals are pretty potent.

I am reminded of these points by the recent death of the economist James Mirrlees, a Nobel laureate. His most famous contribution to the field was a model suggesting that the marginal rate of tax on the most skilled workers should be zero.

To illustrate the rationale for this view, imagine that Jerry Seinfeld is no longer doing comedy. His non-existent output, correspondingly, results in no government revenue. What if the government taxed his additional comedy work at a rate of zero? Theoretically, such a policy would encourage Seinfeld to produce more comedy shows without harming government revenue. Both Seinfeld and his audience would benefit.

Mirrlees did not think this was a practical guide to policy, if only because the tax authorities will never be able to tell at exactly what level a zero marginal tax rate will have the desired effect of inducing talented people to continue working. Instead, the model is a guide to thinking about the relevant trade-offs behind tax policy — namely, that foregone output from the talented is a major consideration.

Now, do I wish the world was arranged in such a way that zero tax rates could be handed out, at the proper margins, to these highly talented individuals? Absolutely. I don’t think you would find the same aspirational enthusiasm from the progressive left on this issue. My core stance toward highly productive businesspeople is much more positive than, say, that of Paul Krugman or Emmanuel Saez, both of whom have focused on higher marginal tax rates as a means of raising government revenue.

Assessing the empirical data is, of course, important. But to actually understand politics, even as it unfolds in the course of academic debate, it is also necessary to recognize the power of desires and aspirations.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Tyler Cowen is a Bloomberg Opinion columnist. He is a professor of economics at George Mason University and writes for the blog Marginal Revolution. His books include “The Complacent Class: The Self-Defeating Quest for the American Dream.”

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