Bad Incentives That Work Quite Well: The Opportunity Cost of Political Partisanship

Nick Kristof, writing in the N.Y. Times:

This is what poverty sometimes looks like in America: parents here in Appalachian hill country pulling their children out of literacy classes. Moms and dads fear that if kids learn to read, they are less likely to qualify for a monthly check for having an intellectual disability.

Many people in hillside mobile homes here are poor and desperate, and a $698 monthly check per child from the Supplemental Security Income program goes a long way — and those checks continue until the child turns 18.

And:

This is painful for a liberal to admit, but conservatives have a point when they suggest that America’s safety net can sometimes entangle people in a soul-crushing dependency. Our poverty programs do rescue many people, but other times they backfire.

Some young people here don’t join the military (a traditional escape route for poor, rural Americans) because it’s easier to rely on food stamps and disability payments.

Antipoverty programs also discourage marriage: In a means-tested program like S.S.I., a woman raising a child may receive a bigger check if she refrains from marrying that hard-working guy she likes. 

And:

“One of the ways you get on this program is having problems in school,” notes Richard V. Burkhauser, a Cornell University economist who co-wrote a book last year about these disability programs. “If you do better in school, you threaten the income of the parents. It’s a terrible incentive.”

I have always admired Kristof as a person and a writer and if you don’t know his work, this column is a good place to start (as well as his book Half the Sky, co-written with his wife Sheryl WuDunn).

Let me add just one tangential observation — about our hyper-partisan political environment. When people talk about this partisanship, one element that’s overlooked is the opportunity cost. Look at that sentence Kristof wrote:

This is painful for a liberal to admit, but conservatives have a point when they suggest that America’s safety net can sometimes entangle people in a soul-crushing dependency.

Kristof is a measured, humble, fact-based writer — the very opposite of the typical partisan flame-thrower — but it’s hard for me to imagine reading a sentence like that, written by practically anyone, before the recent Presidential election.

During a heated election period (which, in the case of the 2012 election, arguably went back all the way to 2008!), advocates on both sides of the aisle are so worried about giving their opponent any ammunition that it affects what they say, how they say it, and how loudly.

The result is more silo-speak — liberals and conservatives each shouting to their blind followers, and demonizing any dissent — and less worthwhile public thinking. I think back to how Bryan Caplan put it in a recent podcast:

People have often said that politics has been the religion of the 20th century, and I think there’s a lot to that. In the same way that people get attached to a religion, they get attached to a political party. And once you’re part of it, you don’t want to hear someone talking about the horrible things that your religion or your party did in the past. You don’t want to go and say the people who now run it might be morally questionable, or hypocritical, or just wrong. Instead, you want to find a sense of community with a bunch of like-minded people. You all tell each other how wonderful you are and try to defeat your Satanic enemies who for some strange reason continue to dispute the truth that you have obtained.

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  1. Nosybear says:

    Politics as religion – interesting. Religion, science and now politics are mental models we use to understand the world, one of the three is effective but this is a digression. Yes, this Liberal knows that there are those who manipulate the social safety net system. I have extended family members who do so. This is a result of some perverse incentives that give a family more income for having another baby, as an example. This is not the first historical example: Many of our beer styles today exist because of taxation schemes someone figured out a way around. Even architectural styles exist because of efforts to tax building owners based on the number of windows facing the street. No matter what we do, there will be those who manage to find a way around it, for example, some fairly wealthy friends who live in Colorado and own a house in Texas to avoid our state income tax. It’s inevitable. Key, Right, is to make the system work for those who really need it but then, what do we do with the others? I hardly think starvation on streetcorners is acceptable for the US.

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    • Joe J says:

      ” I hardly think starvation on streetcorners is acceptable for the US.”
      The problem with that statement is obesity, not stavation, is the more likely problem facing poor in the US. Recognising that fact, one must also recognise how far the scales have tipped away from a hand up towards dependency/lifestyle.

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      • mr gray says:

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  2. Roger Dooley says:

    Well said! If politicians, and the legions of partisans who support them, could simply carry on adult, fact-based conversations, imagine what we could accomplish!

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  3. Jaime says:

    I would love to this kind of assessment be put into context as compared against the incentives rich people have to find and exploit tax-reduction loopholes. Mainly to see the comparative effects of both and get a measure of which of those problems should be tackled first. (Although admittedly, in order to be fair this would also need to include the cost of enforcing any measure to stop either of these “exploits”).

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    • Joe J says:

      In perspective, sure that’s easy. It’s human nature, everyone is a little greedy and a little lazy. That’s everyone, rich and poor. So when a politician says my group doesn’t do bad behavior but the other group always does it. Both parts are wrong. Both groups have a percentage of people try to do the ‘bad’ stuff at about the same rate. Why about the same rate? Because they are both human and we are talking human nature.

      As to the enforcement cost, that can actually be lessend a great deal, by simplifying both. We don’t need 187 different kinds of “welfare like programs” which just adds to the confusion and misdirection. WHen someone claims people on welfare only get $X they often deliberately ignore, they also get X in food stamps, X in housing allowance, X in medicaid, X in child care, etc. on Federal, state and local levels. Asking for reform is not wanting to starve people.

      And on the other side, noone can understand the jumbled mess of contradicitions exemptions and rules in a standard 1040. Can anyone honestly say their tax forms are guaranteed 100% accurate, even if they are trying to be honest. That just breeds accounting tweeks, that only those with full time accountants can even attempt to figure out. And this doesn’t even touch on the accounting gymnastics of companys, stocks, bonds, options, etc. Asking for tax “fairness’ assumes you can get any 2 people to agree on what fair means.

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    • J1 says:

      Which problem should be tackled first seems an easy decision. I’m pretty sure there aren’t any tax loopholes for the rich that make having more children out of wedlock or intentionally keeping your child illiterate a (perceived) rational economic decision.

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      • csdx says:

        Actually, given that it can be disadvantageous for two high income people to get married (the marriage tax penalty). I’d say that there actually are incentives for the rich to have children out of wedlock.

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  4. Martin says:

    We have a similar debate in the UK, and it can reach similar levels of hyperbole, especially when tabloids get involved (“benefit scum”, “scroungers”, etc.). This kind of thinking is needed but sadly rare in politics.

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  5. Bill says:

    Substitute sports team for political party and Bryan Caplan makes a lot more sense.

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  6. Eric M. Jones. says:

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    • James says:

      “The top 2% own 50% of everything, the bottom 50% own 2%. Why there is not yet rioting in the streets is a mystery to me.”

      Not surprising, as from the post it seems that a lot of things must be mysteries to you.

      To solve this mystery, you could start with the fact that (accepting your numbers for the sake of discussion) even their share of 2% of the wealth affords most of the 50% a pretty comfortable life. As has already been pointed out, many of the poor in this country aren’t stealing bread, they’re riding around their local WalMart on mobility scooters (purchased with SS money – I’m sure you’ve seen the ads) because they’re too obese to walk.

      Then you could consider that anyone with energy and ambition enough to participate in more than an occasional street riot, let alone organize them, can easily use that energy and ambition to become one of the upper 50%.

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      • Thalia says:

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      • James says:

        “You must be white and middle class if you truly believe that energy and ambition are sufficient to propel someone into the upper 50%.”

        Half right. Mixed white/Indian ancestry. Today I’m middle class, or probably upper middle class, but I was born & grew up in just the conditions Mr. Kristof describes. The way I know than energy and ambition (and in all honestly, not an extraordinary degree of either) can propel someone from the bottom quintile to the top is because I did it myself.

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      • JAM says:

        “You must be white and middle class if you truly believe…”

        It is too bad when the content of ideas cannot be debated without someone injecting racial ad hominems.

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  7. Enter your name... says:

    It’s not painful for me to admit. Of course taking something too far has bad consequences, that is true for any policy. For instance, how low can we feasibly cut taxes and still maintain our country? Aren’t taxes presently lowest than in many, many years? Even conservatives wouldn’t argue for zero taxes. Well. Not too many would. Making a government check too easy to get is just as silly.

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    • Joe J says:

      Actually for most of US history we had no income tax. Currently income tax makes up only about half of the revenue. Strangely enough during the time when we had zero income taxes we also generally had little or no debt. So can we run a country with no income tax, Yes. So yes there are people who would argue we should have no income taxes. We would actually have to make cuts in the size of the US government, probably about the size that Canada did a few years back. They have yet to have rioting in the streets.

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      • Joe D says:

        By all means, let’s return to protectionist import and export tariffs. So long, MFNs. Adiós, NAFTA. Move a quarter of the Navy into the Coast Guard, because smuggling will become more attractive.

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      • Ryan says:

        For most of US history we weren’t an empire intent on policing the world and shaping trade and policies in basically every country on the planet. Are the direct and indirect benefits of having this empire greater or less than the relatively low taxes we pay?

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  8. Caleb B says:

    I just wish there were a political party that represented my point of view…instead, I have to chose between a party that wants to give away the farm and one that wants to make abortion illegal. Why can’t I be both for gay marriage AND also not want to be taxed to death?

    Note to liberals: making 120k in a household does not mean you are rich when you have $200k in student loans (shut your mouth about the deduction, it caps at $2500/yr)

    Note to conservatives: abortion lowers the crime rate, shouldn’t you be for that?

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    • John says:

      Killing everyone that commits a single crime would likely lower the crime rate substantially, this doesn’t make it good policy. I’m not saying that this policy and abortion are equivalent, simply that correlation (heck, even causation) with a positive result doesn’t alone make a good policy.

      As a whole, I agree with your statement. I wish there was a party that was more fiscally conservative while being more socially liberal.

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    • Joe J says:

      Not knowing your other political beliefs. But you may want to take a look at the libertarian party.

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    • JAM says:

      I agree with Joe J’s response to Caleb B.

      In both cases, being “for gay marriage AND also not want to be taxed to death”, what you really want is decreased government intervention in your life.

      After all, what business is it of the government if you want to form a union with a man or a woman so long as you believe it increases your happiness and it doesn’t harm others?

      As far as taxation is concerned, the one-note-samba we heard from the left for the last several years is for the wealthy to pay their “fair share” while conveniently never bothering to define what that is. It seems that whenever there is another program a politician can promise supporters, it’s time to round up the clubs and pitchforks and just “ask the wealthy to pay their fair share.” Wouldn’t it be much simpler to define a simple tax code with no deductions for anyone, and then we would all have a better sense of what a “fair share” was and could rationally discuss it?

      Both of the major parties consistently use the force of government to enact their preferences on everyone. And what is worse is that in doing so, they wind up massively distorting market price signals such that when we do make choices, they are hardly free ones.

      Further, as the article indicates, these “political gangs” place themselves in echo chambers such that there is almost no chance of an enlightened exchange of ideas. For instance, who could disagree with the general concept of “The Golden Rule.” “Do unto others…” And yet during the Republican primary, Ron Paul voiced the opinion during a televised debate that we should have a foreign policy that seeks to emulate “The Golden Rule” and was summarily greeted by a chorus of Boos from the audience.

      I think you will find that libertarians, although not perfect, are much more intellectually consistent in their efforts to achieve peace and freedom than either of these other gangs we call political parties.

      Sorry for taking up so much space on the soap box. Just needed to vent…

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    • Thalia says:

      Which party doesn’t want to give away the family farm? The Republican party has been consistently for more spending, not less. For collecting less in taxes, and handling it by driving up the debt. There hasn’t been a Republican in office since Eisenhower who didn’t decrease the debt. So HOW do fiscal conservatives support this Republican party?

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      • Joe J says:

        Well I for one support Libertarian party. But between the Dems and Repubs. Repubs give lip service to cutting, but like all politicians lie. Dems, don’t even give lip service, they say they will increase spending, claiming it will some how lower the debt, but they lie about that.

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