David Frum

02.08.12

Answering a Murray Defender

Before proceeding to the conclusion of my review of Charles Murray's Coming Apart, let me pause to answer a defense raised by Bryan Caplan, a libertarian economist at George Mason University.

In the first part of my review, I suggested that the rising social problems of the white working class in America might be caused, at least in part, by the decline in working-class wages over the past generation.

Caplan's answer:

But Frum's story makes little sense. Divorce, out-of-wedlock births, and low labor force participation are expensive. If you're worried about being poor, you'll studiously avoid them. So how could economic distress be their "root cause"? 

Caplan adds, adopting my analogy of the collapse in wages to a hurricane:

The hurricane should have made people more careful with their food. Yes, they experienced a natural disaster. But instead of prudently adjusting their behavior, they're being bizarrely short-sighted and irresponsible. And it makes you wonder: If this is how they act after a hurricane, would their behavior would have been even worse if the hurricane had never hit?

Caplan should have given this post 5 minutes more thought before hitting PUBLISH. As is, it's open to three obvious rebuttals, or anyway 3 rebuttals I would have thought obvious.

1) If it's true that a decline in the rewards of labor will induce people to labor more in order to maintain their prior income, then poof there vanishes the supply-side argument against raising taxes on the rich. The rich—as Murray argues in Coming Apart—are cognitively much superior to the poor. The rich are less prone to "short-sighed and irresponsible" behavior. Surely then we can safely raise their taxes, and count on them to work harder to recoup their losses?

2) Caplan seems to think he is making a novel point in Murray's defense. He's not. Murray himself raises the very same argument offered by Caplan, and I quote Murray as doing so in Part 1 of my review.

On the contrary: Insofar as men need to work to survive—an important proviso—falling hourly income does not discourage work.

The key point is the proviso that Murray notes: insofar as men need to work to survive.

Declining wages would be expected to lead to rising work effort only where workers would otherwise face absolute deprivation—for example in a pre-modern subsistence economy. That is what happened in early modern Europe. From 1450 to about 1800, wages consistently fell. Workers responded by laboring harder and longer and bearing more children in a desperate attempt to outrun their Malthusian trap.

Early modern social thinkers who observed these realities concluded thereby that it was a great mistake to allow any increase in the wages of the poor: wage increases would only reduce their work output. The implication that follows for contemporary America is that the surest way to improve the behavior of the working class would be to cut their pay even more.

You can see why Murray did not wish to develop this line of thought, preferring to leave the point hanging in the air. Caplan does Murray no favor by making the point explicit.

3) Economics usefully tells us what people should do when faced with certain incentives. Economics goes badly wrong when it insists that real life must always conform to the predictions of economic models.

Gary Becker has convincingly argued that racial discrimination is economically irrational. And yet discrimination occurs.

Behavioral economists do an experiment where they offer two people a $100 bill if they can agree on how to divide it. Even if one partner demands $90, the other should still agree—after all, she'll gain $10 more than she otherwise might have had, and thus emerges a clear winner. Yet people won't do it. They'd rather receive nothing than accept an outcome they regard as unfair.

People often act for non-economic motives. Otherwise, we'd replace the Congressional Medal of Honor with a big cash prize.

People work not only for money, but also for dignity and satisfaction. And who has made this latter argument more forcefully than Charles Murray himself? The argument that work is a source of dignity above and beyond its sometimes meager material rewards is the crux not only of Coming Apart, but of every Murray book since Losing Ground.

In fact, in Losing Ground, Murray boldly inverted the argument to explain the rise of an underclass. Yes, he acknowledged, even in pre-welfare reform America, welfare paid less than low-wage work. But the existence of welfare had discredited the moral worth of work. Welfare made suckers out of people who worked hard for only a very marginal improvement in their living conditions. Welfare thus induced laziness, even in the face of economic incentives that might otherwise seem to induce labor.

But here's the question: if—as Murray argued—pervasive welfare dependency can inspire a widespread feeling that "work and marriage are for suckers," why wouldn't persistently declining wages have a similar effect? Isn't a man who works harder and harder for less and less going to feel at least as much a fool as a woman who works hard when welfare would have paid her nearly as much for far less effort? Isn't the mechanism exactly the same? And isn't it bizarre to defend Charles Murray's most recent argument by so radically (and unknowingly!) repudiating Charles Murray's most famous argument?

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One last point, call it a bonus number (4). I didn't use the phrase "root cause," so I don't understand why Caplan put the words in quote marks as if I had.