Monday, January 20, 2014

Rant: That Economics Professor/Obama/Socialism Meme

This "economics professor" meme's been going around for at least a year now and several times I've vowed to take it on but never got around to it. I saw it again recently and, even though I'm supposed to be working on my syllabus, I can't take it any more. For those of you who haven't seen it before, I've pasted it in its most recent incarnation below. My comments follow.

An economics professor at a local college made a statement that he had never failed a single student before, but had recently failed an entire class. That class had insisted that Obama’s socialism worked and that no one would be poor and no one would be rich, a great equalizer.
The professor then said, “OK, we will have an experiment in this class on Obama’s plan”.. All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A…. (substituting grades for dollars – something closer to home and more readily understood by all).
After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.
The second test average was a D! No one was happy. When the 3rd test rolled around, the average was an F.  As the tests proceeded, the scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.
To their great surprise, ALL FAILED and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great, but when government takes all the reward away, no one will try or want to succeed. Could not be any simpler than that.
These are possibly the 5 best sentences you’ll ever read on this experiment:
  1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.
  2. What one person receives without working for, another person must work for without receiving.
  3. The government cannot give to anybody anything that the government does not first take from somebody else.
  4. You cannot multiply wealth by dividing it!.
  5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.
What I am reading now is liberals, progressives or those that dismiss the STORY because it’s a scenario and not real. They can’t cope with the real truth that you can’t move poor people into prosperity by legislation from Washington, DC.  Government doesn’t have the authority to take from Citizen A and give to Citizen B to make things even.
I'm not even going to bother addressing the "Obama as a socialist" because only the most misinformed of the misinformed could possibly call Obama a socialist.  And besides, it's not really relevant to the core issue, which is an ostensible critique of "socialism".  Yes, I'm using scare quotes, because the allegory creates such a strawman of socialism, it is recognizable only as a cold war era parody. 

Anyway, there are way too many problems with this meme to discuss in just one post, so I'll limit myself to discussing 2 major problems.  

False Assumption:  Theory of Desert
Some of the main problems with this "experiment" are the false assumptions typical of adolescent libertarians.  

Check out this passage and see if you can find the false assumption(s):

 After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.

The assumptions here has to do with a notion of desert that is tied strictly to effort.  More effort=you deserve a higher grade, and the converse is also assumed, if you got a poor grade, it's because you didn't try very hard: you always get what you deserve.  Although utterly simplistic, in itself this notion has intuitive pull, but a fleeting moments reflection will suggest that this is NOT how grades are distributed.  As anyone who has struggled through a math class can tell you, if grades reflected effort, they wouldn't have received a C but a A; and I'm sure we've all known someone who, thanks to natural talent, sailed through a math or chemistry class with little or no effort, only to receive an A.  As someone who has worked as a tutor and a teacher, I can assure you, grades and effort have a mild correlation but that is it. 
There are many more important variables that determine a student's grade such as (a) native intelligence, (b) parental, family, and peer support, (c) whether they have to work a part-time job to pay for school, (d) the quality of their previous educational institutions (e) nutrition during childhood development.  In fact, THE NUMBER ONE PREDICTOR OF ACADEMIC SUCCESS IS A STUDENT'S SOCIO-ECONOMIC BACKGROUND.  There are decades of literature supporting this conclusion--and the effect is regardless of gender, geography, and culture.  

Now lets complete the analogy with distribution of wealth.  This fantasy notion that in our economic system wealth is distributed according to effort would be laughable if it weren't the source of so much pernicious vilifying of the poor and self-congratulation by the rich.  Consider for a moment the typical minimum wage earner who works 2 full-time jobs just to pay his/her bills and put money aside to send their child to college.  What about a teacher who works in the inner city and runs the unpaid after-school extra-curricular activities? Are we seriously to believe that this person doesn't work as hard as a banker, someone who plays the stock market, or someone who inherited or married into wealth simply because of the amount of wealth they have?

This idiocy also ignores the fact that, next to the UK, the US has the lowest rate of social mobility in the industrialized world.  Do you think this is because poor people have a lazy gene that gets passed from generation to generation or might it be that those that come from wealth have the economic and social support networks to acquire the skills and relationships necessary to achieve and maintain their socio-economic status?  E.g., a family that has the wealth to send kids to university without incurring student debt, to be able to focus 100% on school and networking because they can avoid having to work a p/t job while in school, etc...  A family that lives in an area with good elementary and high schools so the child has the skills to be successful when they do go to university?  A family that lets the child avoid student loans, so when they're done with school you aren't saddled with 10s of thousands of dollars of debt as you begin your post-school life.  A family where there isn't regular violence so the student can concentrate on school work without fear of abuse?  

When I tutored low-income high-school kids, some of the kids couldn't go home for fear of violence. The police were regularly called to the house to break of fights.  Imagine trying to study in that atmosphere.  Sorry kid.  You chose the wrong parents and you're just not trying hard enough. You deserve whatever happens to you.  (And please don't give me that bullshit story about the one kid who overcame blah blah blah.  Yeah, he/she was an outlier, therefore everyone can do it.  That's science.)

In an economy where a good education is a strongly correlated to economic success, unequal access to good educational facilities at an early age is going to initiate a sequence of events which will have multiplier effect on unequal access to economic opportunity.  The supporting literature is there for anyone who cares to relinquish their fantasy that "hard work" is all it takes to make it.  

“At virtually every level, education in America tends to perpetuate rather than compensate for existing inequalities. The reasons are threefold. First, the K through 12education system is simply not very strong and thus is not an effective way to break the link between parental background and a child’s eventual success. … Second, because K–12 education is financed largely at the state and local level, resources devoted to education are closely linked with where people live and with the property wealth of their neighbors. For this and other reasons, poor children tend to go to poor schools and more advantaged children to good schools. … Finally, access both to a quality preschool experience and to higher education continues to depend quite directly on family resources.”  2006 Policy Brief of the Brookings Institution, Isabel Sawhill (2006:3)

Lets look at some numbers, shall we? In the US, only 8% of men that grew up in a family in the bottom 20% made it to the top 20% (Therefore, 92% of the bottom 20% don't work as hard as those in the top 20%).  42% of men born into the bottom 20% stay there.  65% born in the bottom 20% stay in the bottom 40%.  Should we infer from this that 65% of offspring in the bottom 20% are just lazy?  They obviously deserve to be poor.  They just don't work hard.  It's got nothing to do with the huge advantages that come with growing up in the top 40% and the major disadvantages of growing up poor and having to compete with resource-abundant competitors.  And, certainly, whatever jobs the poor do, they don't work very hard...that's why they deserve to be poor.

Lets look at the flip side:  62% of Americans (male and female) born into the top 20% stay in the top 40%.  I'm sure each and everyone of them worked hard (at least 2x as hard as any poor person works) for that economic status and didn't get any help, didn't take advantage of their parents' valuable social network for jobs, didn't inherit or receive any of their parents' wealth to start a business, didn't marry a rich spouse, etc...  They didn't have any advantages over their poor counterparts and so they deserve the extra wealth because it is purely a reflection of their individual effort which began on a level playing field--the very same one the poor kids started on.  If only those poor kids had worked as hard as the rich kids, they could be rich too.  But no.  They just decided to be lazy and that's why they deserve to be poor.

I could rant for days on the myth that wealth and academic performance is a measure effort rather than natural talents, parental support, socio-economic class, social capital, home environment, health, peer group, neighborhood, access to quality primary and secondary education, and dumb luck but I shall stop here. 

There's normative issue that relates to the relationship between desert and effort but it intersects with the next section so I shall address below:

False Assumption:  Motives 
There are a lot of false assumptions about student (and by extension, worker) motive and covering all of them would take too much time, so I'll cover just one:  The professor's "experiment" (and by extension, the analogy) imposes a false view of what motivates action in a "socialist" system (or even in this one).  Also, the experiment presumes a hyper-individualist mindset which is what occurs in a system where people aren't frequently incentivized to help others (i.e., a capitalist one).  In such a system, all action is selfishly directed since helping others comes at a cost.  In a socialist system, community has value and so the action calculus isn't simply a matter of considering what is best for one's self but must also take into account the effect on the welfare of the community.  

The libertarian might reply that "waaaaaaaaaaaaahhhh! but human nature is selfish and people won't realistically help others."  This is complete bullshit.  First of all, there's no such thing as human nature as it is popularly conceived. If there is any intrinsic component to human nature it is that we thrive in strong caring communities and wither in hyper-individualized ones.  Our behavior is a response to whatever environment we are in.  If we create/live in an environment in which there is a great cost to altruistic behavior, then we can expect people not to engage in such behaviors.  It is a matter of what resources are scarce, what types of behaviors are incentivized, sense of group-belonging, and how resources are allocated.  It is also a matter of value.

In a socialist society, the flourishing of the community has value independent of the individual.  This is unlike in a libertarian conception where everything centers on the individual to the total destruction of community (check out any number of studies on the modern demise of American sense of neighborhood and community).

So, if we are to construct a real socialist "experiment" in the classroom, we have to set up the incentives such as we'd find in a socialist society.  We'd also have to reconsider what the goal is.  As (ill)conceived by the professor, the goals and rewards are individual grades.  We'd need to change this to reflect a better conception of a socialist classroom.  The goal should be the community's (i.e., the class') knowledge of economics, not individual grades.  

Now we have to consider how to incentivize behavior that will be conducive to this end:  Consider perhaps the professor rewarding the students with natural aptitude for helping the students that are struggling.  Anyone who has ever taught anything knows that the best way to learn something is to teach someone else.  Students help one another for the benefit of the community goal and both groups benefit in so doing.  It's not just a matter of sending students home with their books, each one hoping the other will study.  It's a matter of working together to achieve a shared goal.

Stop and think for a moment if you were in such a class and you were a struggling student.  A group of students who excel in the class spend time with you every week to help you learn the material.  What is the social effect of this show of support, care, and solidarity from your peers?  Might this incentivize you to work hard and perform to the best of your ability?  Might you feel compelled to not let the group down?  This would be a better reflection of a socialist classroom.  

The objective of the class is to get everyone to excel at the material.  The students are motivated not by mere letter grades but by a desire to learn the information (whoa! what a concept!).  Ostensibly, they wouldn't be in an economics class if they didn't want to study economics.  There are literally hundreds of other classes they could have taken, many of them easier, so the idea that students are solely motivated by individual grades is spurious.   
If you want to reject this socialist class model as a pipe dream, know that there are schools all over the world (including the US) that operate with this model that have excellent learning outcomes comparable to the best prep schools.

Lets once again complete the analogy with work.  The implicit assumption is that, just like students with grades, workers only work to get money.  Money is obviously an important reason for which people work (especially at the low end of the pay scale where individual's life circumstances are usually such were they just need a job--any job--and often don't have the luxury to find one they genuinely like) but it is not the only reason people work.  Without listing them, I'm sure you can think of jobs that pay more than your own that you wouldn't do.  If pay were the only thing people cared about, you wouldn't be able to think of higher paying jobs that you wouldn't do.

Lets talk about redistribution of resources.  The assumption is that high wage earners don't see any value in having part of their wages redistributed to (in theory) improve their community and so, would cease to "work so hard".  While it wouldn't surprise me if there were a minority who felt this way, I doubt they are the majority.  Most people recognize the value of social programs.  

This brings me to another false assumption about the proportion of  tax dollars that go to welfare programs.  Between 9 and 12 cents/dollar of your total tax bill goes to welfare.  So, if you paid 10 000.00 in tax, between 900.00 and 1200.00 of that went to welfare payments.  Basically, just under 100/month.  

Is it really plausible that someone making over 100 000 in wages (unlikely, since most people in this income bracket don't derive all their income from wages, but lower-taxed capital gains etc...) is going to stop working because they have to pay $100-150 a month to welfare?  Are we really supposed to believe this crap?

I could create an entire blog devoted to all the problems there are with this meme  Anyway, the few I've mentioned should be a start.  If I get bored one day, I'll address the 5 bullet points at the end of the meme. 

Concession:  The libertarian/conservative does have some legitimate concerns when it comes to the possibility that certain types of welfare programs can create learned helplessness (i.e., welfare culture).  There is empirical support for this but by and large, the proportion of people who abuse welfare programs is dwarfed by the number of people that don't (depending on the program, there is between 3 and 10% fraud).  Add to this that the proportion of the population actually on welfare is very small (4%)--especially if you consider current economic conditions.

Even if certain welfare programs do promote learned helplessness, this is not an argument against welfare programs, but an argument against certain program designs.  There are many ways to address chronic poverty through welfare policy.  The main predictors of how long someone will stay on welfare are their job skills and education.  If these two variables aren't simultaneously addressed while assistance is given, the likelihood of the recipient coming off welfare goes up dramatically.  To assume they stay on welfare because they are lazy is to ignore these statistics.  Without job skills and education how can we expect such individuals to enter the job market and become self-sufficient?


  1. I often hear impassioned rants about socialism from my friends/family members in the fire department and military. Yes, those libertarian individualists chose jobs paid for by taxes, serving the community and they might even end up sacrificing themselves for others.

  2. Thank you for this excellent review of the professor's experiment and clear exposition of the fallacies in it. I completely agree with your position. I consider the libertarian agenda for this country as probably one of the greater threats to our society. The ultimate state of affairs that can result from a society where the vast majority of wealth is owned by a handful of people and the vast masses struggle for existence is a violent revolution. This has been the lesson of history and is possible for the USA. When economic deprivation of the bottom tier reaches a point where their families are at risk of physical harm, i.e. hungry, ill, taken advantage of by unscrupulous privileged neighbors the seniors of those families will begin to fight to protect their children. The fight can easily escalate to violence in a battle between the have's and have not's. The fundamentals of the libertarian agenda focuses on government policies and processes that move wealth from the lower to the higher brackets. Such policies as regressive or even flat tax structure, unregulated financial markets, deregulated environmental and product safety, free license to capital for exploitation of labor, and the other proposals that have been made all work to further enrich the wealthy at the expense of the poor.

  3. Thank you both for your comments. Joe, I completely agree with you that the American version of popular libertarianism with be the undoing of much of what is good in American society. With no commitment to community, how can we expect collective action in service of improving community? That said, there are some classical libertarian principles that do have merit. It's the hyper-selfish money-as-a-measure-of-moral-worth American version I find appalling.

  4. Could Amitabha Palmer do a similarly scholarly analysis of the recent and ongoing socialist experiment in the once thriving country of Venezuela please?

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  5. That would take an entire book. However, if what you're asking is whether I'd attempt to defend a centralized state-run economy, the answer is an unequivocal "no". You can benefit from the efficiencies and price signaling of free markets and still acknowledge a role for redistribution. The two are not logically incompatible as the adoption of this strategy by many nations in the world attests.