Tuesday, May 28, 2013

More than the minimum

Megan McArdle gets it right when she says:
My point is one that both sides should be able to agree on: whatever we redistribute, the most important task of economic policymaking is to ensure that everyone has the opportunity to get a job which can support them decently--which is to say, at the minimum respectable standard of their society. He or she has to be able to obtain, in exchange for their honest labors, what Adam Smith called "the necessaries":

By necessaries I understand not only the commodities which are indispensably necessary for the support of life, but whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without. A linen shirt, for example, is, strictly speaking, not a necessary of life. The Greeks and Romans lived, I suppose, very comfortably though they had no linen. But in the present times, through the greater part of Europe, a creditable day-labourer would be ashamed to appear in public without a linen shirt, the want of which would be supposed to denote that disgraceful degree of poverty which, it is presumed, nobody can well fall into without extreme bad conduct. Custom, in the same manner, has rendered leather shoes a necessary of life in England. The poorest creditable person of either sex would be ashamed to appear in public without them. In Scotland, custom has rendered them a necessary of life to the lowest order of men; but not to the same order of women, who may, without any discredit, walk about barefooted. In France they are necessaries neither to men nor to women, the lowest rank of both sexes appearing there publicly, without any discredit, sometimes in wooden shoes, and sometimes barefooted. Under necessaries, therefore, I comprehend not only those things which nature, but those things which the established rules of decency have rendered necessary to the lowest rank of people. All other things I call luxuries, without meaning by this appellation to throw the smallest degree of reproach upon the temperate use of them. Beer and ale, for example, in Great Britain, and wine, even in the wine countries, I call luxuries. A man of any rank may, without any reproach, abstain totally from tasting such liquors. Nature does not render them necessary for the support of life, and custom nowhere renders it indecent to live without them.

If that isn't possible for everyone, or can be done only with heroic and unceasing effort, then economic policy is not working, even if the gini coefficient and the tax laws are arranged to everyone's perfect satisfaction.

Economics is about more than tax policy, or inflation policy. It's part of how we shape our society and our community.

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