“Any man who is under 30, and is not a liberal, has no heart; and any man who is over 30, and is not a conservative, has no brains.” – Winston Churchill
There are two different kinds of sciences: positive and normative. Positive science looks to explain things and determine the what, the how, and the why. Normative science places judgment on things and asks: is this good or bad and, given that answer, is this something we should encourage or discourage? (Note that you can believe that an outcome is “bad” given your preferences, but still think that it would be wrong to try to fix it, as it might result in even “worse” outcomes.) In biology, the mapping of the human genome is an example of positive science. Once mapped, we may find that a particular sequence of DNA in a chromosome causes a particular birth defect that makes a child’s life difficult (or even painfully short) and the parent’s life just as bad. Normative science would ask: if we can draw blood from a child in a mother’s womb and determine that, because their DNA follows this sequence, they will have the birth defect — should the mother abort the child? Should we be engaged in research to genetically modify that chromosome to wipe out the birth defect? Or should we let nature take its course? Those are complicated questions with many different angles, and it’s easy to see how some people would come down on one side because of their beliefs about the world, while others would fall on the other.
This positive/normative distinction holds for economics also. My role as a professor is to teach positive economics: I show students what happens and, as much as we can determine, why. I leave it to students to apply their own normative judgments and to determine, given the facts, whether they personally think an outcome is good or bad and whether a proposed alternative to that outcome would be better or worse. Whether you are in favor of a flat income tax or a progressive income tax, or whether are in favor or price controls on prescription drugs or not, is going to depend in part on what your belief system is. Hopefully it would also depend on the facts (i.e., does this policy achieve its intended goals, and is the cost of doing so relatively low?), but that seems to be asking too much these days. Thus, even if we can agree 100% on the exact outcome of a policy (which is hard to do), we can disagree on whether it is good or bad. That is why, in part, economists disagree on a variety of different issues. Some care more about budget deficits than others, some care more about long-run capital formation than others. Are some of them “right” and others “wrong”? Not at all. They just have different priorities. I tell my students that they can take any position they want — they just have to understand the consequences of their position and know what the costs and benefits are, so they they don’t just look at the benefits and ignore the costs (something politicians love to do).
I’m an evil conservative, and I own the shirt to prove it, but I don’t wear it often because most people wouldn’t get the joke. I am against giving tax breaks to people who don’t pay taxes. I am against price controls that would make products cheaper so more poor people could afford them, since they also result in firms being less willing to produce them. I think that market solutions to pollution can work as well and often at a lower cost than government regulation. Many on the left demonize conservatives as uncaring or heartless: how could you not want to help poor or homeless people? One must truly be evil to not want to give money to people who need it, right? Call it what you want, but I just think markets work better than government, and I have decades of data from across the world to back me up. If government were in charge of cell phone technology and production, there would be no iPhone. Monthly plans would cost more than they do and be far less reliable. There is very little that the government does better than markets, when you look at it from a cost, productivity, or quality perspective. Charities in this country used to help poor people, but once the government got involved in the income redistribution game, people started donating less to charitable causes, especially Democrats, since it’s now the government’s responsibility. But why do I believe these things, other than just observing what happens when the government gets involved? I blame my parents.
My parents understood the power of incentives. When I turned 16 and was able to drive the family car, my mother made me keep track of my mileage and pay per mile for using the car. Then, when I graduated from high school, she gave me back all that money — around $600 if my memory is correct. If she had just told me that I could take the car whenever I wanted and pay nothing (she even paid for gas), I would have driven that car everywhere. The number of trips to the Family Fun Center (I love the review on this page) would have doubled. I would not have considered the cost to the family, since there was apparently no cost to me. Under her devious plan, I adjust my behavior to account for the approximate cost to the family, and drive the efficient amount, even though ultimately I pay nothing to use the car. It’s probably not just a coincidence that I do something similar when I assign written homework assignments in my principles classes. I grade the first few assignments very carefully, giving students grades like 16.25 out of 20, so they know that I am really reading them and they need to take them seriously, work hard on them, and provide quality answers. Then on the last one, I just give everyone 100% and don’t grade them. Inevitably, one student says “But I spent 3 hours on it! And you’re not going to grade it?” To which I respond, “If you’d like me to grade yours, I will — but the grade can only go down.” The student usually retracts his or her outrage at that point. The purpose is to give students the incentive to work hard and, given that they’ve done that because my threat of grading seems credible, there is no longer any need to carry it out. I save time by not having to grade it and they all get good grades — and as long as they have learned while completing the assignment, why not lessen the burden on everyone? (In subsequent semesters, when I have had the same students taking another course with me, I had to do this on the penultimate assignment to stay one step ahead of their expectations.)
My stepfather used to randomly tell my brother and me to get all the cash we had on hand and he would double it. We were 10 or 12 at the time so we got a small allowance and usually spent it when we had it. (Oh, how I wish I had all the money I spent on Garbage Pail Kids back…) It was his way of encouraging us to save our money. Occasionally there were times when I had like $50 and I was very happy with the surprise. But sometimes he’d do it after he knew we had just spent money on something (Legend of Zelda for the NES!) and had no cash left. It made me upset when he chose those times, but he got his point across, and I became better at saving.
I understand directly how incentives work and that when the government changes the rules in a market and changes the incentives, it affects behavior whether they want it to or not. When you tell people that you’ll help pay for their retirement and health care when they’re older, they save less in their lives (read the fifth line down in the abstract). When you means-test Medicaid for senior citizens, so that seniors with a lot of assets have to pay for their care while others don’t, you find seniors transferring vast amounts of their wealth to their children to get around the system.
But why am I a conservative when it comes to economic issues? My father and my stepfather. My father owns a construction company and works at least 60 hours a week. He takes risks with his money and employs several people, often taking jobs he would rather not have to take just to make sure his employees have income that week. After the Northridge earthquake in 1994, he was probably working 80 hours a week, if not more. He had been through lean times when business was not so good, and he wanted to take advantage of the sudden upward swing in the demand for construction work and build up a good base of clients that would provide referrals to their friends. Business hasn’t slowed down since. My father never expected anybody to give him anything, and he worked hard to build a great business from nothing.
For years, my stepfather awoke before 4:00am so he could drive from Sylmar to Bakersfield (a drive of around an hour and 15 minutes) and be there by 6:00am. He and my mom owned a Pepperidge Farm route. Those cookies and goldfish don’t just magically appear on your store’s shelves. People like my stepdad drive from store to store before the sun is up, check the existing stock, pull cookies from the stepvan, and re-stock the shelves. In return, he was paid a percentage of the sales. He worked 8-12 hours, then finished the long drive back home. He worked hard, long hours to put food on our table. When money was tight, he didn’t ask for the government to help. He just worked harder. He went to other stores that didn’t carry Pepperidge Farm cookies and managed to get the product on the shelves there. It meant even more work for him, but more money for us. Hopefully he’s reading this and realizes how much I appreciate what he did for our family — even if it meant that he wasn’t home as much as we would have liked. He gave me my first job, taking the minivan to Ridgecrest every other weekend to stock product at the stores there. I made pretty good money, and the faster I worked, the quicker I got home.
That’s why I believe in personal responsibility. That’s why I am against government intervention except when it is proven to improve market outcomes (market failures like asymmetric information and externalities). I know people respond to incentives — I do, my students do, and countless economic research has shown it. Heck, even pigeons and monkeys respond to incentives. And when you don’t force people to suffer the consequences of their bad decisions, they make more of those bad decisions. So if that makes me evil and heartless, so be it. But if my choice is between heartless and brainless, that’s an easy choice for me to make.