Economic Sense

Rep. Alexandria Ocasio-Cortez - What we have here is a failure to communicate? Or is it?

Democratic party representative Rep. Alexandria Ocasio-Cortez is gaining in popularity. I recall seeing a very similar energy at the Democratic National Convention building around Barak Obama a few years before his run for presidency. One reason is, she's asking a lot of the kinds of questions that resonate with the public. This from a CNBC news story:

Stating that "a system that allows billionaires to exist" is immoral

and asking:

"Are we comfortable with a society where someone can have a helipad while [New York City] is experiencing the highest rates of people experiencing homelessness since the Great Depression?"

To the surprise of many, the democratic party, nor progressives have the monopoly on calling out the callousness of the free market or the gross and offensive inequalities that capitalism and markets can lead to. Conservative and libertarian thinkers and economists throughout history have joined the chorus. In Thomas Sowell's 'The Quest for Cosmic Justice' he discusses how Adam Smith (known as the father of economics) 'deplored not only the callousness of the rich and powerful of his day, "who never look upon their inferiors as their fellow creatures"

As he points out, Nobel Prize winning economist Frederich Hayek shared a similar concern: 

"the manner in which the benefits and burdens are apportioned by the market mechanism would in many instances have to be regarded as very unjust if they were the result of a deliberate allocation to particular people."

While Hayek shared the same adverse reaction to inequality as many progressives (or as in the case of Rep. Alexandria Ocasio-Cortez - self declared Democratic Socialists) the important distinction is a recognition of a larger underlying system or process (what he refers to as a 'spontaneous order'). Democratic Socialists like Alexandria Ocasio-Cortez seem to want to disrupt or take down the system, libertarian thinkers, economists, and philosophers like Adam Smith, Hayek, and Milton Friedman want to channel it for greater good. As Milton Friedman states in his book "Free to Choose:"

"Life is not fair. It is tempting to believe that government can rectify what nature has spawned. But it is also important to recognize how much we benefit from the very unfairness we deplore."

He speaks more about how society benefits in this way, addressing directly the "system that allows billionaires to exist" Rep. Alexandria Ocasio-Cortez thinks is 'immoral' according to the CNBC story:

"The system under which people make their own choices-and bear most of the consequences of their decisions-is the system that gave the Henry Fords, the Thomas Ava Edisons, the George Eastmans, the John D. Rockefeller's, the James Cash Penneys the incentive to transform our society over the past two centuries. It is the system that gave other people an incentive to furnish the venture capital to finance the risky enterprises that these ambitious inventors and captains of industry undertook.....society as a whole benefited from their willingness to take a chance."

This is no different from today, and relates perfectly to Jeff Bezos' (CEO of Amazon) helicopter landing pad. However, the relevant comparison may not be between the fortunes of folks like Jeff Bezos and the poorest of the poor, but how minuscule the fortunes built by the captains of industry are compared to the 'addition to the wealth of the community as a whole, to the well-being of the masses of the the people' that resulted from their innovations. 

While many free market advocates and even democratic socialists like Rep. Alexandria Ocasio-Cortez share in their distaste for inequality, both differ fundamentally about their view of the system behind it, what to do about it, and maybe most importantly how to communicate about it. 

As Bryan Caplan states in 'The Myth of the Rational Voter', "the optimal mix between markets and government depends not on the absolute virtues of markets, but on their virtues compared to those of government'

Part of his book lays out the argument that in general, society and voters over estimate the virtues of government while underestimating the virtues of markets. This leaves wide open a gap to be filled by demagogues and populists to exploit for political gain. He calls on economists to step up their communication game. 

"When the media spotlight gives other experts a few seconds to speak their mind, they usually strive to forcefully communicate one or two simplified conclusions."

As he notes, economists are often reluctant to do this. They take some pride in or are just trained to speak with precision and qualification that isn't suited for popular communication. We've seen the same thing happen in the space of food and agriculture with regard to science communication. As recent research points out (https://www.nature.com/articles/s41562-018-0520-3), the greatest critics of biotechnology are also the least informed. But those most informed either don't know how or are reluctant to communicate about the actual science supporting modern food and agricultural production technologies persuasively. 

When it comes to economics Milton Friedman was definitely an exception to this rule. He was an excellent communicator (check out more below). He didn't have blind faith that free markets were perfect. His proposal for a negative income tax is one example of how to work with 'the system' to address the same issues of inequality that his intellectual opponents have since practically franchised as their own cause.  

There are no easy answers to these complex problems. There are two kinds of errors we can make broadly, as Bryan Caplan states in his book, hubris, and self-abasement. 

"the first leads experts to overreach themselves; the second leads experts to stand idly by while error reigns."

I would say this holds for economists, scientists, farmers, and all of those in the agriculture industry. Will we let error reign? Will we let others fill the gap with two minute sound bites and social media sensationalism?  How do we do a better job communicating and engaging more effectively? This becomes an important question for agriculture going forward, as popular law makers on the rise are more than willing to bit the hand that feeds them and embrace reforms that could totally change 'the system' following recommendations from groups like EAT Lancet and others.  

References:

Alexandria Ocasio-Cortez: A system that allows billionaires to exist alongside extreme poverty is immoral from: https://www.cnbc.com/2019/01/22/alexandria-ocasio-cortez-a-system-that-allows-billionaires-to-exist-is-immoral.html

Milton Friedman's PBS Free to Choose Video Series: https://www.youtube.com/watch?v=f1Fj5tzuYBE 

Extreme opponents of genetically modified foods know the least but think they know the most
Philip M. Fernbach, Nicholas Light, Sydney E. Scott, Yoel Inbar & Paul Rozin 
Nature Human Behaviour (2019) 

Free to Choose. Milton and Rose Friedman. Harcourt Publishers. 1990

The Quest for Cosmic Justice. Thomas Sowell. The Free Press (Simon and Schuster, Inc). 1999

The Myth of the Rational Voter. Bryan Caplan. Princeton University Press. 2007