Friday, May 23, 2014

Advocacy and the Social Sciences at the University of California

Alvaro Huerta  is a Visiting Scholar at UCLA.  Today, the UCLA Bruin published his piece on the challenges that many Hispanics face in our economy.  Several of the policy proposals that he advocates (such as sharply raising the minimum wage) reject the core logic of Econ 101.  

What are the general lessons here for economists?

1.  We have not done a great job teaching the basic insights that we have learned about market economies over the last 150 years.

2.  We do not have a monopoly on leading the public discourse concerning how society evaluates what public policies are "good" and "bad".

3.  There are many University of California social science scholars who seek to blur the lines between positive and normative analysis.

This politicization of the social sciences appears to be a resurgent trend.  UCLA seems to celebrate activism among its faculty and researchers.  I see this at my own Institute and wonder whether this is wise?   The core job of the social scientist is to explain and predict human interactions.  For how many University of California social scientists, do they have the more ambitious goal of "changing the world"?

I do support Alvaro Huerta's broad goal of improving the living standard for all.  99% of economists would say that the most efficient way to achieve this goal is early investment in kids (see the Heckman Equation) combined with increased competition in the supply of urban schooling.   Center city teacher's unions have effectively blocked many reforms that would greatly benefit many Hispanic kids.    Every other sector of the economy faces competition, why not this one?  Many affluent children who go to private schools, would attend public schools if such public schools raised their game.

Many of Dr. Huerta's policy proposals focus on "redistribution" rather than on skill formation.   The problem with his redistribution proposal is the act of redistributing income reduces economic growth because of the distortionary incentives built into taxation of labor and capital.   Those who are passionate about helping the 99% must think hard about how to accelerate the growth of the U.S economy.  This is not a zero sum game division of a pizza.  The U.S economy is not growing in large part because of the lack growth of our individual skills.  We need to invest more in our young people and for them to invest more in themselves by studying more hours and studying college subjects that focus on skill formation and career development.