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Values, Statistics, Authority

January 6, 2010

Not long ago, David Brooks characterized health care reform as The Values Question: “We can debate this or that provision,” Brooks wrote, but our attitudes toward reform ultimately depend upon “moral preference.” Statistics cannot decide questions of value — Brooks has that part right. He is mistaken, however, to characterize health care reform as essentially a question of values. Our values do not exist independently of statistics and, more broadly, human knowledge; nor do they exist independently of our reliance on trusted authorities (as I have argued with respect to global warming).

Health care reform is a decision between vitality and security, as Brooks suggests, if and only if it is true that the “system after reform will look as it does today, only bigger and more expensive” — a conclusion Brooks he considers to be “the general view among independent health care economists.” But, of course, that is precisely the point Brooks’ liberal colleagues would dispute. Paul Krugman may not be a health care economist, but he is a Nobel laureate. Contra Brooks, Krugman claims that we are not about to witness a “vast rise” in health care spending, citing estimates by the CBO and CMS:

The key thing to understand in the coverage debate has always been that it costs surprisingly little to cover the uninsured . . . Take the CBO estimate of the cost of subsidies and Medicaid expansion in the Senate bill — that is, ignoring all possible cost savings. It’s $179 billion in 2018. Take the CMS projection of total health care spending in 2018: it’s more than $4.5 trillion. So the direct cost of expanding coverage — the initial bump in the blue curve above — is less than 4 percent of total health care spending. That’s the amount by which, on the current trajectory, health spending rises every 7 months.

The CBO and CMS projections might, of course, be wrong. But supposing they are not, Brooks dilemma between innovation and security dissipates. Which raises the obvious question of who’s right: Brooks and “independent health care economists”? Or Krugman, CBO, and the CMS? Given that most New York Times readers do not have the time or resources to settle the matter independently, the health care reform becomes as much a matter of authority — deciding between Brooks and Krugman, in this case — as it does statistics and values.

Values, statistics, and authority — this dizzying trio is not limited to a few New York Times columnists squabbling over health care. To take a more recent controversy, this time over social democracy, Jim Manzi has argued in the Winter 2010 issue of National Affairs that wealth redistribution and economic growth are fundamentally at odds — or, at least, a difficult balancing act for any society (see also Ross Douthat’s latest column). Historically, Europe has favored social cohesion, and the United States growth. Yet, if president Obama and the Democrats have their way, America will look more like a European social democracy in the years to come.

So what is so bad about social democracy? In its quest for economic equality, Manzi argues, Europe has become far less globally competitive than America. Here is the statistic:

From 1980 through today, America’s share of global output has been constant at about 21%. Europe’s share, meanwhile, has been collapsing in the face of global competition — going from a little less than 40% of global production in the 1970s to about 25% today.

Manzi’s numbers are by no means incontestable. Here’s Jonathan Chait on Manzi:

First of all, let’s note that while he concludes with a swipe at “social democracy,” Manzi is comparing a unit he calls “Europe.” I emailed Manzi, and he explained that “Europe” includes, well, all of Europe — not just social democratic western Europe but eastern Europe, the Ukraine, and Russia, which are not social democracies by any means.

Second, Manzi has an odd description of timing in his first sentence that, even after several readings, I didn’t notice until somebody else pointed it out to me. He cites America’s economic growth since 1980, but counts Europe starting in “the 1970s.” What is the 1970s? Over email, he specified that he meant 1973. So he’s comparing The U.S. since 1980 with Europe since 1973 — which is, to put it mildly, a very unusual way to construct a comparison. Of course, this causes the 1973-1980 economic slowdown to be counted against Europe but not the United States.

And third, Manzi cites total share of world GDP, which is a measure of population growth along with rising wealth. And, since 1980, the population of the United Stated has grown 35%, compared with 7% in the European Union and 0.7% in Russia. But of course, merely adding more people does not make your population better off. The more common measure of living standards in GDP per capita.

Taking all of this into account, Chait concludes that real income growth per capita since 1980 has only been five percent higher in the United States than in Europe. Thus, from the liberal point of view, social cohesion and innovation need not be a zero sum equation.

But, you ask, who’s set of numbers are right? Again, most of us will seek to determine who is more credible, Manzi or Chait. Suppose, however, that we attempt to sift through their competing claims. Manzi, in his rebuttal to Chait, does not so much attempt to prove that wealth redistribution inhibits economic growth, as he does introduce an additional metric of growth — the absolute size on an economy. So Chait’s critique stands. But that doesn’t let us off the hook — for even if Chait wins the debate over per capita GDP growth, the question remains as to which is the better metric, per capita GDP or absolute size.

It is tempting to conclude that bias — the presence of values in the production of knowledge — is inevitable. Rather than giving an objective account of what’s-out-there, what if Brooks, Manzi, Krugman, and Chait are reciting, revising, and inventing stories about the economy? What if we are, all of us, at once telling stories about the world and an integral part of the world’s story?

That is what the postmodernists would say. Or, if you prefer, that is their side of the story.


Update: For more on the Chait/Manzi controversy, see “Chait Vs. Manzi, Ctd” at The Daily Dish. See also my follow up post.

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3 Comments leave one →
  1. jimmanzi permalink
    January 6, 2010 3:15 pm

    Thanks for your close attention to this. I have a reply to Jonathan’s post here:

    http://theamericanscene.com/2010/01/06/more-reactions-to-keeping-america-s-edge

    Best regards,
    Jim Manzi

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