“Joe the Plumber” Goes to College

October 27, 2008

For release noon Tuesday Oct. 28 (653 words)

IN DEFERENCE to “the profligate, soak-the–rich, redistributionist economic philosophy” that seems to be taking the country by storm, and in keeping with my university’s emphasis on immersive education, I have undertaken an experiment applying current popular wisdom to the academic environment.*
   
For those who may be unaware, introductory economics courses have  historically been quite rigorous and demanding. They are the Achilles Heel for many would-be business majors, the so-called washout courses within most business colleges. This may be due to its rigorous content or possibly just due to the mean-spirited nature of those teaching the subject matter. Whatever the explanation, 36 years teaching have produced an interesting distribution of grades for well over 6,000 students. Close to 65 percent of these students have earned a grade of C- or below.
   
Against this backdrop I decided to give the 180 students in my current classes a hands-on experience with our progressive tax structure. Since few of them earn any significant amount of income, the next best thing was substituted for earnings (namely, classroom performance) in the form of test points. The referendum put before them for their approval was: “Be it resolved that students earning a C+ or more will be assessed a 20 percent tax on points earned on examinations, points that will then be distributed to less successful classmates.” Or, in the words of a presidential candidate, words spoken in an exchange with the now famous “ Joe the Plumber”:
                
“It’s not that I want to punish your success. I just want to make sure that everybody who is behind you, that they’ve got a chance for success too. My attitude is that if the economy’s good for folks from the bottom up, it’s gonna be good for everybody . . . I think when you spread the wealth around, it’s good for everybody.”

The class discussion was then opened. Nothing was said that had not already been said in the context of the progressive income-tax debate. The better performing students cried foul: “It’s unfair because it destroys incentives to do well and rewards poor performance.” The majority, however, saw nothing wrong with the scheme, noting “It’s nothing more than  distributive-social justice.” Of course, there were the always-present undecideds: “Do we have to make a decision right now? Can’t we wait until we have taken the remainder of the tests?”
   
The question was called and the vote taken: 105 in favor of the redistribution, 60 opposed and 15 “present.” No surprises there — the students voted their self-interest, as will the general populace on Nov. 4. That choice (candidate) that holds (promises) the greatest rewards will receive the voter’s support.

THERE IS NOTHING WRONG with a pursuit of self-interest as long as there is at least a loose connection to the public interest. This clearly was not the case, however, in my immersive classroom exercise. Nor does it appear to be the case in the political arena. In their frenetic quest for votes, candidates make the most outrageous and often contradictory promises to win over diverse and incompatible special-interest groups.

For example, low-income, high-risk families have been given sub-prime mortgages with disastrous consequences for themselves, financial institutions and the stock market — the public all the while being promised a sound financial network. Rarely challenged on the incompatibility of these promises, the politicians don’t miss a beat — they are off to the next special interest group to make more such free-lunch promises.

From an economic standpoint, this flagrant vote-buying would be more efficiently accomplished through cash transactions rather than payments in kind. One solution for this prostitution of the democratic political process might be voter literacy tests with a heavy economics content. Some way must be found to make self-interest dovetail with the public interest in the political arena much in the same way that competition (Adam Smith’s “invisible hand”) regulates markets.

Otherwise, the cynicism expressed in Frederic Bastiat’s statement,”Government is the great fiction, through which everybody endeavors to live at the expense of everybody else,” will wash over the body politic more so than it already has done.  

Clarence R. Deitsch, Ph.D., an adjunct scholar of the Indiana Policy Review Foundation, is a professor of economics at Ball State University. Contact him
here

* See “Bookmarks” in the Oct. 10, 2008, Wall Street Journal



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