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Interesting concepts, to be sure. Sort of the opposite of the Daddy Party and the Mommy Party, I think.

You might also consider that the Carrot and the Stick correspond fairly closely to the idea that people are either pretty good at figuring out what's good for them as individuals (say shopping or working at Wal-Mart) or they're sheeple who need the (heavy-handed) guidance of a 'kind and wise' government (assuming, of course, that it's controlled by the 'right kind' of people).

Personally, I would like to see more of the fully grown carrots rather than the baby one's they are feeding us. In other words, at the end of the day, big government is big government no matter which party is in power.

I prefer the carrot economy and like Bob, would like to have bigger carrots.

But we need bigger sticks to beat the others back.

I am generally a 'carrot guy' but I also want to reduce suffering in the world, and reduce poverty. Mostly I think that the 'carrots' work for that, but I think that some of the issues raised by the 'stick' group have some relevence.

I am becoming increasingly concerned that median wages are not keeping up will with economic growth. I am hoping that this is a lag effect, or a distortion of data, but if it is not it is a problem. If the rising tide isn't lifting all boats, only the yachts, we need to know why and address that.

I also think that sometimes the 'carrot' and 'stick' determination isn't as obvious as it may appear. Sometimes, something is sold as a carrot (being pro-growth) when it is in fact a 'stick' (beating down competition.) Tarrifs and subsidies are often in this camp.

Also some areas, the environment for example, don't correlate entirely to this analogy. I certainly don't approve of a 'carrot' approach that allows growth to be made by hiding the costs of environmental damage. That is false bookeeping, not real 'growth.'

Dave brings up some good points.

A reality that doesn't get much (or enough) discussion is that the conditions and policy that created the middle class following WWII do not exist today.

Innovation is the domain of the educated and intelligent. The educated and intelligent make certain that their offspring are likewise educated and intelligent, ensuring wealth and prosperity for generations. Wealth begets more wealth, and eventually power. Let's encourage this process for everyone, yes.

But what about those who are born stupid to stupid parents? Predictably they make stupid decisions and themselves have stupid children who continue stupid lives of misery and poverty. He won't innovate, he's too busy staring blankly into space when he should be restocking those shelves. If her wages go up, she'll spend it on the Lotto, not on sending the little one to preschool.

Doesn't the Republican side of us say it's their own damn fault, to hell with them for being stupid? Aren't they just a mass of lazy, useless human waste?

But the Democrat side of us cries out in protest: that woman can't help her IQ, she was born with it, born of a single mom who dropped out of high school pregnant, who smoked a pack a day in the 3rd trimester, who let her learn about sex education from the boy in the trailer two blocks over who likes to torture small animals. He's a product of a one parent home, peers who think school is selling out, that despite the .00001% odds of becoming a professional basketball player, that's really all he should put his energy into. Do these two now have the common sense, the resources, the will to raise a kid who will have a chance to enter the wealth cycle, even if by some miracle they stay together? Extremely unlikely. They need a hand-up. Their kid needs a hand-up. We can't blame them for the bad decisions their parents made, or her parents' parents. And so on.

It's not the fault of the rich for the situation of the poor-- the real blame goes back hundreds of generation-- but any solution that gives a hand up to the poor will inevitably have a cost. Any solution that tries to solve poverty will be expensive and difficult and perceived as a penalty to many, especially when it fails a good percentage of the time.

So that's where I stand on the issue of the rich -vs- the poor: Republican and Democrat. The Carrot party and the Hand-Up Party. Both and neither.

Some great "hard heads, soft hearts" comments! If only those who claim the latter would apply the former instead of demonizing all the things that lead to growth, we could find pro-growth solutions that genuinely provide a "hand up". (e.g. Milton Friedman has advocated a negative income tax for decades; Charles Murray has a recent book with a controversial "pay cash" proposal.)

Regarding median wages: there are several complicating factors that suggest that the "no gains" statistics are misleading. For recent discussion on various blogs, try this Technorati search: http://technorati.com/search/%22median%20wages%22?language=n&authority=a7.

I'll throw in another controversy: the way the poverty rate is measured virtually guarantees that we can't measure real progress, and thus can't use official stats to help understand what works and what doesn't.

If we judge be RESULTS instead of intentions, it seems pretty clear that the "paternalist government" approach is a failure -- as Democrats such as the late Sen. Daniel Patrick Moynihan noted (again, decades ago).

Oh brother. Here we go with Republicans are wealthy and look with disdain on the poor and disparaged. Damn, those insensitive, greedy, lawyers and businessmen. How many Democratic leaders rose to their positions by starting as a warehouse worker?

I'm an independent but vote Republican. I am neither wealthy nor do I have a master's from MIT.

But I do agree that education is a key, if not THE KEY, to increased prosperity for all. I will also opine that the K-12 public education system in the U.S. is dreadful overall.

The federal government has failed and continues to fail in its' efforts to solve the problem because it is a state and local problem. But, a discussion about the causes and solutions here would cause Steve to become a full time comment moderator.;>)

Well, I don't think that I have all the answers, but I think wealth and poverty is a whole lot more complex than smart and stupid.

I am also conservative enough to have a whole lot of suspician toward anyone who says they have all the answers, and utopia simply means following their plan.

I have seen quite a bit on median wages, and they estimates range a lot and it is a tough question to answer. I don't know of anything that has concluded that they have kept up with economic growth at all. There are also distressing signs that class mobility has been declining in the U.S. for quite some time. These are trends that a conservative wouldn't expect to happen absent outside effects so either the basic assumptions are wrong or something is detrimentally effecting wages and mobility.

Either way, it seems something that sould be paid attention to.

We're going to have to define what poor is.

No cell phones? No internet?

"I have seen quite a bit on median wages, and they estimates range a lot and it is a tough question to answer. I don't know of anything that has concluded that they have kept up with economic growth at all. There are also distressing signs that class mobility has been declining in the U.S. for quite some time."

Median income is without question rising, maybe not at the pace of economic growth, but rising nonetheless. It seems income is sensitive to recessions and such, but it has always been rising since the 50s(the chart doesn't start until 1967, but I think we all know wages increased dramatically before that).

http://southdakotapolitics.blogs.com/south_dakota_
politics/images/real_household_income.JPG

As far as mobility goes, according to this CATO report on Reaganomics, a good amount of mobility did indeed exsist in the 80s(when there were obviously low taxes, deficits and other pro-growth policies), amazingly, one in the lowest quintile in 1980 was more likely to be in the highest quintile by 1990 than to still be in the lowest!

http://www.cato.org/pubs/pas/pa-261.html

I think we might need to accept the fact that the wealthy will gain more from economic expansion than the poor... but as long as EVERYONE gains(like in the STRONG economic growth of the 80s and late 90s) so what? If the richest quintile earned 50 billion dollars a year and the lowest earned 200,000 dollars a year(inflation adjusted of course) would that be so wrong?

Syphax, nice chart though it seems sort of flat as of late, doesn't it? And, can we point to the bubble years as sustainable? A bubble is a bubble after all.

My point. I think the carrot guys bascially concede that the economy is undergoing structural change, especially with respect to labor (is someone cranking out webpages at 45K/year labor?); the stick guys though seem, to me, in denial of those changes and tend to be more in favor of protectionism rather than addressing what is needed to progress in this environment.

You have an excellent blog. I read it now and then and again.

Recently I stumbled upon the following link at thekirkreport.com:

http://www.financialsense.com/editorials/weiss/
2006/0918.html

I also placed this link in the URL box provided. Will you please comment?

Peace,
Meel

Sounds like you're the one who is a jerk.

The carrot and stick analogy is very helpful. I'm no economist, but I do have an interest in learning this art.

I am particularly interested in the size of the carrot argument. I mean in this volitile world, it would seem sensible for us to lay out a vision of where we are headed and then where we want to go. I do not hear this conversation in public discourse (i.e., non-academic circles). Let me say (somewhat naively I admit), that some honest and widespread discourse about this would help a lot.

Let me just say, I really believe in the American people and I don't feel the proponents of either side are giving them a fighting chance.

Can someone help me understand?

Very interesting and exciting blog, congratulations! I've found this when I was searching for USA-debt clocks, and have found really the best debt clock worldwide! As a German and republican, life in Germany isn't that easy, because you're surrendered by democrats. I hope that someday, even the German government will understand carrot economics and use it. Germany is the most perfect example, that Stick Economics doesn't work.
Good luck!

As of 2001, the top 1% of households owned 33.4% of all privately held wealth, and the next 19% had 51%, which means that just 20% of the people owned a remarkable 84%. Leaving only 16% of the wealth for the bottom 80%.

In terms of financial wealth, the top 1% of households had an even greater share: 39.7%

Source:
http://sociology.ucsc.edu/whorulesamerica/power/wealth.html

I was unaware that the top 1% (3 million Americans) having twice as much wealth as the bottom 80% (240 million Americans) was a good thing, especially for the well being of the country and economy.

For simplicity's sake, let's say we have 100 people representing the population of the United States. The bottom 80 makes an average of 30,000/yr. However the richest person (1) makes 4,800,000/yr. This person makes 160x more than each person in the bottom 80.

The carrot approach assumes that this 1% deserves to have 16,000% more wealth than the rest.

Now let's suppose Big Bad Government was to tax #1 an additional 10%, so our unfortunate fellow is left with a measly 4,320,000 and we divided the 480,000 by the bottom 80 people.

Now each of these 80 people have an additional $6,000. But they don't receive it in cash, they receive it in Health Care, College Assistance, Drug Rehab for the non-working so they can return to the work-force, increasing America's productivity. (Obviously there's more)

Would this really hurt #1, maybe he'd have 10% less vacation homes, or 10% less cars, or maybe even ::gasp::, 10% less jewelry.

Would he even notice? Does he go hungry? Do millions of lower income families have less trouble feeding their children after losing their job?

Now let's talk about the unskilled workers sitting on that, not-so-much-fun poverty line. They're making 11,000/yr.
Let's give them 6,000 in food stamps, Section 8 Housing, Medical Care, Job-retraining. It's as if they've received a 64% boost in income, just by taxing 10% of the top 1% of Americans (not even the 2-20% of Americans)

Can someone here explain to me why this makes sense to Democrats, and not Republicans (the RELIGIOUS right), maybe these republicans should pick up and read their bible and remember a word called charity, instead of using thus Bible to force their views on the other half of Americans.

Just my 2 cents, but what do I know, I'm just a dumb 22 year old Moderate who's father is a self-employed small business owner and mother had a good white-collar insurance job. I come from an upper-middle class family, so I guess I just don't understand the plights of the Upper Class.

Rich versus the poor and middle class
1. Does the Rich get better of the justice system? OJ, Paris Hilton, Britteny? Robert Blake. Does anyone believe that the middle class and the poor get the same breaks when arrested?
2. Do they get same or better Police protection, not only from their own Police Dept BUT, the Sheriff, State, government? Of course, they pay more taxes in Beveraly Hill but LA County and california, I would assume they get more than they pay for.
3. Do the stand in line at airports? Ever see one next to you? yet you pay the taxes to support the Airport.
How about ANY line that is for tax supported? Do you see them in lines or brought in side doors.
4. Did you every get a Police escort? sometimes the rich do if they ask for one.
SO anyone disagree that they should pay a little more instead of less? I work for a salary, they tax me at 33%. If you are rich and live on stocks, you pay MAX 17% thanks to King George.
Warren Buffet (sp) said "See my secretary out there, she makes $50,000 a year, I make billions. yet, George gave me a tax cut and I pay less percentage than she does, go figure" (not exact quote)

Nobody said the rich shouldn't pay more taxes than the non-rich. And Warren Buffet is not limited to paying only what the government asks; he can pay more, if he thinks that would be fairer. Lastly, he is in complete control of what his secretary is paid -- so why doesn't he triple it or quadruple it? Is he just being unfair?

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