Divide and Conquer

Over at Crooked Timber, Chris Bertram thinks he's found an inconsistency between Will Wilkinson's position on relative incomes and Tyler Cowen's position on relative GDPs:

But digging deeper, the crux of Tyler’s argument has been that Europe’s ageing population matters because it will lead to lower growth rates and that the compounding effect of these will be that Europe’s position relative to the US (and China, and India) will decline, and that that’s a bad thing for Europeans. Whilst Tyler insists that these global relativities matter enormously, Will suggests that domestic relativities between individuals matter hardly at all. Since I think of Will and Tyler as occupying similar ideological space to one another, I find the contrast to be a striking one, and all the more so because I think that something like the exact opposite is true.

As far as I can tell, the premise is flawed. I don't see that Dr. Cowen ever argued that relative GDP is important. His point was simply that, all else being equal, future Europeans will be better off with a per-capita GDP of $100,000 than a per-capita GDP of $50,000, regardless of how well the US does. In fact, he's stated explicitly in the past his belief that Europeans would be worse off, not better off, if the US were to adopt European-style domestic policies that slowed its growth rate:

My sentence is a bit different: "Trying too hard to limit risk will increase the number of global people who are just outright screwed over."

My sentence is the least politically palatable or salient of the three. But the more globalized the world becomes, the greater its relevance. It is imperative to keep the United States -- the number one generator of global public goods -- as a highly productive, innovative economy.

...And then I was planning on going on to make the same point Brian just made. But he already did, and I probably wouldn't have done it as well anyway, so I'll just stop here.


Update: I will add, however, that what constitutes a minimum decent standard of living is largely subjective and based on social mores. What we have now isn't good enough for all time, and to assume that it is is nothing more than status quo bias.

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