The General Welfare

Progressives are likely facing a long time in the wilderness when it comes to the Supreme Court. Beyond the anti-worker, anti-consumer, anti-voter decisions already laid down over the past decade or so, we can anticipate a conservative majority for many years to come. But watching and waiting is no strategy at all. What can we do?

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Erwin Chemerinsky’s We the People offers an answer: we must build a progressive reading of the Constitution. The groundwork and vision for progressive priorities and arguments should be made now. They will help to persuade and nudge in the meantime, and build and nurture when the time comes. According to Chemerinsky, the values and policy preferences of progressives can and should be located in the text of the Constitution and its Amendments. This is important to counter conservative arguments that lay sole claim to that text, but at least as important is to make for ourselves a positive case.

I would like to briefly discuss Chemerinsky’s argument, and then to discuss (i) the parallel to a similar, vital progressive re-reading of fundamental economic theory, and (ii) what economists can contribute to the specific struggle for a progressive Constitutional law. The link is through the economic concept of a social welfare function. Defining, interpreting, and applying this concept is a key part of the economist’s training and toolbox. But just as conservative jurists have argued through the doctrine of originalism to own the sole claim to the text of the Constitution, so too have economists have ceded too much ground to a particular, conservative interpretation of one of our most important and useful tools. Rehabilitating the concept of the social welfare function is good for economics, and also shows how our tools can complement and bolster the case for a progressive reading of the Constitution.

The general welfare

Chemerinsky’s case flows from the Preamble of the Constitution, which looks like this:

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

According to Chemerinsky, the Preamble contains vital tools for the interpretation of the text that follows. Yet while it was freely referenced as a relevant part of the text in the early days of the U.S. and the Court, the fashion has changed:

In the few occasions over the last century in which the Preamble has been mentioned, the Supreme Court has summarily rejected its relevance to constitutional interpretation and decisions. The result is that it plays no role in constitutional arguments and analysis.

[…]

But this has been a mistake because the Preamble states the ideals for the Constitution and for the republic.

At the core of the progressive reading of the Constitution are, in this argument, the stated values of democratic governance, effective governance, justice, and liberty, and the implied value of equality. On this ground, as Chemerinsky goes on to show, we can construct the arguments for progressive goals that draw their power directly from the interpretation of the Constitution’s text. The book is devoted to a range of examples under each umbrella value to which progressives could usefully devote their energy.

It is in the values of effective governance and equality that Chemerinsky incorporates the Preamble’s stated goal to “promote the general Welfare”. Effective governance means doing right by the people, and equality means not leaving anyone behind. In the section of We the People devoted to the core value of equality, Chemerinsky specifically identifies minimum entitlements as a progressive ideal that can be situated in the notion of “the general welfare” from the Preamble to the Constitution:

Nothing seems more basic to the general welfare than food, shelter, medical care, and, for children, education.

This seems like a fine idea to me. It also seems like a fine place for economists to enter the picture, concerned as we are with the evaluation of policy. Appealing as this idea may be, does it jive with the economists’ notion of the general welfare? How would we decide?

The answer—the trick, maybe—is that we don’t. The economists’ version of the general welfare stands ready to call this brilliant, horrible, or anything in between. Our version of the general welfare is that the thing stands in for your values and your judgements. Just as Chemerinsky makes the case that value judgements are inherent in interpreting the law, so too are they inherent in welfare analysis in economics. But, again, just as Chemerinsky makes the case that originalism has hijacked the debate over values, so too has a particular interpretation of the welfare hijacked the debate over values in economics.

I think there are two things here for the progressive economist that are worth thinking about.

The first is that I think there is an analogy to what Chemerinsky is advocating for in the law to what we economists should be advocating for in economics. Sure, we don’t have a Supreme Court or a Constitution to focus on, but we have plenty of practical and textual baggage strewn around by our own conservatives’ interpretations. We are beholden to a false idea that there is an “economic way”: that economics says this is right, and other considerations say that is right, and you should adjudicate. This is nonsense.

Second, I think we economists could be allies in the project of building the apparatus for a progressive conception of the Supreme Court. The history of how things like the radical re-imagining of the Second Amendment came to pass through decades of hard, academic groundwork shows us that there is space to flex real influence at the most general level here.

Both projects for economists hinge on our special expertise in parsing the history, interpretation, and implications of the concept of “the general Welfare”. A progressive re-reading of the Constitution can be situated in the same place as a progressive re-reading of economics, to the mutual benefit of the legal and economic pillars of a progressive policy platform.

The general welfare to an economist

To an economist, the idea of a social welfare function is this: given the well-being of each member of society, what is the well-being of society as a whole? If there are alternative choices that lead to different levels of well-being for different people, which alternative should we as a society prefer?

The concept is called a social welfare function because it is filtered through the mathematical language of economic theory. The function takes as its arguments the level of utility of each person in society, and returns a number representing welfare, an index of the overall wellbeing of society. Utility is our made up abstraction for a person’s well-being, and welfare is, then, our doubled-down made up abstraction for society’s well-being. A bigger welfare number is better, but what makes the number bigger is up to they who specify the function.

The upshot is that, to an economist, asking which alternative policy we should implement boils down to choosing a social welfare function. Let’s pretend for a second that we know perfectly what will happen when we enact a policy, and that we can see into everyone’s soul and know perfectly how they will feel about the outcome (finding out how they feel is, by the way… a whole other can of worms.) We can express the idea of what is “right” in a couple of different ways. If you would like a justification for choosing some policy, we can find you a social welfare function that will do the job. Or, if you tell me your social welfare function, we can tell you what policy you should choose.

Even after assuming we know everything, it’s hard! If a policy helps one person and hurts another, there is no oracle which we can appeal for the answer. These are true dilemmas. Everyone has to decide for themselves how to balance those interests. It is standard when teaching this material to try to associate the ideas of famous moral philosophers with conjectured forms for the social welfare function—these are big, weighty, old questions.

The form of social welfare function is therefore where you can locate an economist’s value judgements. There is no such thing as an objective, technocratic answer to what policy economics says is the “right” one. Even if we were all to agree on what would happen if we pulled a lever, reasonable people could disagree on whether the lever should be pulled. It depends on their values—their social welfare function.

Earlier I mentioned that Chemerinsky advocates for minimum entitlements for food, shelter, medical care, and education. When I teach the social welfare function framework to students, they routinely suggest as desirable the kinds of social welfare function that make minimum entitlements a good policy. This kind of social welfare function, and these kind of policies that it selects, are square in the middle of what kind of value judgements are considered sensible by smart people who are trained in the economic framework. I might go further and speculate that many and perhaps most reasonable people would not support the kind of assumptions about the general welfare that are required to justify the current trajectory of policy and Constitutional interpretation. But that’s just my guess.

The point is that reasonable people may disagree. Inescapable value judgements animate both the reading of the Constitution, as Chemerinsky details, and the reading of economic theory and policy. This is the place where economics meets the Preamble of the Constitution: the general welfare is, to an economist, inherently a value judgement. It is also a technical question, with a well-defined grammar to hash out our disagreements. To respect the direction to “promote the general Welfare”, we are required to define and advocate for our values. Once we have done that, though, we are free to make the economic case for the kind of progressive policies we prefer.

A progressive reading of economics

Unfortunately, in practice, all too often the richness of the general concept of a social welfare function is largely sublimated to a particular functional form. It is one that inherently favors the rich and powerful over the poor and powerless. It lives under the name of efficiency in economics textbooks and, improperly interrogated, it leads the student of economics to implicitly accept value judgements that are extreme and unpopular.

By efficiency I have in mind a utilitarian social welfare function that measures utility in dollars and cents. This metric takes a social welfare function that adds up the dollars or dollar-denominated equivalents enjoyed by everyone in society, and prefers policies that make that sum as big as possible. Students of economics will recognize this as embodied in jargon like “maximizing the sum of surpluses”, “minimizing deadweight loss”, or “cost-benefit analysis”.

This is the gremlin in the machine that James Kwak dubbed “economism” in economics pedagogy. Kwak demonstrates a separate problem from the one I want to consider here. Much of the econ 101 gospel, focusing on too-simple models, presents a misleading picture of what kinds of policy pass the test of a social welfare function based on efficiency. A disingenuous insistence on both the too-simple models and the efficiency metric leads one to, for example, reject as naive the notion that things like minimum wages or union membership could be desirable.

More pertinently for the current topic, even if we have the right model in mind, efficiency embodies value judgements that are extreme and, I think, would not find broad support. It is also, by the way, the ideological core of the kind of economics “education” offered to federal judges by conservative organizations, programs that the evidence suggests result in more economics jargon and more conservative judgements by those treated (Ash, Chen & Naidu 2018, pdf).

There are two issues with an obsessive focus on efficiency to the exclusion of other value judgements. First, in the presence of inequalities of opportunity, dollar utilitarianism recommends policies that perpetuate unequal outcomes. It is pathologically fixated on the size of the pie and entirely unmoved by who gets a slice. This is not an obscure complaint, but one that is inherent to the most basic economic idea of mutually beneficial exchange. It is all very well to claim that the market for housing or education or food is efficient, but that’s not at all comforting to a person who can’t afford any.

An outcome in which very few people were fantastically well off and most people were not well off at all is perfectly acceptable to a dollar utilitarian social welfare function if the alternative is a more equal distribution but a smaller total. If that seems a far-fetched example, I invite you to consider the distribution of wealth and social mobility in the United States.

Second, dollar utilitarianism requires dollars. There is nothing about dollars in the concept of a social welfare function. In fact, I would wager that most people would agree that there is a lot more to “the general Welfare” than cash. What a bizarre world it would be otherwise! Policies like more federally mandated vacation time for workers, more libraries and parks, or social programs for the elderly are not likely to pass an efficiency test, but it is not hard to make a case for them. It just requires thinking a little more carefully about not only how you should weigh the well-being of different people, but about how exactly you might measure well-being in the first place.

I think Chemerinsky’s project should find natural allies in the kind of economist who yearns for a less self-contentedly conservative reading of economic theory. Economic theory and policy can tolerate a progressive re-reading too, by re-emphasizing the social welfare function in general over the excessive focus on dollar utilitarian efficiency in particular. We have been hijacked too long.

Taking economists’ welfare to the Constitution

It is fair to say, then, that efficiency is shorthand for a radically conservative social welfare function. Monetize everything and make the numbers big, and on you go: an objective answer has been conjured to subjective questions. And it just so happens that our answer has nothing whatsoever to say about inequalities, and it has a mean view of well-being and what it means to promote a good life.

But perhaps this is too unfair. First, economics texts do talk about equity, even if it’s often subservient to efficiency. Second, even a social welfare function that embodies efficiency is consistent with many progressive policies. And third, it would be useful to have something we can take to the Constitutional reading that is less an inward-looking fight about economics and more an outward-looking recommendation about policy.

Therefore, I want to finish by thinking about a couple of different ways that the economic approach to social welfare can complement and bolster the progressive reading of the Constitution.

A rejoinder to my first complaint, about inequality, is found in the standard apologetic afterthought in introductory economics: there is a trade-off between efficiency and equity. Sometimes more equity can only be had with less efficiency, and that’s up to you to decide.

The nature of the efficiency-versus-equity relationship, and in particular whether there is a trade-off at all or whether they are mutually reinforcing, is a perpetually open empirical question. My concern here is one of framing. Efficiency and equity are cast as antagonistic co-equals in this story, two enemies in a tug-of-war. Social welfare functions bake in both of these and more in one swoop.

It is for this reason that I, like most economists, much prefer a softer, trickier concept of Pareto efficiency. A situation is Pareto efficient if what you face are true trade-offs between people—there is no way to make everyone better off. There are many ways to be Pareto efficient, but only one way to be dollar utilitarian efficient. This really opens us up to the ambiguities inherent in using economics to evaluate policy. If even our efficiency concept offers us a menu of options rather than a single dish, it becomes apparent that we will have to dig a little deeper to make our case. There is no “economic answer” that is to be weighed against “other concerns”. Economic answers are ambiguous and incomplete.

Efficiency is not everything, and there is more than one way to be efficient. Different ways have different winners and losers. To compare them is to judge competing interests.

Next, sometimes we might need or want to fight battles on the preferred ground of conservatives. What if we need to use the narrow, mean social welfare function of dollar utilitarianism? Does that mean to have lost the fight for progressive policies that promote equality and the general welfare?

Any student of microeconomics should confidently tell you that the answer is no. In areas from healthcare to the environment to the power of big business, again and again progressive policies are efficient policies, even in the narrow sense. Single payer healthcare, carbon taxation, and vigorous antitrust enforcement are all textbook examples of policies that both enhance efficiency and equity. The narrow view of efficiency may hinder our ability to address inequalities by race or gender, for example, but it still admits some valuable and desirable policy goals.

Even a narrow, conservative definition of the general welfare admits some progressive policies. To have policy goals that are tailored to the audience’s social welfare function is not a surrender.

Finally, no-one is really that interested in social welfare functions or definitions of efficiency. (This is probably obvious after I’ve spent so long going on about them.) The practical question here is how economists can use their public face or influence to support our brothers and sisters who will build the progressive reading of the Constitution.

My position is that it is never accurate to say about some policy or another that the economics goes in one direction, but nevertheless one should prefer the other. The most wonderful thing about economists’ conception of the general welfare is that it can accommodate any policy.

Our expertise is in identifying and measuring trade-offs. We should also be in the business of evaluating them. Any policy can be supported by an economic argument. I don’t mean that as an indictment of how vapid economics is; I mean it as an endorsement of how powerful and accommodating economics is. Since we are not technocratic, we are free to advocate. All we have to do is be honest about what value judgements we needed to get us from the policy implications to the advocacy.

Economics does not evaluate policies without values. Making the economic case for your preferred policy is good economics: it is not cheating or being biased, but rather teaching and explaining.

We don’t need to hide anything. We can support the project of progressive planning for what comes after the next era of conservative policy and courts by being economists, with expertise and opinion both. Combine an honest reckoning about what the policy will do, and what value judgements make it the right choice, and you have the very best economics there is.

We the economists

Towards the end of We the People, Chemerinsky sums up:

In this book, I have presented my view of a progressive vision for the core values found in the Constitution as expressed and embodied in the Preamble.

Compared to this, scuffling around with arcane things like social welfare functions seems not to amount to much. But, for better or for worse, economics has real power, including with the law. We too are allowed to have a progressive vision. We are lucky that we have the language and the license to locate that vision within the formalities of the subject.

I think that “the general Welfare” supports minimum entitlements, as Chemerinsky argues. I think it supports much, much more besides. Of course, it also can support policies that I think are very bad. I don’t know whether it’s hubris or genius that we have folded the weighing of subjective value judgements deep into our methodology. But that’s the economics that we have, and I think we should use it.

 

 


 

Addendum! While I was writing this post, I wondered to myself if maybe I was going a bit far in my diagnosis of the efficiency hijacking. Then this tweet appeared in my timeline, and I got over that instantly:

I mean.

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