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The grasshopper wins, and Greg Mankiw’s grandmother would be “shocked and appalled” all over again

Given Grandma Mankiw’s hypothetical distaste for Sonia Sotomayor’s spending habits (recall that Grandma “would have been shocked and appalled” by the judge’s lack of savings), I expect she (the grandmother) would be even more irritated by the success of Sotomayor’s recent book:

Now that Sotomayor has a ton of money coming in, in addition to a well-paying job and pension for life, that would almost seem to validate Sotomayor’s foolish, foolish decision to enjoy herself in middle age rather than sock hundreds of thousands of dollars into a retirement account she likely would never touch during her lifetime.

One interesting thing about this example is that Mankiw apparently holds within himself a descriptive and normative view of economics. Descriptively, he models people as “spenders” or “savers.” But, normatively, he seems to attribute higher values to the “savers.” (He also seems to be confused about the relation between saving to intertemporal preference (see my long paragraph here), at least in Sotomayor’s case, but that’s another story.)

This is fine—there’s no reason that Mankiw shouldn’t express his views. I personally don’t get it (except as a comment on his grandmother’s Great-Depression-induced attitudes) but the way Mankiw wrote his post, it really does seem that he sees it as a negative comment on the judge that she’s not saving her money for a tomorrow that will never come.

It’s not just econ

This tension is hardly unique to economics. Every social science has its descriptive and moral component. For example, my colleagues and I have descriptively studied partisan bias of electoral systems—but the very word “bias” implies a perspective that it’s a bad thing. When psychologists study schizophrenia, it is typically with the ultimate goal to prevent and treat it. When sociologists study networks, I think there is a general view that you don’t want to be the Unabomber, that it is better to establish enduring human connections with friends. And so on.

The moral component of social science seems different than the utilitarian component of physical science. For example, if a chemist might be working on some new polymer in pursuit of a social goal such as the design of an ultralight efficient car, but in that sort of example I see a clear separation between the scientific activity and its later use, a separation that seems much less sharp in social science.

Anyway . . . I’ve written a lot (for example, here) about different and somewhat contradictory perspectives inside microeconomics. But this latest discussion, about Sotomayor and Grandma Mankiw, made me think about this different set of contradictions within macro, related to the Keynes’s famous argument that saving rather than spending can be individually wise but bad for the larger economy, and counterarguments that the Keynesian prescription might work in the short term but have bad long-term consequences.

So, my comment about the overlapping descriptive and moral natures of social science is not a criticism. I think it’s necessary and appropriate.

Back to Sotomayor, Grandma Mankiw, and Greg’s 93% tax rate

Anyway, this all gives me some insight (or, at least I think it does) on Mankiw’s claim that he would work less once Obama came to power and cranked the marginal tax rate up to 93% (see updates here and here). As the commenters discussed, you can only get the tax rate up to 93% by making some assumptions about savings and compound interest and the inheritance tax.

How does this all fit together? Recall that, a few years ago, Mankiw wrote that it is wrong to tax a “justly acquired endowment” that is not “unfairly wrested from anyone else.”

So here’s the deal. From Mankiw’s perspective, saving is moral, spending is not so moral (and, recall that the criticism of Sotomayor is not that she’s spending beyond her means, but just that she’s spending what she’s already earned). Sure, Mankiw is putting this anti-spending perspective in the mouth of his grandmother, but the way he writes it, it appears to me that he’s expressing his own beliefs as well here. And he views taxes as a sort of fine or punishment. Put these two things together, and you can see how he would (a) support a tax on consumption (an activity of which he expresses disapproval) and (b) gets annoyed by income and inheritance tax. After all, from his perspective, high income represents a good thing so why tax it, and inheritance represents savings (unspent income), which is also good, so that shouldn’t be taxed either.

The idea that Sotomayor spent all her money, and is now rewarded for that behavior by a Supreme Court seat and “a seven-figure advance” and royalties from her new book—that’s gotta be really galling from the virtuous-ant-and-lazy-grasshoper perspective attributed to Grandma Mankiw. It’s the flip side of taxing the bequests of elderly rich people who virtuously saved their money and wisely invested it for decades in real estate and the stock market. It’s the world turned upside down.

46 Comments

  1. gwern says:

    > Now that Sotomayor has a ton of money coming in, in addition to a well-paying job and pension for life, that would almost seem to validate Sotomayor’s foolish, foolish decision to enjoy herself in middle age rather than sock hundreds of thousands of dollars into a retirement account she likely would never touch during her lifetime….The idea that Sotomayor spent all her money, and is now rewarded for that behavior by a Supreme Court seat and “a seven-figure advance” and royalties from her new book—that’s gotta be really galling from the virtuous-ant-and-lazy-grasshoper perspective attributed to Grandma Mankiw. It’s the flip side of taxing the bequests of elderly rich people who virtuously saved their money and wisely invested it for decades in real estate and the stock market. It’s the world turned upside down.

    A mistake is still a mistake, even if some chance event helps them avoid the consequences. How many judges ever reach the Supreme Court or write best-selling books? ‘Become a Supreme Court justice’ is not any retirement plan I ever heard of, or to put it another way: a lottery winner is still a fool for playing the lottery, and not a sagacious font of wisdom on financial choices.

    • Andrew says:

      Gwern:

      That does indeed seem to be Grandma Mankiw’s reasoning. But recall that Sotomayor had already been a very successful lawyer and Federal judge at the time of Mankiw’s “shocked and appalled” statement. Sotomayor didn’t need to be a Supreme Court judge or a bestselling author as a retirement plan. She already had a retirement plan as a Federal judge, and so I don’t see why it was a “mistake” for her to enjoy herself in middle age. She wasn’t playing the lottery; she was spending her money in leisure pursuits, secure in the knowledge that more money was coming and that her retirement was secure.

      • Jonathan (a different one) says:

        Mankiw’s grandmother almost surely fails to take proper account of a lack of dependents as well. Reducing the bequest motive has very big effects on estimates of life-cycle savings behavior. In addition, we still don’t know if Sotomayor has large sums socked away in the gov’t 401k equivalent from her time as a Federal jusge.

        • Andrew says:

          Jonathan:

          Grandma Mankiw might well also disapprove of Sotomayor’s childlessness, although this might not quite reach the “shocked and appalled” threshold.

      • Barry says:

        And as was pointed out during the initial arguments, her tenure and pension as a Federal judge are constitutionally protected. In practical terms, it means that the Federal judiciary would have to have been politically c*strated before those could be reduced; in such a massive political change in the USA, any other economic assumptions would be shattered.

  2. Chris says:

    My guess is that Sotomayor’s savings probably got hit hard by her divorce.

  3. zbicyclist says:

    Mankiw chose a prominent but inappropriate target in Sotomayor (who, as noted, had that federal pension).

    But the larger issue of inadequate baby boomer resources in retirement is a difficult one. See for instance this discussion at MarginalRevolution http://marginalrevolution.com/marginalrevolution/2013/02/assorted-links-707.html where these same themes of morality play out in the discussion of a recent Washington Post article. http://www.washingtonpost.com/business/economy/fiscal-trouble-ahead-for-most-future-retirees/2013/02/16/ae8c7350-5905-11e2-88d0-c4cf65c3ad15_story.html?hpid=z1

  4. numeric says:

    Mankiw wrote that it is wrong to tax a “justly acquired endowment” that is not “unfairly wrested from anyone else.”

    Hmmm. Ugg hit Drup over the head with a club 40,000 years ago and grabbed his territory. Ugg’s descendants are better off–how do we compensate Drup’s? American slaves, European Jews, Ottoman Armenians, etc. Someone got the fruits of their labor (including Mankiw, like most white Americans, who benefitted from slavery). A more modern case–inheritances derived from the financiers who crashed the world economy in 2008–are those unfairly wrested or not?

    I stil think Mankiw goes past 100% marginal tax rate, but I’m too lazy to produce an actual example.

    • txslr says:

      Your claim that “…most white Americans” benefited from slavery is profoundly wrong. The owners of slaves can safely be presumed to have benefited from slavery at a cost borne by the slaves (of course) and to some degree everyone else. Imagine that in the morning we rounded up all the Jews in America and put them to work picking crops. Do you think that this would benefit “most” non-Jews who would have to do without their major contributions in other areas, simply because the costs of agricultural goods might be a tiny bit smaller?

      Expropriating the labor of others is both immoral and economically costly.

      • Bill says:

        @txslr:

        Slavery was free labor that helped build the industrial might of the country. It didn’t just benefit a sliver of the Southern elite. That is not to say that others were not similarly mistreated, even among whites. But it was clear that blacks were chattel–i.e. engines of the economy.

  5. Gary says:

    Or it could be that Mankiw is … let me think of the proper social-science term for it .. um, um, .. asshole?

  6. GabbyD says:

    ” But, normatively, he seems to attribute higher values to the “savers.””

    hi, but where in his paper does he say that higher values are attributed to savers? he did say that theres no accounting for intertemporal preferences, right?

    • Andrew says:

      Gabby:

      Why do I say that Mankiw seems to attribute higher values to the savers? Because he attributes to his the sympathetic figure of his grandmother the emotions of “shocked and appalled.” That’s a value-laden phrase!

  7. What do you call it when the idea of a statement is contradicted by the act of making it? Like the wall where someone has painted “Don’t paint on the wall.”

    That’s what Mankiw reminds me of when he writes about himself as an economic actor – the rational calculator who’s going to work less if his taxes go up. Yet he’s taking the time to write these statements in his blog, which nets him no money, or newspaper columns, which pay far less than he could make if he used the time consulting. (I had a blog post about this a couple of years ago.)

    • Andrew says:

      Yeah, when I blog it’s for the purely instrumental reason that I want to raise my profile and thus my consulting rates. It’s my dream to get into that exclusive 93% tax bracket.

    • Pithlord says:

      From vaguely-remembered undergraduate philosophy, I think it’s called a “performative contradiction.”

  8. Fernando says:

    From a very quick reading: Is this not moral hazard? E.g. SM took time off maybe bc she had a defined benefit plan. Had she been on a defined contribution plan she may not have taken the risk. So maybe it makes sense to tax her 95% or enough so society is compensated for the implicit subsidy.

    This also opens up an issue of fairness. If I lose my private sector job I lose health insurance, and get to keep only meager defined contribution plan. Maybe I deserve this, I am not a federal judge, a fireman, a policemen, or a life guards. Maybe they are more worthy than I, but it seems to me that taxing the unworthy to subsidize the worthy is somewhat regressive. If you are a liberal you may want to give me a tax break.

    Moreover, it is the risk of moral hazard that introduces the compulsion for saving and health insurance. If people do not save who pays for them in retirement? Or do we let them starve? One way to solve such problems is coercion, another is internalize the externalities via social norms and preferences like the virtue of saving. Maye Mankiw is a libertarian and prefers to work the norms margin rather than the coercion one.

    • Popeye says:

      Back when the economy was strong, the private sector was where dynamic individuals had the opportunity to make a fortune, while the public sector was where risk-averse dullards took jobs with limited upside because they wanted stability. When the economy turned south, this bargain became horribly unfair.

  9. Anonymous says:

    Hi Andrew,

    I think you are missing some of Mankiw’s point. Taking the inherent uncertainty of life into account, a person with the means should save a portion of their income to build redundancy into their financial situation.

    I don’t know the specifics of federal judges pension plans, but would it not be possible that some future government could alter them in a populist move to reduce the deficit (win votes).

    Now, it is unlikely that in Sotomayor’s case there will be any negative repercussions for her relative lack of saving. However, there are millions of Americans (and millions of middle-class individuals in other wealthy countries) who have similarly not saved for their retirement. Without the earning capacity and pension Sotomayor enjoys, many will either face old age in poverty, be forced to live of their adult children (if they have any who have the means and willingness to support them), or place a significant strain on public finances in the future.

    I’m not a regular reader of Mankiw, but I believe this may be where he is coming from. It is understandable he may view this in a moral or normative fashion.

    • Andrew says:

      Anon:

      Unlike Mankiw’s grandmother, I refuse to find it immoral that a childless middle-aged well-paid professional decides to spend her money and enjoy herself. I mean, sure, she could instead be giving all the money away to the poor, but I don’t think that’s what Grandma Mankiw is proposing. My impression is that Grandma would prefer that Sotomayor put it in a bank account that, realistically, she will never touch. In any case, I find it interesting also because of the contrast between economists’ common refusal to question individual preferences.

      • Anonymous says:

        Andrew,

        As I said, in Sotomayor’s case it is unlikely there would be any negative repercussions for her not to save. So sure, there’s nothing wrong with her spending the money she likely worked hard to earn.

        I think were this becomes an issue that might take on moral/normative undertones is when an entire generation fails to adequately save for a time when they are no longer able to earn the money required to keep them in the lifestyle they become accustomed to. What happens when they retire?

  10. Steve Sailer says:

    The Obamas were basically broke, taking out (if I recall correctly) three home equity cash withdrawals on their condo, up until Barack getting elected to the Senate garnered Michelle a huge raise in pay from the U. of Chicago Hospitals to do whatever it is she did. (When she became First Lady, her position was eliminated, implying that her job’s main duty was making pillow talk with a rising politician.) And then the money came pouring in for his books.

    Basically, Michelle’s $200,000 raise after her husband’s election to the Senate was a payoff from a private medical organization to the man who might well (and, indeed) turn out to be the President who reorganizes health care finance to think nicely of private medical organizations.

    Indeed, Michelle’s previous $117k per year salary at the hospital was pretty much of a bribe, too, since her husband was chairman of the Illinois Senate’s Health and Human Services Committee.

    But it seems like a smart strategy. Obama may well be the first ex-President to become a billionaire.

  11. Steve Sailer says:

    The Obamas, who made $252,000 in 2004, up from about $170,000 in 1997, were so broke when they hit it big that they didn’t shelter any of their $1.6 million income in 2005 from taxes. They needed every penny. Only with their $1 million 2006 income did they put aside $70,000 in an SEP to shelter some of Barack’s book earnings.

    Michelle has expensive tastes, although Barack does not. (He’s finally developing a taste for quality golf courses, but until recently he just played at whatever mediocre golf course was around.) That caused a lot of tension in their marriage, with Michelle aghast that Barack turned down a $1 million per year salary offer to head the liberal Joyce Foundation to stick with his political ambitions. The 2004 Senate run was, by agreement with Michelle, his last try at politics.

    The Joyce offers shows that for very high-achieving non-Asian minorities like Obama and Sotomayor, there are always ways, if necessary, to make decent money in the Role Model business. So, their spendthrift finances make sense since they could always bail out, if the finances got too tight, into being the diverse face of some big money organization.

    • BRD says:

      Could you please provide a source for this? I would be interested in reading more about it.

  12. conchis says:

    He also seems to be confused about the relation between saving to intertemporal preference

    I have to admit I don’t see what Mankiw’s supposed to be confused about here, and I wonder if you’re just talking past each other. The relevance of intertemporal preference is just that, other things equal, a higher discount rate (caring less about the future) should rationally lead to less saving for the future. Exactly how this plays out will clearly depend on other things, such as the shape of your utility function, the return on savings, and your expected income profile over time. But that doesn’t make intertemporal preferences irrelevant.

    In very broad brush strokes the standard econ model that Mankiw is likely working with is something like the following. (If you think this doesn’t make sense, it would be great if you could point to the specific bit that you find problematic.)
    – Other things equal, diminishing marginal utility creates a preference for smoother consumption profiles over time.
    – Other things equal, a positive return on savings creates an incentive to defer consumption now, because saving now will get you more consumption later.
    – Other things equal, a positive discount rate has the opposite effect, creating an incentive to consume more now because you value current consumption more than delayed consumption.
    – Exactly how these general preferences feed into ‘optimal’ savings behavior will depend on how your preferred consumption profile over time compares to your expected income profile: (a) if the two are perfectly aligned, then you’ll just consume all your income and never save; (b) if you expect your income profile to increase over time relative to your preferred consumption profile, then you’d ideally like to borrow money early in your life against later earnings; (c) if you expect your income profile to decrease over time relative your preferred consumption profile, then you should ideally save now, and consume in excess of your income later; (d) in practice most people’s income profiles are n-shaped over time, suggesting that they borrow early (student loans, mortgage etc) and save later in order to smooth their consumption over time.

    • Andrew says:

      Conchis:

      Following the link above, here’s the story. Mankiw wrote:

      Optimal saving is a function of the subjective rate of time preference, and economists have no basis to say that some intertemporal preferences are better than others.

      And here was my reaction: I don’t quite follow the “intertemporal preferences” thing. Yes, I understand the meaning of the phrase, I just don’t see how it really applies here. If Sotomayor has enough money now, and she’ll be getting enough money in the future, then what does intertemporal preference have to do with anything? Is the argument that, if she has a long time horizon, she’ll save more now so she can “buy a jet ski made out of diamonds” (in the words of commenter Drew Miller) in a few years? That doesn’t make a lot of sense to me. I don’t see intertemporal preference as the appropriate analytical concept here.

      To say it again: Sotomayor was financially comfortable at the age of 55, and she’ll be financially comfortable at the age of 75 (assuming she lives that long). If she put off a vacation at age 55 in order to save money, that wouldn’t give her any higher quality of live at age 75, it would just mean she’d have more money untouched, sitting in the bank at age 75.

      • conchis says:

        We’re seem to be coming from such different places here that I’m still confused about what your objection is, but bear with me…

        My best guess is that the key difference is that:

        (1) Economists assume that a little bit more consumption will always bring you a little bit more utility (albeit at a diminishing rate), so there is always a marginal trade-off between consumption now and consumption later (putting off the vacation at 55 would give Sotomayor higher quality of life at 75). As long as this is the case, intertemporal preferences (how much do I prefer utility now to utility later) will be relevant to the optimal savings profile.

        (2) You assume that utility tops out at some point, above which further consumption has no effect. In this case (provided that you reach the maximum in every period, even without saving) there’s no tradeoff between utility now and utility later, so intertemporal preferences don’t matter.

        Does this seem right to you? If so, then I doubt Mankiw would disagree with your analysis, conditional on your assumptions. It’s just that he (and most economists) would disagree with your assumptions. It’s not obvious to me that either of you are necessarily right in this case, but your analysis does seem to be a much more special case than Mankiw’s (which will apply to any circumstance where utility isn’t saturated in every period).

        • Andrew says:

          Conchis:

          No, I’m saying that if she spends less in her fifties she won’t be consuming more in her seventies, she’ll just have more money in the bank in her seventies, money which she’ll leave untouched until she dies. It’s not consumption now vs. consumption in the future (in which case I understand the relevance of intertemporal etc.), it’s consumption now vs. putting the money in the bank and never touching it.

          Again, the argument could be made that it would be more moral for Sotomayor to not spend her money but to give it away to charity, but I don’t see Mankiw making this argument, and also this then would not really argue about intertemporal preferences either.

          • conchis says:

            What’s the basis for the claim that she won’t spend it in her 70s? (The economist argument being that if she would get utility from spending it, then she should spend it. Unless she’s holding onto it for consumption in her 80s, in which case, well, intertemporal prefs are still relevant.)

          • Chris Auld says:

            I agree with conchis. Andrew, you are assuming for some reason that if Sotomayor has more savings in the future that will have no effect on her consumption in the future, and also that she is indifferent to the size of her bequest. Why would you make these assumptions?

            One of the bizarre implications of your argument is that Sotomayer is completely indifferent to changes in wealth: such changes would have no effect on her consumption at any time, and she is indifferent to her bequest, so she is indifferent to her wealth (at least up to the point where enough is taken from her that she no longer has “enough”).

            Notice that arguing that high anticipated future income rationalizes low current savings is an argument based on intertemporal preferences, not an argument that intertemporal preferences aren’t relevant.

            Think about Sotomayer’s intertemporal preferences (only slightly loosely) as preferences over consumption now or savings (or borrowing) now. Such preferences are clearly the right concept to think about savings, in fact, I don’t think it’s much of an exaggeration to claim that they are tautologically the right analytical concept to think about savings behavior.

          • Andrew says:

            Conchis, Chris:

            OK, I get your point. I still think that in this particular case it would be unlikely that Sotomayor would spend all that money in her 70s but I agree that it’s a possibility. So there are 3 things she could do with her money: spend in her 50s, spend in her 70s, give away to charity now, or save till she dies and bequeath it to charity then. Intertemporal preference is part of this choice. I don’t think intertemporal preference is most of it, but I agree that it’s part of the story. Thanks for your patience in clarifying.

          • conchis says:

            Andrew: thanks also for persevering with the conversation. I also agree that intertemporal preference is only part of the story.

          • Steve Roth says:

            I think this may be simple: Andrew is asserting that her *marginal* propensity to spend/consume at age 75 — her imagined *extra* spending if she had a pile of cash — will be zero.

            If: 1. that is correct, and 2. she also thinks that will be correct, then her spending/not-saving behavior now is eminently rational.

            While that may not assuage Grandma Mankiw, it certainly should assuage her son.

          • conchis says:

            Steve: Yes, but MPC is an output of the underlying model, not an input. We’re arguing about what underlying assumptions about the utility function or income profile could lead to an MPC of zero.

            Roughly, these are:
            (1) Your actual income profile happens to correspond exactly to your preferred consumption profile
            (2) Your utility function maxes out at a ceiling, which is met every year, without saving
            (3) You’re not actually trying to maximise utility so you don’t spend more even when you’d get utility from it.

            Note that if we’re treating utility as defined by revealed preference, then (3) isn’t actually possible, and it’s just a slightly confused way of claiming (2). By the definition of revealed preference, if you don’t spend when you could, it’s because it doesn’t increase your utility. The only way claim (3) makes sense is if you’re treating utility as something like quality of life (which is fine, as long as we’re clear about that).

          • Steve Roth says:

            @Conchis:

            Right. #1 seems to characterize Sotomayor’s situation. But it’s important that her “preferred consumption profile” includes realistic/accurate (hence rational) expectations about her future preferences — in particular that her age-75 utility function will max out at a ceiling equal to or below her expected age-75 income profile. IOW she knows, accurately, that her ex-post intertemporal preferences will match both her future income, and her current, ex-ante preferences.

            As for what’s an output: I *think* your model has MPC as an output *because* it is based on the doctrine of revealed preferences — a doctrine that was resoundingly revealed to be logically insupportable and circular (and self-contradictory in Samuelson’s successive iterations of the doctrine) by Stanley Wong in 1978 (re-issued 2006):

            http://books.google.com/books?id=haB3KYNrk-wC&dq=wong+revealed+preferences&source=gbs_navlinks_s

            So yeah (also?), I like to think in terms ordinal (i.e. absolute) rather than cardinal (relative preferences) utility. But I think that’s an aside.

            But basically, Mankiw’s moralizing (it’s nothing more or less) from a profoundly a- or im-moral ethical position just pisses me of profoundly.

          • mike says:

            Sonia Sotomayor’s intertemporal preferences may be influenced by her health profile, which includes Type 1 Diabetes.

            She may prefer spending in the current period over saving to spend when she is 75, because she may believe that she may not be (alive or) able to take that exceptional vacation when she is 75 years old.
            http://www.publichealth.pitt.edu/news.php?id=306

            Life Expectancy Increasing for Type 1 Diabetics, According to Latest Pitt Research

            The life expectancy for participants diagnosed with type 1 diabetes between 1965 and 1980 was 68.8 years – a 15-year improvement, compared to those diagnosed between 1950 and 1964, according to the study. Meanwhile, the life expectancy of the general U.S. population increased less than one year during the same time period.

            end-block-quote

            Her cohort based, life expectancy may give rise to the different complaint — that despite her judicial philosophy, she was a bad choice for Supreme Court Justice because her “appointment for life” may not be as long as those nominated and approved by GOP presidents.

          • conchis says:

            @Steve:

            your model has MPC as an output *because* it is based on the doctrine of revealed preferences

            The question that we’re trying to answer is whether an MPC of zero is rational. If your model takes an MPC of zero as an input then it can’t answer the question; to do it’s job, any model you use for this needs to have MPC as an output. That model doesn’t have to be based on revealed preference, and I indicated above that mine could be based on quality of life instead.

            I like to think in terms ordinal (i.e. absolute) rather than cardinal (relative preferences) utility

            I think you have ordinal and cardinal backwards, but as you note, it’s not really relevant here anyway. (You can use both, just for different things.)

  13. Mark Palko says:

    I don’t want to make assumptions about the grandmother in question (she was, for all I know, a proto-Randian), but the Depression-induced attitudes that so valued frugality and savings were part of a larger framework of attitudes about taxation, compensation and wealth, attitudes that Mankiw strongly objects to. I’m not quite sure how he can reconcile these ideas.

    • Andrew says:

      Mark:

      I haven’t corresponded with Mankiw in awhile, and I don’t know that he’d want to respond to this one, but I wonder if he’d feel that such attitudes were appropriate in the depression but not now. After all, even a conservative economist who opposes 1970s-level regulations might agree that regulations in the 1920s were too lax. Similarly, he might feel that the 1930s-vintage social safety net was fine, while opposing its current levels. We’re used to thinking about directional politics, in which liberals want more more more and conservatives want less less less, but, at least in theory, Mankiw might want more government and taxes than in the 1920s but less than now.

      I suspect that Mankiw’s immediate reaction was partisan: he’s a Republican, Obama’s a Democrat, and he was using Sotomayor to say something negative about Obama. Also there was that weird anti-Sotomayor memo from Laurence Tribe. Maybe there was some conversation going around Harvard at the time that Sotomayor was, as Tribe notoriously put it, “not merely as smart as she thinks she is.” I wouldn’t be surprised if Mankiw had been in a setting with lots of anti-Sotomayor remarks, so he didn’t realize how goofy it would sound for him to bring his grandmother into the story. If, in his social circle, Sotomayor was already some kind of joke, it would be no big deal to attribute all sorts of stupidity to her. The same way that people were making Dan Quayle jokes back in 1988.

      • Mark Palko says:

        Andrew,

        Actually, I was thinking more Post-war era (I had originally written “Depression-era” but I changed it to “Depression-induced” for this reason). The Seventies may well have represented a non-war peak in regulation and government control of the economy (can you imagine anyone suggesting something like a price freeze?) but it’s the Eisenhower era attitudes toward taxes and compensation that seem to me to be most at odds with Mankiw’s beliefs. As DeLong has pointed out, the quarter century after the war was marked by deep distrust of the wealthy and a sense that the economic system could be horribly unfair. Given that every adult in the mid-Fifties had been alive in the Depression, the sky-high marginal taxes and defined benefits plans weren’t surprising.

  14. Geoff Robinson says:

    In Australia John Quiggin has argued that the apparent productivity gains that followed economic liberalisation have been overstated because levels of worker effort and consequent disutility from work have increased. Responses by other economists have evaded this suggesting they see working harder as a good thing as it might look from elite professional perspective maybe not to a clerical worker.

  15. dr2chase says:

    I’m a little surprised not to see the word “diabetes” appearing anywhere on this page. That’s going to change your retirement planning somewhat. Yes, diabetics who take good care of themselves live nearly as long as non-diabetics, but (1) even a few years at the margin changes your retirement planning and (2) this was less the case when Sotomayor was a young adult (she’s a little older than me, I recall my freshman history prof first losing a foot to diabetes, then his life, all while I was in my 20s or perhaps early 30s).

  16. Anonymous says:

    “It’s the flip side of taxing the bequests of elderly rich people who virtuously saved their money and wisely invested it for decades in real estate and the stock market. It’s the world turned upside down”

    Don’t know if you are aware of, but this is one of the most insightful sentences I ever read. I would have also added “saved their money, wisely invested…, and paid a lot of fees to the friends of…”.

  17. anon says:

    Why are we having this discussion? Mankiw is a partisan hack who was just looking to attack.