[T]wo of the biggest and most daunting long-term problems facing the US economy are (1) the fact that Americans aren’t as well educated as their counterparts elsewhere in the world; and (2) the fast-growing obesity epidemic.
Both of these problems are caused, in large part, by America’s very high levels of child poverty.
So if you fix the child-poverty problem, you’ve made a serious dent in both the education problem and the obesity problem.
What’s more, the child-poverty problem really is one of those problems which can be fixed quite easily just by throwing money at it. Give enough money to children in poverty, and they’re not poor any more. Problem solved — at least to a first approximation.
Is there a conservative way of addressing such issues? I don’t think there is — I think that conservatives will simply say that questions of education and nutrition are a matter of individual choice, and that the government should not concern itself with such things. But if we continue down that road, I fear that the unemployable underclass will only continue to grow. And that anger at the powers that be — whether it comes from the Tea Party or from Occupy Wall Street — will only continue to grow along with it.
What Felix is talking about here is essentially an externality problem, what we in economics call agglomeration externalities. The easiest way to explain is to talk about what is perhaps the most common one: education. The idea is that the more educated people there are in a society the more society benefits as a whole. So an individual's education not only benefits themselves but also has an added benefit to the society as a whole. We call this social returns to education.
Health problems are another potential example: sick people create a drag on both productivity as well as on the health care system which, in turn, creates a drag on the economy.
Assuming these types of externalities exist, they create a role for government to help promote the activities with positive externalities and restrict the activities with negative externalities. And indeed governments do: we build bike lanes and tax cigarettes for example.
Whether such agglomeration externalities exist is a question that becomes political for these very reasons. I recently had a editor of a top journal reject a paper for assuming social returns to education. I had defended the assumption with what I thought was a pretty convincing set of empirical studies, but his conclusion was that the verdict had been decided the other way. I am not sure his judgement was a political one, but perhaps - he was from a certain school that has become synonymous with conservative economics.
But what Salmon makes me wonder is if the very idea of agglomeration externalities is somehow incongruous with the whole individualist philosophy of some conservatives.
I don't really have an answer here, just a question: suppose that for some activity agglomeration externalities are real, positive and large for economic growth - does this mean necessarily that government should be involved with actively promoting the activity? And if so, does this undermine the idea of individual self-determination in favor of collective action?