That claim, of course, is utter nonsense. First of all, most of billionaires’ gains are unrealized, which means that they would essentially be forced to take out loans to pay this wealth tax. How are they supposed to expand, or invest further in their business, or pay their existing employees, let alone hire new ones? It would be economic suicide for California to implement this sort of proposal, especially for the part of California that Khanna is supposed to represent.

What Khanna is thinking is probably along the lines of what Luke Metro guessed in a post on Twitter:

I think this is probably right—it’s a sense of complacency from two of the capital-g Greatest cities in the country, something I’ve seen happen to my own home state of Massachusetts, which I moved out of last year because it was just too expensive. See, about a decade ago, it truly felt like Boston was at the cutting edge of scientific innovation and felt economically vibrant. That’s completely shifted in the 2020s.

See, there used to be this sense, you could feel it in the air, that this was a place where serious innovation was happening, and biomedical research seemed to be what the smartest people in high school (2015-19) and college (2019-23) were pursuing—now, almost 30% of lab space in the city is sitting empty (and that started before Trump 2.0, so it can’t be conveniently blamed on him). Meanwhile, 46% of twentysomethings in Massachusetts say they want to go to another state—primarily (red and purple) Southeastern and Southwestern states. I mean, that’s what happens when you crowd out businesses from developing in the state, crowd out all hiring that’s not dependent on continued federal funding, tax everyone to high heaven, and, following lockdowns that lasted through 2022 in much of the state, focus on insane and offputting activism (most recently: abortion till birth, I wish I were exaggerating).

To be clear, the network effects of Harvard and MIT alone (not even mentioning all the other colleges, as well as those of having three medical schools in the same area and several top hospitals) are still very high. None of those places are losing their credibility any time soon, and students will still flock to them regardless of the overall picture. But that overall picture is less vibrant than it once was!

Young people who are smart and enterprising and responsible largely want to get good jobs and/or make good jobs and live in places where they feel like they can buy homes and build families. Even if they get their training in Massachusetts, as so many brilliant minds do, they eventually plan on leaving the state precisely because they are smart and enterprising and responsible. Of course the state will suffer. And California will suffer too if it takes the same path, even if it currently has the network efforts to pull it through in the short term.

But the bigger issue is—and this brings me back to Ro Khanna—it’s precisely these bad conditions that states like Massachusetts and New York and California are creating—those that eventually result in skyrocketing costs and stagnation—that make insane proposals more palatable to the average voter (who is feeling squeezed) that cause costs to soar further and stagnation to accelerate. In other words, these states are in a death spiral.

As a friend in tech texted me last night: “Ro Khanna proposal mad popular jus sayin.’”

Unfortunately, he’s right: the Ro Khanna proposal is mad popular just saying. About two-thirds of Americans—including majorities of Republicans, independents, and (perhaps more predictably) Democrats—support a wealth tax as well as a billionaire income tax. People are sick and tired of feeling like they can’t afford the basic standard of living that was once accessible to them. Especially as the past few years of rampant, unpredictable inflation and political changes eat away at their sense of stability—which means that even if the overall rate of inflation has decreased since its peak in 2022, few seem to have the confidence that it won’t get as bad or worse in the near term, let alone the long term. Especially as the costs of housing, healthcare, and education—not exactly stupid consumer goods—continue to spiral out of control.

I think my biases are pretty clear by this point: I’m pro-growth, pro-free-market, pro-capitalism, and all the rest. I’m not particularly sympathetic to regulation, after having seen it strangle all the economic life out of Massachusetts in the past few years, and find both the populist right and populist left economically illiterate.

That said, I often feel that the people I actually agree with have no idea what to do with these trends in public opinion, falling into three main categories:

1. People whose heads are in the sand: They don’t know that this is happening, and don’t care. They have other things to tend to, either because they are single-minded engineer types with little understanding of the political process, or wonks who are invested in research and don’t care about the political process either. Honestly, I’m sympathetic to both, as both the business and policy worlds run on such types and non-partisan people who really care about boring details make things run.

2. People who think the Republican Party will save them: This isn’t Mitt Romney’s GOP and hasn’t been for a while. Again, a majority (51%) of Republicans support a billionaire/wealth tax. If you look at younger generations, it’s probably higher, not lower. And if you think Republican electeds will bulldoze over public opinion after a decade of populist revolt, well: look no further than Governor Greg Abbott in Texas ordering a moratorium on data centers. Politicians—in fact, the best, or at least smartest, politicians—care about and feel accountability to the people who voted them in, and are not going to call their voters dummies (unless they want to lose). To assume you can rely on a single party which has to respond to the needs of its voters, without ever communicating with those voters directly, is utterly useless.

3. People who understand the problem, but sneer at voters: Then there is another type of person, one who looks at the polling, sees the numbers, processes the numbers, understands the full extent of how bad public sentiment is toward business, and declares that the people are not only wrong, but stupid—in fact, so stupid that they can’t accurately assess their own financial situation, and too uppity to slum it a little bit longer. Their only proposed solution to public sentiment is bulldozing over public opinion and telling people they’re wrong, whether or not it is politically viable and whether or not it will lead to better, pro-growth outcomes.

It’s that third category, if you can’t tell, that I have the least patience for—at least the other two literally don’t understand how badly the public feels toward the present economic situation, whereas the free-market types in the third do, but think they can stick their fingers in their ears and make other people do the same.

I think part of that is honestly a fear response; I think they fear that if we acknowledge that things aren’t going so great right now economically or socially or politically, that it’s bad that the median age of first-time home buyers is now 40, that it’s bad that people feel obligated to take out loans for degrees that barely seem to pay off, that it’s bad that around one-in-four recent grads lives with their parents, well, then, there seem to be few reasons to oppose the sort of European-style soft socialism that Ro Khanna is proposing. That is to say, I think they agree with socialists in a sense and believe that in order to support a free market, you can’t ever acknowledge that anything might be wrong with the economic status quo outside of a serious, easily defined event like the COVID lockdowns or the 2008 Global Financial Crisis.

But obviously, right now, there is something deeply wrong! If there weren’t, if it were all about individual responsibility, the median age of a first-time home buyer would be 30 or even 35, but certainly not 40, for crying out loud. Young middle class recent grads would be going out and living on their own, or with friends, and ideally getting married and starting families, not sitting in their parents’ basements well into their 20s and even 30s as is the norm in economically dilapidated Southern Europe, waiting for their lives to start. What’s funny is that the three places where government has most intervened—housing, healthcare, and education—are also the goods seeing the most skyrocketing costs. There’s an easy win for free-market types, if they’re willing to take it: talk about how markets are more functional when government intervenes less (e.g., the markets for consumer goods like smartphones and appliances) and less functional when government intervenes more (e.g., federal student loan program, spiraling Obamacare premiums, even cars).

And yet, instead of actually attempting to find a strategy of speaking to the general public’s concerns, free-market types insist that the general public is too stupid to see how good they have it.

There was a discourse on Twitter a few weeks ago about the cost of burritos that I found very telling:

This turned into an all-out Twitter feud, one that seemingly everyone had opinions on. What I found most striking was that the free-market side was so fixated on the concept of a $20 burrito—obviously something of an exaggeration (albeit not THAT big of an exaggeration)—that they failed to see that the discourse was not really about the burrito at all. It was about people getting screwed, and feeling screwed, to the point where affording a simple treat or a lunch out on a busy day has become prohibitive and people feel like they are drowning, even when they are doing fine on paper.

Of course it’s true that no one’s entitled to a burrito or to another person’s labor, but when people’s quality of life declines—when the burrito they used to be able to comfortably afford seven years ago is out of reach today, while their rent keeps climbing too—they are not going to take that decline without pushing back.

See, it’s one thing to expect people to sacrifice their quality of life for “the greater good” in a time of war or pandemic or what have you, but it’s another thing altogether to expect people to sacrifice their quality of life because of the government’s decades-long, utterly destructive interventions in the markets for housing, healthcare, and education, as well as its money printing during extended, destructive lockdowns that have continued to harm our civic society six-and-a-half years later. That’s not a sacrifice in the true sense of the word so much as it’s bullying people into accepting that they have been screwed out of their inheritance, one that they are old enough to remember.

Meanwhile, people who feel bullied by the economy and by the government (and worst of all: by the commentators) will turn to opportunistic hacks like Ro Khanna, whose net worth is reportedly upwards of 340 million, and who has probably made the calculation that he’d prefer to try to get on the “right side” of the mob (as though there is one) and maintain his power, rather than actually represent his Silicon Valley constituents who don’t want this—because he understands that his constituents are on the “wrong side” of the mob.

Most people don’t care that Silicon Valley types and the very wealthy in general are net taxpayers and net job-makers when it feels like average people can’t pay the bills and are subject to the whims of a society that feels like it’s falling apart at a rapidly increasing rate—tech execs have the money to escape that dysfunction, but normal people making $60k a year don’t. If people feel like they are forced to choose between economic dynamism and social cohesion, they will choose the latter.

Now, personally, I think society will only unravel further if economic opportunity dwindles. Just take a look at Europe, which, for all its socialism, is in a slump that it has papered over by taking in unreasonable numbers of migrants and refugees, whom native Europeans are increasingly turning against; our healthcare system is a nightmare, but the UK’s NHS is probably worse. Stalinist and Maoist communism/socialism obviously don’t work, but neither does the softer European form. At the end of the day, a society needs real productivity to be able to fund socialized projects in the first place.

But it doesn’t matter what I think. I’m in the minority when it comes to my opinions on economics, and I know that. What I want to see is those I agree with—the free-market types, the tech bros (and broettes), the pro-business, pro-growth, pro-dynamism types—actually try and come up with some sort of proposition that makes normal people feel like they don’t have to turn to hackish proposals from Ro Khanna and Bernie Sanders in order to escape downward social mobility.

That could be something as simple as tech/business execs explicitly offer WFH benefits for parents of children under 5—before the government mandates they offer paid parental leave anyway. It could be that they direct their incredible wealth to public beautification or infrastructure projects (and not de facto tax shelters) that offer tangible benefits to normal people—before that wealth is taxed anyway. My only hope is that the people who actually have money and power and are invested in America’s growth and future actually do something, anything but sit on their money and tweet about how $20 burritos are fine, actually.

But my enthusiasm faded pretty quickly, and I wound up feeling rather conflicted as I looked further and further into their entire RCT-oriented project: while (admittedly) rigorous, it struck me as essentially being experimentation on poor people in the developing world the likes of which would not stand in the developed world, all shrouded in the language of “gold standard” research. What I also found myself disagreeing with was the underlying idea that you could understand a poor country’s problems by simply running tests: they clearly believed social science could be as clear-cut as, say, medicine, in which RCTs are regularly used, and that instead of attempting to do big question research, economics as a profession should consider little questions instead and add up the results to understand the bigger picture.

I bring this all up because I got into a little back-and-forth on Twitter over the following paper today:

Reading the abstract alone, I felt my general antipathy toward development economics rise up for the first time in several years (although it was a little bit rusty). Here is a prize-winning paper based on (what was certainly expensive) research that involves playing with the professional and marital lives of women in Bihar, the poorest state in India.

Now, before I go any further, I want to say: One of the important things about research is that sometimes asking a question that seems entirely useless has rewards no one can envision. I do believe that some seemingly “worthless” questions are absolutely worth investing in.

But not all of them. And here, the question of “Do men with jealous tendencies prefer their wives work in single-sex spaces?” is, as I see it, not a particularly worthwhile question—and while I would shrug or be amused if someone studied it using some sort of methodology that didn’t require doing a randomized experiment on actual people, I’m more actively critical when it involves a randomized experiment that actually interferes, for better or worse, with the lives of real people who, I’ll add, are often very poor and often don’t really know what they’re signing up for, or what academic research even really is, leading to real issues regarding informed consent.

Let’s just look at this paper, as an example, which was only a two-week experiment to see the choices women and their husbands would make. The author found that women who reported more jealous husbands were also more likely to elect for a female-only workplace, but couldn’t rule out that that was just preference so he went further, I’ll just quote from his blog for the World Bank in which he summarized the results of this paper:

To measure preferences for female peers, I offered women and their husbands the option to forgo 20-35% of the salary to guarantee assignment to a female peer rather than risk having a (presumably male) standard peer. For ethical reasons, to ensure no potential future spousal conflict, when the peer support program was implemented, all women were matched with a female peer, even those that did not pay the fee, but importantly, they did not know this when making their choices. Over half (53%) of households paid the fee to guarantee a female peer when the discussions happened one-on-one (Figure 2). The fee was roughly equivalent to a full day of total income for the median household. This substantial willingness to pay reinforced the results from the first experiment that women have strong preferences for female co-workers that extend beyond workplace safety or social image concerns. However, it could still be that households preferred the female peer because they would make for a better mentor.

To test whether spousal jealousy drove these preferences, I introduced a treatment, called the husband program, where husbands could join the peer support discussions or receive recordings if they could not attend. Demand for female peers dropped substantially (by 19 percentage points) when husbands could monitor conversations (Figure 2). This decline was significantly larger in households with more jealous husbands.

One could still argue that perhaps female peers are valuable because they offer better advice but the value of this drops when the husband is present. To rule out peer quality completely, I introduce another treatment arm, called the video program, where women watched pre-recorded videos of their peers rather than interacting directly, and were told the script was identical regardless of the peer’s gender. If households cared about peer quality, preferences for female peers should disappear when the content is exactly the same. Yet one-third of households still paid for a female peer when simply watching videos, suggesting that peer quality is unlikely to explain the results and pointing to spousal jealousy being a constraint on women’s labor market choices. Qualitative interviews with a separate sample confirmed this interpretation: 84% of respondents said husbands would prefer their wives watch videos of a female peer due to jealousy.

OK, well, credit where credit is due: he and the IRB at least considered “potential future spousal conflict” here, but there are still things that are off to me. For instance, the inherent deception of having someone pay a fee—amounting to the median Indian daily salary—to guarantee a female peer when you know you’re going to assign a female peer regardless. Or the part where a husband is able to monitor his wife’s call, and asking the wife survey questions in front of her husband as to how she wants to be addressed at work.

Tell me: would that sort of deception have been allowed in, say, inner-city Baltimore? In rural Mississippi? In the poorest, roughest parts of the United States? As development economist and 2015 Nobel laureate Aengus Deaton wrote in a critique of the randomista direction in development economics:

Even in the US, nearly all RCTs on the welfare system are RCTs done by better-heeled, better-educated and paler people on lower income, less-educated and darker people. My reading of the literature is that a large majority of American experiments were not done in the interests of the poor people who were their subjects, but in the interests of rich people (or at least taxpayers or their representatives) who had accepted, sometimes reluctantly, an obligation to prevent the worst of poverty, and wanted to minimize the cost of doing so. That is bad enough, but at least the domestic poor get to vote, and are part of the society in which taxpayers live and welfare operates, so that there is a feedback from them to their benefactors. Not so in economic development, where those being aided have no influence over the donors. Some of the RCTs done by western economists on extremely poor people in India, and that were vetted by American institutional review boards, appear unethical, and likely could not have been done on American subjects.

Let’s take a look at some of the most unethical RCTs—not the minor cases, like this spousal jealousy paper, but the really bad ones. Like this one RCT that went viral for being almost cartoonishly bad in 2020, in which researchers randomized the “treatment” of…shutting off water to tenants in Nairobi slums to see whether or not their landlords would pay the utility bill. Another RCT, also in 2020, randomized exposure to a Protestant Evangelical theology program in poor Filipino households to examine what impact that would have on their economic outcomes. I mean: that is just bad on every conceivable level (see more criticism of the paper here). You do not get to mess with people’s beliefs and worldviews and families because you have an ivory tower chair, or because it might help your tenure case. You just don’t.

It’s also not clear to me that any of this is particularly good economics, in part because the entire randomista revolution in development studies treats economics as something that can be done completely technocratically, maybe even more so than other subfields within economics—there is a blindness to politics, to culture, to all the other little variables that might have implications for both the external and the internal validity of the RCT. As New School economist Sanjay Reddy writes in Foreign Policy:

The reliability critique contests the idea that RCTs provided a sure means—indeed the gold standard—for inferring, although in narrow terms, what worked in development. Those who have made the reliability critique, including eminent, statistically minded economists (a few of whom are also Nobel Prize winners), have argued that RCTs suffer from two problems of reliability. The first, external validity, concerns whether the estimate of the effect of a treatment from the place that the RCT is administered, even if it is accurate there, can be transferred elsewhere, given differences in the behaviors of different populations, as well as in the prevailing environmental, institutional, and social circumstances. For instance, public health information may influence behavior more where the government is trusted than where it is not. It may even have the opposite effect from that intended if the government is held in great suspicion. The second concern, internal validity, is about whether the results from a given context are really meaningful and accurate even there. RCTs are designed to measure the average effect of a treatment in a population and cannot generally tell us how it affects different parts of that population (in an extreme case, which is encountered frequently in medical trials, it may harm some people even as it creates a benefit on average). The effect of an intervention may moreover change over time even in a single place due to learning and behavioral responses. For these and other reasons, it is necessary to take care in interpreting what RCTs have actually measured and in employing their lessons, even in the very same place that they have been implemented.

I don’t want to be misconstrued as saying something I’m not. What I’m not saying is that RCTs are bad, or worthless, or should be thrown out from social science work in developing countries entirely. I’m not saying that contemporary empirical social science or development economics are bad or worthless either. What I am saying is that when you’re talking about something as expansive as development, the idea that you can piecemeal together RCTs to form a theory of a developing country without any understanding of politics or culture is suspect. More importantly, I’m saying that the ethics of experimental design are of utmost importance, especially when there is the sort of power differential between you and your subject that there inherently is in development economics.