Saturday, February 18, 2012

Why Is Macroeconomics So Hard? Misinterpretation of Social Loafing

This is convoluted; bear with me.

Social loafing is the phenomenon of people exerting less effort to achieve a goal when they work in a group than when they work alone.

Misinterpretation of social loafing is then thinking that someone must be doing something because they are a member of a group.

An example of this is the recent debt ceiling debate.

In this case, both sides agreed that something needed to be done about government finance. Broadly, the Republican position — a very firm line on tax changes — was new. Broadly, the Democratic position — we’ve always increased the debt ceiling when we needed to — was not. I think both sides would agree that the whole debate was largely driven by Republicans defending an updated position. Here’s where the social loafing comes in. Three of the items that make macroeconomics hard are at play: 1) we’ve always raised the debt ceiling so we should this time too, 2) the Republicans have staked out a position to not raise the debt ceiling so being a Democrat means wanting to raise the ceiling, but there is also 3) some degree of social loafing. I believe many Democrats were uninterested in seriously engaging this problem because they were members of a group, and that membership gave them the appearance of doing something when they weren’t really doing anything at all.

There’s actually quite a lot of this around — even outside of macroeconomics — once you know what to look for:

  • Accusations by the left that Obama is parroting defense policies developed in the Bush administration are an accusation of social loafing, while the acceptance of those policies by most Democrats because Obama is their leader are the misinterpretation.
  • Being against gay marriage on moral grounds is not social loafing, but many Republicans who flex the party position in public are socially loafing. The misinterpretation shows when that moral flexing becomes a flexible moral position when this issue hits closer to home.

Broadly in macroeconomics, the current dynamic — where most Republicans support tax cuts and most Democrats support spending increases — is social loafing, and the belief that those groups are doing something worthwhile by not doing anything new at all is the misinterpretation.

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