Bernie Sanders' Deodorant Argument Is One of the Most Substantive of the Campaign So Far

Presidential candidate Bernie Sanders said this:

If 99 percent of all the new income goes to the top 1 percent, you could triple it, it wouldn't matter much to the average middle class person. The whole size of the economy and the GDP doesn't matter if people continue to work longer hours for low wages and you have 45 million people living in poverty. You can't just continue growth for the sake of growth in a world in which we are struggling with climate change and all kinds of environmental problems. All right? You don't necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers when children are hungry in this country.

Naturally, some media sorts exploded with self-satisfied criticism (I, II, III, among many others). Jim Tankersley's response at Wonkblog was typical:

The literal implication of that last sentence is that there some kind of a national trade-off between antiperspirant/Air Jordan variety and food for children. This makes sense if you believe that the government should be allocating the resources in the economy -- in this case, directing fewer of them to personal hygiene and footwear and more to child nutrition.

It makes less sense if you look at economic history.

Except of course, this is not at all what Sanders is arguing. While I don't expect the man on the street to necessarily catch Sanders' drift here, self-styled wonks should see it immediately.
 
Whenever someone argues that we should distribute the national income more evenly so as to reduce poverty and inequality (as Sanders does), the very first thing someone says in response is that doing so will reduce growth and innovation. Sanders is mocking this argument, saying he'd gladly cut poverty and inequality even if it meant a reduction in superficial product innovation.
 
If the company that determined there was big money to be made by innovatively telling teen boys that using a certain brand of deodorant would cause attractive women to have sex with them decided not to go through with creating Axe because taxes were too high, Bernie is saying he is OK with that. You might have less brands to choose from on the deodorant aisle, but on the plus side kids will get to eat.
 
Bernie is not arguing, contrary to what Tankersley suggests, that we spend too much buying deodorant. This should be pretty obvious as he didn't talk about the quantity of deodorant being consumed, but instead the dizzying (and socially useless) number of products in the deodorant category. The massive prizes our economic system pays out to someone who can capture deodorant market share with slick advertising may indeed incentivize them to innovate new branding strategies, but, Bernie amusingly asks, would cutting that incentive really be so bad?
 
This is the most substantive argument in the presidential campaign so far, and may be the most substantive argument uttered in electoral politics for a long while. Few candidates are willing to wade into the murky economic debate of equality/efficiency tradeoffs, and fewer still are willing to aggressively say that: yes, in fact, cutting poverty and inequality is worth a reduction in innovation, and oh by the way, the kinds of things we call "innovation" are often little more than new marketing gimmicks with dubious social value.
 
Although Bernie confronts the equality/efficiency debate head on in favor of equality, it's worth noting that there is scant evidence there is any necessary trade off between the two. When you look at the egalitarian social democracies of northern Europe, the countries Bernie models his policy prescriptions off of, you don't find low-growth, low-innovation backwaters.
 
Here is GDP per capita in constant dollars of the Nordics and the US:
 
 
All five countries have similar growth, which you can see somewhat better with this graph:
 
 
Some years are better than others for the respective countries, but overall growth is pretty similar.
 
It's harder to know exactly who is the "most innovative," but to the extent that people try to create such measures, these countries always do quite well. In the most recent iteration of the Global Innovation Index, Sweden (3rd) and Finland (4th) rank ahead of the US (6th) while Denmark (8th) and Norway (14th) are nearby.
 
If entrepreneurship is what gets you excited, then note that, in the years for which there is comparable data, Finland, Sweden, and Denmark have higher enterprise birth rates (percent of companies in a year that are start ups) than the US, though Norway has a lower rate.
 
So, despite a tax level double ours and very generous welfare benefits, these egalitarian countries do not suffer for growth, innovation or entrepreneurship. Although Bernie is amusingly (and reasonably) skeptical of the value of the innovation that high poverty and inequality is supposed to bring us, it's also true that you can have high levels of innovation and egalitarianism at the same time. 

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