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Medianism simply aims for economic policies that benefit the majority of ordinary people. This simply applies democratic norms to economic questions. Democracy prioritizes the preferences of the median voter, and medianism extends this idea to economics.
For example, when economists think about how “the economy” is doing, they have traditionally focused on total income (GDP) or per-capita income (mean GDP) as the most important measure. But GDP is biased in favor of rich elites because even if 90% of people’s incomes drop, if the richest 10% are getting a lot richer, GDP can still grow and it can look like “the economy” is doing great even though most people are doing terrible.
A much better measure of “the economy” is median income because that is a more accurate reflection of the economic well being of most people. Policies that improve median income are more likely to benefit the majority of the population (and get democratic approval) than policies that boost mean GDP. Unfortunately, median income has been ignored relative to GDP and because it has been neglected, it is poorly measured, so our first priority should be to try to measure it with at least as much precision as we achieved long ago in measuring GDP.
The mechanics of how to measure median income need better protocols and more international agreement so that statistical agencies can measure it more reliably. For example, it would be easy to incorporate life expectancy with median income and thereby gain a more comprehensive measure of wellbeing by measuring MELI (Median Expected Lifetime Income). The MELI FAQ explains why MELI is better than GDP for most (but not all) applications and why it will be more successful at replacing GDP than other attempts such as the United Nations’ efforts with the HDI.
Medianism seeks to replace the primary moral philosophy that governs economics and business: money-metric utilitarianism or mmutilitarianism. Mmutilitarianism is the idea that total income is what matters even if most people get nothing and all the benefits go to the rich. It over-emphasizes the welfare of elites and medianism seeks to find ways to refocus our energies towards the economic well being of the average people (near the median income) and seek policies that benefit a majority of people. Mainstream economists often recommend policies that benefit an elite minority because of unthinkingly following mmutilitarian ideas.
Using GDP for economic welfare is a prime example of mmutilitarian ideology, and the methodology of cost-benefit analysis and the way efficiency is defined and adulated in economics are additional ethical issues that medianism seeks to reform. Cost-benefit analysis has become a pervasive ethical standard that determines how the law is interpreted and it is increasingly required of most government programs and regulations.
As with GDP, cost-benefit analysis is biased in favor of wealthy people. If a government regulation benefits Bill Gates $10 billion and every single American $20, then it is a great deal for America according to cost-benefit analysis because the benefits ($10b) vastly outweigh the costs ($20 * 300 million Americans = $6b). That is what efficiency is all about.
Obviously because every voter loses money except one guy (the one who need more wealth the least), this is not a policy that would gain democratic approval. But standard cost benefit analysis would readily approve it because the rule is to simply add up costs and benefits. Advocates of cost-benefit analysis claim that it is fair because it ignores how the costs and benefits are distributed, but it is actually biased in favor of rich people because they have more monetary wealth to potentially lose in any policy change and all policy changes always redistribute resources. Cost-benefit analysis is mmutilitarian because it literally values each person according to how much wealth and/or income they have at stake, so Bill Gates’ value is millions of times greater than other Americans.
Cost-benefit analysis was a great advance in policy making when it arose in the mid-20th century, because it can be implemented with procedural fairness and it helps government become more efficient, but it tends to yield elitist results because efficiency is a mmutilitarian ethical standard. All it would take to make it democratic is the addition of a simple rule: No change should increase inequality unless it also benefits the majority of the population. This ensures that the median person will not be hurt by any policy AND that policies will be efficient.
To give a concrete example, almost all economists (including myself) are generally in favor of increasing international trade because it is efficient and makes each country richer, but most economists also recognize that globalization has increased inequality in rich countries like the USA. Globalization has made rich people like Bill Gates a lot richer while it has also hurt wages in many sectors, particularly among the majority of Americans who don’t have a college degree.
Medianism would still agree that globalization should be good for America, but that the rich who benefit most should share more of the costs. For example, we could perhaps pair free-trade policies with higher taxes on the rich to help pay for more educational and training opportunities for the majority of Americans whose wages have been stagnant or worse due to globalization. That way the majority of Americans could share the additional prosperity of new free-trade agreements.
This specific idea might not be the best way to achieve a more prosperous middle America, and it wouldn’t be politically easy to accomplish, but we should at least try harder to help the median American share more of our growing prosperity.
For more about medianism, click on the above links. Or check out the blog for more recent information about economics and other general information and ideas.