[jon.kiparsky]

macosxnerd101, on 08 January 2013 - 12:27 AM, said:

Really what is assumed with this model is that the tax revenues go back to benefit those from whom they are collected.

And that's pretty ambiguous. Surely we can't just talk about direct material return, dollar for dollar - we'd have to talk in terms of what bundles of goods people are willing to buy, and under what circumstances. But we can only have that conversation in a context unpolluted by the utter nonsense of the "I've got mine, Jack" right.

This, again, is where we have to reconstruct the consensus that the Friedman school has done so much do destroy. Because clearly, beggar-thy-neighbor is not the way any human being actually wants to live, so the arguments against taxation fall apart at their conclusion. A set of premises which leads to an absurd conclusion is absurd, ergo, the Chicago Gang is absurd.

So once more, we're back to "which taxes are reasonable?" And here, economists could do a lot of good, if they'd plant one foot on each buttock and pull until their heads came popping free. Because economists have a set of tools with which to analyze the actual results of policies. They can supplement the naive intuition which can lead to poor policy, and offer some depth to the discussion.
What they shouldn't try to do is value judgements, since value judgements are in fact the question we're trying to answer. If they begin by assuming that gilded-age laissez-faire sink-or-swim is morally correct, the economists have sidelined themselves from the discussion before they say one word. Their input is useless, since it's aimed at supporting a conclusion known a priori. On the other hand, if they come to the table in a spirit of honest inquiry, then they're incredibly useful. Who knows, if that were to happen, an economist might someday get laid.

[Ticon]

Its always disappointing to look at my paycheck. Because I make minimum wage..

But even if I made triple that I'd still be unsatisfied. Because I Like money.

[macosxnerd101]

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And that's pretty ambiguous. Surely we can't just talk about direct material return, dollar for dollar - we'd have to talk in terms of what bundles of goods people are willing to buy, and under what circumstances.

On the Micro side, this isn't feasible to do with analyzing taxes. Which markets receive the tax revenues? Does one market benefit from taxes over another? Macro does a better job of answering these questions than micro because we look at the economy as a whole. You're probably familiar with the term Aggregate GDP.

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So once more, we're back to "which taxes are reasonable?" And here, economists could do a lot of good, if they'd plant one foot on each buttock and pull until their heads came popping free. Because economists have a set of tools with which to analyze the actual results of policies. They can supplement the naive intuition which can lead to poor policy, and offer some depth to the discussion.

From a Micro perspective, we can analyze taxes in the sense of how they impact actor decisions and preferences. From a macro perspective, which is perhaps more important when looking at fiscal policy, we look at how tax policies and the spending from them affect aggregate economic growth.

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What they shouldn't try to do is value judgements, since value judgements are in fact the question we're trying to answer.

I don't think anyone is valuing judgements. However, it is necessary to construct and understand accurate models at the basic level before adding complexities. Laissez-faire is simple to model. Taxes complicate that model. Multiple markets complicate that model. Macro looks at things very differently, though certainly using some of the basic equilibrium models.

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Who knows, if that were to happen, an economist might someday get laid.

I'm sure a lot of days will be maid when that happens. They may even throw a party at some banks.

[lordofduct]

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snip...

I don't think anyone is valuing judgements. However, it is necessary to construct and understand accurate models at the basic level before adding complexities. Laissez-faire is simple to model. Taxes complicate that model. Multiple markets complicate that model. Macro looks at things very differently, though certainly using some of the basic equilibrium models.

...snip

I'm not exactly sure what you're arguing for here. It sounds like you're saying that "we need a starting point, laissez-faire is a simple starting point, and taxes and other regulations complicate that."

Well no, they don't complicate it... they turn it into NOT a laissez-faire model.

It also sounds like you're implying that a laissez-faire approach is good because it's simple. o.O, economies aren't simple, so a model for it probably wouldn't be simple either.

[macosxnerd101]

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Well no, they don't complicate it... they turn it into NOT a laissez-faire model.

Yes and no. We have the basic free market trade model. Adding taxation doesn't turn it into a purely socialistic or communistic model. There are still certain free market elements. Consumers and producers still make decisions and trade with each other to maximize utility. And without the laissez-faire starting point, how do we model what taxes will do? Economics is a science. We have to start with a base control.

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It also sounds like you're implying that a laissez-faire approach is good because it's simple. o.O, economies aren't simple, so a model for it probably wouldn't be simple either.

Markets are the most efficient way to allocate resources. I'm not saying that good -> simple or simple -> good.

[jon.kiparsky]

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Markets are the most efficient way to allocate resources.

Sometimes. Certain resources, yes. However, as we've established, they're not the best way to allocate health care. (can we end this experiment now? it's dumb!) They're not the best way to allocate methadone treatment. They're not the best way to allocate roads or fire-putting-out services. They're not good for armies, they do a terrible job at commons situations like fisheries (Nietzche was right: cod is dead). Markets are really great for allocating widgets, but widgets are not the only things economics has to deal with.

[lordofduct]

macosxnerd101, on 08 January 2013 - 12:06 PM, said:

Yes and no. We have the basic free market trade model. Adding taxation doesn't turn it into a purely socialistic or communistic model.

...snip

I didn't say that adding taxation turns it into a purely socialistic or communistic model. I said nothing of socialism or communism. And I find it telling that you turn from my saying no longer laissez-faire (which is an extreme and simple model) that thusly I'm implying it must turn to the extreme opposite. Like this is a dipole subject or something...

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Markets are the most efficient way to allocate resources. I'm not saying that good -> simple or simple -> good.

First sentence is an unsupported claim, jon covers that in his post above this.

Thank you for clearing up what I inferred, because it sounded like you were implying simple -> good.


I would also like to add to jon's recounting of how it doesn't allocate all resources effeciently. Markets don't also do well in allocating resources needed to maintain the ecology of the world. Markets favor the individual, and the individual will forego long term side-effects if it benefits them more in the short term... especially if the short-term relative to them is long (like their lifespan). 50 years of self satisfaction can cause major impacts for centuries effecting economies, people, and ecology of the Earth.

This post has been edited by lordofduct: 08 January 2013 - 10:55 AM

[supersloth]

what happened to p4p? i was hoping to find out if he was just a dumb sheltered child, an idiot, or actually mentally deficient.

[jon.kiparsky]

lordofduct, on 08 January 2013 - 12:46 PM, said:

macosxnerd101, on 08 January 2013 - 12:06 PM, said:

Yes and no. We have the basic free market trade model. Adding taxation doesn't turn it into a purely socialistic or communistic model.

...snip

I didn't say that adding taxation turns it into a purely socialistic or communistic model. I said nothing of socialism or communism. And I find it telling that you turn from my saying no longer laissez-faire (which is an extreme and simple model) that thusly I'm implying it must turn to the extreme opposite. Like this is a dipole subject or something...

It always seems weird to me that people want to treat socialism as if it were something other than a mode of allocating resources. A socialized resource is one that an economy handles as a public good. If you have a park, you have socialism. If you have a public library, you have socialism. If you have a police force to beat up a bunch of socialists in the park when they're demonstrating against the closing of the public library - that's socialism!

There may be people who advocate that all goods or most goods should be socialized - I think most of us find that to be silly. But the idea that you can have an economy without socialism is even more loony. You can at least imagine a completely socialized economy - it would suck, but you can make a coherent picture of it. The idea of a completely privatised economy is simply incoherent.

So "laissez faire" is simple a parody of an economy. You can use it as a sort of stalking horse, but if you want to talk seriously you have to get past that to the real world.

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I would also like to add to jon's recounting of how it doesn't allocate all resources effeciently. Markets don't also do well in allocating resources needed to maintain the ecology of the world. Markets favor the individual, and the individual will forego long term side-effects if it benefits them more in the short term... especially if the short-term relative to them is long (like their lifespan). 50 years of self satisfaction can cause major impacts for centuries effecting economies, people, and ecology of the Earth.

Good point. The problem of socialized costs is an important one.

[ishkabible]

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The idea of a completely privatised economy is simply incoherent.

let's say I have this business. it provides health care, insurance and a fire department. You have to live in my gated community to receive these services. In the gated community is a pond that people can fish in and some guards for your protection. You have to pay an annual fee for all this called "taxes". now other than scale, what's the difference between my business and a government?

[jon.kiparsky]

Just about everything. In fact, the only similarity is the word "taxes".

[lordofduct]

Relative to itself, the economy that functions inside said closed system would have actors (citizens) distinct from the company that provides said services. This distinction between the two would be analogous to private and public sector.

[supersloth]

jon.kiparsky, on 08 January 2013 - 04:46 PM, said:

Just about everything. In fact, the only similarity is the word "taxes".

what if we called them.... Paxes...?

[jon.kiparsky]

supersloth, on 08 January 2013 - 06:49 PM, said:

jon.kiparsky, on 08 January 2013 - 04:46 PM, said:

Just about everything. In fact, the only similarity is the word "taxes".

what if we called them.... Paxes...?

Then all similarity vanishes.

[ishkabible]

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Just about everything. In fact, the only similarity is the word "taxes".

How so? Is not a government a set of services that we pay for? Protection is perhaps the most cited I would imagine. We agree not to do(or do as the case may be) X, Y, and Z in order receive A, B, and C. I forget who said it but government was once defined as giving up freedom(e.g. agreeing to do or not do certain things) in return for protection and other services. A portion of our production is something we give up in the form of taxes. It's a transaction like any other only blown WAY out of scale.

Is the constitution not a contract? Are state constitutions anything but contracts?

This post has been edited by ishkabible: 08 January 2013 - 05:17 PM