Re: Dickens on the Laffer Curve
In a message dated 4/23/05 4:42:26 PM, [EMAIL PROTECTED] writes: Peter C. McCluskey wrote: Mancur Olson claims in his book Power and Prosperity that the marginal income tax rate was effectively zero. The effective taxes were near 100% of what a typical worker in any given position could produce, but workers producing more than expected kept all the unexpected wealth. That created stronger incentives on each person to work hard than in the west, strong incentives to prevent others from working hard, and some incentives for each industry to deceive the system about what a typical worker can produce. There were few problems with the total amount of economic activity under Stalin. The problems were with the goals which that activity satisfied. Much as I admire Olson, this is crazy. Collectivization didn't just costlessly move resources from agriculture to industry/military production. There was an enormous deadweight cost in reduced production *per farmer*. Not to mention massive destruction of human capital - i.e. death. He has a slightly better case for industry - Stalin did firmly back unequal pay. But a 0% marginal tax rate cuts against everything I've ever read about Soviet economics under Stalin. I'd been wondering how to express the very same thoughts--I do admire Oslon a great deal, and I do find the idea crazy. Is it possible he was employing irony?
Re: Dickens on the Laffer Curve
Yes. It suffers a bit from the historians' If you don't have a document, it didn't happen bias, but it's good. Anton Sherwood wrote: Speaking of Communism, is The Black Book worth having? I saw several copies yesterday at a secondhand store in San Leandro, marked about $8 if memory serves. -- Anton Sherwood, http://www.ogre.nu/ -- Prof. Bryan Caplan Department of Economics George Mason University http://www.bcaplan.com [EMAIL PROTECTED] http://econlog.econlib.org [M]uch of the advice from the parenting experts is flapdoodle. But surely the advice is grounded in research on children's development? Yes, from the many useless studies that show a correlation between the behavior of parents and the behavior of their biological children and conclude that parenting shapes the child, as if there were no such thing as heredity. --Steven Pinker, *The Blank Slate*
Re: Dickens on the Laffer Curve
[EMAIL PROTECTED] ([EMAIL PROTECTED]) writes: Taking the example of Stalin's war on the peasantry in general and the Ukraine in particular, we see that massive confiscations of income at marginal rates well in excess of 100% certainly detered economic activity, to put it rather mildly. Mancur Olson claims in his book Power and Prosperity that the marginal income tax rate was effectively zero. The effective taxes were near 100% of what a typical worker in any given position could produce, but workers producing more than expected kept all the unexpected wealth. That created stronger incentives on each person to work hard than in the west, strong incentives to prevent others from working hard, and some incentives for each industry to deceive the system about what a typical worker can produce. There were few problems with the total amount of economic activity under Stalin. The problems were with the goals which that activity satisfied. -- -- Peter McCluskey | Everyone complains about the laws of physics, but no www.bayesianinvestor.com| one does anything about them. - from Schild's Ladder
Dickens on the Laffer Curve
I think Bill accidentally sent this to me privately instead of the list. Subject: Re: Laffer Curve From: William Dickens [EMAIL PROTECTED] Date: Wed, 20 Apr 2005 16:31:33 -0400 To: [EMAIL PROTECTED] I'll bite. I completely agree with Bill in the short-term. Higher taxes raise revenue. But I also have a sneaking suspicion that higher tax rates in the long run may hurt growth so much that the present value of taxes would be higher if rates were lower. And I have a sneaking suspicion that more equitable distributions of income lead to less social conflict and rent seeking and lead to higher growth. Unlike you I can point to some theoretical and empirical studies that back my suspicion up (though I wouldn't bet my life on it being true). My point is that any of us can have sneaking suspicions. Dueling sneaking suspicions aren't going to bring us any closer to agreement. Just talking to people who grew up in Scandinavia, they frequently tell me that high taxes had no effect on the older generation. But (combined with the welfare state) they raised a generation of shiftless, no-ambition slackers. If the U.S. had Swedish-level taxes during the 80's, I suspect it would have been a far less entrepreneurial and innovative economy in the 90's. Two thoughts. First, the empirical studies on the effects of distribution of income on growth suggest no such effect. But I have no idea how robust those results are and wouldn't be at all surprised if they allowed for some range of results if properly done. Personally I have little doubt that the various forms of welfare (not progressive taxation) do tend to destroy initiative among some parts of the population. I've had too much personal experience with smart, talented people getting caught up in welfare programs and not going anywhere not to suspect that this is a serious draw back of such programs. That's why I very much like to tightly time limit any generous welfare program. However, I have to admit that I don't know that there just aren't slackers in the world (some talented and bright) who would find parents, friends or some other less desirable way to support themselves if there weren't welfare programs. I don't know of any cross national study of long term welfare participation (OECD might have some aggregate study of this). The European Community Household Panel could be combined with the GSOP and the PSID or SIPP to good end to do such a study. Any graduate students out there looking for a thesis topic? - - Bill Dickens William T. Dickens The Brookings Institution 1775 Massachusetts Avenue, NW Washington, DC 20036 Phone: (202) 797-6113 FAX: (202) 797-6181 E-MAIL: [EMAIL PROTECTED] AOL IM: wtdickens -- Prof. Bryan Caplan Department of Economics George Mason University http://www.bcaplan.com [EMAIL PROTECTED] http://econlog.econlib.org [M]uch of the advice from the parenting experts is flapdoodle. But surely the advice is grounded in research on children's development? Yes, from the many useless studies that show a correlation between the behavior of parents and the behavior of their biological children and conclude that parenting shapes the child, as if there were no such thing as heredity. --Steven Pinker, *The Blank Slate*
Re: Dickens on the Laffer Curve
And I have a sneaking suspicion that more equitable distributions of income lead to less social conflict and rent seeking and lead to higher growth. I wonder what the Laffer Curve would have to say about the tax rates and equitable distributions of income and lesser or greater social conflict and higher or lower growth etc, that led to and constituted the socialist Wholecaust (of which the Holocaust was a part): 62 million killed in the former Union of Soviet Socialist Republics; 35 million in the Peoples' Republic of China; 21 million in the National Socialist German Workers' Party. http://rexcurry.net/socialists.html The poverty, misery, famine and slaughter were so enormous that Holocaust Museums can quadruple in size and scope as Wholecaust Museums.
Re: Dickens on the Laffer Curve
In a message dated 4/21/05 12:26:02 PM, [EMAIL PROTECTED] writes: And I have a sneaking suspicion that more equitable distributions of income lead to less social conflict and rent seeking and lead to higher growth. I wonder what the Laffer Curve would have to say about the "tax" rates and "equitable distributions of income" and "lesser or greater social conflict" and "higher or lower growth" etc, that led to and constituted the socialist Wholecaust (of which the Holocaust was a part): 62 million killed in the former Union of Soviet Socialist Republics; 35 million in the Peoples' Republic of China; 21 million in the National Socialist German Workers' Party. http://rexcurry.net/socialists.html The poverty, misery, famine and slaughter were so enormous that Holocaust Museums can quadruple in size and scope as Wholecaust Museums. Taking the example of Stalin's war on the peasantry in general and the Ukraine in particular, we see that massive confiscations of income at marginal rates well in excess of 100% certainly detered economic activity, to put it rather mildly.
Re: Dickens on the Laffer Curve
So it worked in the short run, and in the long run they were all dead! On Apr 21, 2005, at 5:10 PM, Bryan Caplan wrote: Yes, but ag collectivization in the USSR DID raise additional government revenue, at least in the short-run. The people starved, production fell, but Stalin got more grain to feed the cities and export. At least that's my recollection from Conquest. Of course, productivity growth in agriculture was very low afterwards, fitting my long-run Laffer curve story! -- Prof. Bryan Caplan Department of Economics George Mason University http://www.bcaplan.com [EMAIL PROTECTED] http://econlog.econlib.org [M]uch of the advice from the parenting experts is flapdoodle. But surely the advice is grounded in research on children's development? Yes, from the many useless studies that show a correlation between the behavior of parents and the behavior of their biological children and conclude that parenting shapes the child, as if there were no such thing as heredity. --Steven Pinker, *The Blank Slate* When a pitcher's throwing a spitball, don't worry and don't complain, just hit the dry side like I do. - Stan Musial
Re: Dickens on the Laffer Curve
Speaking of Communism, is The Black Book worth having? I saw several copies yesterday at a secondhand store in San Leandro, marked about $8 if memory serves. -- Anton Sherwood, http://www.ogre.nu/
Re: Dickens on the Laffer Curve
That's the trouble with the empirical testing of Laffer effects. Your selected timeframe has an inverse relationship with the revenue maximizing rate of taxation. The tax policy that maximizes revenue over the next hour is to confiscate everything. The revenue maximizing tax policy over the next century is to tax at some lesser rate that anticipates the formation of capital to expand the tax base. Depending on the time frame you chose, you can conclude that t is currently on whatever side of t* you prefer so as to make the case for a tax cut or a tax hike. jlw Stephen Miller wrote: So it worked in the short run, and in the long run they were all dead! On Apr 21, 2005, at 5:10 PM, Bryan Caplan wrote: Yes, but ag collectivization in the USSR DID raise additional government revenue, at least in the short-run. The people starved, production fell, but Stalin got more grain to feed the cities and export. At least that's my recollection from Conquest. Of course, productivity growth in agriculture was very low afterwards, fitting my long-run Laffer curve story! -- Prof. Bryan Caplan Department of Economics George Mason University http://www.bcaplan.com [EMAIL PROTECTED] http://econlog.econlib.org [M]uch of the advice from the parenting experts is flapdoodle. But surely the advice is grounded in research on children's development? Yes, from the many useless studies that show a correlation between the behavior of parents and the behavior of their biological children and conclude that parenting shapes the child, as if there were no such thing as heredity. --Steven Pinker, *The Blank Slate* When a pitcher's throwing a spitball, don't worry and don't complain, just hit the dry side like I do. - Stan Musial .
Re: Dickens on the Laffer Curve
It's not as funny when you explain it... On Apr 21, 2005, at 9:51 PM, James Wells wrote: That's the trouble with the empirical testing of Laffer effects. Your selected timeframe has an inverse relationship with the revenue maximizing rate of taxation. The tax policy that maximizes revenue over the next hour is to confiscate everything. The revenue maximizing tax policy over the next century is to tax at some lesser rate that anticipates the formation of capital to expand the tax base. Depending on the time frame you chose, you can conclude that t is currently on whatever side of t* you prefer so as to make the case for a tax cut or a tax hike. jlw Stephen Miller wrote: So it worked in the short run, and in the long run they were all dead!
Re: Dickens on the Laffer Curve
If you ever wondered which end of the ideological spectrum was a humorless lot... Stephen Miller wrote: It's not as funny when you explain it... On Apr 21, 2005, at 9:51 PM, James Wells wrote: That's the trouble with the empirical testing of Laffer effects. Your selected timeframe has an inverse relationship with the revenue maximizing rate of taxation. The tax policy that maximizes revenue over the next hour is to confiscate everything. The revenue maximizing tax policy over the next century is to tax at some lesser rate that anticipates the formation of capital to expand the tax base. Depending on the time frame you chose, you can conclude that t is currently on whatever side of t* you prefer so as to make the case for a tax cut or a tax hike. jlw Stephen Miller wrote: So it worked in the short run, and in the long run they were all dead! .
