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.
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------------------------------------------------------------------------------ Peter McCluskey | Everyone complains about the laws of physics, but no www.bayesianinvestor.com| one does anything about them. - from Schild's Ladder
-- Prof. Bryan Caplan Department of Economics George Mason University http://www.bcaplan.com [EMAIL PROTECTED] http://econlog.econlib.org
"Isolated among strange influences, Lavinia was fond of wild
and grandiose day-dreams and singular occupations; nor was
her leisure much taken up by household cares in a home from
which all standards of order and cleanliness had long since
disappeared."
--H.P. Lovecraft, "The Dunwich Horror"
