Tom, don't go!
Behind the original question I posed about "progressive taxation" was a
motive. In preparation for someday attacking the analysis that is going to
defend the California de-regulation as a form of "progressive taxation." I
wanted to check to see if there was any basis for claiming, as the economists
are, that a drop in electric rates was progressive because small users spend
more of their income on electricity than do large users, and thus were going
to get a more "progressive" impact from the (supposed) future drop in
electric rates.
I thought that was a ridiculous claim, and still do, but wanted to check
about the definition of "progressive taxation" used by mainstream economics.
For my purposes, which is to attack a forthcoming report, I've learned
that I should attack on the substance of what they are doing rather than on
the basis of a single, unequivocal, well-agreed-upon definition of
progressivity. It seems to me that a change that widens the dollar gap
between money in the hands of the poor and the rich is not "progressive."
(By the way, I never suggested that it is bad for the poor to cut their
electric rates -- seems as if somebody erroneously inferred that.)
I opened my Schumpeter's History of Economic Analysis and learned that
there are even worse positions available to those who see things differently
than I do in this discussion. Nobody has yet brought up the marginal utility
of money as a reason for calling such a change progressive. The marginal
utility of money for the rich is much lower than for the poor, hence one
would have to give them a huge electric rate cut to give them a sum of money
than would have the same marginal utility as a small rate cut for the poor.
How did we miss getting that argument?
There are other bases for attacking the forthcoming study, and I will use
those. One thing the authors do is produce forecasts of the increase in
electric consumption for various classes of customers, and for the state as a
whole. They only produce numbers for rate cuts. I asked them if they were
assuming fully reversible preference functions -- which baffled them. They
had no idea of the assumptions behind elasticity studies. Surely, I said,
consumption wouldn't go back to its original level if any rate cuts were
reversed. After a little discussion they replied "We're only looking at
rate cuts, not increases." So much for Berkeley Ph.Ds in economics off to
another prestige department and looking for publications. Just run
regressions and get the grants.
Gene Coyle
Timework Web wrote:
> I haven't had so much fun since a bunch of latter-day Anarcho-Pagans
> called me provocateur and police agent. O.K., O.K. I can see I'm not
> welcome here. Unless I get positive feedback from other subscribers, Pen-l
> won't have me to kick it around anymore. *That's* my gambit. I'm not in it
> for the gratuitous abuse.
>
> Roger Odisio wrote,
>
> > Typical email gambit, I see. Create a strawman position (Max, I, and
> > others aren't merely answering the "arithmetic" question about
> > progressivity, but "seem to be arguing" for some claim of distributive
> > justice), attribute it to others, and whack away. But you've added a
> > novel twist, at least. That strawman you've created is so unworthy, you
> > say, you refuse to talk about it!
>
> > I can't think of anything further I could possibly want to say on the
> > topic of progressivity, Tom, including in response to whatever it is you
> > can dream up to say about my last two messages. Bye.
>
> Tom Walker
