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Tag Archives: Incentives

A Better Solution: Tax Rocks or Churches

The Biden administration may be realizing that a corporate minimum tax is inconsistent with the multitudinous tax preferences that Leviathan himself gives corporations in order that they do what he wants them to do. Here is another idea to finance the $2.3 billion of proposed “infrastructure” or whatever pleases Leviathan: tax rocks instead. The proposal is succinctly explained in my article “Joe Biden’s Economic Agenda: An Early Appraisal,” in the Spring issue of...

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Henderson on Good and Bad Inequality

My Policy Ed video for the Hoover Institution’s PolicyEd video series is out. Here it is on YouTube. A summary of the 4-minute video: Both good and bad income inequality exist. Good inequality comes from entrepreneurial innovation that improves the lives of consumers, even if the inventor gets wealthy. On the other hand, using political muscle to get rich leads to bad inequality, as it comes at the expense of consumers. It is vital to have...

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When to blame?

This comment by Arthur Schopenhauer raises some interesting questions: If a person is stupid, we excuse him by saying that he cannot help it; but if we attempted to excuse in precisely the same way the person who is bad, we should be laughed at.  And yet the one quality, like the other, is inborn.   This proves that the will is the man proper, the intellect the mere tool. While one can question any of these three claims, there is a real issue here that cannot be...

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Strangely Liberating

Working on my taxes recently reminded me of a fun discussion I had with the late Stephen Williams, a judge on the United States Court of Appeals for the District of Columbia. (He’s pictured above.) I never met him and we mainly corresponded by email. After I told him that in December 2017 I had doubled my usual charitable contribution to the Institute for Justice so that I could get the tax deduction one last time (due to the 2017 tax cut law), we went back and...

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Logical and Praxeological Impossibilities

The use of logical impossibilities makes rational discourse impossible. A and non-A cannot both be true. Everybody cannot have an income higher than the median or the average. Nobody can consume if nobody produces (including do-it-yourself). Everybody cannot consume more if everybody produces less. You can’t be inclusive without admitting the non-inclusive in your inclusive set. And so on. There also exist praxeological impossibilities which make any rational...

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The Logical Basis is a Difference in Incentives

British economist Charles A. E. Goodhart writes: Thus, people voting with their dollars are supposed to be rational and to reach an efficient outcome, but when they vote with their ballots, they may not achieve their own best interests. I have always found it difficult to perceive the logical basis for this dichotomy. This is from his “The Free Banking Challenge to Central Banks,” Critical Review, Summer 1994. The basis for the dichotomy is a difference in...

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An Unnecessary “Stimulus”

In two Defining Ideas articles in 2009, “Who’s Afraid of Budget Deficits? I Am” and “Furman, Summers, and Taxes,” I criticized Lawrence Summers and Jason Furman, two prominent economists who worked in the Obama administration, for their dovish views on federal debt and deficits. They had argued that we shouldn’t worry much about high federal budget deficits and growing federal debt. Of course, that was before the record budget deficit of 2020. Now even Summers is...

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PC and PG Matter More than Content at Google

Transparency and directness – I have always been a pretty passionate guy, especially at Waze. After the acquisition, I was invited to speak on many different Google panels and events and very quickly, I began racking up my HR complaints. I used a four letter word, my analogy was not PC, my language was not PG… I actually stopped speaking at events where the majority appreciated what I was saying but the minority that was offended by something (words and not content)...

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Private versus Government

In his textbook Public Finance, 7th edition, 2005, Princeton University emeritus professor of economics Harvey S. Rosen, discussing the idea that incentives to monitor are better in the private sector than in government, quotes Adam Smith‘s statement to that effect in The Wealth of Nations. He also gives a famous modern example. Rosen writes: Anecdotal evidence for this viewpoint abounds. One celebrated case involved New York City, which spent $12 million attempting...

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What the Success Sequence Means

[continued from yesterday] …This is a strange state of affairs.  Everyone – even the original researchers – insists that the success sequence sheds little or no light on who to blame for poverty.  And since I’m writing a book called Poverty: Who To Blame, I beg to differ. Consider this hypothetical.  Suppose the success sequence discovered that people could only reliably avoid poverty by finishing a Ph.D. in engineering, working 80 hours a week, and practicing...

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