Monthly Archive for July, 2014

Tipping the Scales

Former economist Paul Krugman has actually managed to get these words past an editor at the New York Times:

There is, however, one big difference between corporate persons and the likes of you and me: On current trends, we’re heading toward a world in which only the human people pay taxes.

Now I think we can be quite sure that even Paul Krugman, with his gargantuan capacity for forgetting everything he once knew, is well aware that we already live in a world where only human people pay taxes. That’s an instance of the general principle that the legal incidence of a tax does not determine its economic incidence. The corporate income tax is levied by law on corporations, but its economic effects are felt entirely by humans.

Why then, did he write this in the first place? Well, the charitable reading — and I am all in favor of charitable readings — is that all he’s saying is that the legal incidence of taxation has shifted somewhat from corporations to individuals.

But why would that be interesting? And why would it be, as Krugman seems to take for granted, a clearly bad thing? Suppose that in 1990, I received a $1 dividend and paid a 25% tax, keeping 75 cents in my pocket, while in 2014, due to a fall in corporate rates (leading to higher dividend payouts) and a rise in personal rates, I received a $1.50 dividend and paid a 50% tax, keeping 75 cents in my pocket. Who cares?

Well, perhaps there are reasons to care, involving some non-obvious incentive effect of the sort that it takes an economist to notice. Well, that, then, is where the economist comes in — his job being to explain why he thinks these things matter. In this case, I don’t offhand see the argument, but I’m perfectly happy to believe there might be one. On the other hand, if Krugman actually has an argument in mind, one wonders why he’s so reluctant to share it.

Oh, he does pay lip service to the need for an argument, but all he offers is sophistry:

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Applied Bayesianism

When I was a child, my parents took me to Atlantic City every summer. And we would always make a side trip to Longport (three towns away) to collect seashells, because my Dad said that Longport was famous for the quality of its seashells.

Last week, on a whim, my wife and I went down to Atlantic City for a few days, largely because it looked like they were having nice weather down there. In a fit of ambition, we walked the entire 16-or-so-mile roundtrip from the Steel Pier area to the far end of Longport. Along the way, I noticed no difference between the Longport seashells and the Atlantic City (or Ventnor or Margate) seashells. Moreover, we met a lifelong Longport resident (and enthusiastic civic booster) who confirmed that she had never in her life heard that there was supposed to be anything special about Longport’s seashells.

Over my lifetime, I’ve accumulated a lot of advice from my father, some of which seemed to make sense. But in light of my trip to Longport, I’m re-evaluating.

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ACT now!!

jamiewhyteIf you like The Big Questions, you really ought to know my brash and brilliant friend Jamie Whyte. After a brief but dazzling career as a philosopher at Cambridge university (he once won the prestigious Analysis prize for the best article by a philosopher under 30), Jamie distinguished himself as a management consultant, a foreign currency trader, and, via his frequent writing, an incisive and steadfast defender of rational thought and individual freedom. His little book on Crimes Against Logic delivers brilliantly on its promise to “expose the bogus arguments of politicians, priests, journalists and other serial offenders”, and his recent collection Free Thoughts (which, true to its title, you can read for free) is essential fare for anyone who cares about clarity of thought — or, because Jamie is as funny as he is brilliant, anyone who’s just looking for a good chuckle.

Now, in his most startling career twist yet, Jamie has become the leader of a political party in his native New Zealand — the ACT party, named for its forerunner, the Association of Consumers and Taxpayers. ACT stands unabashedly for individual liberty, the rule of law and the enforcement of well-defined property rights. It campaigns against corporate welfare. It’s even pro-immigration. And thanks to New Zealand’s system of proportional representation, it actually gets representatives into parliament.

After several years of turmoil, the party turned to Jamie’s leadership in February of this year. With the boundless energy that inspires awe in everyone he meets, Jamie is re-building the party and promoting a principled free-market agenda in the run-up to the September 20 general election.

actThe downside of being a principled politician — and the reason they’re almost vanishingly rare — is that it’s hard to raise funds when you won’t cater to special interests. ACT opposes both corporate welfare and legal favoritism for union members, which cuts out most of the usual big donors. Here’s where you can help, and I hope you will.

Never before (and, I expect, never again) have I encouraged my readers to support any political party with their votes, let alone their dollars. That’s because I’ve spent my adult life being seduced and abandoned by politicians who talked a good game and then caved in to expediency when the chips were down. But Jamie — and therefore ACT — is different. I know him as a friend, and I know that principles are his passion.

You can help make ACT’s vision a reality by visiting the donation page and giving generously. Remember that a New Zealand dollar is worth about 88 cents U.S., so if you’re an American, a “$100 donation” is actually $88.

A little more background on New Zealand:

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