Debate Blog

Heard only a little of the undercard, but I do have some comments on it. But I’ll add those later.

Re the main debate (I’ll add to this every twenty minutes or so till the debate is over): (Note this is live-blogging, hence not always carefully thought through).

Minimum wage: Some reasonable answers, but not one of them has contrasted it with the EITC, or pointed out that the minimum wage concentrates the burden on a small fraction of the population , while the EITC spreads that burden — or that the EITC, unlike the minwage, actually increases employment.

Kasich asked what specifically he’d cut from federal spending. Lots of blather, absolutely no answer. Not even a pretense of an answer.

Kasich suggests that national debt affects employment. Presumably he just made this up. Offers no theory, no evidence — presumably because there is none.

Ah. Having been asked a second time, Kasich now gives specifics. Kudos to the moderator for re-asking.

Bush wants 20% corporate tax rate, which is 20% too high (but with full expensing, maybe not so bad). Bush asked what regulations he’d repeal, responds with several specifics. Good for him.

Fiorina responds to a substantive question with “Let me tell you a story about someone I met”. I hate this stuff. Rest of her answer pretty good, though.

Paul asks where income inequality is “the worst”. Does “worst” mean too much or too little? He seems to assume the former. I.e. he assumes the current level of inequality is too high. Where is his argument? He seems to think arguments don’t matter as long as you speak forcefully enough. I hate this stuff too.

Re illegal immigration, Trump says “We are a country of laws”, to imply that because it *is* illegal, it *should* be illegal. Does the same argument show that if Obamacare is a law, then we, as a country of laws, should not change it?

Jeb more or less fine on immigration, but not speaking with the genuine and moving passion his brother spoke with in 2000.

Cruz stoops to the lowest demagogery about immigration — pointing out economic downside, ignoring economic upside.

Jeb sure not getting much screen time so far.

Fiorina pointing out crony capitalism aspect of Obamacare — this is, I think, a good and mostly original tack.

Fiorina calling for free market in health care, ignoring all the reasons why free markets arguably won’t work (moral hazard, adverse selection, etc). There might be answers to those things, but it is dishonest to pretend the questions don’t exist.

Ah—-now Fiorina talks about states managing high risk pools — so she *is* (finally) addressing some of the issues. Once again, thanks to the moderator for asking a second time.

Paul wants to eliminate the payroll tax, which is probably the most efficient tax we’ve got.

*And* Paul wants to tax investment income. :(

Mortgage interest deduction keeps coming up. Nobody has mentioned that it becomes unnecessary if you don’t tax investment income in the first place.

Cruz eliminates corporate income tax *and* payroll tax. Best possible tax to eliminate and the worst.

Cruz says he will make jobs boom by taxing export but not taxing imports. HAHAHAHAHAHAHAHAHAAA. (Taxing exports but not imports is, of course, *exactly equivalent* to taxing imports but not exports.

Ah. Bush finally gets some airtime. And on a good topic for him: tax reform. Let’s see how he does.

Oh God. He tells a story about some friends of his…… This is pathetic.

Pretty good back and forth between Paul and Rubio.

Cruz jumping into that back and forth, also pretty effectively.

Fiorina eloquent and good on zero based budgeting.

Bush still mostly invisible.

Trump says TPP will let China come in and “take advantage of everyone” Take advantage by selling us stuff we want to buy?

Trump quoting numbers on how many hundreds of billions we “lose” on trade. What does that even mean?

Paul gets in fantastic zinger with “China’s not part of this deal”.

And Bush *still* pretty much invisible.

Paul interjecting himself more than (in my memory) he has in earlier debates. I think he’s helping himself.

I fully expected that the big story tonight would be “Jeb Bush is back on his game”, necessity being the mother of high performance. Guess I was wrong.

—————–

While they’ve cut to a commercial, I’ll insert my comments on the small part of the undercard that I heard:

1) I like Huckabee’s tax plan a whole lot, but he keeps lying about it. He says he’ll tax consumption, not labor or capital. But that’s fully equivalent to taxing labor. So to say he’s not taxing labor is plain dishonest.

2) Christie, asked substantive question, leads off with stupid anecdote. This should be enough to disqualify a candidate, dammit.

—————————

Bush gets a chance to talk. He’s against ISIS and for American leadership. Not doing much to differentiate himself from the pack.

Trump thinks he knows Putin “very well” because they were on 60 Minutes together. Hrm…

Bush takes on Trump on American leadership in mideast — doing a bit better now…..

Trump pointing out we have no idea who the rebels are — we’re giving them hundreds of millions but have no idea who they are. I don’t know that he’s right, but I’d bet he is.

Fiorina gets in good dig on meeting Putin. And speaking very effectively on foreign policy vis a vis Russia.

Bush: “All the things that would create economic growth, Hilary is doubling down against”. I think he anticipated this as an applause line. But silence from the audience.

Though I’ve focused mostly on negatives, I do think that pretty much everyone is doing remarkably well. (Of course it’s a zero-sum game, so in that sense there have to be losers — but even the losers are playing a very good game.)

Cruz making the case for rules-based monetary policy, and pointing out you can serve as lender of last resort without bailouts. He’s doing very well on this.

Kasich arguing that “when you run something” you need to maximize in the short run, and the long run be damned. (Not in those words, but that’s exactly the meaning of what he said.) Making him the epitome of everything that’s wrong with politics.

Kasich getting booed for this. As he should be.

Fiorina: “Socialism starts when Govt creates a problem and then steps in to solve the problem”. She’s really very good at this.

This is very definitely running too long. (2 hours and 8 minutes so far, and more to come, though I think it’s just going to be closing statements now —- but they should have cut it off at 90 minutes).

Bush devotes his closing statement to the VA ?!?!?!?

And now to sleep……

Share/Save

43 Responses to “Debate Blog”


  1. 1 1 Henry

    Do you agree with Oren Cass that a wage subsidy would be better still than the EITC?

  2. 2 2 Steve Landsburg

    Henry: Haven’t thought hard about it. The ideal is to counteract all the existing distortions that lead to too little work. Exactly what’s the best way to do that is a subtle question.

  3. 3 3 Advo

    Here’s a good argument on why a high level of income inequality is bad – because it leads to the concentration of capital among a small group of high earners, while leaving the lower income groups capital-less.

    Extreme capital concentration within society is not desirable because of the frictional costs and information problems involved in deploying capital.
    It is often assumed that it is good if all the capital accumulates to people who have proven themselves skilled capital accumulators (e.g. Warren Buffet).

    Unfortunately, a lack of capital among the lower classes means that there will be many opportunities where capital could be deployed at high returns, but these opportunities cannot be exploited because information problems and frictional costs prevent the use of debt capital.

    Let’s say you’re a poor person and you spot a business opportunity where you could make a lot of money, but you need $20,000 in capital, which would yield a risk-adjusted return of 15%. Unfortunately, you don’t earn enough money to save this amount in any reasonable timespan, you don’t know any people who would lend it to you, and the banks aren’t generally interested in this kind of thing.
    While Warren Buffet might want to invest for a 15% risk-adjusted return, the frictional and information costs involved would be way too high for him to consider such small investments.

    That, in a nutshell, is the problem of income inequality. The more capital is concentrated in a few hands, the more small-scale high-return opportunities go unexploited.
    I believe that the much-reduced ability of a large part of the population to save equity capital is one of the reasons for the apparent decrease in long-term growth economic growth potential and the decline of the natural interest rate.

  4. 4 4 Advo

    Not to mention the fact that even where debt capital can be used in lieu of equity capital, there are considerable additional costs involved. In other words: an economy where capital is sufficiently dispersed so that people are able to pay their tuition fees themselves is more efficient than one where they have to take out student loans.

  5. 5 5 Harold

    “Cruz stoops to the lowest demagogery about immigration — pointing out economic downside, ignoring economic upside.”

    Shocking. That a politician would do such a thing. Of course you would never see an economist doing that.

    “Paul gets in fantastic zinger with “China’s not part of this deal”.”
    If Trump was not aware that China is not involved in the TPP, I think that is a huge deficiency for a presidential hopeful. That alone should rule him out.

    “I like Huckabee’s tax plan a whole lot, but he keeps lying about it. He says he’ll tax consumption, not labor or capital. But that’s fully equivalent to taxing labor. So to say he’s not taxing labor is plain dishonest.” I think saying where the legal burden should be OK, and the voter can work it the economic burden out if they want – or have it pointed out by other candidates.

  6. 6 6 Keshav Srinivasan

    Steve, why is taxing imports but not exports equivalent to taxing exports but not imports? I’d imagine that they’d have dramatically different effects on incentives.

  7. 7 7 Jim W K

    Advo, your concerns about income inequality are justified in terms of capital investment, but that’s not the be all and end all, because job creation is the most important factor in this equation.

    Far from being the ugly fat cats that keep millions of people poor, entrepreneurs are actually the real saving graces. We are told we need 600 million new jobs in the next decade to fully employ the world’s eligible workforce, and entrepreneurs and small businesses are the top creators of new jobs, providing 70% of all new jobs in the world, and up to 90% in some emerging economies. Entrepreneurs may be very wealthy, but they are the main drivers of economic growth and the most important players in increasing global prosperity.

    In the second place, entrepreneurs do an awful lot with the money they make in terms of generous donations to noble causes. Just the top 5 of the world’s most generous charitable donors (Bill Gates, Warren Buffett, George Soros, Azim Premji, and Charles Feeney) have donated over $70 billion thus far, with doubtless much more to come.

    The reality is that the richest are the primary job creators and the most generous benefactors.

  8. 8 8 SeanV

    Payroll Tax is the most efficient tax. Appreciate a brief explanation for that. Is it among the current taxes or in broader theory? What about Land Taxes?

  9. 9 9 Steve Landsburg

    SeanV: Among the taxes we’ve got, not among all conceivable taxes.

  10. 10 10 AMTbuff

    Why shouldn’t a country with generous welfare state benefits choose its immigrants? Doesn’t it make sense to choose the ones most likely to contribute high value to the economy and least likely to require subsidies from government? How does illegal immigration, bypassing this selection process, make sense?

  11. 11 11 Steve Landsburg

    AMTbuff: Why can’t you have (pretty much) unrestricted immigration with the proviso that immigrants do not qualify for those generous welfare state benefits unless/until they go through some process at least as rigorous as the one we have for admitting them now?

  12. 12 12 Doctor Memory

    “Bush wants 20% corporate tax rate, which is 20% too high”

    So the ideal corporate tax rate is 16%?

  13. 13 13 Doctor Memory

    More seriously: the preferability of the EITC to the minimum wage is one of those rare issues where you and I agree, but the sticking point seems to be political plausibility? Fiddling with the minimum wage, at the state level, appears by demonstration to be possible, whereas the EITC never seems to even get mentioned. How do we fix this? Why do our nominally conservative/libertarian state governments (WI, TX, NJ and KS come to mind immediately) not attempt to replace their state minimum wages with expanded EITCs?

  14. 14 14 Alan Gunn

    Paul says he wants to eliminate the payroll taxes, but what he means by this is that he wants to shift the employees’ share to the employer. Which may be good politics, but which, as I understand it, is meaningless except for trivial legal details about how it’s collected. Not that anybody else’s tax plans make much sense either. Huckabee’s “fair tax” plan, the way it’s been advertised, makes things come out right by counting taxes the Federal government pays to itself as revenues. Sort of like the people who claim there’s a Social Security trust fund.

  15. 15 15 Josh

    Answering Steve @ 11, could it be because we don’t really think we could bring ourselves to truly restrict access to , say, urgent medical care or education for the children, regardless of immigration status?

    I’m not saying there aren’t creative solutions to this issue but that’s the only answer that makes sense to me on some level.

    Perhaps if we made the immigration process more transparent/simpler, we could force immigrants to save first for a year or two worth if health insurance before coming here. I dunno maybe that’s already a rule?

  16. 16 16 Ben Kennedy

    “He says he’ll tax consumption, not labor or capital. But that’s fully equivalent to taxing labor. So to say he’s not taxing labor is plain dishonest.”

    I don’t understand – isn’t the FairTax a national sales tax? What do you mean by “fully equivalent”?

  17. 17 17 RPLong

    Doctor Memory #12 – I lol’d

  18. 18 18 Ricardo Cruz

    “Steve, why is taxing imports but not exports equivalent to taxing exports but not imports? I’d imagine that they’d have dramatically different effects on incentives.”

    Let me rephrase your question “why is taxing buying but not selling equivalent to taxing selling but not buying? I’d imagine that they’d have dramatically different effects on incentives”

    Other than McScrooge who values money for money’s sake, people sell you stuff, because they want to buy stuff. Two sides of the same coin.

  19. 19 19 Ricardo Cruz

    I am surprised Chris Christie is so low in the polls.

    Don’t take me wrong, I dislike them all, but his rhetoric seems pretty good, so I am surprised Americans prefer someone like Ben Carson who seems so low energy and never say anything intelligent.

  20. 20 20 Keshav Srinivasan

    @Ricardo “Let me rephrase your question “why is taxing buying but not selling equivalent to taxing selling but not buying?”" But why would a tax on goods that are shipped from China to the U.S. be equivalent to a tax on goods that are shipped from the U.S. To China. That’s clearly what “imports” and “exports” mean here – imports to America and exports from America.

  21. 21 21 Keshav Srinivasan

    @Ricardo Here is Ted Cruz’s quote: “Which mean if you’re an exporter, if you’re a farmer, if you’re a rancher, if you’re a manufacturer, you don’t pay the business flat tax. Exports are free of that tax, but all imports pay that 16 percent business flat tax, which means this tax plan would cause jobs to boom and it would let America compete with China and the world on a level playing field.”

  22. 22 22 Kirk Taylor

    “Mortgage interest deduction keeps coming up. Nobody has mentioned that it becomes unnecessary if you don’t tax investment income in the first place.”

    Shouldn’t that be “tax income” vice “tax investment income”?

  23. 23 23 Steve Landsburg

    Keshav (20,21): Ricardo really did answer this in 18. (Thanks, Ricardo!)

  24. 24 24 Steve Landsburg

    Kirk Taylor #22: no, I meant investment income.

  25. 25 25 Steve Landsburg

    Ben Kennedy (#16): People work, they earn money, they use the money to buy things. You can tax the money as it comes in or you can tax it as it goes out. Either way, you are changing the terms of trade between leisure and consumption. Nobody has any reason to prefer one to the other. (A more precise statement: The consumer’s optimization problem is the same under either tax.)

    As a practical matter, one tax might be more conducive to certain kinds of loopholes than the other, but loopholes aside, there’s no difference.

  26. 26 26 Ben Kennedy

    Wouldn’t a consumption tax create fewer distortions for economic growth? We could kill income, investment, corporate, and estate taxes, all things that discourage economic activity. We could get rid of paternalistic HSAs, 401Ks, TAP 529s, etc – let people apply their knowledge of their particular times and circumstances to their own lives.

    Plus, from a moral standpoint, a consumption tax is fair – if someone earns 100K but lives a 50K lifestyle, it seems intuitive that they pay the same share as a someone who earns 50K and lives a 50K lifestyle. If that person invests and eventually consumes at a 200K lifestyle, then they pay for it at that time.

    Shouldn’t the tax code encourage the behavior you praise Ebenezer Scrooge for?

  27. 27 27 Steve S. from CT

    Regarding taxing income versus consumption (#25) – is it in fact the case that people work, earn money, and use the money to buy things?

    Krugman is fond of the aphorism “your spending is my income” but I’m wondering if that’s an over-generalization. Specifically, I don’t think it takes into account the notion of financing – that is, should we consider spending $250 on groceries versus spending $250 on a monthly car payment to be equivalent?

    If I pay cash for everything, then I can see how (assuming no loopholes) a 1% increase in income tax is equivalent to a 1% increase in consumption tax. However, once credit is involved I suspect that changes things considerably.

  28. 28 28 Steve S. from CT

    @Ben Kennedy (#26) – seems to me the challenge is defining what “consumption” means. Maybe this is what Steve means about the equivalence.

    Seems to me that “consumption” is when you actually extract the utility from the good or service – you consume an apple by eating it, not by buying it. The price you paid when you bought it is a proxy for your expectation of the utility you anticipate collecting when you actually consume it.

    I don’t think anyone’s proposing that we tax the act of eating apples – it’s theoretically possible I suppose, and maybe even a good idea, but complicated. Instead, we’re talking about taxing the transaction in which we purchased the apple, right?

    Given that, what distinguishes a “consumption transaction” from a “non-consumption transaction?” I don’t think there is an inherent difference distinguishing “buying” an hour of Joe’s time to give me a haircut, versus “buying” an hour of his time to fix the clippers I use to give haircuts, versus “buying” an hour of his time to give haircuts in my barbershop. They’re all transactions in which one party is “providing” and one party is “consuming.”

    It’s just a question of perception – all things being equal, there’s no difference between us agreeing that I will pay 100 plus 25 for the government (consumption) versus us agreeing that I will pay 125 minus 25 for the government (payroll). Of course, in real life generally speaking all things aren’t equal.

  29. 29 29 Steve Landsburg

    Ben Kennedy: I agree with much of what you say about the desirability of a consumption tax. Of course, since a tax on labor income is fully equivalent to a consumption tax, all of your arguments apply to that equally well.

  30. 30 30 Steve Landsburg

    Kirk Taylor (#22): Elaborating a bit on my quick answer at #24: There’s a tax on borrowers and a tax on lenders. All that matters is the sum of those taxes. The tax on lenders is positive. The whole argument for a mortgage interest deduction is that it is a negative tax, bringing the total to roughly zero, which is where it should have been in the first place. Much simpler, though, to not tax interest income in the first place, in which case there’d be no reason for the negative tax at the other end.

  31. 31 31 SeanV

    But a true consumption tax occurs when people are able to shelter some or all of their income in savings account/pensions , etc. Then the consumption is foregone. Foregoing consumption is a huge economic good, along with risk-bearing, and knowledge/information sharing/exploitation. That’s really the whole point of the income tax/consumption tax dichotomy.
    PS – It’s not my spending that pays Krugmans income – it’s my taxes – which is the point really. What better way to show tribute.

  32. 32 32 Steve S. from CT

    Is it an oversimplification to say that an “income tax” is when the seller pays, and a “consumption tax” is when the buyer pays? (noting that in a VAT system the seller might collect the tax, but the buyer is actually paying it)

    If that’s valid, then let’s say we have a system with a flat-rate 10% consumption tax, and 0 income tax. If I buy a stock for $100, I’d owe $10 in tax. If I later sold it for $1,000, I’d owe nothing, but the buyer would owe $100. The government still gets 10% of the transaction – but no need to worry about cost basis or anything.

    Similarly, if I got a job making $10 an hour, I assume I’d owe no taxes on that, but my employer (having “bought” my time) would be liable for $1/hour in taxes.

    Let’s say I buy a house for $100,000. I’d owe $10,000 in taxes, plus whatever other fees. If I take out an $80,000 mortgage, at 3% my payment would be $337, but my tax liability wouldn’t be $33, I don’t think, it’d just be $20 – 10% of the $200 in interest I’m paying.

    Conversely, if I deposited $10,000 in a savings account paying 2% interest, I wouldn’t owe any taxes when I withdrew money, but when the bank pays me that $17 in interest, they would also have to pay the government $1.70 in taxes.

    Does that sound right? If so, then it would certainly be very simple to administer. Of course it’s highly regressive – but I can think of a few ways to address that.

  33. 33 33 Keshav Srinivasan

    @Steve (#23) I’m afraid I don’t understand the argument. If you impose a tax on black people selling things to white people but no tax on white people selling things to black people, obviously that leads to different consequences than putting a tax on white people selling things to black people but not black people selling things to white people. Why should it be any different if you say “people in America” and “people in China”?

  34. 34 34 Ben Kennedy

    Steve, I’m getting hung up on “fully equivalent” – is this with regard to tax bill amounts or to something else like incentives?

    It seems to me that you can’t mean amounts. If I were a trust fund baby, my labor income tax would be 0, but I would be paying any consumption taxes that existed. On the other side, Scrooge may pay a high labor tax, but almost no consumption tax. Is the concept you are trying to convey that it is the sum of all gain taxes (labor, investment, inheritance, gifts, gambling, etc) that is fully equivalent to a consumption tax?

  35. 35 35 Steve Landsburg

    Ben Kennedy:

    Is the concept you are trying to convey that it is the sum of all gain taxes (labor, investment, inheritance, gifts, gambling, etc) that is fully equivalent to a consumption tax?

    Absolutely not. (Try writing out the optimization problem and you’ll see this.) A tax on labor is equivalent to a tax on consumption at a constant rate; a tax on interest/investement income is equivalent to a tax on consumption at a rate that increases from one year to the next.

    (Equivalent means same effect on incentives, on all choices made, etc etc)

    If you are a trust fund baby whose parents earn a million dollars, triple it through investments, and leave you the proceeds, then you’ll have enough to buy three million apples at $1 each. If your parents’ labor income (but not investment income) is taxed at 50%, they’ll leave you enough to buy 1.5 million apples. Alternatively, if their labor income is untaxed and instead apples are taxed so that they now cost $2 instead of $1, then your trust fund is *still* enough to buy 1.5 million apples. The incentive effects of the labor income tax and the consumption tax are identical (either way, your parents realize that every dollar they earn working in the coal mines will get you only 1/2 of an additional apple, so either way, they face the same discincentive).

    A tax on investment income changes the incentive structure, because it makes it relatively more appealing for your parents to spend on themselves instead of letting it grow (and get taxed!) and then leaving it to you. So that tax is not equivalent.

    Re Scrooge: If he never spends his earnings, and if he doesn’t care about his heirs or about anyone else, then neither a tax on his labor nor a tax on his consumption has any effect. (Why should he care if the govt takes half of the earnings that he’ll never spend anyway?). If he *does* care about his heirs, we’re back in the trust fund example.

  36. 36 36 Steve Landsburg

    Keshav (#33): Your analogy is perfectly right. Your conclusion is perfectly wrong.

    Suppose I put a tax on sales from white people to black people. Because I’m white, that discourages me from selling my car to a black person. As a result, I’m more likely to sell my car to my white neighbor, Bob. As a result, Bob is now less likely to buy a car from a black person.

    So a tax on whites selling to blacks discourages both whites selling to blacks and blacks selling to whites — just like a tax on blacks selling to whites.

    That shows that both taxes have the same sort of disincentive effects. To see that the disincentive effects of one tax are exactly the same as those of the other requires a more formal analysis, starting with writing down the optimization problems. But if you do the formal analysis, that’s what you’ll get.

  37. 37 37 Advo

    @SL post #11:

    Limiting welfare benefits is going to do nothing to discourage immigration from poor war-torn countries, especially because the US offers considerable opportunities for crime and because prison life will look relatively attractive for a man whose family is starving in the DRC.
    Unless you have immigration restrictions, you’re going to end up with dozens of millions of such immigrants every year, until life in the US is so horrible that people would rather stay in Somalia.

  38. 38 38 Harold

    Re import/export taxes. I struggled with this also. I thought of a 1,000,000% tax on exports that would effectively stop imports. Without exports, how would we pay for the imports? At equilibrium, I thought it would have the same effect as 1,000,000% tax on imports-i.e. prevent all imports and exports.

  39. 39 39 Steve S. from CT

    @Steve (#36) – let’s say we have two widget manufacturers, Red Acme and Blue Ajax, and two pools of buyers – 50 Red and 50 Blue. Acme and Ajax price the widgets at $100, and year one they each sell 50 for a gross profit of $5,000 and let’s say a net profit of $2,500. We then impose a 10% tax on sales from Reds to Blues. Red Acme needs to decide how to adjust pricing.

    Option 1 – keep pricing at $100. Red Acme has an additional $250 in costs due to the tax, earning $2,250 net, while Blue Ajax still earns $2,500

    Option 2 – raise price to $110 for Blues, maintain $100 for Reds. Acme keeps their 25 Red customers, loses 25 Blue for net profit of $1,125 versus Ajax’s $3,750.

    Option 3 – drop price to $90 for Reds, raise to $110 for Blues. Ajax counters by dropping its price to $90 for Reds as well but maintains $100 for Blues. Acme sells 25 at $90, Ajax sells 25 at $90 and 50 at $100.

    Option 4 – drop price to $90 for Reds, keep at $100 for Blues. Ajax matches. Acme sells 25 at $90 and 25 at $100 netting $40 each, total $2,000. Ajax sells 25 at $90 netting $40 each, and 25 at $100 netting $50 each, total $2,250.

    Option 5 – Acme raises prices to $110 across the board. Ajax matches. Acme makes 25 @ $60 and 25 @ $50, Ajax makes 50 @ $60, the CEOs of Acme and Ajax each grant themselves big bonuses.

  40. 40 40 Ben Kennedy

    Thanks Steve, that example makes it very clear.

    I’m trying to piece through why a white-to-black transfer tax would discourage whites buying from blacks -

    The competitive market price for apples is $100 for 100 apples. Now suppose a tax is implemented such that Black Henry must pay $100 to buy 50 apples from white sellers ($50 to the seller, $50 to the state)

    Both White John and Black Henry are shopping at the apple bazaar. White John goes to buy apples from a black seller who happens to have 100 apples left. Legally, he can buy 100 apples for $100, so he makes that offer. Meanwhile, Black Henry who happens to be at the same stall offers $100 for 99 apples. Black Henry is in the area because the tax is a huge disincentive to buy from white sellers. The black seller is inclined to accept Black Henry’s offer, as $100 and no apples is worse than $100 and 1 apple. White John then wanders over to a white seller to buy 100 apples for $100 dollars.

    Thus, the tax has created incentives that discourage a sale from black people to white people because the tax will always incent black people to outbid white people buying from black sellers

  41. 41 41 Steve S. from CT

    Still struggling with #36 – specifically with the assertion that “I’m more likely to sell my car to my white neighbor.” Sure, I’d prefer to sell to the white neighbor because I make more profit – but my preference doesn’t influence my white neighbor’s decision to buy from me rather than the black seller offering the same price. Why should he care that I’m making more profit by selling to him?

    So while it’s true that if I sell my car, it’s more likely to have been sold to my white neighbor – however, it’s less likely that I will have sold the car at all (at that price).

    If I do want to make it more likely for my white neighbor to buy then I have to drop my price – which means it’s no longer equivalent.

  42. 42 42 Ken B

    @Steve 11
    Perhaps because then you have “illegal welfare recipients” and then claims no-one is illegal, so they are really undocumented welfare recipients.
    In other words, I don’t think the notion of second class citizens is compatible with the American body politic.

  43. 43 43 Simon

    “Yeah, drugs might be an even better epmxale. We certainly put enough people in jail and spend enough money fighting the drug war that it’s hard to imagine we’d be more serious about enforcing minimum wage laws than drug laws. And yet, mysteriously, drugs havent become rare….”True, but such “failure” isn’t the point in the case of the drug war; like the War on Poverty, the War on (some) Drugs isn’t intended to eradicate illegal drug use. Success in that sense would be self-defeating; the point is to grow the power of government and the careers and budgets of law enforcement bureaucrats. Therefore the War on Drugs must be perpetual and the solutions offered aren’t really intended as cures. It would be a lot easier to enforce draconian labor laws than draconian drug laws because most employers can’t hide everything they are doing from the government (unlike drug users). In other words we could solve our labor problems within the existing legal climate, whereas true drug eradication can’t be solved, without resorting to extreme measures like a police state. I’ll take the current Unz minimum wage proposal seriously when I see the government taking labor laws, immigration laws, and border enforcement seriously. Saying “assume we have tough enforcement of minimum wage laws” is like saying “assume we had real border enforcement” or “assume we made a real effort to penalize the hiring of illegal labor”. We can’t assume that; recent history demonstrates that we can’t assume that, because TPTB don’t want enforcement. It’s just another bait-and-switch, like the 1986 Amnesty. Prove the government is serious about enforcement, and then maybe we have a valid argument. Otherwise, it’s just another “assume we have a can opener” on a desert island scenario.

Comments are currently closed.