Monthly Archive for April, 2022

Where I’ve Been

Published
by
Steve Landsburg
on April 24, 2022
in Economics, Personal, Puzzles and Surprises
. 69 Comments

A couple of weeks ago, I was in Las Vegas for the annual meeting of the Association for Private Enterprise Education, where I was honored to give an invited plenary address.

From there, I went directly to Atlanta, where I gave a short talk at the Gathering for Gardner, honoring the legacy of Martin Gardner. There were a lot of other really cool talks too.

I am sorry that the Las Vegas talk was not recorded and that the recording from the Atlanta talk won’t be available for a few months. Therefore I sat down in front of my webcam and repeated both talks, sticking as close to the original words as my memory would allow. Unfortunately there is no way to recreate the audience reaction or the question and answer periods.

Click below to view either or both of those re-creations.

The second talk is essentially a six-minute excerpt from the first. It surely benefited from the discussions here, here and here, and most especially from the comments of Bennett Haselton.

A few more words about escalators for those who care about this kind of thing:
Continue reading ‘Where I’ve Been’

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Mea Culpa

Published
by
Steve Landsburg
on April 1, 2022
in Bad Reasoning, Economics, Oops, Personal and Policy
. 5 Comments

Economists, like everyone, should admit to their mistakes and correct them. That’s what this post is for.

The argument against taxing capital income runs like this:

1) Current and future consumption should be taxed at the same rate.

2) A tax on capital income is equivalent to a tax on current consumption coupled with a higher tax on future consumption.

Conclusion: Capital income should not be taxed.

I made this argument several years ago in a talk at the Cato Institute. I recently got a complimentary note from someone who had just watched the video of that talk, which caused me to go back and watch a few snippets to remind myself of what I’d done to earn this compliment. And I was mortified to see myself stating not point 1) above, but this far more general point:

1′) All things should be taxed at the same rate.

The status of 1′) is complicated. It is true that in an ideal world, all things including leisure would be taxed at the same rate. But in a world where you can’t tax leisure, the ideal tax system is far more complicated, with the optimal tax on each consumption good varying according to various elasticities and cross-elasticities of demand and supply. So 1′) is true in an ideal world, but surely false in our world, where leisure is very difficult to tax.

Fortunately the full generality of 1′) was not needed for my argument; all I actually used was 1). But in the video, I very clearly stated 1′) as if it were gospel, and even devoted an entire slide to it. This mistake doesn’t overturn the conclusion, but it’s still surely egregious enough that if, say, Paul Krugman had made a mistake like this, I’d have been all over him.

So: Mea culpa.

A subsidiary point: The word “should” in these statements can be interpreted in (at least) two ways — from the point of view of efficiency and from the point of view of fairness. In the few paragraphs above, and in the bulk of my Cato talk, I was using the word “should” in the first sense. But I also tried to address fairness issues in the Cato talk, and from that angle, I’m less sure that 1′) is wrong.

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