I am sorry, but this is absurd

by on August 19, 2013 at 3:39 am in Economics, Philosophy | Permalink

Charles Manski, a well-known professor of economics at Northwestern, writes:

The anti-tax rhetoric evident in much lay discussion of public policy draws considerable support from the prevalent negative language of professional economic discourse. Economists regularly write about the ‘inefficiency’, ‘deadweight loss’, and ‘distortion’ of income taxation.

In fact he wishes to abolish those concepts for their anti-governmental implications and work only with social welfare functions directly.

That’s one easy way to limit deadweight loss from policies, namely take it out of your analytical framework.  The reality is that it is still the simplest and best way to explain why very high rates of taxation — as noted say by George Harrison or Bjorn Borg — are not such a good idea.

Manski also ignores that a belief in deadweight loss is fully compatible with the view that government spending may bring economic benefits.  In fact you often cannot understand the benefits of (some) government spending without first grasping the deadweight loss concept.

And even if you think Arrow’s theorem is overrated in its importance, as I do, working with social welfare functions isn’t exactly a recipe for wringing normative preconceptions out of your economics.  And any plausible social welfare function is going to pick up some concept of deadweight loss and stick it back into the calculations.  How about a social welfare function which says “minimize deadweight loss”, which is what you often find in Mirrlees?

It’s called microeconomics.  Yet Manski complains that “…prominent applied public economists continue to take the theory quite seriously.”  You’ll even find the notion of deadweight loss in some Principles books, believe it or not.  Must we derive a new social welfare function every time we wish to do partial equilibrium analysis, say of a tax on a single (small) commodity?

And get this example of mood affiliation:

The Feldstein article and similar research on deadweight loss appear predestined to make income taxation look bad. The research aims to measure the social cost of the income tax relative to the utterly implausible alternative of a lump-sum tax. It focuses attention entirely on the social cost of financing government spending, with no regard to the potential social benefits.

Contra Manski, I say it is fine to study the tax side of the equation while leaving the benefits (and costs) of expenditures to other researchers.  (By the way, Manski’s supposed culprit, Martin Feldstein, first made his name studying how to measure the benefits of public expenditure.)  All his point really boils down to is to note that in a second best comparison, optimum deadweight loss generally will be positive, as noted by Lipsey and Lancaster long ago in their 1955-56 ReStud piece, not to mention Frank Ramsey.

Manski wishes to cite the work of James Mirrlees for inspiration, but in fact Mirrlees has been a firm believer in the deadweight loss of taxation concept, and in comparing economies to hypothetical first best situations, as illustrated by for instance by these pieces.

I can thank Manski for reminding me that Tyrone, my evil twin, has been begging me for a chance to blog again at Marginal Revolution…

prior probability August 19, 2013 at 4:55 am

Agreed. I would only add that taxes are not only “bad” from an efficiency perspective; taxes are also a form of theft

dead serious August 19, 2013 at 10:29 am

Go bang your crazy drum elsewhere. Theft my ass.

You’re the kind of person to come screaming for help with your hem pulled up to your knees when a fire starts in your kitchen or a loud bang outside your window awakens you at night.

Derek August 19, 2013 at 11:23 am

Ok, that accounts for a really small percentage of tax expenditures. Justify the rest.

Andrew' August 19, 2013 at 11:41 am

hysterical ad hominem DS,

Please see below the definition of theft.

dead serious August 19, 2013 at 1:08 pm

There is a simple solution if you don’t like the sort of “theft” you’re being subjected to: leave. Go seastead or something.

Commenters here are people who were born on third base and think they’ve hit a triple.

Andrew' August 19, 2013 at 2:59 pm

Or I could just vote for lower taxes to defund the useless things like spying that make up the vast majority of government spending that aren’t direct cash transfers.

I will make note of your opinion that our success relative to other nations is due to our government and not our limitation of it.

Andrew' August 19, 2013 at 4:04 pm

I’ll make you a deal. First I’ll start calling you Alive Really Serious.

Next, if you think it’s not theft, don’t pay it and see if people with guns don’t show up to take it.

dead serious August 19, 2013 at 5:42 pm

Here’s a counter that makes as much sense: don’t pay your mortgage.

See if people don’t show up with guns. Or worse, lawyers.

By your logic, loans = theft.

Alternatively, don’t pay your bookee.

mark August 19, 2013 at 11:45 am

Ok, then, redistributive taxes are theft.

Ben Fenster August 19, 2013 at 1:09 pm

Having others give their lives for you to be free and then refusing to pay your fair share of the abundance you earn off their sweat and blood is moral degeneracy. You are the criminal.

Andrew' August 19, 2013 at 3:35 pm

So the one and arguably two legit wars we’ve fought now legitimizes all the cockamamie BS the government does? I almost feel sorry for you except you probably vote.

Ricardo August 19, 2013 at 4:02 pm

Ben, you owe me $100 for the work I’ve been doing for you, even though you never asked me to.

T. Shaw August 19, 2013 at 12:19 pm

Years! Obama and the 47,000,000 Thieves need your money.

Future (survivors of the zombie apocalypse) generations of economists and historians will wonder in disbelief at how a system so dull and illogiocal as “income redistribution” was allowed to ruin the greatest economy in human history.

dead serious August 19, 2013 at 1:23 pm

By income redistribution, I take it you mean bloated defense contractors and wall street bailouts.

Andrew' August 19, 2013 at 4:09 pm

Obviously not. We’d be dead without national defense and the the government saving our economy. What are you some kind of freeloader?

dead serious August 19, 2013 at 4:21 pm

Well, that’s just it. Sometimes the government provides services you personally find useful and in other cases the services it provides you revile. You’re hardly unique in that view.

I’ve said many times I’d cut the defense budget in half, or to a third of what it is. I’m sure there are many “Amurika Fuck Yeah” types who would have me strung up for daring to suggest that. These same people don’t like their taxes going to help poor people keep the lights on.

TuringTest August 19, 2013 at 8:37 pm

Come on DS, is that all you got? Surely you can do better than that

dead serious August 19, 2013 at 11:41 pm

Says the content-less Eliza bot.

Bucky August 20, 2013 at 8:21 pm

Property is theft.

Andrew' August 19, 2013 at 5:12 am

What does he think about the theft part?

Yancey Ward August 19, 2013 at 10:57 am

That it is good for you.

Andrew' August 19, 2013 at 11:46 am

For certain definitions of “good” and “me.”

Andrew' August 19, 2013 at 11:49 am

Considering the total lack of meta-rationality on display, I was making a joke- as in, if he doesn’t like the cost side of the utilitarian equation, he’s going to really hate anything close to a moral preclusion.

Alan August 19, 2013 at 5:57 am

Maybe this is part of a much subtler long-term study to test the Sapir-Whorf hypothesis.

Anon. August 19, 2013 at 6:17 am

K.O.!

Rahul2 August 19, 2013 at 7:02 am

I vote for more Tyrone.

revver August 19, 2013 at 11:49 am

I second that motion

MC August 19, 2013 at 2:13 pm

If Tyrone were a regular blogger, I would visit his blog every day.

Norfolk August 19, 2013 at 7:03 am

You are not Manski’s intended audience; his message is political ideology (not economics) aimed at the public.

As Bertrand de Jouvenel wisely noted — through the centuries men have formed political & economic concepts designed to limit the exercise of State rule… but one after another, the State, using its intellectual allies {like Manski}, has been able to transform these concepts into intellectual rubber stamps of legitimacy and virtue to attach to its decrees and actions. Many and varied have been the arguments that the State and its intellectuals have induced their subjects to support State rule (and taxation).

To maintain government rule, the majority of citizens must be persuaded by ideology that their government is good, wise {or at least inevitable) and certainly better than other conceivable alternatives. Promoting this ideology among the people is the vital social task of the Manski-caste of “intellectuals”.

Chris S August 19, 2013 at 9:54 am

Are curly brackets and parentheses now interchangeable? As a software coder I object – as an evolutionary linguist I am intrigued.

Ricardo August 19, 2013 at 4:05 pm

I bet that software engineers are the second biggest occupation represented by MR readers (after economists). I doubt any occupation has a higher percentage of libertarians than software engineering.

Go Kings, Go! August 19, 2013 at 4:24 pm

As a glottochronologist I would like to know when you started calling them “curly brackets”.

Urso August 19, 2013 at 4:31 pm

Oddly enough there is such a thing as a “bracketologist” but they mostly work for ESPN.

Clam August 19, 2013 at 7:03 am

Stop trying to make mood affiliation happen. It’s not going to happen.

Ted Craig August 19, 2013 at 7:19 am
Gunnar Tveiten August 20, 2013 at 8:27 am

True, allthough Detroit ain’t precicely a -average- US city.

Claudia August 19, 2013 at 7:21 am

So Tyrone wrote this one? I think you are both way over-thinking it. Manski’s argument at its heart is about framing (some of us are susceptible to such effects). Imagine if instead of ‘deadweight loss’ it had been called the ‘cost of social benefits’ or something else even more neutral. Sure you can call taxes ‘theft’ but most would agree that’s a rather loaded phrasing. Economists use a lot of terms without thought that actually have an emotional effect on lay persons (and economists too). Framing matters and it’s absurd to assume otherwise.

Andrew' August 19, 2013 at 8:10 am

But he’s fine with “WELFARE economics”? It reminds me of someone else we hear from around here.

Andrew' August 19, 2013 at 8:13 am

Theft – Wikipedia, the free encyclopedia
en.wikipedia.org/wiki/Theft‎
In common usage, theft is the taking of another person’s property without that person’s permission or consent with the intent to deprive the rightful owner of it.

I say it for one reason and only one reason. Because it IS theft. So, you’d better have a damn good reason for it. Like a bonified negative externality which you actually fix or a real public good.

Claudia August 19, 2013 at 8:40 am

I agree that the costs should be justified by the benefits (integrated over the populace as a whole). But I also think we often use words in ways that muddy the actual tradeoffs and are distracting/manipulative. So maybe Manski goes too far, but I think the push back here is a bit moody too.

Andrew' August 19, 2013 at 10:45 am

“the costs should be justified by the benefits”

That is squishy not even counting the questionable psychic benefits people will claim. But it’s even more than that. If you do believe it is theft, then the theft of taxes can only be morally justified by an equal and opposite theft of free-riding. It’s not enough to just say as long as I give 10 guys enough of the 1 rich guy’s money to buy their votes. If you don’t believe it, then you are just an extreme pragmatist, and that’s being generous because you probably just have a political agenda. I was kidding above with the theft concept to to try to make the point that by muddling the terminology rather than further dis-aggregating concepts, this gentlemen does not seem to be improving the analysis. To your point, does he want to go through the entire lexicon to remove value-laden terms? I doubt it.

Andrew' August 19, 2013 at 10:51 am

Not trying to give you a hard time. Like they say, never mud wrestle with a pig ;)

Claudia August 19, 2013 at 11:06 am

Now don’t bad mouth pigs (worse than taxes are theft). Some of my best childhood memories are from out in the hog barns … they are actually clever animals, but it’s the sows you should be wary of as they bite. Carry on, but I maintain that the ‘framing matters’ point of Manski’s argument is a valid one (and under-appreciated by most economists).

Andrew' August 19, 2013 at 11:52 am

Did framing matter in your dissertation? What matters even more than framing is which models you compare and which ones you leave out.

Claudia August 19, 2013 at 12:29 pm

Well as it turns out my dissertation focused on survey-based measures of preference parameters (mainly risk aversion). I am fairly certain that the framing of the survey question had a larger impact on my results than the many, many maximum-likelihood panel models I used to analyze the responses. And I certainly would not have wanted the word “dead” in any of the choices. We actually had to completely re-do the questions because at first it was a choice between a new and old job (potential status quo bias). I prefer that people make choices about taxes, benefits on unemotional logic and not get all riled up with colorful words.

Andrew' August 19, 2013 at 1:23 pm

I meant on you, personally.

You can fool some of the voters all of the time, but probably not someone who’s been staring at a problem for years.

Phill August 19, 2013 at 9:17 am

You say that as if personal property weren’t a social construct granted to you by the state…

Andrew' August 19, 2013 at 10:31 am

In fact I do.

QLW August 19, 2013 at 11:10 am

Yes, theft did not occur prior to the creation of the state…

Ricardo August 19, 2013 at 4:06 pm

You’re starting to get it, Phill!

j r August 19, 2013 at 10:19 am

Taxation is not theft. Your first clue should be that they are two different words.

Salem August 19, 2013 at 10:55 am

What a hilariously bad argument.

Pigs are not quadrupeds. Your first clue should be that they are two different words.

j r August 19, 2013 at 12:12 pm

Notice that I said first clue. There are more clues, but someone interested only in tautology will most likely miss them.

Andrew' August 19, 2013 at 11:48 am

Actually, that they are two different words used by government officials is my first clue that they are the same thing.

j r August 19, 2013 at 2:23 pm

You do understand what the words “the same thing mean?” If not, Google metaphor and work backwards from there.

Andrew' August 19, 2013 at 3:24 pm

Yes, as in “no domestic spying program” and “massive domestic spying program” mean EXACTLY the same thing under oath in Congressional testimony.

lxm August 19, 2013 at 12:25 pm

Andy,

You have alternatives: Move to Monaco. Find an island and make it your own country. Or best: move to Somalia! You could even move to Idaho and join a local militia! From most of those places you could still access the internet, at least some of the time!

If it’s theft and you stay here, then you must be getting something in return.

Best Wishes!

Andrew' August 19, 2013 at 1:24 pm

Except that you are trivially wrong.

lxm August 19, 2013 at 3:25 pm

Moving to Monaco is no trivial decision! You pay no income taxes; you live in a beautiful city filled with beautiful people and the French military protects you for free!

I suspect that one of us is trivially wrong, but it is not me.

Andrew' August 19, 2013 at 4:07 pm

My car was stolen and I didn’t move to Monaco. I stayed here but I wasn’t getting anything in return from the car thief.

mofo. August 19, 2013 at 3:27 pm

Ahh, reducto ad somalia, the last ditch argument of the outclassed statist. Well hey buddy, if you disagree with me you should move to North Korea!

Ben Fenster August 19, 2013 at 3:38 pm

But Somalia conforms to the libertarian ideal. North Korea defenitely does not conform to the mixed economy ideal!

Andrew' August 19, 2013 at 4:16 pm

Somalia was Communist followed by civil war.

Stop being stupid. I don’t mean that as advice not to anyone in particular.

Jacob A. Geller August 19, 2013 at 3:35 pm

Um. There is a democratic process behind taxation you know. Many voters would like to see Social Security, the police, Medicare, and national defense still be things. They are aware that these things have costs. They are aware that these costs come in the form of taxes… some are even aware of deadweight loss. And they think the things are worth the taxes. Not all voters think this, but certainly quite a lot do. I can’t see how taxation is the same as, say, a mugging. The word “theft” strikes me as rhetorical overreach.

Ricardo August 19, 2013 at 4:12 pm

The point is not that some voters want these things (which is certainly the case). The point is that even those voters who do *not* want these things are forced to participate. If 49% of voters say “I would prefer not to participate in that program,” and then you take the money from them anyway, then at least some proportion of that 49% is likely to call it theft. Of course, the word “theft” is inflammatory. But which is closer to the truth: “theft” or “voluntary”? It certainly is not voluntary!

lxm August 19, 2013 at 5:15 pm

Public services come at a price. And, yes, they are not voluntary. If you want to live where you do not pay that price, then move. Please! If you do not like the mix of public services you get, then participate in the political process and try to get it changed.

Taxes are the price you pay for public services. They may be excessive; they may be unfair; they may have unintended consequences, but they also pay for the roads, defense, education, and the invention of the internet among other things.

Grow up.

whatever August 19, 2013 at 11:31 pm

@lxm

Most of what the (federal) government does has nothing to do with infrastructure or services that people want to pay for. Most of it is redistribution: SS, Medicare, Medicaid, govt salaries, pensions, safety nets, etc. Paying taxes for these services is indeed theft. It is taking money from some people by force to give it to others. It is irrelevant who voted for what. People never pay more taxes than they owe. They pay taxes because they are forced to do so. When they vote to increase taxes, it is invariably the taxes paid by others.

*You* grow up. None of this is surprising. There is such a thing as human nature.

Ricardo August 20, 2013 at 2:42 pm

@lxm,

There’s no need to say “grow up.” We can exchange views without belittling each other.

The more general question here is: in what circumstances is it alright to compel people to do things that they do not wish to do?

The answer surely cannot be “whenever the majority wishes,” because that would open the door to slavery, etc.

Your answer seems to be along the lines of, “whenever it supports the common good.” But this is also problematic, because we don’t always agree on what constitutes the common good. (This is why Tyler mentioned Arrow in his post.)

So then the next move is to say: “I can’t really define the common good, but I know it when I see it.” To some people, that is a poor excuse for coercion.

Claude Emer August 19, 2013 at 11:07 pm

Re: Taxes are theft because I don’t want to pay them and I’m compelled to by force. Some interesting side conversation that’s nonetheless fun to engage in. A few thoughts:
1. You’re assuming your pay is yours but you don’t realize it’s because government was setup to make sure you get compensation for your work. So the only reason that money is yours is because government compels your employer to pay you something by force. There are plenty of governments that say the pay for your work belongs to government or plenty of employers who would like nothing more than not pay you. That’s why they teach history and geography in school, so you get some perspective.
2. Likewise, every right you claim is guarded by government by force, particularly rights you enjoy by your citizenship
3. The result of 1. and 2. is that every right you assume as a given is only given by the strength of government. Again, there are plenty of countries where citizens possess God-given rights on paper but said rights are not enforced by their governments. You can get an idea what it’s like to have “God-given” rights that are not enforced. Again, I refer you to History and Geography.
4. Government provides the service of keeping those rights, taxes are the cost of that come service.
5. Please, look up the words citizenship and civics. Being a citizen comes with rights and duties. People like to enjoy the rights and pretend the duties don’t exist. They’re both part of the deal, neither is optional. If you claim your rights, you ought to pay your duties and that’s what taxes are, duties.
6. Here’s another analogy: You hire a company to mow your lawn then refuse to pay the bill, they get a lawyer and sue you, you end up being ordered by the judge to pay up. Your logic, the judge committed theft by compelling you to pay when you didn’t want to.
Final note: Government is not a foreign entity that likes to come from wherever and claim your property. Government is YOU and your neighbors. To claim that government has no right on your money is to claim you have no right to your money.
You don’t like government, change government. There are rules for that. What there are no rules for is denying government its “rights”.
If people were more interested in respecting their obligations than in fighting freak sideshows of culture wars, they would elect people who think that the role of government officials is to govern, not fight freak sideshow fights.
Civics, that’s what’s for dinner.

whatever August 20, 2013 at 1:26 am

You can’t even imagine a business paying employees without a government? You think trade appeared *after* the establishment of governments? hiring someone is trading money for labor. No government necessary. (Although it helps.)

And like all other people on this thread commiting the same excluded middle fallacy and using the same strawman argument, you fail to realize that most of what the government does today is redistribute money, not provide a service that people would pay for if it weren’t non-excludable.

Sure, people won’t pay for public goods (say National Defense) because it’s non-excludable. This is the free-rider problem. OK, got it, we need a coercive entity, the government, to ensure that someone pays for National defense.

But that’s 20% of the budget. Infrastructure is 3%. Education is a wasted 2%. Research and Development is less than 1%.

SS is ~25%, Medicare/Medicaid/CHIp is ~25%, Social Safety Net is 15%, servicing the debt is 7% (twice infrastructure), fed pensions another 7%.

Stop lying. The government isn’t in the business of offering services that people would pay for. It is mostly in the business of stealing money from some to give to others.

Claude Emer August 20, 2013 at 4:16 am

1. Trade before government, read history. Most likely, you wouldn’t like what that’s like. You would need government real quick to enforce trade rules, hence the establishment of governments.

2. The real fallacy is “I don’t like that government is doing what I told it to do, therefore government is a thief.” Where’s the logic? That you are not aware of the benefits of your citizenship doesn’t automatically translate into government is a thief.

3. More importantly, that you are not aware that taxes are your duty and that rights do not come without duties is why government is the way it is. As I wrote before, everything you claim as yours is only yours because government says so and is making sure it stays that way. Why? Because you setup government to say that.

All you describe are policies you don’t agree with to make your claims. What you failed to see is you told government to enact those policies and you can tell government to stop them. All you have to do is convince your neighbors because they are government as much as you are. Judging by the quality of your arguments, good luck.

whatever August 20, 2013 at 11:44 am

I guess you didn’t read what I wrote. I acknowledged the necessity of government. What’s special about the policies I mentioned isn’t that I don’t like them, it is that they are purely [b]redistributive[/b]. Building a road or a bridge may be a very good investment that only the government can make (eminent domain; we can argue this particular point, but it’s irrelevant to what I was trying to explain), but 75% of what the government does is fundamentally different: it is just reshuffling money around, it is taking from some to give to others, it is, yes, theft.

You mention duties, great. But who decides what these duties are? If my neighbors gang up against me and steal my TV set, it is democratic, but it is still theft. When 60% of the population don’t pay any net fed taxes at all, and vote to increase the tax rate on the 40% that do, it is democratic, but it is still theft.

And no, things are not mine because the government said so. You are so enamored with the government that you can even for one second imagine a world where the government doesn’t rule every aspect of your life. There are places where there is (or was) no government and yet people trade and businesses exist.

People here have even mentioned Somalia as the example not to follow. And I don’t deny that Somalia is a sh*t hole. But Somalia is doing better under anarchy than it was doing under communism. In fact it does better than its peer. Where it doesn’t do better than its peer, it is doing better than it did before. But that’s not my point: there are 9 cell phone operators in Somalia, more than where I live; there are some airlines in Somalia; there are “banks”; etc. and all other businesses that we are used to, plus the ones we are not used to (brothels, security agencies, etc.). I don’t deny that the State helps, but no the State is not a necessity of life.

Does any of this have practical implications? Will we get rid of the government? I doubt it. But the fact is plain and simple: taxes are theft. People who deny it have an incentive in denying it: the are the beneficiaries of the theft.

Claude Emer August 20, 2013 at 2:21 pm

I read what you wrote. Nothing you wrote proves your point. Those redistributive policies are in place because you put them in place as is your prerogative. That’s how a democracy works. You enjoy your rights then deny your obligations. Government is only doing what you told it to do. I’m not enamored with government. I’m responding to people who have no clue as to what government is and what duties are.

If your neighbors gang up on you and it’s legal it’s not theft unless you change the laws to make it illegal, which is within your rights. 47% of the people don’t pay net fed taxes because the law says they don’t make enough money to pay fed taxes. You don’t like it, change the law. You have no proof who voted for what, just drivel. The people who pay no fed taxes include the working poor below the poverty line, senior citizens, wounded war veterans, big corporations who report no profit. You tell me they all vote the same way.

As for trade without government, you may not have understood my point. There are governments that enforce trade rules and government that don’t. You set this government up to enforce trade rules. You could decide you don’t want government to have that function. My guess is you wouldn’t like the results. Just because you can have trade without government doesn’t mean you would.

Again, the question is whether taxes are theft or not. Taxes are the duty paid for citizenship. You point to how tax money is used, which I’m going to assume means you have no issues with the fact that they are collected in the first place. Therefore, you don’t think they’re theft.

Your argument comes down to the fact that you don’t like how taxes are used.

whatever August 21, 2013 at 1:33 am

No, I don’t think you read what I write.

That taxes are theft is obvious: money is taken by force from people. That is theft. Of course, it is a particular kind of theft. But it is theft.

What I was responding to is the idea that it is somehow a good kind of thievery because the money stolen is used for services that people want. It is the infrastructure argument: the government builds a useful infrastructure that benefits everybody. The problem with this argument is that most of the money isn’t used for services that benefit all, but rather it is simply redistributed, i.e. taken from some and given to others. This has nothing to do with whether I like SS or Medicare.

Your mention of the 47% shows that you don’t read what I write. I don’t care what Romney believes. My point was that WHEN (i.e. “if”) 60% of the population don’t pay a price for an action and yet benefit from it, why wouldn’t they vote for it? And yet, it is still theft. If 51% of the population vote to enslave 49%, that may make slavery legal, but it is still slavery.

You don’t seem to agree with the preceding. You seem to think that since what the government does is legal, then it can’t possibly be theft, or slavery, etc. This is probably the heart of the disagreement, not just between you and me, but with others in this thread. You also seem to deny that there is a difference between the individual and the collective. No, I didn’t ask the government to do whatever it does, and no I can’t change the laws. Sorry. Again, if 51% decide to steal my wealth, there is exactly nothing I can do. Voting will get me exactly nothing.

The “duties” argument is nonsense. I have agreed already that citizens should pay taxes for public goods, e.g. National Defense. Taxes that fund National Defense are still theft, but I can see that there is some kind of justification (namely, the free rider problem). My entire point was that even if that justification were valid (it may or may not be), the great bulk of tax revenues is NOT used that way. In other words, I could be convinced that it is my duty as a citizen to pay for National Defense, I can’t be convinced that it is my duty to pay for whatever the majority decides I should pay for. You seem to think that if the majority agrees, any abhorrent decision is all right, and I have a duty to comply.

That was fun. Good bye.

Claude Emer August 21, 2013 at 10:17 am

Ah, your argument has evolved. Now it’s theft because it’s taken by force. Read my first post to which you were responding in the first place. Hopefully, you read this one even though you seem to have decided the debate is over.

I wrote 47% to correct you. It has nothing to do with Romney but with government statistics. Even though you’re introducing the force argument you’re still stuck on what government does with the money it collects. Here’s what you missed. National Defense isn’t the only thing government does that guarantees your rights. The entire judicial system, the existence of laws to enforce. Those are not quantifiable but are government benefits. The fact that you have a system that allows you to change laws. That’s not quantifiable. The list goes on.

To you, the duties argument is nonsense because it has to be so you can make your claim. Well, if you learn nothing more, learn that taxes are the duties of citizenship. You have rights and you have obligations. If you claim your rights, fulfill your obligations.

I was waiting for you to claim you have no responsibility towards government and no responsibility for government. You finally got there, although weakly with your collective vs. individual argument. When you come up with the political system that implements each individual’s policy preference, I’ll be the first to help you setup that system. Until then, individuals make up the collective and the collective shapes government.

Finally, I repeat that you have no idea how people vote. It’s not exactly a secret that a lot of people vote against their interests, and for reasons that have nothing to do with economics.

whatever August 21, 2013 at 12:36 pm

@Claude Elmer

Oops, I responded to your message below instead of here. Sorry about that. See my message below.

Claude Emer August 20, 2013 at 4:52 am

I don’t see my reply below so I’ll simplify even further:

1. Government is a thief because it takes my money without my consent: your citizenship and legal residency is your consent.

2. Government is a thief because it spends money on things I don’t like: first, spending money doesn’t make one a thief, but I’ll play along. Government spends money on what you tell it to spend money. You can’t have it both ways.

In a democracy you get the government you deserve.

whatever August 21, 2013 at 12:34 pm

OK, I’ll play a little longer. It’s not that I don’t want to, but this thread is getting old, and there are other newer posts that are interesting too.

My argument hasn’t changed. It was the main topic of most of the thread, and it was the topic of this particular sub-thread. You even introduced your first message with “Re: Taxes are theft because I don’t want to pay them and I’m compelled to by force.”

This was always the argument. What I responded to was the specific idea that taxes fund the preservation of rights. See for example #4 in your original message. I think this argument is misleading or disingenuous. Most of the budget isn’t spent on preserving my rights. Maybe a few % are used that way, even including the judicial system and the police (FBI, etc.; we are talking about the Federal government). I can see that someone could feel that these services justify the theft, but I think justifying redistribution is a lot harder.

If I take your money by force and give you a widget in return, one you didn’t ask for, it is theft. You argue here that it is not theft because you have some duty to accept the exchange. I could argue that if the widget was so valuable to you, I wouldn’t need to take the money by force, you would voluntarily buy the widget from me. This is why it is theft. Others have pointed this out. What I wanted to add is that the government doesn’t even do that. It takes your money, but gives the widgets to others.

The reason I think this distinction (redistribution) is important is because I actually agree with you that taxes are necessary. Except I think they are necessary for true public goods, i.e. goods that are non-excludable and non-rivalrous. National Defense is the archetype of such goods. If I can’t be excluded from that protection, why on earth would I voluntarily pay for it? I wouldn’t and nobody else would (free-rider problem) and therefore the service wouldn’t exist. This is why we need to force people to pay for National Defense. This logic may or may not be valid, but it does not apply to what most of the government does, was my point.

The 47% thing, if you are interested, I’d like to point you to this paper:
http://taxfoundation.org/sites/taxfoundation.org/files/docs/wp1.pdf
Both taxes paid and services received are considered. Public Goods are considered too, etc. Pretty good starting point, I think. The bottom line is that the bottom three quintiles (and maybe even part of the fourth quintile) receive more in benefits than they pay in taxes. (I forgot if it’s in the paper, but it is also a trend over time, more and more benefits are paid to the 2nd, 3rd, and 4th quintile, while the 5th is paying more and more of the taxes; the bottom quintile stays flat, the poor never win.)

Oh, I know how people vote. The benefit of voting, at the individual level, is null. The cost of voting properly (doing the research, etc.) is extremely high. So voting is mostly expressive (rational ignorance). This doesn’t change anything to what I wrote. Even if you vote to increase taxes that you yourself pay, the point of voting is to also force me to pay taxes. Otherwise you could just voluntarily pay more taxes. But that’s not what people want, they want others to pay more taxes as well. This is what makes taxes theft, it is the coercion. The coercion is what makes the government, otherwise it would be just another corporation offering a service, and the government is funded by taxes.

Most of your other arguments seem to be “what we have is the best I can think of, therefore it is good enough.” That you believed that the government had to compel employers to pay employees says a lot about how you think the system works. Employers and employees enter voluntary transactions. If the employer doesn’t pay, the employees leave and the employer goes bankrupt. By the way, same thing with your loan example in your original message. If I borrow money I accept the terms and yes I have certain duties regarding the repayment. Taxes are different in that I did not agree to the terms. And the terms are changed all the time, again without my agreement. In short: taxes are theft. :-)

Lee A. Arnold August 20, 2013 at 10:50 pm

Andrew: “the intent to deprive the rightful owner of it.”

No, that is not the intent.

Brian Donohue August 19, 2013 at 8:32 am

Framing, marketing; taxes, ‘cost of social benefits’- what is in a name?

If you’re in the business of selling government, you sell government.

I think it’s creepy that so many people go to so much trouble to sell me government, especially because too much government is bad for my health.

TGGP August 19, 2013 at 9:03 am

A tax might have no social benefits at all (say, a tax rather than subsidy on a public good). Or a public good could be paid for by two different taxes with different deadweight losses. “Deadweight loss” is a useful concept because it indicates both sides are losing out and a Pareto improvement might be possible.

I don’t think most lay persons are even familiar with the term “deadweight loss”. They don’t like taxes because they don’t like handing over more money. That’s also why they dislike “inflation”, implicitly holding their own income constant while they prices they pay go up.

Chris S August 19, 2013 at 9:57 am

But imagine how much more scary taxes are when we say they have DEAD right in there with them. Almost as bad as Obamacare death panels – who wants those? Now the DEATH penalty, that’s satisfying, because you deserve it.

TGGP August 19, 2013 at 7:18 pm

I favor death panels. It’s best to ration by price, but rationing at any rate is inevitable.

Tracy W August 19, 2013 at 1:13 pm

“Dead” does capture the important point that it’s a loss to everyone – some value is destroyed not just transferred.

Silas Barta August 19, 2013 at 6:22 pm

“Deadweight loss” is also used in *anti*-market-connotative models too, such as “DWL of a monopoly”. (When I looked this up several years ago, the chart on the wikipedia page was phrased as something like “DWL of a tax or monopoly”.)

ThomasH August 19, 2013 at 8:12 am

Comparing the dead-weight loss of income taxation (or ideally of consumption taxes) to other ways of financing government services — payroll taxes, sales taxes, corporate income tax — is a very useful way to address tax reform.

nemu August 19, 2013 at 12:52 pm

Sure. But comparing it to lump sum taxes in a GE is not.

Turpentine August 19, 2013 at 8:38 am

Funny, I actually agree with Manski on this one. Words have an important framing effect, at least in the general population. The public discourse would be better served if we were to stick to neutral more neutral terms.

Cliff August 19, 2013 at 11:43 am

In other words, descriptive terms should be replaced by euphemisms. Because if there’s anything lacking in life, it’s euphemisms

Michael August 19, 2013 at 11:47 am

Manski’s objective is not to move to “neutral terms”, his goal is to move entirely to terms that justify his pre-existing biases.

Deadweight loss is an adequate description of a real thing. Manski is the one trying to pervert the language.

Fwiw August 19, 2013 at 3:45 pm

Deadweight loss is an inadequate description of a theoretical thing.

Just saying it’s a mistake to think of the supply and demand curves as “real things”, as they’re only only (inadequate) mathematical representations of much more complex real-world phenomena. Maybe that’s pedantic, but economists have a tendency to get over-invested in models and I think that should be avoided.

Andrew' August 19, 2013 at 12:19 pm

Again, while just accepting words like “Welfare economics”?

And he’s not just talking about framing and renaming (surely absolutely neutrally!) , further down he’s talking about not using the concepts at all.

Dismalist August 19, 2013 at 9:03 am

Ministry of Love.

J Storrs Hall August 19, 2013 at 9:27 am

Would that be Tyrone Cower, star of such classics as “The Mark of Zero,” “Prince of Fixes,” “The Sum also Rises,” and “Witness for the Persecution”?

JohnC August 19, 2013 at 10:16 am

See also Pinker’s The Stuff of Thought (discussing George Lakoff’s notion that “frames trump facts,” driving public opinion this way or that) and The Blank Slate (discussing the “euphemism treadmill,” i.e.,when we invent new words for emotionally charged referents, the new euphemism eventually becomes tainted by association, so a new word must be found (Rinse. Repeat.)).

KevinH August 19, 2013 at 10:17 am

I think the article is off base, but I think I see the roots of the problem that he is trying to discuss.

First is just how jargon plays in lay-hands. ‘Deadweight loss’ doesn’t really accurately describe the phenomenon. I can’t come up with anything better, but a key concept (as I understand it, correct me if I’m wrong) is that we are comparing the tax practice to an optimal lump sum transfer, at the same overall tax level. To the lay person ‘deadweight loss’ doesn’t bring this important counter-factual to the front.

The second issue I think is with the science side, and we certainly have this problem in psychology and medicine as well. I think for all three we are squarely in Khun’s ‘fact accumulation’ stage. We know lots of little bits about how people think, how their genes and behavior effect health, and how a large economy works. However, we don’t really have a single successful overarching theory that puts all those facts together. Econ is at least at the stage where they are trying to put those models into a workable form, but they still have a long way to go. That means that we never really have a gold standard counter-factual to test theories/analyses against. Actually the thing that comes to mind is Emily Oster’s piece of pregnancy. She talked about how one of the best studies to find a link between binge drinking an alcohol also had a high level of cocaine use in the binge drinkers. What the doctors didn’t have is some well-established model that says ‘cocaine will cause x problems’. Likewise, all we seem to have in economics is abstract mathematical proofs of optimal situations. That is a very poor gold-standard to discuss messy real-world policy implications. Until we have models that say how the world actually works as well as how it could in theory work, these sort of biased analyses will be easy to generate.

Cliff August 19, 2013 at 11:45 am

Aren’t we just measuring the lost revenue that does not go to the government (or anyone)? In other words, the loss that results in no corresponding benefit, i.e. is deadweight?

JasonL August 19, 2013 at 10:58 am

Why are we acting as though mothers all across America are sitting around the table fretting over deadweight loss? If only. To the extent this is a thing, it is a thing among people who know what the word means and is clearly not some kind of brain washing the hoi polloi scheme from the kochtopus or whatever.

Andrew' August 19, 2013 at 12:16 pm

What, you haven’t seen the full sections of books at the bookstore touting the newest deadweight loss diets?

But seriously, it’s a bad example on his part. I am the people his parents warned him about and I’ve never thought anything about deadweight loss other than it is one of those semi-confusing economics terms like “moral hazard” that demand deeper reading.

Yancey Ward August 19, 2013 at 11:02 am

I propose that we call taxes puppies.

mark August 19, 2013 at 11:51 am

Can we also remove the words “progressive” and “fairness” from taxation discussion, as long as we are trying to make discourse as accurate and non-leading as possible?

Michael August 19, 2013 at 11:57 am

Only if we can call food stamps herpes.

NPW August 19, 2013 at 12:05 pm

The proper cuddly term is woof or woofies according to my daughter.

Brian Donohue August 19, 2013 at 12:08 pm

+1.

sam August 19, 2013 at 11:13 am

Both the inefficiency of taxes and the fact that utility functions are convex are important ideas. But is it really that surprising that some bad economists focus exclusively on the former while other bad ones exclusively on the latter.

tt August 19, 2013 at 12:20 pm

i think you doth protest too much

steve August 19, 2013 at 12:35 pm

When I was robbed, they took my wallet and I got nothing in return.

When I pay taxes, I get police (got my wallet back), roads, national defense, basic research, etc.

They are exactly alike, so I can see why people interchangeably use the two words.

Steve

Andrew August 19, 2013 at 1:28 pm

What did I just say? Something about actual public goods and negative externalities?

Now, I don’t expect anyone to walk with me down the anarcho-capitalist theory on those things, but please feel free to accept your own mainstream conceptions!

Andrew' August 19, 2013 at 1:48 pm

Oh, and did you really get your wallet back? I find that statistically unlikely or astronomically lucky.

Aside from the reality versus notional gap, lots of people get little from cops except harassment and the drug war. Roads are okay, although they kill lots of people. National defense is now spying on us while we saber-rattle abroad, basic research is probably far too basic, etc. I’m glad you think you get utility from these things, I think I get a lot less.

TMC August 19, 2013 at 1:49 pm

Transaction #3 – When you got your wallet back you bought a hamburger.

Transaction #1 – Involuntary.

Transaction #2 – Involuntary.

Transaction #3 – Voluntary!

Turkey Vulture August 19, 2013 at 12:59 pm

Taxes are not theft, and can never be theft. Even if a 100% wealth and income tax were involuntarily levied against you by the majority, and taken by the government, it would not be theft. Because.

Just like slavery. If the majority votes to make you a slave, and the government enforces it, you’re not actually a slave, and it isn’t actually slavery. Because.

Rich C August 19, 2013 at 1:01 pm

It’s all about changing the narrative.

You don’t like the story that is being told? Use your power and influence to change it into something else. Various power groups have been doing it forever.

Emil August 19, 2013 at 1:17 pm

Nothing new or strange here. it’s newspeak, a specialty of the leftist statists

Fwiw August 19, 2013 at 3:47 pm

you do understand the irony of using words like “newspeak”, “leftist”, and “statists” in a critique of cliches?

Emil August 19, 2013 at 5:56 pm

No

JB August 19, 2013 at 1:28 pm

It seems like the fundamental problem with taxes and discussions about taxes is still misaligned incentives of individual actors (especially lawmakers). This may be painful to watch given that it was 1978 and very little has changed:
http://www.youtube.com/watch?v=TruCIPy79w8

Baphomet August 19, 2013 at 3:24 pm

It is not clear to me why “deadweight loss” should be taken to be an anti-taxation term, as it may just as well be seen as referring to the potential tax revenue lost because of individuals adjusting their decisions in response to the tax.

Moshe Syrquin August 19, 2013 at 5:24 pm

From the Journal of Economic Perspectives, Winter 1993 (B. Saffran, Recommendations…, p. 198):
“The Henny Youngman Award for this issue goes to Senator Robert Dole:
“[T]he definition of deadweight economic loss is a busload of supply-side economists going over a cliff with one seat empty,” quoted in “Some Other Reasons Why Treasury Cannot Index Gains,” by Lee A. Sheppard in Tax Notes, September 7, 1992, 1249–56.”

Ann Onymous August 19, 2013 at 6:15 pm

Here is a better idea: don’t talk about taxes at all. Just focus on spending and all the wonderful things it can achieve. Kinda like Gruber’s comic book on Obamacare. That should set the mood straight.

Tilman Borgers August 19, 2013 at 9:48 pm

Manski’s call for more clarity in research about the welfare consequences of taxation seems to me very reasonable. The discussions on this notice board suggest that many contributors think that social welfare is measured additively, as “social benefit – social cost,” and that cost are appropriately measured as “deadweight loss.” From other areas of economic theory we know that additive functional forms are quite restrictive. Is there any justification in the theory of social welfare for this particular functional form? And why is “deadweight loss” a good measure of social cost? If, as Tyler suggests, Arrow’s preference aggregation theorem is not that important, are there other theorems in welfare economics that are more important, and that support this view of social welfare? What are those theorems?

mulp August 20, 2013 at 1:42 am

So, with Texas converting paved 60+ MPH highway to gravel 30MPH roads, Texans are shedding the deadweight cost of taxes and the Texas economy is becoming more efficient?

While Texas roads are being torn up by oil industry trucks, the price of oil is a 8-10 times higher than when the gas tax was last hiked in Texas, given oil price is a significant contributor to road cost.

Tyler Fan August 20, 2013 at 1:23 pm

I prefer Tyler to Tyrone. Don’t get me wrong, Tyrone is amusing. And there are policy ideas floating around out there whose perniciousness calls for a Tyrone. But I prefer the infinitely charitable Renaissance man that is Tyler. And the thought of ever falling into Tyrone’s crosshairs surely chills the blogosphere.

Floccina August 23, 2013 at 10:27 am

What got me in the article was the talk about infrastructure. Yes infrastructure can be a good investment but only about 6% of the federal budget goes for infrastructure.

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