By now it is a theological dogma among Republicans that cutting marginal tax rates for the wealthy will incrase revenue. But if that’s the case, why does the Republican budget make any budget cuts at all? Why not just keep cutting marginal rates and using the extra revenue to pay for Medicare and Medicaid? If you don’t get enough revenue to make up the gaps, then cut again!
Either Paul Ryan believes in the Laffer theology, in which case his plan is incoherent. Or he doesn’t believe in the Laffer theology, in which case he’s a sadist. Your mileage may vary.
(Zasloff): “By now it is a theological dogma among Republicans that cutting marginal tax rates for the wealthy will incrase revenue.”
Charles Schultz, a Kennedy-Johnson member of the President’s Council of Economic Advisors, called the Laffer curve a straightforeward consequence of standard economic analysis.
(Zasloff): “But if that’s the case, why does the Republican budget make any budget cuts at all? Why not just keep cutting marginal rates and using the extra revenue to pay for Medicare and Medicaid?”
Google “deadweight costs due to taxation. The government of a locality is the largest dealer in interpersonal violence in that locality (definition, after Weber). The State (government, generally) cannot pay for a good or service without a definition of that good or service. Aggregation of resources and decision-making authority into the hands of the goons with the guns adds nothing to the health care industry. The “public goods” argument for State provision of charity fails; oversight of corporate functions is a public good. The State itself is a corporation. Therefore, oversight of State functions is a public good which the State itself cannot provide. State assumption of responsibility for the provision of the public good of charitable medical care transforms the “free rider” problem at the root of public goods analysis but does not solve it. Further, “What works?” is an empirical question which only an experiment, a competitive market in goods and services, can answer. A State-monopoly provider of medical care will stifle innovation.
(Zasloff): “Either Paul Ryan believes in the Laffer theology, in which case his plan is incoherent. Or he doesn’t believe in the Laffer theology, in which case he’s a sadist.”
Or Jonathan Zasloff is unfamiliar with standard economic analysis and responds with anger born of frustration to what he doesn’t understand. I get the same feeling trying to read Number Theory. In __The Road to Wigan Pier__, George Orwell speculated that socialism expresses a hypertrophied sense of order, like compulsive handwashing or rearranging the socks in the underwear drawer ten times a day. Elsewhere (e.g., “Raffles and Mrs. Blandish”, “Inside the Whale”), he suggests that a preference for authoritarian politics expresses vicarious sadism. In __Socialism__, Von Mises suggests that socialism expresses a primitive revenge fantasy.
Malcolm, as per usual your post is incoherent and ventures into tl;dr territory. Still, just taking one key point: you apparently agree with the person you cite to the effect that “the Laffer curve [is] a straightforeward consequence of standard economic analysis”.
Um, no, not in any useful way.
The Laffer Curve starts with a truism: at 0% taxation, tax revenue will be zero; and at 100% taxation there’s no incentive for economic activity, hence no tax revenue. In the middle there is some tax revenue. The line between these two points must be curved, and there will be tax rates sufficiently punitive that lowering taxes increases the size of the economy sufficiently to actually increase revenue. All of that is, so far as I know, not disputed by anyone.
The part where this falls apart, where I and people far more knowledgeable than I dispute the usefulness of the Laffer Curve, is figuring out the shape of that curve: where are we on the curve? The experiment has been done: in the case of the American economy, lowering tax rates lowers revenue. This suggests that the shape of the curve is such that its inflection point comes at a significantly higher point than any recent level of taxes in the US. Economists who have studied the curve estimate that its inflection point may be on the order of 70% - twice the highest top marginal rate currently used in the US (and that would be assuming it’s the top marginal rate that’s relevant, as opposed to overall per-GDP taxation, and that is decidedly not a good assumption).
So, this comment was long (especially hard to justify given that the length of your comments was one of my complaints), but the short version is: (1) The Laffer Curve Exists; (2) It isn’t relevant to budget policy in the US, because it kicks in at levels vastly in excess of those we see; and (3) Republicans are routinely either massively ignorant or flat-out lying on the subject.
I think the simplistic premise is the first order problem.
To think there is a simple continuous function Laffer(X) where X is a tax rate between 0 an 1, and all we have to do it pick the correct value for X that gives the maximum.
To take first year Real Analysis and call it economics is truly silly.
Malcolm,
1. Warren Terra and MobiusKlein skewered you on Laffer; they don’t need my help.
2. I don’t understand a word of this.
3. Orwell considered himself a socialist, fwiw. A Tory socialism, no doubt. But a socialist. Context is important.
Warren Terra, you say 70 per cent is 2x the top marginal tax rate in USA. This is true only if you ignore state and social security taxes. Someone who is self-employed and lives in Hawaii or Oregon will bay 35% Federal, 11 % state, and 12% social security taxes. 58% is less than 70 %, but it’s way over half of 70%.
People who are not self-employed pay the 12% also. It’s just not as apparent.
Why would anybody believe that revenue is solely, or primarily, a function of the highest marginal tax rate? That’s a ridiculous idea. There are all kinds of other variables that affect revenue, including rates at lower income levels, GDP, unemployment, who knows what else. Have Lafferites ever heard of a function with more than one independent variable? I guess not.
Besides, what is the highest marginal rate? For lots of wealthy taxpayers it’s only 15% - the tax on dividends and capital gains (and on hedge fund managers as well).
Whoever thinks the Laffer Curve says anything useful about the top marginal personal income tax rate — one rate among many rates, on one tax among many taxes — has to answer some questions.
What the hell are the labels on the axes of THE Laffer Curve? Is the vertical axis “government revenue”, or “government revenue as a fraction of GDP”, or what? And how about the horizontal axis? Sure, it runs from 0 to 1, or 0% to 100%, but percent of WHAT?
Anybody with an 8th-grade education can construct a tax table that 1)collects 10% of GDP in total taxes, and 2)features a 90% top marginal rate. (Unusually dull 8th-graders might need a hint: brackets matter, not just rates.) I invite Lafferites to tell me where they plot THAT point on Laffer’s napkin.
-TP
Dave,
You raise an important qualifier with the state taxes - although (1) I did point out that the top tax bracket was not actually likely to be the relevant number; I only mentioned it because I liked the coincidence; and (2) the point about that number being half the approximate theoretical inflection point was that the inflection point was a long way away; with your corrections it may be more than half, but it is still quite long enough as to render the Laffer Curve in effect irrelevant.
You (and Charles) are however wrong to invoke payroll taxes: payroll taxes are regressive, and the preponderance are capped to affect only the first ~$100k of income ($106.8k in 2010, Wikipedia informs me). The tax bracket for the last part (the top $25k) of that first $107k is 28%, so there would in effect be a tax rate of ~40% from ~$82k to ~$107k, then down to 28% again from ~$107k to ~$170k.
Payroll tax is also problematic to include because that 12% is half from the employee, half from the employer - in effect, the employee is being paid about 6% more than they ever realized (at least for the first $106k), every penny of which difference goes to payroll taxes (as Charles points out, the self-employed usually do realize this, as it’s often brought home to them rather painfully). Because “income tax” as distinct from “payroll tax” is not assessed on this 106% figure, some correction must be made when the two are combined, in terms of figuring out what proportion of the money dedicated to salary instead winds up as taxes.
And, of course, part of the payroll tax is not capped - it’s only 1.6%, though.
Still, your points are well taken; although miles below the theoretical Laffer Curve Inflection Point, in many states the effective top marginal rate is more than half of it, at least for simple income. The “35 is half of 70″ coincidence just seemed to good to pass up.
Dave Schutz:
1) FICA (SS taxes) are imposed only on the first $106,800 of labor income, and the rate for someone who is self-employed is about 12.5%.
2) Marginal income tax rates apply to gross adjusted income, i.e., after deductions. For simplicity, let’s imagine someone who takes only the standard deduction, is unmarried has no dependents, and has only labor income (no investments, no interest, no dividends, no capital gains). Based on this tax table (hope it formats cleanly):
Single:
If Income is
Over But Not Over The Tax Is Plus of the Amount Over
$0 $8,375 $0 10% $0
$8,375 $34,000 $837.50 15% $8,375
$34,000 $82,400 $4,681.25 25% $34,000
$82,400 $171,850 $16,781.25 28% $82,400
$171,850 $373,650 $41,827.25 33% $171,850
$373,650 And Over $108,421.25 35% $373,650
I’m not sure about the standard deduction, but from this page, I think it is $5700.
So, someone earning $14,075 (8375+5700) will pay 12.4%*$14,075 + 10%*$8735 = $2,583. This is an 18% Federal tax rate for someone at the top of the lowest bracket. Someone at the top of the 2nd lowest bracket would pay $9,604 dollars to the Feds on $39,700 of GIA (don’t forget to subtract the deduction after calculating the FICA 12.4% but before the calculation of the income tax). Someone at the top of the 3rd bracket has labor income of $88,100 and taxes of $27,706, for an average rate of 31%. The increases pretty much flatten out at this point, so someone at the top of the next bracket (income of $177,550, total federal taxes of $55,070 remember that FICA tops out at $13,243) is also paying 31%, someone at the top of the 2nd highest bracket (income of $379,350, fed taxes of $121,664) is paying 32%, and someone in the highest bracket and making $500K of labor income is paying $165,887 to the feds, or 33% of income.
Let’s imagine (I have no idea, since I live almost as far away as possible for someone in the U.S., my state has no tax on labor income, and I can’t be bothered to explore) that HI’s taxes are not graduated, but are a flat 11% on all income. Then the tax rates become:
Share of income going to taxes:
Fed Fed+HI
18% 24%
24% 33%
31% 41%
31% 41%
32% 43%
33% 44%
44% is also over half of 70%, but it is considerably closer to “half of 70%” then it is to %58! Once you throw in itemized deductions, non-labor income etc., etc., that 44% is going to be considerably lower.
I am not absolutely certain of my calculations, not being an accountant, a tax attorney
or a tax preparer, but I am numerate, and feel reasonably confident of them (I may have misunderstood this year’s value of the std. deduction, in which case, my percentages should be a tad lower).
Apologies for the length of this comment, but if we are going to be making assertions about taxes, we should work out the examples to be sure that the assertions are not entirely silly.
Remember, marginal tax rates are not identical to the fraction of your income that you pay in taxes!
Warren Terra while I was composing my magnum opus. Ah well. Anyway, that table sure did not format cleanly, so I’ll try again.
Single:
If Income is
Over But Not Over The Tax Is Plus of the Amount Over
$0 $8,375 $0 10% $0
$8,375 $34,000 $837.50 15% $8,375
$34,000 $82,400 $4,681.25 25% $34,000
$82,400 $171,850 $16,781.25 28% $82,400
$171,850 $373,650 $41,827.25 33% $171,850
$373,650 And Over $108,421.25 35% $373,650
[James Wimberley: taking pity on Marcel, and as I have access to more formatting commands than mere commenters, here's his nice table formatted:]
Single
$0
$8,375
$0.00
10%
$0
$34,000
$837.50
15%
$8,375
$34,000
$82,400
$4,681.25
25%
$34,000
$82,400
$171,850
$16,781.25
28%
$82,400
$171,850
$373,650
$41,827.25
33%
$171,850
$373,650 And Over
$108,421.25
35%
$373,650
Aargh.
Warren Terra POSTED while I was composing my magnum opus.
(Klein): “I think the simplistic premise is the first order problem.”
“Simplistic” is academicese for “stupid”. Same to you, buddy.
(Klein): “To think there is a simple continuous function Laffer(X) where X is a tax rate between 0 an 1, and all we have to do it pick the correct value for X that gives the maximum.”
This is an incomplete sentence, but I think I get the drift. No one says that the distribution of taxes makes no difference. Milton Friedman once said, however, that within broad limits the total tax burden was more important than the source of taxes. Tax revenues/GDP = the fraction of traded goods and services that move at the command of the goons with the guns.
I read the Brookings publication Vouchers and the Provision of Public Services which claimed that some analyses argued the welfare-economic case for anti-progressive (decreasing marginal rate) income taxes. It did not go into details. I read somewhere that some Swiss Cantons have tax ceilings such that nobody pays more than $X. Hayek explained the argument in The Constitution of Liberty. For another day.
(Klein): “To take first year Real Analysis and call it economics is truly silly.”
You calling <a href="http://www.brookings.edu/experts/schultzec.aspx"Charles Schultze “simplistic” and “silly”? Find a vaccine for cancer or prove Goldbach’s conjecture and I’ll grant your authority.
(Warren): “…there will be tax rates sufficiently punitive that lowering taxes increases the size of the economy sufficiently to actually increase revenue. All of that is, so far as I know, not disputed by anyone.”
Progress. You won’t dispute the basic Laffer idea.
(Warren): “…where I and people far more knowledgeable than I dispute the usefulness of the Laffer Curve, is figuring out the shape of that curve: where are we on the curve? The experiment has been done: in the case of the American economy, lowering tax rates lowers revenue. ”
I suspect you have to consider the immediate effect and the longer term effect. That requires assumptions about the alternative universes in which rates were something other. Empirically, we have only inter-regional comparisons and inter-temporal comparisons. We disagree about the results of “the experiment”.
You addressed my points. So why say “incoherent”? Seems to me you comprehend okay.
One final point: I don’t know anyone who accepts the relevance of the Laffer curve who also holds maximizing current revenues to the government as a goal. Some Libertarian candidate for President suggested this etymology for “politics”: “poly”, from the Greek for “many” and “ticks”, which are blood-sucking insects.
And the table is still unreadable. Well, it is the table for singles here. Apologies for the several consecutive posts.
Malcolm, I didn’t “address you points”. I responded to the first line you wrote, of about a dozen. It was the part I could understand.
As to your comments:
Why build all those strawmen? Don’t you know there are livestock that could be eating the straw? The whole point of my comment was that the Laffer Curve was Obvious But Moot. No-one disputes the existence of a curve; the problem for your argument is that few serious economists dispute the fact that the shape of the curve renders it irrelevant to our current taxation situation; the Laffer Curve only becomes interesting at rates that are nowhere near our tax rates.
The whole point of my first comment, which seems to have utterly passed you by, is that the curve is only a useful justification for cutting taxes if we are at a rate higher than that at the inflection point. Or, at least, if we’re at a point near to that inflection point, such that the slope of the curve is near zero and so tax cuts will be nearly revenue-neutral. That inflection point is, of course, the point at which revenue is maximized. Given that we’re nowhere near that point, the Laffer Curve cannot be used to claim that cutting taxes will be helpful or even minimally harmful to tax revenue.
As to short-term versus long-term, responding to a complaint that the desired effect has not materialized by asking for more time, and then again for yet more time, is rarely especially convincing. And I really don’t think you want to get into a debate about whether high taxes are good for either short-term or long-term economic growth on the basis of inter-regional comparisons in the US. About the only low-tax parts of the US that have ever had decent economic growth are examples of resource booms (Alaska, Texas) or flukes (Virginia being next to DC). Otherwise, you’re left with places like Arkansas, Mississippi, and Montana. All have much to recommend them, I’m sure, but not a stellar economic record.
That’s nice. Except that, y’know, you don’t get to do that. You can argue about whether the experiment was properly designed, or say that it lacked an appropriate control, or whatever. You might even be able to do so convincingly; because we don’t have parallel universes to examine, the controls are indeed problematic. But we did lower taxes, and revenue did fall.
(Warren): “But we did lower taxes, and revenue did fall.”
And we raised them and the growth rate fell (meaning later tax receipts fell, relative to the alternate universe in which thay had been unchanged).
First year Real Analysis is really, really cool stuff. I’m not putting it down.
I learned some awesome stuff in that class. Crucial.
But turning the Laffer curve thought experiment into a real model is simplistic. No other word.
As in oversimplifying an immense amount, which turns it into a non-viable model.
But the secondary problem, beyond the simplistic model is this:
Even granting a simple Laffer(rate) function maxima, and assuming it’s a unique maximum,
why must the government actually set the tax rate to that value?
I can come up with valid rationals to set the tax rate above or below the maximum. Govt does not exist to maximize it’s revenue, but to provide for the welfare, freedom, and security of it’s citizens. Revenue is just the means of paying for said products of government.
Small Govt conservatives believe that the duty of government is small, so no need to tax more than that value, no matter the optimum.
(Warren): “…where I and people far more knowledgeable than I dispute the usefulness of the Laffer Curve, is figuring out the shape of that curve: where are we on the curve? The experiment has been done: in the case of the American economy, lowering tax rates lowers revenue.”
(Malcolm): “…Empirically, we have only inter-regional comparisons and inter-temporal comparisons. We disagree about the results of ‘the experiment’“.
(Warren): “That’s nice. Except that, y’know, you don’t get to do that. You can argue about whether the experiment was properly designed, or say that it lacked an appropriate control, or whatever. You might even be able to do so convincingly; because we don’t have parallel universes to examine, the controls are indeed problematic. But we did lower taxes, and revenue did fall.”
Do I get to google “Laffer Curve”? Here: “
What all this means is that cutting the top tax rate in half has resulted in much more income being reported and taxed in every country that tried it — the United States, United Kingdom, New Zealand and India, for example. Some mistakenly imagined that proved the rich suddenly became richer when U.S. tax rates fell from 1986 to 1988. What it actually proved was that the rich reported more taxable income when tax rates on an extra dollar became more reasonable. These facts are not seriously in dispute regardless what portion of this widely observed “Laffer Curve” phenomenon was due to a change in actual income (a supply-side effect) or to a change in the proportion reported to tax collectors.
In other words, supply-side economists were right all along. Their critics were wrong. Several Nobel Laureates in economics have now said as much. Get over it.“
(Moebius): “…turning the Laffer curve thought experiment into a real model is simplistic. No other word.
As in oversimplifying an immense amount, which turns it into a non-viable model.”
Simplicity is a virtue. “Oversimplifying” is a judgment call, as is “non-viable”. If your complications add nothing, the simple model is better.
For the rest, we agree. I suggest that the burden of proof falls on the advocates for violence (i.e., government).
And simplistic does not mean stupid, just not considering all the realities of the world.
“Simplicity is a virtue” is a slogan, not analysis.
(Mobius): ““Simplicity is a virtue” is a slogan, not analysis.”
(Albert Einstein): “Any intelligent fool can make things bigger and more complex… It takes a touch of genius - and a lot of courage to move in the opposite direction.“
Macolm,
html can be your friend, if you learn to format links properly and to close tags.
The passage you quote, by its own admission, does not demonstrate that more income materialized - not that an increase in income between 1968 and 1988 would be especially surprising. That economies grow, and that all things being equal (not that they ever are) they grow faster when taxed less, aren’t up for debate. What is up for debate is whether the prediction of the Laffer curve - i.e. that cutting taxes will result in equal or greater tax revenues for certain tax rates - is relevant to today’s America.
Amusingly, even if the result you cite were a demonstration of the proper use of the Laffer Curve to increase revenue while cutting taxes, there’s no reason to think it would be relevant. From 1968 to 1988, the top marginal rate fell from 75% to 28% - nearly a three-fold drop, not the two fold-drop you mention. To the extent that estimates of the shape of the Laffer Curve have to do with the top marginal rate, as opposed to overall taxation, 75% would be above many estimates of the inflection point; even more so once payroll taxes and state taxes are added in. So your much-vaunted example is only relevant if we assume that the supply-side effect it supposedly demonstrates was still working its magic for the last part of that nearly 66% drop in the top marginal rate.
For what I hope will be the last time: No-one disputes the truth of the Laffer Curve - only its shape, and its relevance. Digging up an example in which the top rate dropped from a stratospheric 75% by nearly 2/3 must be satisfying for you, but it’s irrelevant to the real world we live in today.
Warren, Here.
(Warren): “…nearly a three-fold drop, not the two fold-drop you mention.”
I did not cite any rate. I quoted this. On this topic, I’ll gladly attend to economists generally and to specialists in taxation in particular. People who toss insults, like “simplistic”, “theology”, etc. around, beg their dismissal from consideration in this discussion. Which is sad, since Mobius’ point about rates being about something other than maximal or optimal revenue, makes sense.
Hey, I dispute the curve as formulated!
L(X) is way too simple.
You need to have a time domain, since high taxes could conceivably reduce growth in future years. As could underinvestment.
so L(t, X(t) ) is more interesting of a toy model.
Malcolm posits that it’s a reasonable approximation to consider overall tax rate, but it’s far from proven. Certainly many in the Republican party have said that taxing the rich so much slows growth. But never mind. Still unproven.
But I should not expect a reasonable discussion with Malcolm who can not distinguish between the government and the mob.
(hint - oh, never mind.)
Simplicity is good - I like proofs to be simple too.
But until we get a simple proof of the 4 color theorem: http://en.wikipedia.org/wiki/Four_color_theorem
Fermat’s Last Theorem: http://en.wikipedia.org/wiki/Fermat%27s_Last_Theorem
we’re stuck with the ugly, but valid, ones we have.
“I don’t know anyone who accepts the relevance of the Laffer curve who also holds maximizing current revenues to the government as a goal.”
Some really good laughs right here. Thanks!
dave schutz,
I think you are confusing rate with rates with burden with your Oregon example.
You are attempting to criticize a discouse, but you have mistaken the level of that discourse.
It is not true that “…Either Paul Ryan believes in the Laffer theology…Or he doesn’t believe in the Laffer theology…”
Mr. Ryan’s discourse is talismanic, like that of a parrot who is beginning to learn human speech. He is modelling his environment. Sounds, in contexts, are associated with stimuli and are observed to evoke responses and lead to reward. Parrots do it to get attention; politicians do it to get votes. This is all asemantic.
The environment that Mr. Ryan is trying to model and interact with is both incoherent and sadistic, but we must not mistake him for it. I do not say this to excuse him, but to remind that he is not the problem; it is.
And if we’re in a quote-war, MK, I’ll respond with
“For every problem, there is a solution that is simple, elegant, and wrong.”-H.L. Mencken
for the win.
The weird thing about MK’s “math” is that for someone supposedly at least partially mathematically literate, he sure seems to be unaware of modern nonlinear dynamical systems theory. But Smale has been in the introductory curriculum for decades now.
[It's really not right to use language appropriate only for 1 or 2 parameter bijections for what follows, but you got to take your audience into account]
For instance, there’s absolutely no evidence that an actual “Laffer Curve” would be continuous. Since the underlying forcing (differentials) seem to be chaotic across much of the parameter space, and discontinuities occur frequently (eg September 2008), the actual “Laffer Curve” is likely discontinuous and it is certainly possible for some set of feasible input parameters for the map to be multiple valued, particularly in the middle 75% of the simplistic notion of “domain”.
And MobiusKlein is right about time being a parameter, there surely has to be some delays in the forcing terms as well, responding in unpredictable ways to the non-linear technological and political (eg regulatory capture) evolution of the economy.
This is what Martin Gardner tried to get across 30 years ago (although his neo-Laffer curve looks continuous, it does show (egregious) non-uniqueness, and I think he was probably trying not to overly complicate the illustration)
Now I don’t expect Paul Ryan to either understand this or be embarrassed by his lack of understanding, but MK should be ashamed of himself.
So where does that leave us? Looking at the data for tax receipt collection and gdp performance and whatever you like, for as many countries as possible. The US is near the bottom in tax rates. Yet we’re nowhere near the top in many measures of economic performance. So I think we should raise the marginal rates on the wealthiest cohorts to at least 50%. Given the economic performance of the 1940s-60s, I wouldn’t be especially worried about going even 10-15% higher.
For just a moment, let’s assume that the Laffer Curve is continuous, and that it can be modeled with a simple function, and that it has a single local maximum. Is there any reason to think that this function is constant across time?
JMN - no.
Laffer(x) is useful as a thought experiment, but not as a model.
(Russell): “MK should be ashamed of himself.”
Why? It was you guys who descended into ad hominem, and you guys who brought Math into this discussion.
(Warren): “Malcolm, as per usual your post is incoherent and ventures into tl;dr territory.”
In my first comment, I made three points between three Zasloff quotes. The second comment compresses and summarizes a large discussion. The omitted examples, definitions, and complications might hold the argument together (“cohere”), at the expense of brevity (“tl.dr”). Make one criticism or the other, but not both,
(Neal): “For just a moment, let’s assume that the Laffer Curve is continuous, and that it can be modeled with a simple function, and that it has a single local maximum. Is there any reason to think that this function is constant across time?”
No. Nor across cultures. The common assumption around here seems to be that if I did not mention a complication, I was unaware of it. Flat false. It’s not obvious what the Laffer curve represents. One society, over time, as tax rates change continuously? Separate contemporaneous policy regimes? One society, at one time, measured across alternative universes? I believe that it does not matter. The answer is “all of the above”.
(Russell): “The US is near the bottom in tax rates.”
No. Combine dollar-denominated taxes (sales, capital gains, corporate income, personal income), regulatory burden, and the corvee labor we call “compulsory attendance” and you get a very high rate of taxation. One reason I prefer a flat tax on all contractual exchanges is that such a tax would make clear to people who vote to increase the revenue to State-monopoly providers (e.g., “single-payer” health insurance schemes, State-monopoly schools), that they pay the cost as well. Currently, people tolerate injury to themselves just to injure people whose services are more valuable than their own.
I have repeatedly asked participants to this forum to answer the following questions:
1. From State (government, generally) operation (or subsidy) does society as a whole benefit? You may imagine either a dichotomous classification (A = unlikely candidate for State operation, B = likely candidate for State operation) or a continuum…
(highly unlikely) -1 ______.______+1 (highly likely).
2. What criteria determine an industry’s classification or position on the continuum?