Steve Williamson has written a much longer critique of Zombie Economics. It’s a lot more temperate in tone than the blog post I criticised here, and there are some valid points. Nevertheless, the new version exhibits the same fundamental confusion I pointed out last time, trying to claim that rationality assumptions are both important and unfalsifiable.
I’m criticising it again because, in making this mistake, Williamson is not exactly Robinson Crusoe[1]. The same confusion is evident among a great many economists, and even more among proponents of rational choice models in political science and other social sciences. This, despite the fact that the key error was skewered by William Hazlitt nearly two centuries ago, writing on self-love and benevolence.
Before starting, I’ll make a brief, purely mathematical point. Any consistent pattern of choice among objects (of any kind) that we can observe, can be represented as optimization, that is, as the maximization of a function. The classic version of this result was proved by Cantor, who gave us the modern idea of a function as a mapping between sets, and cleared up a lot of the technical puzzles about continuity and so on. Even choices that are inconsistent in various ways can be represented by more general notions of optimization. So, it makes no sense either to claim (as a lot of economists do) that the fact that we can represent action as the maximization of some “objective” function proves anything positive about the way people think or to object (as a lot of non-economists do) to representing choices in terms of optimization. To (ab)use an apposite quote – this isn’t class warfare, it’s math.
Williamson invokes the Cantor result in support of rationality assumptions saying
If the phenomenon can be described, and we can find some regularity in it, then it can also be described as the outcome of rational behavior. Behavior looks random only when one does not have a theory to make sense of it, and explaining it as the result of rational behavior is literally what we mean by “making sense of what we are seeing.
and in response to my criticisms, that I offer
”“ the usual list of complaints, for which there are standard defenses. (i) We can observe economic agents behaving irrationally, so what is all this rational agent stuff about? Answer: If you think you are observing irrational behavior, you just have the wrong model. Think harder.
So far, our disagreement is essentially semantic. Williamson wants to use the term ‘rational’ to describe optimization with respect to any function whatsover. In this includes the kind of behavior displayed by an agent (not necessarily an individual) in a model, any model. So, I can present whatever model I like, and the behavior in it is necessarily rational, and any rational behavior involves optimising something or other. Provided my model exhibits some regularity in the behavior of agents, they must be optimising something – working out what is the kind of problem normally given to sharp grad students.
By contrast, I normally use‘rational’ to refer to the kind of behavior found in the simplest form of the DSGE models: farsighted, and purely egoistic, agents maximizing the expected utility of stochastic consumption streams over time. Most of the time, at least when no-one is challenging them on it, this is the way neoclassical economists use the term themselves.
And this applies to Williamson himself. At the beginning of his defense of modern macro he writes “A second key principle in the post-1970 macroeconomic research program is adherence to optimization – a key organizing principle in all of economics.”
But we’ve already seen that, according to Williamson, any possible behavior involves optimization. That includes the behavior described by Keynesian macro models, not to mention Marxist, institutionalist and even Freudian models. So, this “key principle” is, on Williamson’s account, entirely devoid of content.
In reality of course, Williamson wants to have his cake and eat it. Most of the time he wants to help himself to the strong implications of rationality as represented in standard micro texts, and to demand that macro be built on this basis. But, when this model is challenged on empirical grounds, he retreats to a concept of rationality that is tautologically true. This is a classic example of John H’s “two-step of terrific triviality”.
To quote my own favorite bon mot on this
most rational actor models assume that “rationality” can be represented as “maximization of self-interest”. This assumption is either false or vacuous. Those committed to egoistic rationality tend, when challenged, to oscillate between the two definitions, in much the manner of the function sin (1/x) as x approaches zero.’
The one appeal to empirical evidence in his entire defence of modern macro is, unsurprisingly, the observation that the Keynesian models of the 1960s ran into big problems and that, at least arguably, this reflected the fact that they failed to take adequate account of the way in which workers and firms would rationally respond to higher inflation. Of course, I described that process in Zombie Economics and went on to show how the demand for rational microfoundations led to DSGE macro which failed in its turn. It’s in responding to this failure that Williamson relies on the non-falsifiability of his preferred group of models.
More on similar lines from Noah Smith
fn1. Our profession’s favorite representative individual
John Quiggin 
One way of looking at it is a tautology. The other way of looking at it is a empirical question for neuroscience to answer. since not even the most far-gone autistic will actually optimise a complex million-dimensional utility function in their head before making each economic decision, the actual theory is that these massive computational tasks are taking place at a subconscious level. the more that is understood about how the brain makes decisions, the more falsifiable this hypothesis becomes.
To quote my own favorite bon mot
The hedonistic conception of man is that of a lightning calculator of pleasures and pains who oscillates like a homogeneous globule of desire of happiness under the impulse of stimuli that shift him about the area, but leave him intact. He has neither antecedent nor consequent. He is an isolated definitive human datum, in stable equilibrium except for the buffets of the impinging forces that displace him in one direction or another. Self-imposed in elemental space, he spins symmetrically about his own spiritual axis until the parallelogram of forces bears down upon him, whereupon he follows the line of the resultant. When the force of the impact is spent, he comes to rest, a self-contained globule of desire as before.
I think you push this argument that anything people can do can be interpeted as rationality too far. Its up to economists to come up with sensible stanards of economic rationality and to then test adherence to these. You don’t get anything for nothing.
DSGE is not based on rationality if it involves excessive computational complexities which are a decion-maker cost.
In macro the Debreu- Sonnenschien stuff says simply that the only implications of assuming individual self interest are Walras Law and homogeneity. Any aggregate excess demands that are consistent with these very weak implications are consistent with some consumer preferences. That does not suggest to me that macroeconomics is empty but that a microeconomic rationale for macrotheory is problematic.
hc, I agree entirely. The point is you have to decide how tight a standard you want to include in rationality, at the price of being unable to model behavior that does not meet that standard.
Gerard – obviously normal people are not actuaries of great calculating ability. And even an actuary of great calculating ability would be daunted by some of the optimisation challenges that humans might daily face. However somehow we optimise choices well enough most of the time. We also generally have the ability to learn through trial and error and to learn from the mistakes of others. We may never get it quite right but that does not mean that the search is futile or represents failure. Obviously one of the things being economised on is limited access to calculation power.
Even if people do make a mess of things when it comes to complex choices it does not follow that choosing a bunch of people to deliberate and debate then make choices for us will in any way improve matters. In fact there are plenty of examples from history where it seems to do the opposite.
Personally I can’t sign up to the notion that humans are highly rational. However likewise I don’t buy the idea that they are complete imbeciles. Any system we imagine from pure libertarianism, pure communism, mixed market socialism or something else is going to have an abundance of examples in which people make serious and enduring mistakes. Yearning for utopia is very human but it isn’t going to happen.
I find this to be a very interesting debate Professor and I hope you write more about the role of behavioural econ in the economics profession.
I don’t have much to contribute except that I have also noticed this oscillation between definitions. I prefer using rational in technical terms like you have (complete and transitive). What is irrational is if you take the price vector, change it to a different “frame” and behaviour changes.
When one starts arguing the cost and benefits of assessing different price frames or “rationalizing” the default bias, I just find the story less convincing.
the point is that many economic decisions are made largely on the basis of socially conditioned habits of thought and behavior, technological and environmental limitations, social, political and legal institutions that have emerged over centuries… examining how these work is more useful to understanding how the economy works more than abstract rational utility maximisations in the n-th dimension
@gerard
Yes.
Gerard I also agree with you but I think that we need to go back further than centuries to understand the foundation of the basics of our brain/mind functioning. Although evolutionary psychology can be used as the basis for some really dodgy arguments about human behaviour, I think there is something to the idea that we did emerge and distributed ourselves over the planet as small hunter gatherer groups.
I think that the idea of the rational individual developed from enlightenment thinking that primarily wanted to get rid of the belief in god and magic, so the philosophers of the day were not motivated to retain any of the ideas of the catholic or christian idea of human society as essentially social. But this may have been one of the good things about religion; ie the understanding that we all have an obligation to each other.
TerjeP from your experience as a successful person you see that “However somehow we optimise choices well enough most of the time.”.
From my experience and psychological knowledge, this is not the case for a great many people. A great many people do not have the capacities – because it is more complex than just intellectual capacity – to make optimim choices, even if they do have the requisite knowledge of the available options.
The level of ‘mental illness’ seems to be is increasing, and one of the reasons for this is that the economic choices that people are being ‘forced’ to make, are simply too difficult for some of us.
JQ, it seems to me several participants at the recent 2011 Lindau meeting of Nobel laureates and other distinguished guests are much more sympathetic to your list of major problems with the beliefs underlying economic policies during the past 30 to 40 years (“zombie ideas”) than Steven Williamson. The link to the session on the GFC is here.
http://www.mediatheque.lindau-nobel.org/#/Video?id=641
@Julie Thomas
Ok. However it is hard to respond to your comment without some sort of tangible example or elaboration. We all know people who can be quite dysfunctional. Many of us find them in our immediate or extended families. Many of us have to accommodate and compensate for and councel against the I’ll judgement of people we care about. I know some people have difficulty with financial choices. Some people have difficulty with rules. Some don’t like dealing with public agencies. Some are trapped in a state of welfare dependence by perverse financial incentives. I can see all this. However whilst I can see people struggle with choice making I am troubled by your suggestion that choice making weakens people’s capacity for choice making. In most human endeavors practice leads to improvement. Although clearly strategic insight is also sometimes necessary.
Also just to broaden the debate a little it seems to me that poor decisions about spending money typically have less impact on people’s lives and wellbeing than poor choices about who to sleep with, where to live, what friends to hang out with, what to eat, what to drink, what drugs to take, what arguments to have.
For what it’s worth I think that the prevalence of mental health problems is due to several factors. Obviously this is not a professional opinion but I do know and have spent time with people with serious mental health problems and my mother worked her whole life in mental health and she has influenced my thinking. I would not say economic choices is a factor although difficulty making choices can be a symptom. Factors I attribute are:-
i) welfare dependance and the loss of occupational activity
ii) the welfare state and the consequential breakdown of community ties and economic interdependence
iii) the consequencial breakdown of families caused by both of the above
iv) the destruction and export of unskilled jobs through excessively generous wages and conditions regulation
v) improved diagnosis probably also drives the numbers up
Poor decisions about spending money can be life-or-death, especially in a Libertarian world:
Crowd Yells Let Him Die
social welfare policies are the first, second, third and fourth top causes of mental illness according to Terje but at least he isn’t blaming the freemasons.
@gerard
That’s right Gerard. Everyone knows that there was no mental illness whatsoever before World War II, except for Rochester’s wife, whom he dealt with in a proper individually rational and self-interested manner by locking in an attic.
@TerjeP
Actually making decisions can impair your ability to make further decisions if you don’t get respite (see article linked below). Apparently successful people minimise the non-critical decisions they have to make so as to avoid this problem (e.g always eat the same foods, wear the same clothes etc.). If you are poor and have to continually optimise your spending and make trade-offs, you will end up making bad decisions and suffer stress and perhaps mental illness. Come to think of it if you are on welfare you are probably poor and hence in that boat. Could it be that poverty and not welfare is the problem?
When you get such posts from Terje as:
Just invert his claims to reveal the reality he has misconstrued and add in the missing third – the underlying cause he has ignored.
1 the loss of occupational activity (due to capitalism) then the welfare state
2 the breakdown of economic interdependence (due to capitalism) then the consequential breakdown of community ties and the welfare state
3 the breakdown of families due to the above (due to capitalism).
4 the destruction of and exports of jobs (due to capitalism) and of course the usual song about generous wages and democratic regulations.
Terje blames the welfare state, wages and regulations for: mental health problems
job losses, family breakdown. He should be blaming cartels, monopolies, unregulated commercial practices, and anti-social profiteering generally.
Unfortunately for Terge, the welfare state, wages, and regulations are needed to prevent and alleviate these social problems, and soften the blows of capitalism until time runs out.
Chris – just for the record I’m ignoring you as a general rule because I don’t find you very engaging. I didn’t want you to die wondering.
JamesH – I was offering reasons for an increase. Not reasons for the existence of mental illness.
Matt – what you say regarding respite rings true. Successful managers I have observed avoid to spend too much decision making by delegating, deciding quickly and prioritising. What you say in this regard makes sense. However I still think making decisions is more likely than not to strengthen decision making and decision making strategies (eg don’t sweat the small stuff).
TerjeP I’m not sure what sort of examples or elaborations you’d like. Feel free to ask for specific clarifications; I am willing to anwer relevant personal questions as honestly as I can.
I don’t think I said that choice making weakens people’s ability to make choices. The way I see it is that the mental effort that it takes some of us to make choices, as well as making us very tired – thanks Matt – but it also takes away from our ability to use our brain in other ways that would be of more benefit – like reading to our kids.
If we are in a functional family, we may have some help in these areas. Perhaps the family would be the basis for a more effective economic unit rather than the individual. It is the idea of the autonomous rational individual as the foundation for understanding human behaviour that strikes me as a fundamental problem.
You are perfectly right that our economic decisions are only one of the difficulties that some people have. that determine our success in life; we have too much freedom, too much choice in lots of areas. We can go there also but I think you minimise the problems of making choices. If one is on a fixed, barely adequate income, every choice in the supermarket takes a lot of mental effort and decisions about what needs to be bought this week and what can wait until next week.
If one doesn’t have any savings and lives from week to week, there are significant consequences if one makes the wrong choice. Having once been a single parent in this situation I do know how difficult it is. I think that poverty has a magnifier effect on any other psychological problem one has.
My personal experience is that welfare of the kind that was available in the 80’s, where single parents were encouraged to look after their children first, was what enabled me to overcome the problem I faced from the poor life choices I made.
It was a leftie social worker in the DSS – I think they were Dept of Social Security then – who pointed out to me that I had a responsibility to contribute to society in return for my single parent benefit. She encouraged me to go to uni and the success that I had there was something I had never experienced before. I had never been successful at anything else in my life. But it also provided me with the knowledge and skills to not only save myself, but to bring up 3 kids – despite the extra difficulties that having an alcoholic ex-partner imposed. They are all working full time and paying tax. One of them pays quite a lot.
The way I understand it, that type of care is not available to single parents now. Guess I was lucky.
Rationality depends on what measure is being used. It is quite rational for a person in a small community to adopt group think in order to remain a part of that community as ostracism is the likely outcome for a non-conformist thinker. Ostracism in turn means that small kindnesses and help will be withheld by other community members. In a large community this is not relevant and allows for greater freedoms in beliefs and actions. The threat of ostracism is not an economic outcome and neither are the small favours that can spring from goodwill through a shared system of beliefs. To me this suggests that rationality needs to be looked at in the group context. What looks rational in one context will look ridiculous in another. In fact many decisions are made in an emotional context because economics is not the primary driver.
@TerjeP
Don’t worry – it was not addressed to you.
I have standards.
I agree with the sentiments expressed here regarding overwhelming choices. I like the idea of the right not to choose. A recent example of this is the no-frills superannuation scheme. Most people have neither the time nor the inclination to think about these things, and default vanilla accounts without fees sound like a good innovation. I’m sure many people would never change their account from no-frills if this was the path of least resistance. If people don’t know or don’t care about a particular subject, the default “choice they make when they’re not making a choice” should be set to something sensible, unobtrusive and low risk.
Just on that though, why do current rules force people to “opt in” to after-death organ donation and “opt out” of telemarketing cold calls?
I really don’t see how you can blame welfare for the break-up of the family; there are so many other factors throughout the last century that have contributed to that. What about the effect that war has on men and their ability to be effective parents? I can find links if you’d like; there was something on the ABC about it last week. Please excuse me though, because where I live I don’t have ‘real’ broadband and that extra download time makes it less rewarding to go looking for evidence.
I do know that my maternal grandfather was bedridden after WW1 for the rest of his life, and effectively reduced that family’s economic success.
What about the decline of the extended family and the emphasis on the nuclear family? Surely that has had a big effect on the breakup of families? Another old adage that I think is really good is; ‘it takes a whole village to raise a child’. Two people do not provide enough of a range of adult role models. In some cases, it could be that an aunty is closer to the child in ‘temperament’ and therefore, she lives in the ‘village’, the child will benefit from this interaction.
I believe that the libertarian doesn’t see any problem with expecting units of labour to move to where ever there is work. It seems to me, from my bias, that this ‘enforced’ mobility has contributed significantly to the break-up of the family. Not welfare!
@Chris Warren
Stop ruining John Quiggin’s blog mate. You’re really abusing the absence of our moderator. Every time someone says something against your politics you respond with a personal attack. It’s just not necessary. I don’t agree with much of what TerjeP says either, but a blog where everyone agreed would be pretty boring. How about you try just politely debating him on the issues?
Julie – I don’t think there is any problem with people following the jobs. That is how society has been fornthousands of years and jobs matter both in terms of economic success but also in terms of avoiding social distinction. That said I think the cost of moving is made excessive by stamp duty on property (I call it the moving tax) and moving the jobs to the people is made complicated by some zoning restrictions and by wage regulation. For instance if you live in a remote community many jobs are unlikely to come to you unless you can offer your services at a cheaper rate than those in urban areas. Wage regulation restricts this means to job expansion. Mean while China is booming off of the fact that it has been able to compete on wage rates and in so doing it is building a pathway to a high income future for it’s people. Some Aussies are job snobs but our wage regulators are the real job snobs. They would rather low pay work didn’t exist even if the consequence is higher unemployment and idle citizens. At a minimum we ought to set the minimum wage by region rather than nationally.
TerjeP Some people get better at making some types of decisions with practice, I’d guess, but this is simply not the case for all people. Also your manager is making decisions in a familiar environment and about things he or she will understand and also there will be some way of measuring the success of the decision. None of these things are applicable for my welfare mum.
Rational decision making and behaviour is not the norm for human beings. It is something that comes from socialisation and your system offers nothing in the way of ideas about how to socialise people in a way that will maximise their ability to think rationally. It may be something we can aim for in the future but your simplistic philosophy and economic system will only widen the gap between the rational and the losers.
Julie – I think reading to kids is enormously important. However I’m not buying the notion that economic liberalism will overwhelm people with so many choices that they can’t read to their kids. Of far more significance is whether the parent knows the benefit of reading to their kids and secondly if they value education and literacy.
That’s sounds like rubbish. Lot’s of managers operate in areas where understanding is limited. And mothers are quite capable on the whole at making reasonably rational choices about the allocation of time and resources. We would be extinct if they weren’t.
Do you favour the welfare quarantining started in NT under the Howard government and continued under the current government? It is basically predicated on the same notion as what you are on about. The concept is that welfare recipients can’t cope with the difficulty of make purchasing decisions and need government agents to decide these things for them.
TerjeP I’ve no capacity for understanding economic policy, sorry. I can’t respond to the problems like stamp duty that you introduce. Pretty much non political; just a bleeding heart with some psychology a desire to understand people, and a biased belief that the ideas of free market capitalism are taking our society in the wrong direction.
You say that you don’t see the problem with people following jobs despite the really realy important reason I gave you; that it breaks up that most important economic unit, the family.
the family is the fundamental unit of society and your system does not recognise that. I’m not sure that people have been moving as nuclear families for thousands of years. Do you have any particular examples of this?
I’d have thought that people only began moving for work, since the industrial revolution. Didn’t somebody else say that earler on this thread? It seems to me that for most of human history – which was unrecorded for sure so it’s all pretty much speculation – we moved as family groups.
I’d guess again that you wouldn’t understand the extra burden on the poor that comes from moving to a new location. I’m not talking about people who have to pay extra stamp duty. For the people on the dole who are being accused of ‘job snobbery’, excessive stamp duty is the least of their problems.
Kids who move schools do worse on a number of measures, than those with a stable educational history. If you move away from a family or community where you already have social support, you lose things like free babysitting or a mate who can fix your car.
Anxiety levels and/or depression are exacerabated in some people who are not good at making friends and fitting in with new social groups. When a parent is anxious they are less able to care for their children. The children also lose all their links to a community and while it might be exciting for some kids, others just don’t cope.
I also think that there is a problem with your idea of trade. It seems to me that the way humans traded prior to the introduction of ‘rational man’ and capitalism was more complex than libertarianism recognises; it was more than a simple exchange of goods. If you look at the way the Australian Indigenous trade, there apparently was a very strong reciprocal obligation on each party involved.
TerjeP is right about stamp duty – it is a regressive tax and should be replaced with a land tax.
Having said that, the people most affected by it by far are those in the privileged position of being able to afford to buy a home.
TerjeP the reduction of reading time was only one way in which the burden of choice affects an ordinary person’s ability to do other more important things with their life. I would need to write an essay and provide you with case studies to fully explain the way that too much choice is not good for most people. Of course, your thrive on choice, you love freedom, but you are not the default human being.
@Dan
Land tax makes more sense. However in terms of those affected I think you have neglected to include those who would buy a home if not for stamp duty.
@Sam
I think most people will have seen substantial debate.
People always get paid in their own coin.
That’s odd. You have no capacity for understanding economic policy and yet you wish to debate the merits of one policy position over another. You have no capacity for understanding economic policy and yet you somehow conclude that neoliberal economic policy is the wrong policy mix. That seems like an incredibly judgmental position to take. Surely you should seek to understand first and judge later. I’d suggest you either stay quite on issues of economic policy or else develop some capacity in this area (preferably the later). Maybe if the choice between alternate economic policies is not within your capacity you should let other people make these decisions for you. After all this is the advise you were giving earlier regarding people with limited capacity.
p.s. Julie – do you think forcing people to vote is harsh. After all choices are so hard to make and people have limited rationality.
@Dan
How is stamp duty any more regressive than other taxes. Surely this is only a matter of how it is applied – ie the spread of brackets within which each rate applies, and the increase in the rate, bracket by bracket.
It is always preferable to have the tax base as broad as possible, so stamp duty is an entirely suitable tax, and any regressive nature can be fixed by government. Presumably we do not have a progressive stamp duty because of politics.
Chris – stamp duty is regressive because is it distortionary – it discourages economic behaviour that it isn’t at all clear we ought to be discouraging, to wit: moving house (okay, it probably doesn’t meet the technical definition of regressive).
A land tax could easily raise the same or more revenue without that drawback.
@Terje: “However in terms of those affected I think you have neglected to include those who would buy a home if not for stamp duty.”
Ah yes! Those five.
#TerjeP It is interesting how you have deliberately misunderstood arguments about the effects of being forced into too many decisions and how these affect people’s ability to make good decisions. Your sarcastic remarks and facetious attitude deserve censure.
Moving people from their communities and families to satisfy labour needs increases the pressure on those families, increases the number of things that they have to optimise and causes them to make poorer decisions (or actually to avoid decisions). Decisions avoided include decisions to take up opportunities (all opportunities come with some risk). Pursuing economic policies that exacerbate that problem is likely to lead to worse outcomes for society and the economy. The solution is not to dehumanise, humiliate and disenfranchise people through quarantining or income, removal of compulsory voting (note that this would add a decision not remove one) or making snide remarks about people’s contribution to a debate.
The point is that people do not make decisions by rational optimisation, that any economic theory based on that will produce poor models of behaviour and hence any economic structure based on those models will not be fit for the purpose of making the population secure and content. Of course if you believe the economy is for some other purpose then we can discuss that and see what costs in health care, divorce, crime and mental illness the model is willing to bear to achieve whatever is goals may be.
Yes – distortionary, not regressive (if properly implemented).
However with a reasonable threshold (as in the UK @ 125k pounds), the distortion can be restricted to higher income levels, and only gets paid once ie when there is a transaction.
I have not seen a reasonable proposal for a land tax, so I doubt whether it has any greater efficiency. There is a large debunked literature on the well debunked Henry Georgeist land-value tax. So what is the guarantee that land tax could easily raise money without the same or equal drawback?
TerjeP Well done. You functioned in a non-judgemental and apparently reasonable way for some time. I am so irrational that I didn’t even realise that I wanted to debate the merits of one policy issue over another. I didn’t even understand that we were debating a policy. I thought the ‘idscussion’ was to do with the poverty of rationality.
And you have clearly demonstrated again, as if I needed any more evidence, that you are prone to making pejorative value judgements about people. Do you think that is rational? And your sarcasm is not that impressive, you know.
But I wonder why you pretended to be interested in what I had to say. What did you hope to gain? What was your motivation?
Or if you want to start again with your last question. How do you define ‘force’? The way libertarians usually define it depends on the context, very slippery you are about this behaviour. How do you define ‘harsh’. Do you need a break? That last ps post was a bit dodgy you know. Seemed a bit desperate in some way.
Matt – I don’t deliberately misunderstand anybody. I just articulate what I see as the implications of what they say. If I get it wrong they can correct me.
I’m not denying there are pressures associated with moving. However I don’t think moving for a job is a bad thing. Obviously people need to make the decision according to their circumstances. I think people should be free to make these decisions. I’m surely not suggesting that people be denied the freedom to make such choices. This isn’t the soviet union.
I may have expressed myself a little misleadingly; my point was not that such a thing would be easily implemented, but rather that there is no reason that such a policy, once implemented, would lead to lower government revenue (possibly the opposite).
As for the “paid once” thing – well, that’s just the problem with it. Even if you only tax above a certain threshold, what’s the rationale for this sort of transactional tax? It seems to be a hangover of bureaucratic inertia rather than actual good policy.
In any event, weren’t you advocating keeping the tax base as broad as possible a few posts up? I don’t have a strong view on the matter, just as long as tax policy overall is powerfully redistributive, but I’m not sure what your position is.
TerjaP@47: “I think people should be free to make these decisions… This isn’t the soviet union.” Implication being that the only force that acts to constrain choice is government? That certainly flies in the face of reality.
Julie – my sarcasm was intended to make you think not to bring you down. Please don’t be precious. And you were actually discussing economic policy choices when you said that my preferred economic system would widen the gap between the rational and the irrational. And you have made other comments about capitalism and neoliberalism.