I have a particular fondness for instances illustrating the incommensurability of different reactions to political events, examples of how different people, aligned at different points of the political spectrum, see things so differently that debate or discussion is not likely to effect any changes of mind.
Here's Paul Krugman in yesterday's New York Times, complaining about the "political posturing" that has already begun regarding the scope and size of the Obama stimulus package:
The biggest problem facing the Obama plan is likely to be the demand of many politicians for proof that the benefits of the proposed public spending justify its costs — a burden of proof never imposed on proposals for tax cuts.
This is a problem with which Keynes was familiar: giving money away, he pointed out, tends to be met with fewer objections than plans for public investment 'which, because they are not wholly wasteful, tend to be judged on strict 'business principles.'"
Now, what's interesting about this is not just that it's absurd; it's that Krugman (who is, after all, a really smart guy) doesn't see that it's absurd. The difference between public spending and tax cuts is that the former takes peoples' money away from them for an ostensibly public purpose, while the latter returns money to people that they already earned. It's really not that hard to see that the one calls for a higher "burden of justification" than the other, and that that's not a "problem" that needs to be overcome.
Probably reflective of an overall view that all belongs first to the government. We are only lucky that they let us have any at all...
Mind you, the same logic can be applied to a lot of professional commentators, of all stripes.
That's it exactly. Anyone who disagrees with you gives no thought to consequences, and just tries to starve the government of needed funds. Because you and the government are virtuous, and we're evil.
Where were are these born again due diligencers (actually the biggest spenders in history)
You'd better get used to appending "to date" to that parenthetical.
budget-chickenhawks
-and since the incoming Commander-in-Chief's firmest connection to the military is his grandfather's brother's service as liaison to the Russians who liberated Auschwitz, you should probably put "chickenhawk" in the back closet with "ha! The President looks like a chimpanzee!"
Increased public spending unaccompanied by tax increases does not take people's money away, in the near term. It just increases debt, as tax cuts unaccompaned by spending cuts do.
Once you recognize that, why shouldn't a tax cut have to be as well justified as increased spending?
I think Mr. Post did indeed acknowledge Krugman's pt, but was still surprised that Krugman would make it as it's very weak. In simple terms: before you forcibly confiscate the public's money, you should be prepared to justify why you want to.
et al,
We might wish to distinguish in this instance between "tax cuts" and "tax rate cuts". Bush did tax rate cuts and thereby increased tax revenue, the opposite of a tax cut. That's lesson #1. He then spent too much anyway (with lots of help from both sides of the aisle), thus confirming that if you give pols a bigger budget it burns a bigger hole in their pockets. That's lesson #2.
Comments like this proceed from the premise that tax rate cuts are invariably followed by decreasing revenues (with the implicit presumption that the decrease in revenues is caused by the rate cut). Presumably the point is, when you lower tax rates, revenues go down, resulting in megadeficits unless you cut spending (let's ignore for the moment what happens if you increase spending).
Tax cuts are not, however, invariably followed by revenue decreases, and on at least some occasions have been followed by revenue increases. In the five years after Kennedy's 1964 cuts, revenues increased by about 20%. During the Reagan years, which featured cuts in 1981 and 1986, revenues also increased significantly. Even following Bush's 2003 cuts, revenues increased (the 2001 cuts were followed by a drop in revenues).
In a (probably fruitless) effort to avoid claims that I'm making a "post hoc ergo propter hoc" argument, I AM NOT CLAIMING THE TAX CUTS CAUSED THE REVENUE INCREASES. While the above seems plausibly suggestive of causation, and it's certainly possible, I am neither trained in economics nor smart enough to argue the point with those who are. But hey, I'm not the one claiming that reductions in tax rates lead to megadeficits because the cuts will cause revenues to go down. Presumably the guys making that kind of argument can and will explain why theirs is a reliable premise.
Now when you are in our current situation - when the government has allocated a large amount of money to be used for stimulus - and is now in the process of deciding how to apportion the stimulus between tax cuts and spending, its a perfectly valid and timely complaint to make.
My feeling is that, for arbitrary pairs of people, there's a broad range of commensurable issues, but that for any given pair of people there are a few issues that will be incommensurable; which beliefs those are define one's political identity, in the sense that the individual identifies with those issues right down to the brain stem. That's where arguments get all hideous and nasty as the reptile brain confronts the threat of death. I recently made one such mistake by laughing at the suggestion that equality of income was a laudable goal of any fair tax system.
Just to nit-pick a little, tax cuts don't "return money to people" they just reduce how much is taken away in the first place.
Why? Because Paul Krugman and some collectivist crank on the Internet say so?
The only reason government has the money in the first place is because it forcibly confiscated it from somebody. Sensible people properly recognize that permitting a thief to retain and freely dispose of stolen property requires greater justification than requiring the thief to return the stolen property to its rightful owner.
No, ras, the great thing is he's both at the same time, each irreconcilable with the other. That's what makes him absurd, profound, and amusing.
I am not so sure. It's just I fail to see the logic of applying a lower standard of proof for one policy prescription versus the other. We are not talking about whether tax cuts or public spending are preferable; we are talking about their effect on the economy. If you are a doctor treating a disease, and you have drug A and drug B, should not you hold both drugs to the same standard, even if you believe that drug A is generally better?
Brett:
What a poor analogy. What thief builds public roads, defends you, provides, you with some safety net in case you lose a job etc? Also, thiefs steal against the victim's will. Government, instead, is empowered to tax by laws. You don't like it--change the laws.
More seriously -- if you read something by a Nobel Prize winner, in his/her actual field, and your thought is "That's absurd" and you don't even have a focused education in the subject, wouldn't your first instinct be to think "I must have misunderstood him/her?"
Now, I read it twice, and it seems pretty simple: You can stimulate the economy with government money in two basic ways: You can tax less, thus taking less, or you can spend more. (Or, really, you can do some combination of both).
His point seems rather straightfoward: Why is it that "spending more" seems to require more justification than "taxing less" for the specific concept of "stimulating the economy".
How this is absurd is beyond me, especially given the number and results of actual studies into the effects of various types of government stimulus (from tax cuts to various forms of spending). Given the results of those studies, the burden should be heavier on the tax cutters -- but I suppose supply side economics has a death grip on a third of the country, who still think we linger in the era of 90% marginal rates.
When you say "The argument that tax cuts benefit the economy requires support just as much as the argument that spending increases benefit the economy," I don't disagree with you. What I don't understand is why you and others seem to assume that tax cuts necessarily represent "costs" that require proof of "benefits" to justify them. (I understand the argument that tax cuts are "costs" to be that cuts will pretty much inevitably result in lower tax revenues). To paraphrase you, why shouldn't the argument that "tax cuts depress revenues and thus represent "costs" to the government require support just as much as the argument that spending represents a cost to the government"?
I can't conceive of any argument that government spending doesn't represent a "cost" to the government (maybe there is one and I just am not smart enough to spot it). But in light of the revenue increases referred to in my post above, it's not self evident that all tax cuts are necessarily "costs" (i.e., that they inevitably result in revenue decreases).
Of course, there might be an argument that revenues would have increased even more had the Kennedy, Reagan and Bush cuts not been enacted, and I understand how this could be characterized as a "cost" of the cuts. Or it may be that there's a good reason why a particular tax cut would result in higher (or lower) revenues (Kennedy reduced taxes from a 90% top marginal rate and I suspect there are few today that wouldn't concede that such a confiscatory rate depressed revenues both by discouraging income generation and encouraging tax avoidance). However, my point is that those arguments, as well as any others for the proposition that all tax cuts (or particular tax cuts) are in fact "costs," should actually be made, rather than simply assumed.
So? Somebody who volunteers to provide you with benefits you have not sought does not acquire a claim against you for restitution of the value those benefits.
Also, thiefs steal against the victim's will.
And the tax man appropriates my income against my will.
Government, instead, is empowered to tax by laws. You don't like it--change the laws.
I have an idea. Let's pass a law empowering the government to murder Tugh. That will magically make murder into not-murder, right? And if you don't like it? Change the law.
Krugman's making a political argument, not an economic one. And you're not making an argument at all, just an appeal to authority.
Including, I guess, Obama's own economic advisor, who seems to think that the stimulus effect of tax cuts is approximately three times as great as government spending.
The initial, gut-instinct framing is where, I think, incommensurate or irreconcilable comes into it. I can pile all sorts of logical argument on top of my gut instinct, but my base assumption is always going to start from that instinct. When those layers of logic and argument seem against me, I can feel the base flight-or-fight response rise up.
Your example is hilariously inapt. The government does in fact kill people through execution, and we don't call it "murder". And yes, opponents of the death penalty do need to change the law if they want the legal killing to stop.
You are free to not pay the government your taxes, if you are willing to suffer the consequences. Likewise, you are free not to use public roads and other benefits that government provides.
I guess we do see the things very differently. I don't view tax cuts and public spending as some sort of "voodoo economics". In my mind, both are legitimate means to correct the economy. Both are favored by extremely smart economists. Ergo, both should be held to the same level of proof.
In sum, Krugman assumes that taxes are in no way like theft and do not constitute the taking of money that by right belongs to private citizens. He doubtless understands that many disagree; he simply doesn't care, or at least doesn't care to address that in his post. This isn't about the blinders of partisanship, as David would have it. It's about Krugman not feeling it necessary to include in his argument a note that of course some people take an entirely different view of public funds. David evidently assumes that Krugman's silence indicates folly.
Not every point of view needs to be overtly acknowledged in every discussion. Unless David desires some sort of creeping PCism whereby Krugman gives time to noting political theories he does not share so as not to seem "absurd."
Any increase in spending requires a commensurate increase in taxes and the benefits must (should) be judged to outweigh the increased costs (taxes). Similarly, any reduction in taxes requires a reduction in spending; the benefits of those reductions must favor the tax side.
Treating a tax cut as returning my money is attractive, but the analysis should be about the level of government spending and how my money is spent. If the equations are to balance, the analysis is very similar or the same for either an increase or a decrease.
No, tax cuts are not financed in any way. They are the government deciding how much money to take away and deciding to take a little less than before. What requires financing is the government's expenditures especially they do not decrease to the same extent that taxes are cut.
From a deficit viewpoint which is as you are looking at it, the problem is with the government deciding to spend more than it takes in. That is true regardless of how much or little the government collects in taxes.
Krugman is right that, assuming that the government has to meddle in the economy, we should consciously think about whether economic stimulus is better provided by allowing people to spend their own money how they deem best (cutting taxes) or by the government spending the money of our children how it deems best (increased spending). So who thinks Soviet central planning was effective?
Where Krugman is an idiot is in thinking that not taking someone's money away is the same as giving them money. Even Post makes that mistake by saying that tax cuts "return[] money". Tax cuts are future oriented and thus the money has not yet been taken away. You cannot give back what you have not taken. "Return[ing] money" would describe a rebate of taxes already collected.
Post et al: Fool! Politics are involved in economic decisions!
I am the economy when I spend money.
I spend money on my needs more efficiently than the government does, because I am more aware of what my precise needs are.
The more money I (or any individual) control vs. the government, the more likely it is that the best economic performers will be rewarded with business.
The more money the government controls vs. individuals, the more likely it is that monolithic, less efficient, less useful, poorer performers will be rewarded with business.
Government spending by default has a greater percentage of economic waste than individual spending; therefore, tax rate cuts are good for the economy because they reduce overall econimic waste.
Not to mention that the market is awesome at choosing only good performers to reward. (the secret: define good performer as who the market chooses!)
We could really get an economy going here if it weren't for this whole union thing.
Taxing less IS spending more, it is just that the spending is controlled by the individuals who earned the money rather than by the government.
Justification is required for the proposition that the government spending will more effectively stimulate the economy than spending by the individuals from whom the government confiscates tax dollars.
Since when is having an artificially installed middleman a good thing economically?
Say it with me: "I am the economy. I am the economy."
Government often will assume that just spending the money on something is in itself valuable, and will tend not to make the prioritizations that any individual must make.
So the reason economists scrutinize political but not personal expenditures is they assume that the latter are more subject to inherent prioritization.
I agree, and add that the government has no reason to prioritize, because it can simply confiscate additional resources from taxpayers (whether directly with the tax code or indirectly with the printing presses) anytime it feels less than flush.
Funny how this standard is never applied to Milton Friedman......
My objection is that, assuming we are comparing equal amounts of tax cuts vs. increased spending, the tax cuts don't involve "allowing people to spend their own money." They involve allowing people to spend "the money of their children," as you put it. Thus, it seems pretty clear to me that the decision of which course to take rests on which choice is more effective in growing the economy and producing benefits for the costs.
My objection is that, assuming we are comparing equal amounts of tax cuts vs. increased spending, the tax cuts don't involve "allowing people to spend their own money." They involve allowing people to spend "the money of their children," as you put it. Thus, it seems pretty clear to me that the decision of which course to take rests on which choice is more effective in growing the economy and producing benefits for the costs.
Politics is Krugman's regular topic, and he's not very good at it.
Krugman's demi-god status is in doubt.
From UCLA, FDR's Policies Prolonged Depression by 7 Years, UCLA Economists Calculate, excerpt, emphasis added:
Two UCLA economists say they have figured out why the Great Depression dragged on for almost 15 years, and they blame a suspect previously thought to be beyond reproach: President Franklin D. Roosevelt.
After scrutinizing Roosevelt's record for four years, Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years.
"Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump," said Ohanian, vice chair of UCLA's Department of Economics. "We found that a relapse isn't likely unless lawmakers gum up a recovery with ill-conceived stimulus policies."
Critical thought - including self-critiques - an idea whose time has come.
Translation: I don't like your analogy because I don't have a coherent rebuttal to it, therefore I will harrumph.
The anti-death-penalty crowd routinely refers to government executions as murder. Regardless, there's an enormous difference between subjecting a person to punishment for their commission of a capital crime, and forcibly appropriating a third or more of a person's income purely on the basis of their domicile. If the distinction eludes you, Google "non-aggression principle".
As David Nieporent points out above, I'm also free not to comply with a mugger's demands to hand over the goods if I'm willing to suffer the consequences. You've failed to distinguish taxation from theft.
What makes you think I'm not doing that already?
Maybe under some definition. But since he became the official NYT Editor for Anti-Republican Economic Policy Activism does anyone really believe his schtick? It's like parsing the Hamas spokesman's comments on the Gaza incursion. Who cares?
People whose opinions aren't set in stone care what really smart guys of any ideology have to say. There might just be something worth learning.
Everyone else seems to be ignoring you, probably because you're making sense. I'm adding my two cents just so you don't feel lonely.
If by "silent" you mean "unbeknown to him," then someone who around twenty years ago stopped thinking Krugman was making sense could be the one who suffered the attack.
So, if you start with the premise that much of the tax cut stimulus being proposed is not really tax cutting, but rather, cash payments to those not paying taxes, then there is little difference between that and the type of stimulus spending that Krugman seems to be talking about, except that it would hit consumption instead.
Benito Mussolini was typically the smartest guy in the room, with few exceptions. He spoke four or five languages fluently, transformed Marxian praxis and ideological currents into a nationalist/socialist concoction, then, via demagoguery and practical efforts, plied it into a practical form of governance. Like Krugman, an implacable statist and presumptive, through and through.
In general, if you're going to admonish about "smart guys" and "learning," you might consider accompanying your preachment with a cogent thought or two. Otherwise, it would seem your opinions are set in stone: obsidian.
makework projectsgovernment expenditure stimulus packages and tax cuts is that government expenditure stimulus packages consume real resources on projects that might otherwise not be justified.-dk
So you agree.
Paul Krugman's only public opinion on any topic is "the Republican position is evil", the rest is just the rationalization of the day. How you think such statements lead to enlightenment is your secret.
How smart he in fact is irrelevant.
I think it's very relevant. I rarely if ever learn anything from a dumb ideologue. But I often learn from smart ideologues, whether or not I agree with them.
Sometimes I agree with Krugman, sometimes not. But I often learn from him, and what I learn isn't "the Republican position is evil."
Obviously YMMV. Maybe I started out knowing less than you do, so there's more for me to learn.
I don't know how Republicans can say that hundreds of billions in tax cuts doesn't constitute "one penny" in spending, while waxing lyrical about saving future generations from a burden of debt.
That's the kind of mindset which successfully balooned the deficit under Bush.
If you cut taxes across the board, this means reduced revenue, while federal expenditures remain the same. This also creates an increased budget deficit, thereby increasing government borrowing (unless you actually suggest that Government should rapidly reduce expenditure during a serious recession).
So cut taxes heavily, and in the short term at least, the budget deficit also explodes...only this time your 'bang for the buck' is greatly reduced. Plus, in the hopes of propping up consumer demand, the opportunity for much neglected public investments is lost.
Of course government spending should be, by nature, rigorously scrutinised. What I, and i'm sure Krugman, object to is the idea that huge tax cuts don't cost the country "one penny". Tax cuts are not a free lunch, although Republicans would love you to believe they are.
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