Last week, I took a look at optimal tax rates, the top rates of income tax which economic research suggests would maximize revenue if implemented as policy. The research suggested that for every 1% higher the top rate of income tax rises, the rich report 0.25% less income. This suggested an optimal top rate of between 73 and 80%. Toward the end of that post, I suggested that it might be the case that even as the rich report lower earnings, the economy as a whole might operate more efficiently at those high rates, if the government is more effective at investment than the private sector. Today I’d like to look at some empirical data to see if there’s any historical basis for that claim. Continue reading “Tax Rates and Growth”
Tag: politics
The Biasing Effects of Personal Experience
One of the most common assumptions around is the notion that the only way to truly understand something is to be part of it. It is said that the best way to learn about life is to live it. This idea has tremendous influence–it causes method actors to attempt to directly experience what their characters experience, it causes people to go on trips or to do things purely for “the experience”, and most importantly, it has tremendous influence over how people think about politics, both for the left and for the right. The left scolds well-off politicians, who are assumed to have no conception of what it means to be poor and to suffer. The right scolds young people and ivory tower academics for not directly experiencing the welfare systems they praise, or the private systems they denigrate. There is a kernel of truth in both criticisms, but that’s about it.
Continue reading “The Biasing Effects of Personal Experience”
How Much Should We Soak the Rich?
There’s broad agreement among the political left in most developed states that we should raise taxes on high earners, if not now then after the economy recovers. The justifications vary somewhat, depending on how one comes at one’s leftism, but in most cases it can be boiled down to the principle of diminishing returns, which holds that the more money you have, the less utility additional money buys you. A homeless person almost always benefits more from a dollar than does a rich person, and if we are seeking to maximize welfare, it is reasonable to redistribute wealth from the rich person to the homeless person. Even some right wingers agree to this, in theory. The trouble is that there is much disagreement as to the extent to which we ought to redistribute empirically. That’s the question I’m going after today.
Extending the War on Terror
Back in 2011 when Osama bin Laden was killed, I was excited. This isn’t to say that I thought bin Laden’s execution and subsequent dumping into the sea were optimal–I would have preferred to see him captured and put on trial. No, my excitement stemmed from my belief that once bin Laden was captured the Obama administration would have an excuse to bring the war on terror to an end. See, in 2011 I still had some last vestiges of confidence in the judgement of Barack Obama, vestiges that, sadly, have since proven themselves grievously misplaced. What’s the trouble now? The Pentagon has given a straight answer to the question of how long it expects the war on terror to last. What answer did it give? Michael Sheehan, assistant secretary for special operations at the defence department, said:
I think it’s at least 10 to 20 years
Rethinking Realism
In international relations, realism commonly comes under attack. Realism is the belief that states are rational and that they pursue their interests and their interests exclusively through rational means. Realism is a descriptive theory–it makes claims about how the world is. Many people criticise realism on the grounds that this is very much not the whole story. It is often unclear what a state’s interests are in the first place, and there are many cases in which states act in ways that seem to run contrary to their interests. States sometimes make irrational mistakes. We know that states are not exclusively rational because we care who determines our foreign policy. If all leaders were rationally and pursued the same set of interests rationally, all leaders would be equivalent to one another in policy. Insofar as there are policy differences among different leaders, there is either disagreement about interests, more rational and less rational policies in pursuit of interests, or some combination of both of these things. This often makes realism seem reductionist. It ignores the way we construct our interests, taking them as given. It also ignores the mistakes that people make, the capacity for leaders to be incompetent. However, I do not think realism can be dismissed on these grounds. Instead, it requires re-framing.
Benjamin Studebaker 