Comments on: More on Transparency & Generality

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By: Club Troppo » Scandinavian social democracy — not the road to serfdom after all

Tue, 14 Nov 2006 07:57:23 +0000

[...] Classical liberals tend to be less worried about rule-governed transfers than they are about other attempts to correct market ‘unfairness.’ For example, Cato’s Will Wilkinson suggests that, "The cause of classical liberalism as a really existing possibility for political reform has been harmed by bundling free markets with a ban on transfers" because it made makes enemies of those who supported transfers on the grounds of justice. [...]

By: Club Troppo » Selling out

Club Troppo » Selling out — Sat, 09 Sep 2006 14:08:17 +0000

[...] At Catallaxy Jason Soon favours Murray’s model. Introducing a universal cash grant or negative income tax would pave the way for "a vast slash and burn exercise for the remaining welfare and labour market regulatory machines to facilitate a freer labour market…" For libertarians like Jason, it’s the possibility of finally being able to set the market free that justifies the large income transfers. At the Fly Bottle, Will Wilkinson suggests that: [...]

By: How to Affect Change at Genuine Incorporated

How to Affect Change at Genuine Incorporated — Mon, 12 Jun 2006 02:41:58 +0000

[...] And to bring it down to the managerial level, political philosophy, thinking of a manager as a politician: Governments use coercion to make things happen. Government coercion can be legitimate, but it has to meet certain conditions. One of the traditional conditions is that a majority of the citizens who are going to be coerced, or a majority of their representatives, have to agree to it. However, if policies are structured so that we can’t see whether or how we are being coerced, then we can’t freely endorse them in the democratic process. So those policies fail the test of legitimacy. [...]

By: L

Mon, 03 Apr 2006 02:09:53 +0000

Jacob T Levy: Are you saying that Murray and Friedman’s superficial differences are important, even though an income tax could easily obliterate the differences? (Considering that inflation is ambiguous over 50 years, Murray’s plan probably falls in the range of inflation-adjusted versions of Friedman’s plan.)

Maybe the superficial difference could affect political viability, but I don’t think there’s a difference in terms of discouraging work or the potential for fraud. Either way, it seems to me that it’s just about unreported income, so if the marginal tax rates are the same, the potentials are the same (and probably the same as today).

I’d like to point out that the EITC can have an effective marginal income tax rate as high as 70%. In practice, people who have it together enough to apply for the EITC are ambitious enough to escape it.

By: L

Mon, 03 Apr 2006 02:09:00 +0000

By: Jacob T. Levy

Jacob T. Levy — Mon, 27 Mar 2006 17:43:14 +0000

Friedman’s negative income tax is a bit different. On the one hand, it’s a lot cheaper, because it’s means-tested. On the other hand, it’s got all the disadvantages of means-testing: it’s narrowly targeted and hence unpopular, it’s got the potential to penalize work (unlike the EITC and unlike UBI), it either is open to a lot of fraud or requires a welfare-and-social-work level of intrusive bureaucracy to monitor eligibility.

By: Jacob T. Levy

Jacob T. Levy — Mon, 27 Mar 2006 17:43:00 +0000

By: Aria PN » Free Market with Transfers

Aria PN » Free Market with Transfers — Mon, 27 Mar 2006 17:42:21 +0000

[...] That’s the solution I was proposing in my last post. Free market to get the most benefits and transfers to redistribute them accordingly. One important issue about redistribution is generality versus transparency. Do we redistribute the benefits universally or selectively but transparently? Will Wilkinson expands more on this. This problem in particular is really evident in Indonesia: Part of the issue here is a big principle-agent/incentive compatibility problem between representatives and the citizens they represent. Politicians want to get re-elected. If they can subsidize interest group A at group B’s expense without group B really noticing due to the hidden transfer, then that will sound like a real winner to a politician. Which is just to say that the incentives politicians face encourage them to violate the very conditions of transparency and public justification that make their coercive powers legitimate. [...]