(Parenthetically, this really exposes the problem with libertarian support for the Republican party – even on those issues where conservatives and libertarians are ostensibly on the same page, the resulting policy is often pretty rank from a libertarian perspective. Not that I’d expect the Dems to be much if at all better).

(Parenthetically, this really exposes the problem with libertarian support for the Republican party – even on those issues where conservatives and libertarians are ostensibly on the same page, the resulting policy is often pretty rank from a libertarian perspective. Not that I’d expect the Dems to be much if at all better).

Sure, some of Chait’s critics made more sophisticated arguments than that. But I was responding to Will, and, to a much lesser extent, to you; my point really was that Will hadn’t made a stronger argument than that, at least on that point. And, of course, your argument, while far more sophisticated than Will’s wasn’t even MEANT as a general refutation of his position, but, as you said, a critique of one particular argument.

Moreover, while I’m sure they are out there, and maybe you can even point me to it, I haven’t seen a really sophisticated defense of the Bush tax cut legacy AS A WHOLE, on economic grounds. When even Alan Greenspan criticizes it in retrospect – well, pardon me for suspecting that that’s because such arguments are weak or non-existent. I suspect that the real reasons for support for the project as a whole fall into two categories: the crude political motivations (combined with the naive extreme supply side arguments that no serious, intelligent, person really believes and even Will condemns) that Chait suggests, and some version of the old “starve the beast” argument. I’m less dismissive of the latter rationale than many people are, but it would be nice to see some more forthright admissions that that is what’s going on.

On a slightly unrelated note (I’m speaking as a non-economist, but one who (a) was 3 credits short of an undergrad economics degree, (b) has self educated himself to become reasonably knowledgeable about economics, and, perhaps most importantly, (c) has a mathematical/statistical aptitude and knowledge base to be able to avoid some of the worst errors that people make in this area, the level of economic ignorance on both the left AND the right, as displayed in blog entries and blog comments, is on the whole rather depressing.

Sure, some of Chait’s critics made more sophisticated arguments than that. But I was responding to Will, and, to a much lesser extent, to you; my point really was that Will hadn’t made a stronger argument than that, at least on that point. And, of course, your argument, while far more sophisticated than Will’s wasn’t even MEANT as a general refutation of his position, but, as you said, a critique of one particular argument.

Moreover, while I’m sure they are out there, and maybe you can even point me to it, I haven’t seen a really sophisticated defense of the Bush tax cut legacy AS A WHOLE, on economic grounds. When even Alan Greenspan criticizes it in retrospect – well, pardon me for suspecting that that’s because such arguments are weak or non-existent. I suspect that the real reasons for support for the project as a whole fall into two categories: the crude political motivations (combined with the naive extreme supply side arguments that no serious, intelligent, person really believes and even Will condemns) that Chait suggests, and some version of the old “starve the beast” argument. I’m less dismissive of the latter rationale than many people are, but it would be nice to see some more forthright admissions that that is what’s going on.

On a slightly unrelated note (I’m speaking as a non-economist, but one who (a) was 3 credits short of an undergrad economics degree, (b) has self educated himself to become reasonably knowledgeable about economics, and, perhaps most importantly, (c) has a mathematical/statistical aptitude and knowledge base to be able to avoid some of the worst errors that people make in this area, the level of economic ignorance on both the left AND the right, as displayed in blog entries and blog comments, is on the whole rather depressing.

The problems you refer to are quite real. Alas, I don’t have a great reference on hand to show that that they are taken seriously by libertarians. Instead I will express my respect for one particular libertarian by betting that Alex Tabarrok took some trouble looking into them in his book about privatization of prisons. (haven’t read it)

Note, though, the difficulty of such problems seems to vary a lot between cases. Prisons seem like at least a moderately difficult case. In some cases, there can be even harder problems than you mention, like the technical difficulty of expressing property rights for many kinds of water supplies (huge aquifers, e.g.), or the technical difficulty in saying anything usefully precise beforehand about what you’re buying (custom-written software for air traffic control, e.g.). On the other hand, there are various niches where those problems don’t look very difficult. Privatizing mail delivery, for example, might be nearly as simple as just eliminating the laws which prevent services other than the USPS from doing ordinary mail delivery.

Note also there is ambiguity in “privatization” as in “deregulation.” Libertarians generally favor privatization and deregulation, but that doesn’t mean that any damfool thing which its backers or critics call by those names is a good idea. Roughly, libertarians dislike prior restraint, central control, and rule of men as opposed to law. We prefer rule of law, freedom of contract, clear and tradeable property rights, and such. The electric power “deregulation” in California worked notoriously badly, and I have come to expect people to see that as a telling criticism of libertarian ideas. My usual response is that “deregulation” with arbitrary price controls set by some government board, isn’t: it’s like “democracy” where the elections are limited to candidates chosen by some government board. Similarly, when a libertarian wants to privatize the postal service, it probably means he wants allow anyone who wants to to offer postal services. However, what is often called “privatization” in working politics is often something quite different. If I hear a postal service is “privatized” in the next ten years or so, I will expect it to mean something different: there is still a state-imposed monopoly on mail, it’s no longer given to a department of the state, but to some corporation or other.

The problems you refer to are quite real. Alas, I don’t have a great reference on hand to show that that they are taken seriously by libertarians. Instead I will express my respect for one particular libertarian by betting that Alex Tabarrok took some trouble looking into them in his book about privatization of prisons. (haven’t read it)

Note, though, the difficulty of such problems seems to vary a lot between cases. Prisons seem like at least a moderately difficult case. In some cases, there can be even harder problems than you mention, like the technical difficulty of expressing property rights for many kinds of water supplies (huge aquifers, e.g.), or the technical difficulty in saying anything usefully precise beforehand about what you’re buying (custom-written software for air traffic control, e.g.). On the other hand, there are various niches where those problems don’t look very difficult. Privatizing mail delivery, for example, might be nearly as simple as just eliminating the laws which prevent services other than the USPS from doing ordinary mail delivery.

Note also there is ambiguity in “privatization” as in “deregulation.” Libertarians generally favor privatization and deregulation, but that doesn’t mean that any damfool thing which its backers or critics call by those names is a good idea. Roughly, libertarians dislike prior restraint, central control, and rule of men as opposed to law. We prefer rule of law, freedom of contract, clear and tradeable property rights, and such. The electric power “deregulation” in California worked notoriously badly, and I have come to expect people to see that as a telling criticism of libertarian ideas. My usual response is that “deregulation” with arbitrary price controls set by some government board, isn’t: it’s like “democracy” where the elections are limited to candidates chosen by some government board. Similarly, when a libertarian wants to privatize the postal service, it probably means he wants allow anyone who wants to to offer postal services. However, what is often called “privatization” in working politics is often something quite different. If I hear a postal service is “privatized” in the next ten years or so, I will expect it to mean something different: there is still a state-imposed monopoly on mail, it’s no longer given to a department of the state, but to some corporation or other.

First, “high growth and high marginal rates are compatible” and “that doesn’t make Chait RIGHT, but it does make his argument at least plausible.” My point was just that one particular argument for his conclusions was technically inavlid. That point doesn’t depend on my disproving the conclusion. It seems as though you might have misread me, to think I was trying to disprove the conclusion. (That would not be an outrageous misreading on your part. I’m sure it’s clear that I do disagree with the conclusion. And in choosing an analogy to a policy with widely-acknowledged second-order effects, I chose one where those effects are widely acknowledged to have damaged growth.) Really, I was trying to point out that the argument is technically invalid, independent of the conclusion. If someone writes “like all other geometric figures, kittens before the age 10 days have no more than five corners, therefore there the set of prime numbers is infinite,” the argument is invalid. Is there an infinite number of prime numbers? Yes, in fact there is, so the conclusion is correct, but the argument is still invalid.

I don’t think I’m just being a partisan in thinking this is important here. By coincidence, very recently a similar technical error was made in (for me) the opposite partisan direction: see the comments at http://volokh.com/archives/archive_2007_09_16-2007_09_22.shtml#1190098384 . Technically the two cases are quite parallel. (Here, Chait implicitly claims that the terms after the first in a Taylor series are negligible. There, Roth implicitly claims that the terms after the second in a Taylor series are negligible. In both cases, the implicit assumption is so extreme that it is unreasonable to make it without mentioning it and supplying some serious justification.) For me as a partisan, the cases run in opposite directions: I broadly oppose Chait’s conclusions, and broadly support Roth’s. (I think historians, and others like staff writers at the _Economist_, *should* have be embarrassed for having signed off on that bilge.) But the partisanness difference didn’t stop me from seeing technically similar problems, and seeing them as similarly important. (However, on VC I didn’t get to point out the problem. Here, I was fifth poster. At VC, that might happen on the day the moon loses her daughter, if that occurs in a week when two Mondays come together.)

Second, once you set out to defend the logical validity of Chait’s argument by defending the factual correctness of his conclusion, you appeal to high US growth in the 40s, 50s, and 60s to say “it DOES seem to suggest – well, no, prove – that high growth and high marginal rates are compatible. [...] Now, that doesn’t make Chait RIGHT, but it does make his argument at least plausible [...].” That seems like damning with exceedingly faint praise. How many real-world economic policies are so stunningly bad that they pretty obviously screw up economic growth singlehandedly? Near-total state control of the economy is the single candidate I can think of. And even for a policy as all-encompassing and bad as that, I think many people wouldn’t find the evidence convincing if it weren’t for the crude controlled experiments in partition of Europe in general, Germany specifically, China, and Korea.

It is entirely typical, when a policy which is well-understood to be inefficient, it can be said that high growth and SuchAndSuchHorriblePolicy are not incompatible. For example, racially discriminatory laws like Jim Crow and apartheid are not just morally objectionable, they have long been understood to be economically inefficient. (See http://www.econlib.org/LIBRARY/Columns/LevyPeartdismal.html for some colorful history.) That inefficiency is not disproved by pointing out that various countries have grown rapidly despite them. Similarly, trade barriers are inefficient even though of course countries can grow despite them: there are there are lots of examples.

In fact, for trade barriers, there are not just lots of factual examples, but the aforementioned Smoot-Hawley tariff makes an amusing counterfactual example. I’ve never heard a serious economist try to explain the Great Depression solely in terms of the Smoot-Hawley tariff. Thus, I’m probably in good company in this opinion: if other things had been right in the 1930s, the Smoot-Hawley tariff alone would not have been enough to kill economic growth. So it’s as though this is the second time running that a defender of the efficiency of high income tax rates has chosen an argument which would suffice to defend the efficiency of Smoot-Hawley.:-|

Third “that doesn’t make Chait RIGHT, but it does make his argument at least plausible, and requires of his critics stronger arguments than have been deployed against him.” Really? Of course you are correct that it requires of his critics stronger arguments than claims that 60ish-percent income taxes always suffice to cause very slow economic growth. However, I don’t think it is the case that not a single critic, anywhere, has put forward an argument which is stronger than that.

First, “high growth and high marginal rates are compatible” and “that doesn’t make Chait RIGHT, but it does make his argument at least plausible.” My point was just that one particular argument for his conclusions was technically inavlid. That point doesn’t depend on my disproving the conclusion. It seems as though you might have misread me, to think I was trying to disprove the conclusion. (That would not be an outrageous misreading on your part. I’m sure it’s clear that I do disagree with the conclusion. And in choosing an analogy to a policy with widely-acknowledged second-order effects, I chose one where those effects are widely acknowledged to have damaged growth.) Really, I was trying to point out that the argument is technically invalid, independent of the conclusion. If someone writes “like all other geometric figures, kittens before the age 10 days have no more than five corners, therefore there the set of prime numbers is infinite,” the argument is invalid. Is there an infinite number of prime numbers? Yes, in fact there is, so the conclusion is correct, but the argument is still invalid.

I don’t think I’m just being a partisan in thinking this is important here. By coincidence, very recently a similar technical error was made in (for me) the opposite partisan direction: see the comments at http://volokh.com/archives/archive_2007_09_16-2007_09_22.shtml#1190098384 . Technically the two cases are quite parallel. (Here, Chait implicitly claims that the terms after the first in a Taylor series are negligible. There, Roth implicitly claims that the terms after the second in a Taylor series are negligible. In both cases, the implicit assumption is so extreme that it is unreasonable to make it without mentioning it and supplying some serious justification.) For me as a partisan, the cases run in opposite directions: I broadly oppose Chait’s conclusions, and broadly support Roth’s. (I think historians, and others like staff writers at the _Economist_, *should* have be embarrassed for having signed off on that bilge.) But the partisanness difference didn’t stop me from seeing technically similar problems, and seeing them as similarly important. (However, on VC I didn’t get to point out the problem. Here, I was fifth poster. At VC, that might happen on the day the moon loses her daughter, if that occurs in a week when two Mondays come together.)

Second, once you set out to defend the logical validity of Chait’s argument by defending the factual correctness of his conclusion, you appeal to high US growth in the 40s, 50s, and 60s to say “it DOES seem to suggest – well, no, prove – that high growth and high marginal rates are compatible. [...] Now, that doesn’t make Chait RIGHT, but it does make his argument at least plausible [...].” That seems like damning with exceedingly faint praise. How many real-world economic policies are so stunningly bad that they pretty obviously screw up economic growth singlehandedly? Near-total state control of the economy is the single candidate I can think of. And even for a policy as all-encompassing and bad as that, I think many people wouldn’t find the evidence convincing if it weren’t for the crude controlled experiments in partition of Europe in general, Germany specifically, China, and Korea.

It is entirely typical, when a policy which is well-understood to be inefficient, it can be said that high growth and SuchAndSuchHorriblePolicy are not incompatible. For example, racially discriminatory laws like Jim Crow and apartheid are not just morally objectionable, they have long been understood to be economically inefficient. (See http://www.econlib.org/LIBRARY/Columns/LevyPeartdismal.html for some colorful history.) That inefficiency is not disproved by pointing out that various countries have grown rapidly despite them. Similarly, trade barriers are inefficient even though of course countries can grow despite them: there are there are lots of examples.

In fact, for trade barriers, there are not just lots of factual examples, but the aforementioned Smoot-Hawley tariff makes an amusing counterfactual example. I’ve never heard a serious economist try to explain the Great Depression solely in terms of the Smoot-Hawley tariff. Thus, I’m probably in good company in this opinion: if other things had been right in the 1930s, the Smoot-Hawley tariff alone would not have been enough to kill economic growth. So it’s as though this is the second time running that a defender of the efficiency of high income tax rates has chosen an argument which would suffice to defend the efficiency of Smoot-Hawley.:-|

Third “that doesn’t make Chait RIGHT, but it does make his argument at least plausible, and requires of his critics stronger arguments than have been deployed against him.” Really? Of course you are correct that it requires of his critics stronger arguments than claims that 60ish-percent income taxes always suffice to cause very slow economic growth. However, I don’t think it is the case that not a single critic, anywhere, has put forward an argument which is stronger than that.

Note that my above formulation would not include voucher systems (not “contracted by” the government. I certainly DO see the libertarian argument in favor of such systems, while also seeing counterarguments/practical problems.

Note that my above formulation would not include voucher systems (not “contracted by” the government. I certainly DO see the libertarian argument in favor of such systems, while also seeing counterarguments/practical problems.