Taxing gasoline and other polluting products is a very good idea, of course, but a much bigger source of revenue for reducing distortionary taxes would be to tax land rent.
Odd, isn't it, that so many modern economists don't support LVT. I wonder why...
How many times do we have to get this kind of analysis/guilt trip laid on us? How 'bout these thoughts:
1. We pass on our privately-held wealth to the next generation, too, and not just our debts. (We can't take any of it with us.) Our private wealth has grown from $10 trillion in 1980 to $67 trillion today (or so the WSJ claimed in a recent editorial). Our estimated unfunded entitlement program liabilities is less than that private wealth estimate. These doom-sayers never mention this.
2. Chile privatized their Social Security System in 1980, and they've done quite well in the intervening 26 years as I understand. U. of Chicago Boys devised the method they used to do it. Worked rather well. We could follow their model. We don't because the D Party is wedded to socialism and has blocked any attempts to privatize the SS System.
3. The reason Medicare & Medicaid have such huge unfunded liability estimates is because they predict future costs with a linear projection of past costs (I presume). Health care costs have been going up much faster than inflation, so a simple linear projection leads to these insanely large estimates. (Everyone knows the problem: the system is almost immune from normal free market pressures to compete and become more efficient. Third party payers pay for most health care costs. Health insurance pays for routine expenses rather than just the rare catastrophic illness. This would be like food insurance that pays for your weekly groceries. Health insurance is tax-free if employers pay for it.)
The urgent task is to fix this system. Until we do that, cost projections many years into the future are worthless. (The Concord Coalition loves to lay this kind of guilt trip on us.) They are really just a barely disguised lobbying effort for higher taxes.
What they should do is recommend practical ways to introduce normal market incentives into the health care system. They could recommend we make health benefits taxable. They could recommend more generous Health Savings Accounts (HSAs) so that most everyone will want to have one - if they are too cowardly to recommend making health benefits taxable.
You say in you bokk principles of economics that you are a slow reader. So how can you read everyday (or almost everyday) texts from Washington Post, Wall Street Journal, The Economist, Harvard Crimson, Boston Globe, San Francisco Chronicle, among many other colunists and researchers? With all the admiration and respect that I have to you, I am surprised with that. Do you by any chance have insomnia?
4 Comments:
As I learned from Prof. Cowen, there are never any answers, just more questions :P
Taxing gasoline and other polluting products is a very good idea, of course, but a much bigger source of revenue for reducing distortionary taxes would be to tax land rent.
Odd, isn't it, that so many modern economists don't support LVT. I wonder why...
How many times do we have to get this kind of analysis/guilt trip laid on us? How 'bout these thoughts:
1. We pass on our privately-held wealth to the next generation, too, and not just our debts. (We can't take any of it with us.) Our private wealth has grown from $10 trillion in 1980 to $67 trillion today (or so the WSJ claimed in a recent editorial). Our estimated unfunded entitlement program liabilities is less than that private wealth estimate. These doom-sayers never mention this.
2. Chile privatized their Social Security System in 1980, and they've done quite well in the intervening 26 years as I understand. U. of Chicago Boys devised the method they used to do it. Worked rather well. We could follow their model. We don't because the D Party is wedded to socialism and has blocked any attempts to privatize the SS System.
3. The reason Medicare & Medicaid have such huge unfunded liability estimates is because they predict future costs with a linear projection of past costs (I presume). Health care costs have been going up much faster than inflation, so a simple linear projection leads to these insanely large estimates. (Everyone knows the problem: the system is almost immune from normal free market pressures to compete and become more efficient. Third party payers pay for most health care costs. Health insurance pays for routine expenses rather than just the rare catastrophic illness. This would be like food insurance that pays for your weekly groceries. Health insurance is tax-free if employers pay for it.)
The urgent task is to fix this system. Until we do that, cost projections many years into the future are worthless. (The Concord Coalition loves to lay this kind of guilt trip on us.) They are really just a barely disguised lobbying effort for higher taxes.
What they should do is recommend practical ways to introduce normal market incentives into the health care system. They could recommend we make health benefits taxable. They could recommend more generous Health Savings Accounts (HSAs) so that most everyone will want to have one - if they are too cowardly to recommend making health benefits taxable.
Dr. Mankiw,
You say in you bokk principles of economics that you are a slow reader. So how can you read everyday (or almost everyday) texts from Washington Post, Wall Street Journal, The Economist, Harvard Crimson, Boston Globe, San Francisco Chronicle, among many other colunists and researchers?
With all the admiration and respect that I have to you, I am surprised with that. Do you by any chance have insomnia?
Thanks!
Post a Comment