26 October 2010

A Problem of Perspective

Austan Goolsbee, the new chairman of Obama's Council of Economic Advisers addresses tax "cuts" in this video. I put "cuts" in quotes because, as noted elsewhere, this is not a tax cut but a tax hike. Anyway, here is the clip:

Around the 0:50 mark we come to the fundamental difference in perspective between the progressive/socialist model of government and the classical liberal/libertarian model*. Goolsbee says, "giving these big red eggs to the very high income people would cost $700 billion that we would have to borrow to give it. If you ask objective economists and analysts around the country about what is effective you will find that everyone agrees that these giant tax cuts for very high income people are the least effective thing we can do to get the economy growing."

Let's just stipulate once again that what is proposed is a tax hike, not a tax cut. If the Obama administration has its way, so called "very high income people" will be paying more in taxes next year, not less. That is a tax hike.

Next, Goolsbee says "giving these big red eggs to high income people." The government has nothing to give here. This money already belongs to those "high income" bastards who earned it. Taxation is taking, plain and simple. Just because someone earns more money doesn't mean that they have less of a claim, or the government more of a claim, on it. Any income legally obtained is a person's property.

Then Goolsbee says that giving people what already belongs to them will cost $700 billion. This is stretching the concept of cost beyond any sensible use of the word. "Allowing" people to keep what is theirs is not a cost. Not squeezing more money out of other people for being productive is not a cost. Spending is where costs come from. What costs the government billions and trillions of dollars is throwing away all of the revenue they already take from us, most of it in the form of transfer payments beholden only to bureaucratic inefficiency. That we would have to "borrow" money to pay this cost is sophistry.

But to prove his thesis Goolsbee says that you need only "ask objective economists and analysts about what is effective." I'm noticing this argument technique more and more. It is used constantly by people like Paul Krugman who know full well that there is just as much objective analysis out there, and usually more so, showing unequivocally that what you're selling is horse feathers. It marginalizes any counter-argument as unserious and unworthy of response. In this scenario, anyone with the temerity to disagree with the Goolsbee analysis is politically motivated, while he merely represents what is best for the country as all of the objective smart people concur.

"Everyone agrees that these giant tax cuts" are ineffective at spurring economic growth. See above and see above but also there's some other sleight of hand going on here. There is indeed literature that supports the notion that massive tax cuts during recessions are ineffective at ending recessions in and of themselves. From a classical economics standpoint it is feasible but debatable and certainly not the open and shut case Goolsbee promotes. Morally, of course, it is a slam dunk not to take that which does not belong to you but that's another matter entirely. But again, we are not debating a tax cut. What is much more prevalent in the literature, whether classical, neo-classical, Austrian, hell, even Keynesian, is that tax increases, which this surely will be, are a horrible idea and severely restrict economic growth. The most simple reason is that the market, for all of its flaws, is the most efficient method man has come up with for resource allocation. And government, for all of its useful purposes, is usually the worst. And neither Austan Goolsbee, Barak Obama, Paul Krugman, John Maynard Keynes or any of their strawmen can change that.

*The liberal-conservative dichotomy doesn't work because conservatives have shown just as much fealty to government and using power never given to it to promote idiotic social policy as opposed to idiotic fiscal policy.

It appears Dr. Goolsbee has used his White Board disingenuously before:

1 comment:

Anonymous said...

well stated. when politicians like Obama don't want to "give" rich people more of their hard earned money because they will likely only "save" it and not spend it, they fail to understand the necessity of savings in an economy, which leads to capital formation and business investment. without savings, real economic growth is not possible.