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Jens 'n' Frens
Idle thoughts of a relatively libertarian Republican in Cambridge, MA, and whomever he invites. Mostly political.
"A strong conviction that something must be done is the parent of many bad measures."
-- Daniel Webster
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Monday, April 18, 2011 :::
I thought James Taranto used to include anchors in his html, but it appears they aren't there. Anyway, if you click here and search for "You Get What You Pay For?", you can read about the suggestion that the IRS impose a service that is offered for free by a "think tank", which I presume multiplies the fraction of various line items in the federal budget by an individual's tax bill and asserts, "for instance, $15 of that tax bill went to the FBI."
I assume I don't have to detail here the point that money spent freely by an individual in response to a market offer — "I'll give you X if you pay me $Y" — is different in its economic context from money collected in taxes, even for purposes the taxpayer supports. What I want to note is that this notion is even farther from a market-like transaction than if, upon purchasing a Taurus from Ford*, you were presented an itemized receipt indicating that you had paid a certain amount for an Escort and a certain amount for an F-1 pick-up truck.
At the Taranto link, it's noted that this idea might well increase, rather than decrease, the objection of people to taxes, and indeed one occasionally hears of anti-war taxpayers — frequently people who are more than usually eager to increase other forms of government spending — attempting to withhold the amount "they" pay to the military. As Taranto's reader notes, "There's something the government does for everyone to hate." In a world in which a benign central planner knew everyone's desires, economists have worked out a theoretical solution to the "public goods" problem; it's called Lindahl Pricing, and the gist is that individuals pay for goods in proportion to which they value the good — if I value an expansion in a program $5, and everyone who would benefit from it cumulatively values it $5 million, I pay one millionth of its cost — and if you wanted to do accounting that was economically sensible, you should imagine that you're paying more than average for programs that you value more than average, and that someone else is paying for the programs you don't value. I'm not suggesting that you'd find you had paid a fair amount, or that what the government is doing is close to optimal; I'm just saying that pro-rating each portion in the fashion suggested and imagining that it has much economic meaning is stupid.
* Not that anyone just bought a Ford Taurus today. It's blue, by the way.
::: posted by dWj at 8:17 PM
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