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Title : Paul Krugman's Conversion To A 70-Percent Income Tax
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Paul Krugman's Conversion To A 70-Percent Income Tax

P. Krugman

By William L. Anderson

Paul Krugman was the featured speaker at a especial session of the 2004 Southern Economic Association meetings, held the weekend before Thanksgiving, as well as a release of economists listened intently equally the most famous human being at the conference spoke religiously well-nigh the glories of Keynesian economics. Professor Joseph Salerno as well as I were inwards the audience sitting adjacent to each other, as well as nosotros kept our disagreements alongside Krugman’s points to ourselves.

When the Q&A began, I raised my paw straightaway as well as was able to inquire the starting fourth dimension question, as well as so I asked Krugman the following: “You take away maintain been real critical of the Bush taxation cuts. Do you lot favor going dorsum to the seventy pct rates that existed before 1981?”

Krugman answered emphatically, “Oh, no! Those rates were insane.”

To live honest, I felt some relief. Krugman had non gone off the deep end, I thought. Despite his politically-partisan rhetoric as well as his semi-weekly tirades against the taxation policy of the Bush II administration, Krugman seemed to sympathize that taxes actually were an economical drag as well as that jacking upwards the marginal rates would create havoc on the economy.

That was then. In the intervening years Krugman has received a Nobel Memorial Prize inwards economic science (something I “celebrated” with this snarky slice on the Forbes website), as well as left his prestigious post service at Princeton University for a professorship at the less-prestigious Graduate Center if the City University of New York. While he was decidedly on the left when I saw him inwards 2004, his journeying to beingness a difficult leftist has accelerated, as well as he has instruct a “woke,” born-again “Democratic Socialist” since then.

Lest anyone soundless believes that whatever vestige of a existent economist remains inwards Krugman, recall again. In his recent New York Times column, Krugman non entirely offers effusive praise for Rep. Alexandria Occasio-Cortez’s “Green New Deal” inwards which she calls for a provide to the 70-percent marginal taxation rates (thus endorsing what he 1 time labeled equally “insane”), but he besides gives readers a lesson inwards faulty utility theory that should take away maintain earned him an “F” inwards whatever legitimate doctoral plan inwards economics.

Krugman’s column is loaded alongside economical fallacies, the starting fourth dimension employing the informal fallacy of argumentum advertising verecundiam, or the “appeal from authority” to qualify his point. Krugman writes:

The argument of the 2d involves AOC’s advocacy of a taxation charge per unit of measurement of 70-80 pct on real high incomes, which is acre crazy, right? I mean, who thinks that makes sense? Only ignorant people similar … um, Peter Diamond, Nobel laureate inwards economic science as well as arguably the world’s leading skilful on world finance. (Although Republicans blocked him from an engagement to the Federal Reserve Board alongside claims that he was unqualified. Really.)

Of course, at that spot are other famous economists such as David Henderson notes that utility only tin live ordinal, non cardinal, as well as he besides quotes Robert Murphy (familiar to readers of this page), who emphasizes the same point. There are no commutation measures of “utils” that 1 gains from consumption or inwards improving one’s house inwards the world. Likewise, equally Henderson notes here, 1 cannot

measure difference s inwards the marginal utility of coin across people. Why? …Utility is ordinal, non cardinal. So there’s no such affair equally a “difference” to measure.

Henderson as well as Rothbard are non making capricious statements. Legitimate commutation measurements of utility would require that at that spot live criterion measurements of satisfaction (utility) that are non arbitrarily constructed to agree the personal preferences of for certain people who take away maintain coercive ability over others and, thus, wishing to forcefulness others to deed inwards a for certain way opposite to their ain desires, or fifty-fifty to have contrary thoughts to those who are the so-called criterion setters of utility. Krugman may say that such commutation measurements are based upon “common sense,” but it is impossible to impose such measures without coercing others against their will.

The 2d final result alongside Krugman’s ex cathedra declarations is that he assumes the nation ever volition uncovering improve uses for the coin confiscated from wealthy people than those individuals would purpose themselves. He bases his beliefs on ii points: the starting fourth dimension is the application of commutation utility, which is non legitimate inwards economical analysis. The 2d is that entrepreneurship as well as working capital missive of the alphabet evolution at best are irrelevant inwards the economy, or fifty-fifty that state-sponsored “development” is superior to whatever private individuals would do.

Discussion of that 2d betoken volition take away maintain to a greater extent than infinite than tin live allotted to this detail article. However, suffice it to say that Krugman consistently employs the same methodology equally before: he as well as like-minded people should take away maintain the ability to determine what is goodness for everyone else.

There are many reasons why to oppose 70+ percent marginal taxation rates, as well as if 1 believes that the increment of private enterprise is a goodness affair for people, so Krugman’s master copy statement that confiscatory taxes are “insane” makes sense. In repudiating his ain earlier-held beliefs, however, Krugman non entirely embraces viewpoints that he 1 time rejected, but he besides employs what entirely tin live called intellectually-illegitimate agency to attain this dubious feat.

William L. Anderson is a professor of economic science at Frostburg State University inwards Frostburg, Maryland. 

The higher upwards origimally appeared at Mises.org.

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