Re: Tax Leisure via Time Audits?

[Robin Hanson]

At 04:59 PM 4/26/02 -0700, Wei Dai wrote:
On Fri, Apr 26, 2002 at 05:15:33PM -0400, Robin Hanson wrote:
  I apply the same logic to government.  If I believe, as I do, that people
  often overestimate the value they get from government, I should fix that if
  I can by persuasion.

What if you can't fix it by persuasion and everyone becomes worse off
because of your advice? Or what if you do manage to persuade everyone, and
then they blame you for giving them what they thought they wanted?

Ex post, shit happens.  :-)

BTW, how do you make interpersonal comparisons of expected (rather than
actual) benefits and costs, when people do not have common priors or the
same capacity for logical reasoning? What if some (crazy) person believes
that having a smaller government is worth a quadrillion dollars? How would
that balance out with the (slightly less crazy) people who believe that a
bigger government is a net benefit?

When I'm inferring what it is that people think they want, I don't have to
believe everything they say.  I can also look at their actions.  I can't
see how anyone has a quadrillion dollar willingness to pay, as no one can
afford to pay that much.



Robin Hanson  [EMAIL PROTECTED]  http://hanson.gmu.edu
Asst. Prof. Economics, George Mason University
MSN 1D3, Carow Hall, Fairfax VA 22030-
703-993-2326  FAX: 703-993-2323

Re: Tax Leisure via Time Audits?

[Wei Dai]

On Sat, Apr 27, 2002 at 09:45:12AM -0400, Robin Hanson wrote:
 When I'm inferring what it is that people think they want, I don't have to
 believe everything they say.  I can also look at their actions.  I can't
 see how anyone has a quadrillion dollar willingness to pay, as no one can
 afford to pay that much.

You mean you're going to count a suitcase with a million dollars in it as
being worth only a thousand dollars to me because I only have a thousand
dollars in the bank and am not willing to pay more for it? That doesn't
seem right. What I meant by a smaller government being worth a quadrillion
dollars to someone is that he would choose to have a smaller government if
offered the alternative between a quadrillion dollars and a smaller
government.

Besides, virtually no one pays for government willingly, so
how can you tell how much they're willing to pay for government from their
actions? The only thing you can say, it seems, is that if someone votes
for bigger government, he's probably willing to pay more than $0 for it. 
That doesn't seem to leave you much to go on.

Here's my understanding of why government has gotten bigger as tax
efficiency increased. Whoever is in control of a government, whether a
dictator or a democratic majority, has an incentive to maximize tax
revenue from the rest of the population and then spend the money on
themselves. So in a democracy you're always going to have a majority
that's in favor of bigger government. That fact tells you nothing about
whether bigger government is a net gain for social welfare. And there is
nothing you can do to persuade them that they should not want bigger
government, because it is in fact in their rational self interest to have
bigger government. So the only thing that prevents government from getting
bigger is lack of tax efficiency. 

If you think more slavery is bad for social welfare, you should act to
decrease slave productivity, rather than to increase it. Similarly, if you
believe that bigger government is bad for social welfare, you
should act to decrease tax efficiency, rather than to increase it.