Thursday, April 21, 2011

Krugman Is Either Having a Brain Freeze, or...

more likely, he is just being utterly mendacious, because he writes this in response to the Landsburg post I discuss below:

"There are multiple things wrong with this claim, but the most fundamental, I think, is that it represents a remarkable misunderstanding of the reasons why we have taxes in the first place. They don’t primarily exist as a way to induce lower private consumption, although they may sometimes have that effect; they are there to ensure government solvency."

Aaaargh! Eck! *#!%#&^!@4! Landsburg was NOT (and yes, I am shouting) contending that taxes exist as a WAY to reduce private consumption. He was saying that, as a matter of fact, they will do so. And the tax falls upon whoever has their consumption reduced by the tax. And that won't necessarily be the person upon whom we put the legal tax burden. And what Landsburg is saying is that placing the legal incidence of the tax on Kendrick in the interest of "taxing the rich" does not necessarily really tax the rich. Krugman knows all that. So that's why I choose mendacious as the likely explanation.

Now, Brad Delong has a more intelligent discussion of Landsburg's post. Even that is less than accurate, however: Does DeLong really want to contend that he and I are "consuming" the bombs being dropped in Libya and Afghanistan when he claims "we" are the government? Yes, "we" may consume the national parks and federal highway system, but who is this "we," kemosabe, who is consuming NASA space flights? And while DeLong is surely correct in noting that Kendrick's heirs may bear the burden of this tax, he ignores the fact that Kendrick may have left his money to orphanages, so the tax burden may fall on the very, very poor instead of on the rich.

But what I find more interesting is the comment thread at DeLong's blog. DeLong is not disagreeing with Landsburg's contention that the legal incidence of a tax and the economic incidence are separate matters -- he is, after all, a good economist, and knows this quite well. But I would say about 5% of the comment-writers even have a clue about what is going on. They are merely laughing at "stupid" Landsburg who is too dumb to realize that we can send a tax bill to Kendrick.

So, Professor DeLong, you manage your comments closely enough that you delete links to intelligent papers by Larry White when it suits you, right? So are you going to step in and tell your friendly comment-writers that they have no idea what they are talking about?

UPDATE: As Alex Tabarok and Bob Murphy have pointed out, Krugman makes the same "bizarre" point Landsburg does in his economics textbook.


  1. This has precedent, Mr. Callahan.

    Every time I go to DeLong's blog and read the comments, I feel the commenters are just being sycophants who shout out, "Yeah, that guy...that guy DeLong is talking about...he, uh, he is STUPID!"

    For example, DeLong made a modest criticism of a small point made by Greg Mankiw. The commenter's response?

    "Greg Mankiw is a REPUBLICAN HACK!"

    "I don't know why we take Mankiw seriously anymore."

    "They only bother talking about that guy because he teaches at Harvard."

    "Greg Mankiw knows NOTHING about economics."

    So these armchair internet PhDs have decided in their infinite wisdom who is or is not a worthy economist. I really hope those commenters are just college students or high school students.

    I will be shocked if they turn out to be other economics professors.

  2. Good point Gene. I didn't spell that out in my own (exasperated) reaction to Krugman, but you're right, that is the fundamental thing going on here. He is assuming that Landsburg was saying the purpose of taxation was to reduce consumption, when that's not what Landsburg was saying.

    On the other hand, I can't quite get up the tenacity to go to bat 100% for a guy who says it is literally impossible to tax a rich person. I mean, no it's not. You can tax a rich person. What Landsburg should have said is that doing so wouldn't ease the deficit problem (in terms of real resources) falling on everybody else, because of blah blah blah.

  3. Well, he certainly doesn't claim it's impossible to tax any rich person, just this particular rich person.

  4. Gene wrote:

    Well, he certainly doesn't claim it's impossible to tax any rich person, just this particular rich person.

    If the IRS seized his $84 million, I think most libertarians would get upset at the outrageous taxation. :)

  5. I think the main problem with Landsburg is the other thing DeLong said. We are far from full employment and there could be plenty idle resource around. Also, not all goods are rivalrous. If the government updated the software for a bureaucracy or bought elevator music from iTunes, no one would have to consume less.

  6. scineram, Landsburg handled that well in the comments, I thought: he said sure there might be unused resources, but the government doesn't need to tax anyone to bring those into use; it can just print money. So taking the miser's $84 million and using it to hire laid-off workers is economically the equivalent of printing $84 million and hiring the workers.


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