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It has been asserted that the happiness of a population, particularly once a base level of income is reached, depends not on some absolute measure of well-being but rather how one’s income compares to others around them. Of course you know what the chess-masters are thinking about the best way to improve outcomes: tax the rich. I had an old professor who was famous for advocating sharply progressive consumption taxes.

Fine.

But isn’t that only one of two ways to make lower-income people happier? If we truly were pursuing policy to improve the general well-being of these lower income folks, wouldn’t a more constructive policy be one that advocates the immediate open-immigration for anyone who wants to come to the United States? This would be constructive on the grounds that both I and the relative status folks should support, wouldn’t it? First of all, it would dramatically improve the well-being of the people who would be able to come here. Second, given the large amount of low-wage immigrants coming here, that would necessarily improve the relative standard of living of the prior low-wage Americans. They would favorably compare themselves to the new lower-wage folks in the economy.

So, can you tell me a reason why, if you care truly about increasing our wealth and well-being why every single behavioral anomaly seems to end up being used as a crowbar for more taxation, more open disdain for the rich and for a greater intrusion by government? I’ll begin to take the proscriptions of the behavioralists seriously when they pursue policies consistently according to the standards that they themselves have been promoting for why they do what they do. But I’ve yet to see a Nudger offer up free financial advice to professional athletes who do not take full advantage of global tax havens, and I have yet to see anyone who cares about relative status suggest that it can be “mitigated” (if we accede that it needs to be) not just by forcibly taking wealth from the wealthier among us, but also by allowing the flourishing of the poorest among us.

5 Responses to “Calling All Behavioralists”

  1. Harry says:

    I refer to Wintercow’s Sound Money chart, next to the post, for the behavioralists. One would like a longer-range chart for those who may doubt a good measure of inflation, which has already happened. Today George Melloan had a great piece in the WSJ, of the efforts of the government to send out a chain letter to the rest of the world. Let’s not count on Zimbabwe for help any time soon.

  2. Harry says:

    I liked the part about the behaviorists, the crickets, using the crowbar for ever more taxation. Do any of the crickets out there believe values exist? What do you think, crickets? Have you any ideas?

  3. It is an easy guess that you will not get as much by taxing the poor as you will by taxing the rich. Easily, the poor lack wealth, so why bother taxing them, when you can get more from the rich by definition. Moreover, even the rich who lack the personal facility to comply (stupid; ignorant) have lawyers and accountants to do for them what they cannot do for themselves. In short: you can only tax the rich; taxing the poor is waste of effort.

    That said, it is an easy gloss that taxation of any kind must be a misallocation of resources by definition. The government perceives a mandate to do a thing – fix a road; pave a road; create a road; colonize Mars; prevent cancer – and it forces this to be done, when absent the police power of enforcement, this would not be done.

    That might be fine, except for the fact that voluntary transactions benefit both partiees whereas political decisions are zero-sum.

  4. chuck martel says:

    The poor get taxed lots. Sales taxes, VAT, fuel taxes, tariffs on imports that drive up prices, on & on. Even the sacred social security is just another tax.

  5. […] But if that were really the case, then where are all of the paternalistic nudgers on this issue? Here is another example of what I mean. Here is […]

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