Externalities or Pharoah Cures the Common Cold

Professor Don Boudreaux of George Mason University writes (link here) on his blog about climate change (sort of).  He notes that politicians often fail to take into account “externalities” (i.e., the effects their decisions, made to advance their own personal agendas, have on third parties).  It brought to mind that many of my interlocutors on various blogs and in everyday conversations tend to make a similar “externality error” in reverse, so to speak.

“Oh, ok, so you want lower taxes – well then, who will pay for the government that invented the internet, makes laws so the air will be clean, the streets paved and water/food you drink/eat healthy?” they ask.  It must be taught in a rote memorization class – it never varies!

They seem to think that the government one day waved its magic wand and made the air clean and rid the streets of horse manure and flies, then fancy automobiles came along because the streets were cleaned up – thank you Professor B for the exact right counter-point.

In my next discussion, I’m going to ask one of those pro-government bloggers why that all-knowing and omnipotent government doesn’t simply pass a new law that outlaws global warming, per se.  It’ll be a law that is short and sweet:  “Earth, we command you to stop warming.”  If good things happen at the stroke of the POTUS’s pen, then, by golly, start writing some laws, would ya!?  Next on the list, we’ll outlaw, forever!, the common cold, skinned knees, body odor, heart-burn,  restless leg syndrome (also known as RLS on TV) and erectile dysfunction.  Who needs doctors and pills when we have legislators!

As Yul Brynner in The Ten Commandments would say: So let it be written, so let it be done.

Tax Cuts for the Rich!

The Tax System Explained In Beer – by unknown author.

Suppose that every day, ten men go out for beer & the bill for all ten comes to $100. 

If they paid their bill the way we pay our taxes, it would go something like this : 

The first four men (the poorest) would pay nothing. 
The fifth would pay $1 
The sixth would pay $3 
The seventh would pay $7 
The eighth would pay $12 
The ninth would pay $18 
The tenth man (the richest) would pay $59 

So, that’s what they decided to do. 

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball. 

“Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20”. Drinks for the ten men would now cost just $80. 

The group still wanted to pay their bill the way we pay our taxes. 

So the first four men were unaffected. They would still drink for free. But what about the other six men- the paying customers? 

How could they divide the $20 windfall so that everyone would get his fair share? 

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer. 

So, the bar owner suggested that it would be fair to reduce each man’s bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay. 

And so the fifth man, like the first four, now paid nothing (100%saving). 

The sixth now paid $2 instead of $3 (33% saving). 

The seventh now paid $5 instead of $7 (28% saving). 

The eighth now paid $9 instead of $12 (25% saving). 

The ninth now paid $14 instead of $18 (22% saving). 

The tenth now paid $49 instead of $59 (16% saving). 

Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings. 

“I only got a dollar out of the $20 saving,” declared the sixth man. 

He pointed to the tenth man, “but he got $10!” 

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar too. It’s unfair that he got ten times more benefit than me!” 

“That’s true!” shouted the seventh man. “Why should he get $10 back, when I got only $2? The wealthy get all the breaks!” 

“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor!” 

The nine men surrounded the tenth and beat him up. 

The next night the tenth man didn’t show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill! 

And that, boys and girls, journalists and government ministers, is how our tax system works. 

The people who already pay the highest taxes will naturally get the most benefit from a tax reduction.. 

Tax them too much, attack them for being wealthy, and they just may not show up anymore. 

In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier. 
  
_________
For those who understand, no explanation is needed. 
For those who do not understand, no explanation is possible.

 

Who is John Galt?

We found the ‘free lunch’

It is reported that a US Senator has found either the perpetual motion machine or the free lunch.

Well, sort of.  [CLICK below to read MORE]