Depends on how you’re defining practical, I think. They’re easy to calculate, but they may topple the gov’t.
It depends on how you define ‘success’, but I’d consider it one. It and similar Depression-era job programs put a lot of people to work, and many of its accomplishments are still with us today.
I’ve got nothing against another CCC; I just don’t think it would have a prayer of getting enough support to get to the House or Senate floor. (FWIW, I personally wouldn’t want to invest such a corps with police powers; I’d just want them to be eyes and ears watching bridges, power plants, and whatnot, with radios to call the real cops if they saw anything suspicious.)
Another program that could be expanded is Clinton’s program to get 100,000 more cops on the streets. (I don’t know if it actually attained that number, but that’s not material here.) Police protection is one area where we’ve been trying to get by on the cheap for too long, and that thin blue line is pretty damned thin, in most cities. Other than the fact that he’d hate to endorse a Clinton idea, it’s the sort of jobs program that you could almost see Bush supporting.
Apos: what is MRS? And what is the meaning of the ‘deadweight loss’ term that you and others have bandied about? It’s hard for me to discuss your ideas when I’m not sure what you mean.
RT, when a tax is levied on buyers, the demand curve shifts downwards by the size of the tax. Tax the sellers and the supply curve shifts upwards. Thus a tax places a “wedge” in between the price that buyers pay and the price sellers receive. Thus fewer items are sold. These lost sales are deadweight loss: the tax prevents both the buyers and the sellers closed out by it from realizing gains from trade, i.e. producer and consumer surplus.
The size of the deadweight loss depends on the size of the tax, and its effect on the market depends on the elasticities of supply and demand.
The nasty thing about deadweight loss is that it increases more rapidly than the size of the tax. If you happen to have plotted your supply and demand curves with corresponding shifts downward and upward, you will see that the deadweight loss is the area of a triangle in which no sales take place because of the tax. Double the tax and the triangle’s area increases four times.
Hope this helps. If not, I’ll see if I can scrounge up any actual diagrams on the web.
By MRS I assume Apos means the Marginal Rate of Substitution. But I’ll let him explain in case I am mistaken.
—Apos: what is MRS? And what is the meaning of the ‘deadweight loss’ term that you and others have bandied about? It’s hard for me to discuss your ideas when I’m not sure what you mean.—
Sorry. Maeglin has got it right. MRS is the rate at which I (or anyone) is willing to trade off one good for another. In this case, we’re talking about income (via working) and leisure. Basically, if you make income less attractive (by taxing it, thus making every hour I spend at work less productive for me than it was before), then depending on my preferences, I’m not going to work as hard as I might have before: leisure becomes more attractive, relative to working.
My own explaination of Deadweight loss/welfare loss/excess burden: Think about it this way: let’s I am willing to pay up to $50 for a pair of suit pants. However, they sell for only $45. That means I’m getting something worth $50 to me, at only $45: a net $5 benefit. We can think of that as a benefit to me, but also to society in general: because the market is the way it is, most buyers are getting stuff cheaper than they’d be willing to pay, and usually most sellers are selling at prices higher than what THEY would be willing to sell. This is known as surplus: and it’s cheifly the acheivement of this surplus that makes competitative economies so great.
Now, if you impose a tax on this market of $3, I’ll pay 48, but the seller only recieves 45 of that. However, the extra $3 goes to the government, meaning that the surplus isn’t lost, it’s just going to different people.
But what happens when the tax is raised to $6? The price I face is now $51. And the result is: I don’t buy the pants at all. That means the welfare from this transaction is lost entirely. I don’t get it, the seller doesn’t get it, and the government doesn’t get it in taxes. It’s lost to the world. And that is what’s known as deadweight loss or excess burden.
To connect this back to income and MRS, what’s going on when we tax income is roughly the same as with any good: some people will consume less of it, because you’ve priced them out of the market on the margin.
Point of all this theory? The economic harm from taxes is not that the government takes your money. It’s a bad thing to have your money taken… but from the perspective of society as a whole, it’s also an equally good thing to take money, so it all balances out. The harm from taxes comes when I can make an effort to avoid paying the tax (not evade paying, that’s different), usually by not even engaging in the taxed activity as much as I would have in the first place.
From my perspective, that’s better for me (that’s why I do it!). But from the perspective of society as a whole, me avoiding the tax is pure cost: I miss out on something I would have liked, and no one else benefits from it. THAT is the true cost of a tax.
A head tax is the one kind of tax that doesn’t cause deadweight loss. Why? Because it’s a tax imposed on a people just for existing, period: and all types of people face the same rate. There’s no escaping having to pay it (well, practically: I suppose I could leave the country or commit suicide or something, but that’s too drastic to really consider), and so it can’t factor into any of my decisions about what to buy or consume relative to anything else. If we could finance the government entirely via head taxes, it would be great from the perspective of efficiency: it wouldn’t cause any excess burden at all. Unfortunately, it would be wildly impractical to use such taxes, not least of all because many couldn’t even afford to pay the rate that would be needed in the first place. We could give tax breaks to people who couldn’t pay… but then we’ve destroyed the concept of head tax: you could avoid it by becoming poor. And that would be, again, wasteful.