08 Dec 2016

Tom Woods and I Talk About the Carrier Deal

Shameless Self-Promotion, Tom Woods, Trade, Trump 18 Comments

This isn’t Contra Krugman; instead it’s episode 799 of the Tom Woods Show.

18 Responses to “Tom Woods and I Talk About the Carrier Deal”

  1. Rory says:

    I was hoping for a podcast on this after your Summers and Wolfers blog posts, and hearing your points definitely gave me more complexities to think about. Although I’m still not a hundred percent clear on whether you think this is just not as bad as some libertarians are making it out to be, or you that you think despite the negatives it’s still a net benefit. It is an interesting question to think about the tradeoffs of reducing taxation (therefore theft/coercion) vs. reducing government manipulation of the marketplace. The latter seems to still outweigh the former in this situation for me – it still seems weird to say to the protestations of those against subsidies to, say, Solyndra, “hey wait guys, I need to run the numbers – maybe the subsidies didn’t even outweigh the amount of immoral and unjust taxes they were paying!”

    Bob, this follows my question above (libertarians overreacting vs. true net benefit) but do you have an idea where the line is for you regarding when tax cuts/special treatment outweigh(s) the benefits of less total taxation? After listening to the podcast it seems to me that not considering less taxation generally to be a benefit to some degree is a mistake (e.g. is it “picking favorites” or “manipulative” to give a tax cut to “only” a certain tax bracket?), but likewise I don’t think you could say that any reduction in total taxation is always a good thing – then you’d be in favor of the government rolling dice so they can arbitrarily bankrupt 500 firms with increased taxes as long as the reduction of taxes on some other random group of firms exceeds that by even a penny.

    • Dan says:

      Any tax cut for any reason is a good thing, IMO as a libertarian. If Trump said he was going to reduce the taxes of everyone who voted for him, I’d say that’s a great start, and I’d demand to have mine and everyone else’s lowered too.

      Also, a libertarian doesn’t have to look at the net outcome of a proposed tax policy. We can just state that we favor the tax cuts and oppose the tax increases. It is for economists to do the cost/benefit analysis.

      Also also, a tax cut isn’t a subsidy. It’s absurd to say that the state is giving you a subsidy by taking less of your money. A subsidy is when the state gives you someone else’s money.

      • Rory says:

        I may be misunderstanding the basic argument, but as I understand it, the libertarian position that supports “any tax cut for any reason is a good thing” is that taxes are theft, and less theft is a good thing (correct me if I’m wrong). With that as the real goal, there’s a number of ways we could have less theft on net that I don’t think are self-evidently fantastic. Suppose that we have a proposed policy where small industry A has a 100% tax imposed while everyone in large industry B has its taxes reduced by 10 or 20% or whatever, such that all other things equal the government receives less taxes than today on net. I would think more people (libertarians or otherwise) would be wary of the government manipulating markets like that, but to my understanding of your argument, any misgivings about implementing this tax policy apparently equivocates you to being for thievery and coercion. My point in all of this is that it seems to me that if your underlying argument is simply reducing the overall level of government theft, it’s not as simple as just citing that over and over in various forms as an argument as to why things like this Carrier tax cut is a good thing, because rightly or wrongly, some libertarians think that in this instance less government theft is outweighed by government intrusion in the marketplace.

        The subsidy thing is just an argument along the same lines of the above; let’s say that tomorrow we give a subsidy to a single solar company. I think it’s not a great logical leap to say that if you are pro-Carrier tax cut purely on the grounds that it means less government theft, you would have to be pro-subsidy as well because it would “repay” the company for any unjust taxes paid. However I can’t remember any libertarian discussion of subsidies that speaks highly of subsidies, much less from that angle.

        • Dan says:

          “Suppose that we have a proposed policy where small industry A has a 100% tax imposed while everyone in large industry B has its tax reduced by 10 or 20% or whatever, such that all other things equal the government receives less taxes than today on net.”

          As a libertarian, I’d say the tax cut part is great, and the tax increase part is awful and I’d oppose that aspect of the deal. As far as the overall cost/benefit analysis used to determine what it would do on net, I’d need to wait to see what the economists from the differing camps concluded and then read their work to determine who I thought was right.

          “I would think more people (libertarians or otherwise) would be wary of the government manipulating markets like that, but to my understanding of your argument, any misgivings about implementing this tax policy apparently equivocates you to being for thievery and coercion.”

          You’re misunderstanding my argument. I’d say that the overall cost/benefit analysis is an economic matter, not a libertarian matter. Libertarians are concerned with rights. Lowering taxes is a reduction in rights violations. Raising them is an increase in rights violations. I’m not required to look at a policy in its entirety to determine if it is good or not from a libertarian perspective. I’d simply approve of the parts I felt reduced rights violations and oppose the parts that increased them. Simple as that.

          “…because rightly or wrongly, some libertarians think that in this instance less government theft is outweighed by government intrusion in the marketplace.”

          And what do they mean by government intrusion? If they simply mean that lowering their taxes is bad because they didn’t lower their competitor’s taxes, and that is picking winners and losers, then I don’t care for their argument. If the Mafia is stealing from company A but not company B, I don’t lament the fact that company B has an advantage. I lament the fact that company A is being stolen from. I’m not looking for equality of theft victims. I’m looking for a reduction in theft victims.

          “The subsidy thing is just an argument along the same lines of the above; let’s say that tomorrow we give a subsidy to a single solar company. I think it’s not a great logical leap to say that if you are pro-Carrier tax cut purely on the grounds that it means less government theft, you would have to be pro-subsidy as well because it would “repay” the company for any unjust taxes paid. However I can’t remember any libertarian discussion of subsidies that speaks highly of subsidies, much less from that angle.”

          Let me clarify, if a company is getting a tax cut, tax rebate, or paying no taxes at all, I approve, even if you call that a subsidy. If a company is getting more money than they have taken from them, then I oppose that subsidy.

          But can you point me to an example where a company, like Solyndra, was paying more in taxes than they were getting back in subsidies? Because I wouldn’t even call that getting a subsidy, I’d call it getting a tax rebate or something like that.

      • Tel says:

        Only reducing government spending can truly reduce tax. Thus, if a government offers a tax cut now, but keeps spending constant, this merely adds to the deficit and implies more tax for future generations (i.e. a tax redistribution, not a tax cut).

        Lowering the tax RATE can result in higher total tax collection if we happen to be on the bad side of the Laffer curve. In such a situation there’s no moral or ideological argument to support higher rates, because dropping the rate both improves individual economic freedom and also boosts government collection. It should just be a no brainer for all concerned (although there’s a legitimate argument about how to measure our position along the Laffer curve).

        I should also point out that corporate tax RATE might (hopefully) be a success in terms of keeping corporations inside the country (i.e. keeping them paying any tax, and also keeping those employees paying tax) but in the bigger picture corporations never pay tax anyhow, only individuals pay tax. Changing the corporate tax rate is really yet another redistribution (but it’s not so obvious where the money comes from because of the complexity of the corporate structure).

        • Dan says:

          They could also default on the debt.

          • Tel says:

            Effectively imposing a large tax on bond holders.

            • Dan says:

              No, it effectively is defaulting on a loan. It doesn’t make sense to call a default a tax.

    • Bob Murphy says:

      Rory wrote:

      I don’t think you could say that any reduction in total taxation is always a good thing – then you’d be in favor of the government rolling dice so they can arbitrarily bankrupt 500 firms with increased taxes as long as the reduction of taxes on some other random group of firms exceeds that by even a penny.

      Right, I wasn’t saying on the show “any reduction in total taxes is good,” I was saying, “Any move to reduce a particular firm’s taxes is good.”

      • Rory says:

        Cool, that makes sense. Even conceding that I still find I’m concerned about the effects of this on the market rather than appreciating the reduced government receipts as such.

  2. Bharat says:

    For whatever reason, rather than focusing on protectionism or the myriad of other bad things Trump was doing, libertarians chose to argue against tax cuts. It’s hard to imagine a more self-defeating act.

    • Dan says:

      Yeah, it was freaking bizarre. Suddenly, you had a bunch of libertarians that were saying that they only wanted tax cuts if they were “fair”. Heck, you could oppose every tax cut ever based on that stupid stipulation.

  3. anon says:

    thanks

  4. Craw says:

    So, say the government passes a law that none may procreate. Then they amend the law so that whites may procreate. Anyone want to defend that change?

    • Darien says:

      Am I completely misreading you? Who would *not* defend that change? Assuming that the law can somehow be enforced and really *will* prohibit procreation, without the change the population is extinct in a generation.

      • Tel says:

        Hmmm, I think what Craw is suggesting is that the same people passing the first law, all along were planning on passing the second law. Kind of like a package deal.

        As the saying goes, “incentives matter”… decision makers are more likely to do something stupid or evil if they also know they can exempt themselves from the consequences.

        As a practical example, in Australia we have complicated rules about compulsory “Superannuation” which is kind of like a hybrid between the US compulsory “Social Security” system and a 401k retirement fund. Well the politicians and judges were very careful to ensure these rules didn’t apply to themselves, and they operate a significantly different type of retirement fund (ordinary people’s funds are defined contribution, but politician’s funds are “unfunded” defined benefit, they can dip into the tax pot any time, no I’m not kidding).

        Now recently they have started eyeing off the big piles of money in these Superannuation funds and they are getting their grubby hands ready for a raid… but it won’t apply to their own retirement funds which operate differently and are exempt from all that. Do you get where I’m coming from?

        Related to this concept (borrowed from the tech industry mostly)…

        https://en.wikipedia.org/wiki/Eating_your_own_dog_food

        • Craw says:

          Exactly. I think most here opposed Obamacare. Did they then support congress exempting themselves and their staff?

  5. Tel says:

    I’d like to emphasize that Trump did very clearly promise across the board reduction of corporate tax down to 15%.

    Not sure if Bob mentioned that, maybe I missed it.

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