Paul Krugman, A Country is not a Company, HBR, 1996: Responsible governments do not impose taxes targeted at particular individuals or corporations or offer them special tax breaks. In fact, it is rarely a good idea for governments even to design tax policy to encourage or discourage particular industries. Instead, a good tax system obeys the broad principles developed by fiscal experts over the years--for example, neutrality between alternative investments, low marginal rates, and minimal discrimination between current and future consumption... Quite aside from economists theoretical arguments against industrial targeting, the simple fact is that governments have a terrible track record at judging which industries are likely to be important. At various times, governments have been convinced that steel, nuclear power, synthetic fuels, semiconductor memories, and fifth-generation computers were the wave of the future. Of course, businesses make mistakes, too, but they do not have the extraordinarily low hatting average of government because great business leaders have a detailed knowledge of and feel for their industries that nobody--no matter how smart--can have for a system as complex as a national economy.
Posted on: Mon, 12 May 2014 21:06:04 +0000
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