Summarized from Greg Mankiw’s Principles of Economics PART I - Introduction Chapter 2 of 36 – Thinking Like An Economist, section 20 Economists are often criticized for giving conflicting advice to policymakers. If all economists were laid end to end, they would not reach a conclusion - George Bernard Shaw “Give me a one-handed economist, all my economists say ‘on the one hand, but on the other’” - Harry Truman Why do economists so often give conflicting advice to policymakers? Two main reasons: • economists disagree about the validity of alternative positive/descriptive theories about how the world works • positive/descriptive: describe what is happening • economists have different values and therefore different normative/prescriptive views about policy goals • normative/prescriptive: suggest what should be done Economists disagree about how economic variables are related • which variable is the cause and which is the effect • how much variables affect each other Economists disagree about whether the government should tax households’ income/wages or consumption/spending. Advocates of a switch from the current income tax to a consumption tax believe • the change would encourage households to save more [including for retirement] • because income saved would not be taxed Higher saving would • free resources for investment and capital accumulation • leading to more rapid growth in productivity and living standards. Advocates of the current income tax system believe household saving would not respond much to a change to consumption taxes. These two groups of economists • hold different normative/prescriptive views about the tax system: what the situation ought to be, what tax system we should change to • because they have different positive/descriptive views about the responsiveness of saving to tax incentives: what the situation is, what is good and and bad about the current tax system … improved productivity 生産性の向上 しょうさんせいのこうじょう shōsansei no kōjō
Posted on: Tue, 11 Mar 2014 13:45:46 +0000
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