Jan 16 2013: Thank you kindly for pointing that out Fritzie. It was my intention to refer to half a century ago and I'm confident we've read the works from the same Samuel Bowles.
It is the lack of insight into human behavior what makes economic models so far off these days. Some of the mechanisms that have been discovered and established over the past centuries are quite astonishing, but with the component of individual preferences remaining not fully uncovered yet, a model can never be entirely accurate.
Economics deals with the allocation of scarce goods and once we know and apply individual preferences in models by means of recent developments such as Agent Based Modelling tools, it can become more precise in its predictions and serve society a whole lot better.
Don't forget it's merely half a century since the first economist abandoned the concept of the homo economicus and started to embrace psychological insights. Once we make more progress in this field and put ABM models to use, economic policy becomes more rational in a world of irrational individuals, with all their biases, framing and other limitations. That includes myself of course.
Scientists like Samuel Bowles or Daniel Kahnemann have done some great work in this field and it would be just wrong to disqualify their works as not being scientific. Austrian or Keynesian, is does not matter a great deal what you prefer, because the outcomes of the ideology can only be theorized. In fact I have been supportive for both theories sequentially, but truth is that there does not exist a rational individual in this world and only a model where this can be included can make a sound prediction for future policy. So lets not waste time over this by having discussions about that topic. You can Google it and read for days about this same discussion, perhaps among even more educated economists than ourselves.
Now, let's move forward before a whole generation gets stuck in a life of indebtedness.
Jan 16 2013: If I may Krisztián, you clearly have a libertarian view on this, which is fine of course. But the issue of social immobility and poverty as raised by John is not really addressed by you. Please let us know what your take on that is, how do you, with a free market ideology, look at the fact that people who are born with rich parents have a higher likelihood of success and less for ending up in poverty? You did acknowledge its existence in your earlier posts. Should we accept and neglect social immobility as part of life or would you think there is a suitable measure to correct this?
Let's keep this a pure exchange of ideas on the topic please. Much appreciated.
Jan 15 2013: I know, most people would not prefer a self sustained life, I know I wouldn't. But if I add up 1) more freedom = more equality of opportunity and 2) a proportional tax provides a higher level of freedom, then a proportional tax regime prevails if we perceive equality of opportunity as a justice norm.
Would you say rates should be flat in this instance or rather progressive or perhaps still regressive?
Really interesting Krisztián, looking forward to hear your thoughts.
Jan 15 2013: A proportional tax (regardless its structure) would leave the option for a life without income tax, simply by not having income. Would this not provide a higher level of freedom than horizontal equity?
Jan 15 2013: Okay, so to paraphrase you horizontal equity represents fairness. This sounds very intuitive. In your earlier post you state that variety and freedom increase equal opportunity. Would taxing everybody with a similar amount contribute to our level of freedom? Would it not limit our choices if we'd all had a fixed tax burden?
Jan 15 2013: Really appreciate your thoughts. You're right that the free choice to work more than other would have you end up paying more taxes than others in absolute terms. What I'm curious about is, would you perceive this as fair - holding on to the assumption that opportunities are equal?
Jan 15 2013: Thanks John for your insights. Though it might seem like it, I'm not in favor of a flat tax. My point of view is that as long as there is -and in reality there will always be- inequality of opportunity, a corrective measure i.e. progressive tax is justified. But then it follows that a change in the progressiveness of taxes needs to be backed by arguments referring to changes in inequality of opportunity. Would you say this is a fair policy?
TEDCred score: +0.20 TEDCred reflects your contribution to the TED community.
A reply on Conversation: Is economics a science aimed at deceiving people?
A comment on Conversation: Is economics a science aimed at deceiving people?
It is the lack of insight into human behavior what makes economic models so far off these days. Some of the mechanisms that have been discovered and established over the past centuries are quite astonishing, but with the component of individual preferences remaining not fully uncovered yet, a model can never be entirely accurate.
Economics deals with the allocation of scarce goods and once we know and apply individual preferences in models by means of recent developments such as Agent Based Modelling tools, it can become more precise in its predictions and serve society a whole lot better.
Don't forget it's merely half a century since the first economist abandoned the concept of the homo economicus and started to embrace psychological insights. Once we make more progress in this field and put ABM models to use, economic policy becomes more rational in a world of irrational individuals, with all their biases, framing and other limitations. That includes myself of course.
Scientists like Samuel Bowles or Daniel Kahnemann have done some great work in this field and it would be just wrong to disqualify their works as not being scientific. Austrian or Keynesian, is does not matter a great deal what you prefer, because the outcomes of the ideology can only be theorized. In fact I have been supportive for both theories sequentially, but truth is that there does not exist a rational individual in this world and only a model where this can be included can make a sound prediction for future policy. So lets not waste time over this by having discussions about that topic. You can Google it and read for days about this same discussion, perhaps among even more educated economists than ourselves.
Now, let's move forward before a whole generation gets stuck in a life of indebtedness.
A reply on Conversation: Should there be different income tax rates in a country where opportunities are fully equal but incomes are highly unequal?
Let's keep this a pure exchange of ideas on the topic please. Much appreciated.
A reply on Conversation: Should there be different income tax rates in a country where opportunities are fully equal but incomes are highly unequal?
Would you say rates should be flat in this instance or rather progressive or perhaps still regressive?
Really interesting Krisztián, looking forward to hear your thoughts.
A reply on Conversation: Should there be different income tax rates in a country where opportunities are fully equal but incomes are highly unequal?
A reply on Conversation: Should there be different income tax rates in a country where opportunities are fully equal but incomes are highly unequal?
A reply on Conversation: Should there be different income tax rates in a country where opportunities are fully equal but incomes are highly unequal?
A reply on Conversation: Should there be different income tax rates in a country where opportunities are fully equal but incomes are highly unequal?