Paul L. Caron

Friday, November 30, 2012

Shaviro Posts Two Papers on SSRN

Daniel Shaviro (NYU) has posted two papers on SSRN:

Surely just about everyone in the U.S. federal income tax field has heard of Henry Simons, if only for his famous definition of “personal income.” Few realize, however, that this proponent of “drastic progression” in a broad-based income tax was also a self-described libertarian who generally denounced government economic regulation and was arguably the chief architect of the pro-free market law and economics movement at the University of Chicago. This article provides a brief intellectual history of Simons’ work, aiming in particular to explain how and why he combined these seemingly disparate sets of beliefs, and what we may learn from them today.

Contemporary political debate about Social Security and Medicare often conflates the issue of the programs’ long-term fiscal sustainability with that of whether their design should be made more market-based, such as by transforming Social Security into a private accounts program and Medicare into a voucher-based program. In fact, the sustainability and design issues are fundamentally separate.

This article assesses the case for making the programs more market-based by using two main conceptual vehicles: (1) the model for understanding the programs’ substantive features and rationales that I offered in my books, Making Sense of Social Security Reform and Who Should Pay for Medicare?, and (2) Paul Samuelson’s classic description of Social Security as providing what we would now call an implicit financial instrument that reflects an intergenerational compact. In the end, it reaches largely skeptical conclusions about altering the programs to use either private accounts or vouchers.

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The second article is nothing more than a socialist welfare manifesto that gives short shrift to considerations of fairness and economic efficiency.

Both Social Security and Medicare represent serious transfers of wages, wealth and opportunity from the single, childfree, hardworking, entrepeneurial Black male to the married, breeding, indolent, risk-averse White female.

Apart from economic considerations, these instruments serve to derogate the situation and lifestyle choices of males, singles, the childfree, the enterprising hard-worker and the Black Amerikan. All that amounts to a call to arms, regardless of the economic implications.

And the economic implications are totally perverse: encouraged are indolence, marriage, breeding and risk-aversion; discouraged are working, singleness, non-breeding and risk-taking.

I've been sensitive to the inequities and social costs since I took my first job designing ICBMs, bombers and fighters after the gummint had already spend hundreds of thousands of dollars training me in physics. It was the era of "tune in, turn on, drop out" and of "Going Galt."

So I did drop out and I went Galt, having "worked" only 3 months per year on average over 45 years, and now focus my considerable talents on gaming the system and instructing others how to do the same.

Our economy is now in miserable shape, and I'd like to think that I've contributed to the situation.

Posted by: Jimbino | Nov 30, 2012 10:14:48 AM