An axiomatic model of non bayesian updating
Point 2 is why I stress the economists saying that the gains from cutting corporate taxes really won’t have that much effect on growth. If the government were a perfect effective altruist, it would be no contest – them having the money would be thousands of times more effective than random corporations (or even random middle-class people) having it.Even if the government were to give the money as a tax break to the working classes, it still seems really obvious to me that the increased utility swamps any effect from higher economic growth.
Aside from all of the minor provisions which can be good or bad, the case for slashing corporate rates is that they’re more distortionary and less efficient than other forms of taxation. If you want to tell me that it would, your job isn’t to explain Economics 101 theories to me even louder, it’s to explain how the country’s best economists are getting it wrong. That includes caring less about distortionary taxation, deadweight loss, and all those other concepts.We could give the break to Bob, and have a nominally better economy, but it would just lead to more people buying virtual cats.It could be that the extra two dollars’ of wealth destroyed by Bob’s taxes was some sort of useful machinery, and so taxing Bob harms economic growth.Still, even under these generous assumptions, this bill gives poor people less money than the default case of not doing it.One could argue that poor people are better off with $6 billion in actual money than $16 billion in government programs purporting to help them.If we actually had Pareto-optimal wealth redistribution, then of course, create as much wealth as possible and redistribute it Pareto-optimally. My takeaway from this story is that in societies with a lot of marginal-value-of-money inequality, economic growth is potentially less useful than working to keep the money with people who can spend it on higher-marginal-value things. How low is the marginal utility of money for the person holding the average dollar, if no efforts are made to redistribute it? How much economic growth are we sacrificing by choosing redistribution? How high a marginal utility of money do we get by redistributing it?
Point 1 is why I stress the research showing increasing inequality eg most money going to people rich enough not to really have much use for it.
(added: I would be 100% happy with a bill that cut corporate taxes exactly this much, then raised taxes somewhere else in an equally progressive way, causing there to be the same amount of taxes with less distortion) II.
The fairest thing I can think of is to compare this use of $100 billion to just spreading $100 billion evenly among all the government’s existing priorities.
But we can give the tax break to Bob, and then all the people who saved $2 each from the curse not being activated can give $1.50 to Alice.
That way Bob is better off, Alice is better off, and potential curse victims are better off.” This is the best argument in favor of wealth creation instead of redistribution. We just create the wealth and then don’t redistribute it, except through charity, which is a rounding error, and taxes, which everyone agrees this bill causes there to be less of.
I think the marginal utility from an extra dollar to the poor (and the working class, etc) is orders of magnitude higher than the same dollar going to something else.