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Presumptions Matter

Here’s a letter to the New York Times:

According to Paul Krugman, for government not to raise taxes is for government “to cut checks” to persons whose taxes aren’t raised (“Now That’s Rich,” August 23).

Economists say that money is a “veil” that obscures people’s view of the economy’s underlying reality – namely, the fact that people produce and consume, not money, but real goods and services.  So let’s recast Mr. Krugman’s understanding of taxation in terms of something real.

Suppose that Sue works hard on her land all spring and summer growing 100 bushels of corn, and then successfully resists her Uncle Sam’s attempt to grab 40 of those bushels.  Would Mr. Krugman describe this situation as one in which Uncle Sam gave 40 bushels of corn to Sue?  Even if some sort of familial duty obliges nieces to help feed their improvident uncles, surely it would still be grossly misleading to say that Sue’s transfer of 30 bushels to Uncle Sam, rather than the 40 bushels that Uncle Sam’s friend believes that Uncle Sam “should” receive, means that Uncle Sam gave 10 bushels of corn to Sue.

Donald J. Boudreaux


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