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Quotation of the Day…

… is from page 154 of John Cochrane’s superb 2014 speech “Why and How We Care About Inequality,” which is a chapter in Inequality & Economic Policy: Essays in Memory of Gary Becker (Tom Church, Chris Miller, & John B. Taylor, eds., 2015) (original emphasis):

Now, the critique of an increasingly rent-seeking society echoes from both the Left and the libertarians.  Rent-seeking is a big problem.  Cronyism is a big problem.  George Stigler finds a lot to agree with in Joe Stiglitz.  As do Milton Friedman, James Buchanan, and so forth.

But now comes the most astounding lack of logic of all.  If the central problem is rent-seeking – abuse of the power of the state – to deliver economic goods to the wealthy and politically powerful, how in the world is more governmen the answer?

If we increase the statutory maximum Federal income tax rate 70% , on top of state and local taxes, estate taxes, payroll taxes, corporate taxes, sales taxes and on and on … will that not simply, dramatically, increase the demand for tax lawyers, lobbyists and loopholes?

If you believe cronyism is the problem, why is the first item on your agenda not to repeal the Dodd Frank act and Obamacare, surely two of the biggest invitations to cronyism of our lifetimes?

DBx: Yes.  And the fact that nearly all proponents of using state power to forcibly ‘redistribute’ income or wealth ignore this reality is powerful evidence that they do not think realistically – that they do not think scientifically – about the matters on which they offer policy advice.  For these proponents, the state is simply assumed to have the potential to overcome the human imperfections that cause real (and imagined) problems in the market; this is to say that, for these proponents, the state is simply assumed to have the potential to be god-like.  That attitude isn’t scientific; it’s religious.

(The original version of Cochrane’s speech is here.)


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