Monday, June 19, 2006

Every Economist Should Agree?

Over the weekend, Greg Mankiw linked to an article by Jeff Miron in which he outlines a set of policies, "every economist should endorse, regardless of party affiliation..." Most of his proposals boil down to means testing various programs (social security, medicare, and public (higher) education). While they sound nice on the surface, I was not convinced by his proposals. Personally, my skepticism stems from concerns about the likely consequences from excluding nontriviall fractions of the population from these programs. Before signing off, I want to understand the social consequences of the creation of a new set of us's and them's. E.g., when the complete set of rich people are excluded from subsidized public education, what happens to support for public assistance to education? In short, I am not yet convinced that the benefits of these proposals outweigh the costs.

Anyhow, KNZN raises another interesting point. How is means testing different from tax increases?
Politically, "getting the rich off welfare" may be an easier sell with both parties than "raising taxes." And there may be some substantive sense in which decreasing the amount of money that passes through government programs constitutes "reducing the size of government." But as far as economics goes, this proposal looks like a tax increase, walks like a tax increase, and quacks like a tax increase.
Greg Mankiw elaborates on this point.

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