Laffer Drift

One dark and fearsome crag, half-lost among the Himalayan mountain range of uncleared obligations stretched out before this blog, is a promise to devote a post (or several) to Mencius Moldbug’s Neocameral regime model. The opportunity to make a small payment against this debt having arisen, I am eagerly seizing it.

A relatively marginal but consistent feature in Moldbug’s model is the tendency of Neocameral tax rates to approximate to the Laffer maximum. Since Moldbug aims to rationalize the theory of government, under the presumption of its ineliminably self-interested nature, this suggestion scarcely requires an argument (and in fact does not receive one). Government will always tend to maximize its resources, and Arthur Laffer’s graph of optimum revenue-raising tax rates seems to show the way this is done. A Neocameral regime tends the economy of a country exactly as a farmer tends a herd of animals — without ever forgetting that ultimate redemption occurs in the abattoir.

There is a problem with this assumption, however, which is that the very idea of a Laffer maximum tax rate is incomplete. By coordinating tax rates (on the x-axis) with tax revenues (on the y-axis), the Laffer curve demolishes the crude economic intuition that revenue rises continuously with tax rates. Through the a priori postulate that a 100% tax rate yields zero revenue, Laffer demonstrates that revenue maximization has to be located somewhere in the central region of the curve. Its exact location — as determined by the shape of the curve — is dependent upon empirical factors, such as incentive effects, and cannot be deduced by pure theory.

Missing from the Laffer curve is time, and thus dynamic revenue projection. This is especially important to the Neocameral model, since a central failure to be rectified through reactionary democracy-suppression is the systematic heightening of time-preference, or collapsing economic time-horizons, with which democracy is inextricably bound. The Neocameral state is justified by its capacity for time-extended economic rationality, and this is not something that the simple Laffer curve can reflect.

Adding time to Laffer graphs is not a complex task. All that is required is a multiplication of curves, constituting a time series, with each curve corresponding to a time-horizon. Rather than a single curve, such a graph would consist of a 1-year curve, a 2-year curve, a 3-year curve … and out to whichever extended prospect was considered appropriate.

If levels of taxation were irrelevant to economic growth rates, then each curve would be identical, and this exercise would lack all significance. If, alternatively, taxation effected growth in a predictable direction, then the Laffer curves would steadily drift as time-horizons were expanded.

To begin with the improbable case, assume that extraction of resources from private property owners tends to increase economic growth. Then each successive Laffer curve would drift to the right, as the tax base expands under the beneficent impact of lavish government spending. A small and efficient government, by depriving the economy of its attention, would steadily shrink the tax base relative to its potential, and thus reduce the total level of takings (as a function of time).

If, far more plausibly, taxation suppresses growth, then each successive curve will drift to the left. The Laffer maximum tax rate for a 1-year time horizon will be revealed as ever more excessive as the horizon is dilated, and the shortfall of the depredated economy is exposed  with increasing clarity. The more extended the time-horizon, the further to the left the dynamic Laffer maximum has to be. As economic far-sightedness stretches out into the distance, an authoritarian-realist regime converges with anarcho-capitalism, since growth-maximization increasingly dominates its revenue projections.

Of all the reasons to distrust the Neocameral model, an intrinsic tendency to short-term Laffer-max revenue raising cannot be among them.

[Apologies for the link famine — trawling the Moldbug archive through the GFC is a nightmare undertaking, and it’s 3:30 in the morning. I’ll try to punch some in over the next few days.]




August 6, 2013admin 31 Comments »


31 Responses to this entry

  • Tryptophan Says:

    I don’t know what you mean by the GFC but this is pretty good for the Moldbug back-catalog


    Handle Reply:

    Great Firewall of China.

    Or, in the alternative:

    Guangzhou Fried Chicken


    Posted on August 6th, 2013 at 8:02 pm Reply | Quote
  • Alrenous Says:

    I hoped you would include time in the equation, and then you did. It was nice.

    This has been a continuation of the habit first laid out on your cosmological infancy post.

    While of course I’m happy whenever logic leads to ancap, I think you might be able to halt the regress by rational hyperbolic time-discounting. That is, even for immortals, there’s a maximum reasonable time horizon.

    In this case, assume you invest the extra early returns. At some point, the decrease in expected investment return will be more than the expected increase in future revenues. This investment return rate gives you how much more a present dollar is worth than a future dollar. Recalculating returns taking this into account will give you a finite present tax rate.

    Not only that, even a neocameralist state will have some minimum costs that must be covered, putting a much simpler floor in place.


    admin Reply:

    Yes, I agree with this. The convergence wasn’t conceived as strongly asymptotic, just clear enough to dispel some unnecessary scares about the rationality of intense government predation in well-ordered societies (and also to square with existing evidence on the actual tax policies of high-exit autocracies).


    Posted on August 6th, 2013 at 10:19 pm Reply | Quote
  • Thompson Says:

    The problem with the Laffer Curve is that it’s about taxing income.

    That creation of wealth is taxed rather than possession of wealth is precisely what is wrong with the tax base. Taxing creation rather than possession is precisely backwards from the fundamental standpoint of proper statecraft.

    When you create something you are not costing society anything. When you possess something you are: the cost of defending your right to possess that thing.

    It’s important to distinguish between wealth and income. They’re usually conflated.

    If physicists conflated velocity with position the way people conflate income with wealth, where do you think technology would be today?

    The primary function of government is the protection of non-subsistence property rights i.e. wealth.

    Note, I said “non-subsistence” property rights. The point here is that house and tools of the trade are protected from confiscation under bankruptcy law precisely because they are subsistence assets. Where government does not exist, subsistence properties are typically defended by the occupant, whose life is sustained by those assets. Government brings precisely the property rights we associate with civilization — assets beyond home and tools of the trade i.e. wealth.

    If the primary function of government is to uphold property rights, then why is government funded by taxing economic activity rather than taxing property rights?

    OF COURSE people who have vast property rights should pay more for the existence of the entity that upholds those property rights — just as they should pay more for property insurance.

    OF COURSE people who make money as income every year should have zero tax burden as a result of those CHANGES in their net in-place liquidation value of assets.


    admin Reply:

    Agreed (broadly). I think there is room for some imaginative discussion about the best engineering solution for your OF COURSEs. A payments system for positive political rights would be preferable to any possible system of taxes on productive activity.


    Erik Reply:

    Ehhh. Zippy Catholic, here and related posts at WWWTW argues the entirely contrary position – that no, taxing possession is wrong. The one that appeals the most to me is the point that a property tax undermines property rights; if I have to pay to exercise a right, it’s not much of a right, and if the property tax (adjusted for time discounting, naturally) paid accumulates over time to the point where it exceeds the value of the property, then the “ownership” of the property becomes an outright sham – you can’t tax a ten-dollar man out of eleven dollars and still claim that your government is dedicated to upholding property rights if you want me to take you seriously.

    So at the very least, wealth taxes ought be smaller than inflation.


    Posted on August 6th, 2013 at 10:30 pm Reply | Quote
  • Thompson Says:

    As long as you don’t tax the liquidation value of net assets at the long-term GDP growth rate, you will be evolving a parasitic elite that think solely in terms of increasing GDP and thus resort to flooding the economy with more cheap labor and slaves.


    Mike Reply:

    “liquidation value of net assets at the long-term GDP growth rate”

    This is the sort of highly mathematised rubbish that neoreactionaries are trying to avoid.


    Posted on August 6th, 2013 at 10:32 pm Reply | Quote
  • Handle Says:

    The expression ‘maximize the present value’ would pull a lot of the weight here, and is a growth-invariant expression. Discussions of the Laffer Curve in the Economics literature almost always consider path-dependency and feedback effects, but, of course, the issues are always in choosing the discount rates and estimating future growth. I am a bit of a growth-pessimist, and think we’re in for a long period of plateauing, but at any rate – the main driver for growth in an economy that is capital rich and reasonably efficient in allocation is not labor-incentives (ala Laffer) but technological innovation, which I’m not convinced has the same kind of income-tax-rate sensitivity.

    Also, the analogy to the apartment-building landlord driven by enlightened self-interest is apt. He has a cash-flow and a capital-stock but since there tends to be a common ratio in the market between the two accounting for uncertainty and corresponding to the prevailing profit margin or interest rate, the decisions, rules, and investments he makes always focus on maximizing the value of that stock.


    admin Reply:

    Is your growth pessimism actually an independent variable, or is it a reflection of despair about tax policy (and more specifically about its socio-political root)?


    Handle Reply:

    My pessimism is mostly independent of tax (or other) policy. Or, perhaps more precisely, I should say that the partial derivative of the innovation-rate with respect to policy is very small in the immediate range of current policy (highly inelastic), but I’ll allow for the possibility of some asymptotic veering into either explosion or total suppression with some radical departures from the baseline scenario / status quo.

    A mathematically necessary implication of this is that it takes an increasingly large of amount of resources and investment to produce a diminishing quantity of additional productivity or utility-improving innovation. I’ve researched this question as a hobby for about five years now (I own, a private wiki), and I’ve seen little to sway me from this hypothesis.

    The financial consequence of this should be 1. A capital glut and extremely low interest rates almost anywhere in the world and almost regardless of local fiscal and monetary policies, 2. High scarce-asset inflation (i.e. urban land to median wage ratios) combined with low retail inflation, and 3. Corporations, even high-tech ones, amassing large cash reserves (mostly for the option-value of potential buyouts) and without expanding R&D or other investments.

    A bit more speculative is that you should gradually see various forms of ‘consumer surplus enjoyment of social capital’ become ‘captured’ financially as rents in various ways without much actual improvement in utility or welfare. So, you’d expect that in the life of your median-wage earner, all of a sudden, he’s paying a fortune for higher education (but not getting any smarter or more marginally productive than what is do to natural ability, but he still has to get that ‘official credential’), health care (but not getting measurably healthier), and houses in urban proximity with safe neighborhoods and good public schools (which used to be plentiful and affordable by single-income blue-collar workers, and now suck up all the wages of two professional-class earners). You can imagine what a mess these trends make of the already perilous attempts to measure thinks like GDP.

    The fact that we observe all these should give any techno-futurist-optimist pause.

    One more thing about the Laffer Curve and growth rates (vs growth levels). There’s no reason to believe that human beings are strictly logarithmic in their marginal utilities (sense perception is another matter) – and so trying to posit relationships between growth rates and tax rates is problematic.

    Consider two countries, we’ll call them ‘America’ and ‘China’, over two years, 2012 and 2013, where income tax rates are identical all around.

    In 2012, an American produced 40,000 hot dogs, whereas a Chinaman produced 4,000.
    in 2013, an American produced 40,800 hot dogs, whereas a Chinaman produced 4,400

    The American growth rate was only 2%. The Chinese growth rate was 10%. Yet the American got ‘more richer’ than the Chinaman, and the gap actually increased instead of narrowed. And, arguably, getting that last 800 hot dogs of additional productivity out of an American worker already producing 40,000 hotdog per year was a lot more difficult and innovation-requiring than the ‘copy and catch-up’ growth seen in China.

    What’s important to focus on is the partial derivative of total factor productivity (measuring labor in hours, not wages) with respect to innovation-resource-investment. I’d argue that it’s best to focus on the TFP’s for the outputs which constitute the bulk of economic activity (and it helps if it’s a globally traded, easily transportable commodity). I’d argue further that the data indicates that these derivatives have been falling for a while and continue to do so. The obvious example is petroleum, and the one obvious exception has been information technology. But IT still doesn’t take up a large portion of the economy, and because of its scalability, doesn’t actually employ very many people, especially in the West.

    Anyway, the bottom line is that if I’m right about the situation we’re in – in which innovation is insensitive to liekly policy – then either a static or crudely ‘present-value’ calculated Laffer analysis should be sufficient.


    admin Reply:

    Truly fascinating — but also obscure in its ultimate implications. Are you suggesting that there’s an innovation collapse occurring in parallel with the socio-political collapse that pre-occupies the neo-reaction, irreducible to a common root, and thus over-shadowing — or rendering irrelevant — economically-oriented remedies? It sounds almost like Jim’s vision, except with the deterioration in techno-economic performance spun-off as an autonomous historical factor. Doesn’t it seem odd to have a general historical theory that produces very strong expectations of collapsing time-horizons, but then to postulate a quite other collapse of the future, of such significance that it scrambles all our calculations concerning the other? It’s dizzying, to say the least.

    Clearly, this ‘model’ gets you to your conclusion here very persuasively, but it opens a genuinely immense Pandora’s box on the way. “Yes there is that nightmare, but don’t get too lost in it, because there’s also this (quite different) nightmare …” (I need to find a way to interrogate you systematically about it, before pursuing a response.)

    Handle Reply:

    A slowdown in TFP innovation efficiency (or a drop in radical leaps) is not exactly a nightmare, just a readjustment of pipe-dreams into more grounded expectations. The social, cultural, and political collapse is an entirely different matter, in my opinion.

    At any rate – it’s highly useful for neoreactionaries to distinguish between the two phenomena. The number one ‘counterargument’ I hear to left-singularity hypothesis ‘things are going down the toilet in a hurry’ is ‘well, look at all this technological progress! We must be doing something right. Not only ‘right’, in fact, but ‘better’, because we’ve got better technology than they had bad then. In fact, if I had to choose between time periods, I’d stick with the present and our internet and medicine and plumbing, etc.”

    And there’s no doubt that, for example, contemporary England has a much more advanced technological level than the Victorians. I think it’s completely accurate and useful to say ‘technological level s one thing, and social-cultural-politics is another, almost orthogonal thing.’ After all – it’s possible to just dump a certain advanced level of technology on a backward culture that couldn’t have created it on its own, but can at least maintain parts of it. North Korea, I was told by a Russian who’d had the ‘privilege’ of traveling there, is an example.

    As far as a reconciliation between the two mostly-distinct phenomena goes, I think it’s becoming a kind of NR conventional wisdom that technological progress over the last 125 years has repeatedly ‘bailed out’ (if not completely ‘enabled’) what would have been the calamitous economic and social consequences of various utopian / ideological movements. Sailer’s said something like this, and so has Scott Alexander in his crude summary of the Reaction.

    We would have gone bankrupt under Socialism, ah, but some inventor’s come up a with a new technology, which keeps the party going. We would have utterly lost the open exchange of ideas through our various mediums that requires hard-copy publication in the new censorious age, but then there’s the internet to bail us out. Can we disaggregate Sexual Liberation from advances in easy, cheap birth control? Check out, “A Great Leap Forward” for a good example. Did WWII get us out of the Great Depression? Well, partially. But there’s also the fact that the practical difference (in economically effective terms), in only 15 years, between the 1946 level of technology and that of 1931 has almost no parallel in History.

    As always, the question is ‘what if there’s no more bail-outs?’ I think we’re running out of techno-bail-outs.

    Indeed, the cleverer New Class cultural-revolution proponents tipped their hats to the old cultural order and its norms and mores as having ‘once been necessary, given our backward state of development then, but now, with all this, we can move on to new things.”

    Are they wrong? Yes, but not for everybody. Ross Douthat and Charles Murray and David Brooks have all made the point that the Bobo elites have managed to find their “New Equilibrium”, while the masses continue to drift into ethical chaos and loss of ‘heuristic conditioning’ without the anchor of a socially-supported single moral-cultural vision.

    TFP-improvement-efficiency (‘TFPIE’?) is like a tug boat tied to a cultural Titanic going the wrong way. Perhaps always wanting to go the wrong way, and only checked by an uncompromising reality, the strictures of which are negated by our mastery over Nature.

    In the early Victorian Age, I imagine both ships going strongly in the same direction with complementarity. As the technological ship gains strength, the other one weakly reverses course. These days, it’s going backwards with all engines on full, slowed only by the techno-tug which gets weaker and weaker. Eventually the rope breaks, the techno-tug plodding along slowly, nearly stationary, and the Titanic, well …

    mukatsuku Reply:

    Don’t neglect Baumol’s disease (cost disease of services). Now that we are nearly all serviceproviders, productivity growth has to be lower. Forevermore.

    Not a huge problem, just continue to add leisure [unemployment years, years of higher ed, retirement years]

    vimothy Reply:

    Good comment. This problem goes way back in economics, where it is known as optimal tax theory. The idea being to find the time path of tax policy which minimises distortions subject to whatever the constraints are. This can be done in the usual way (e.g., calculus of variations or dynamic programming — it’s just an optimisation problem) to solve for the optimal time path.

    Interestingly, you can apply the same logic to seigniorage: inflation is a distortionary tax, so it has a Laffer curve and a maximising level. Therefore, in theory, we can compute the optimal level of inflation along with a broader set of tax policy instruments.


    Posted on August 6th, 2013 at 11:09 pm Reply | Quote
  • Kgaard Says:

    Wow … seems like a lot of work. I think the outlines of the optimal tax system already exist: We have 150 laboratory case studies out there in the form of all the countries having tried different things. It’s pretty clear at this point that the optimal tax rates are somewhere between 15% and 25% on corporate and individual income, and 0% for capital gains. Why not just do a 20% flat tax and call it a day? Works wonders for Hong Kong and Singapore. A very big part of the issue is SIMPLICITY of the tax code (and reliability). Getting rid of corruption and making the tax code easy to understand will be hugely pro-growth.


    admin Reply:

    Income taxes are idiotic.
    The key to a sensible tax policy is to recognize its incentive (i.e. deterrent) effects, and therefore never to direct taxes at anything you want to happen (investment, employment, land improvement …). That still leaves plenty of things to tax. (A tax on voting — or ‘poll payment’ — is especially recommended.)


    Posted on August 6th, 2013 at 11:42 pm Reply | Quote
  • Stirner Says:

    The neoreactionaries are going to need to rediscover the economic thought of Henry George (c. 1880’s). George very sensibly bridged the gap between libertarian ideas and socialist ideas with his land value tax.

    Governments should tax land value, not structure value, since the value of the land is completely determined by the surrounding community and infrastructure. It’s not the building that makes a 1/4 acre worth so much more in Manhattan than in Bumfuck, it;s all the the nearby workers, consumers, and the amenities that supports the construction of a skyscraper. Why should developers gain the profits for the value that is created by the neighboring community ? (They should of course, gain the profits of the structure built on the land, but NOT on the Location, Location, Location, of the land itself.

    George rejected taxes on labor and capital, which fits in well with libertarian ideas.

    If we want to wrap this around back to China, Sun Yat Sen was a devotee of Henry George, and his proposals for land reform in China were a hell of a lot better than Mao’s…


    admin Reply:

    Taxing unimproved land values is far more sensible than taxing productive activity, for sure. Pigouvian taxes (directed at negative externalities) make more sense still.


    Posted on August 7th, 2013 at 3:14 am Reply | Quote
  • Thompson Says:


    You’d have to be highly mathematically illiterate to find that the “liquidation value of net assets at the long-term GDP growth rate” is some sort of “highly mathematised” concept.

    Neoreactionaries are trying to avoid the failure modes of civilization, and a major failure mode is the corruption of elites. It’s critical to identify the mechanisms that engender this corruption.

    When government protects property rights without charging a use fee for providing that service while at the same time taxing economic activity i.e. the production of wealth (sales, income, capital gains, etc.) and providing a “risk free asset” basis for the portfolios of the wealthy, this leads to a profound corruption among the wealthy and incentivizes parasitism among the wealthy rather than investment in the creation of wealth.

    If you have a “risk free asset” basis for your portfolios you will become a “no brainer” investor. This leads to things like favoring labor over automation hence falling into the immigration trap.

    Incentives are everything and the current investment environment rewards rent-seeking either via the risk free asset or via public choice special interest lobbying.


    Mike Reply:

    My point is that we don’t need economic theories. (We already have enough.) We need to kill democracy to the extent that it allows morons to vote. That is what will suppress civilisation’s failure cases.

    Economic mumbo-jumbo is a good indicator of civilisational failure, incidentally. No sane civilisation would take vandals like Krugman seriously, for instance.


    VXXC Reply:

    In the case of the United States, Democracy has not governed for 80 years.

    Yes the franchise should be restricted to the responsible and informed.

    However again in the case of the United States we have not had democracy since the New Deal. We have elections whose influence is slight at best.

    And these aren’t the best of times, so democracy’s influence since 2008 is ZERO.

    Krugman is deranged. He sees it ending and wants to bring down the Temple.

    Reaction in the United States is in many ways a faction of the Court Party that realizes the Party is ending. They desire a King to save the Court Party.

    There are problems with a King in America. Reaction seeks to restore tradition, in America there has never been a King closer than 3000 miles. I am speaking of America 1600 to present. When was the last time a warrant was served in America “In the name of the King?” with the exception of the American revolution and the buildup? How often do you think it was the Kings writ even in the 18th century?

    Reaction and restoration in America would be restoring Constitutional Government, I refer to the document of 1789. The people would also demand some restoration of their usurped rights. **The People are not only armed but in an internal Arms Race**

    We look at managerial liberalism which is the New Deal and see it’s a disaster for 40 years and conflate it with “democracy” because idiots vote.

    The New Deal is no more democracy [that’s the “Deal”] than the EU.

    Democracy in America existed 1830-1933. The Democracy in America didn’t destroy the Constitutional Republic, it complimented and strengthened it.

    Also most reactionaries draw back at the thought of violent revolution, preferring order. If you think a Restoration would be violent, try putting a King by any name in charge. You’d have to raze and slaughter most of the country.

    You cannot believe in History and Tradition and ignore Atavism.

    Atavism is my politics in one word.

    In America Reaction is a small but highly intelligent faction of the Court Party that wishes a King to restore the Court to sanity. I suggest the best and least sanguinary course is to call the Constitution King and restore it.


    admin Reply:

    Gödel was right about the US constitution, it was open to democratic-fascist subversion, and by the 1930s it had been fundamentally subverted. Roosevelt worked out how to destroy the autonomy of the judiciary, and later Democrat administrations exploited the potential to transform democratic ‘controls’ into a controlled ‘river of meat’. If atavism is to be effective, it has to reformulate the constitution as an even more paranoid document / emergent AI — assuming relentless hacker assaults by neo-communists, and building in dynamic defense mechanisms that are attentive to the inevitable incompleteness of complex formal systems. Defending the Republic (rather than serving the people) has to be recognized as the central task, which only an eternal — and ruthless – vigilance can accomplish.

    Royalism is mere laziness in comparison.

    VXXC Reply:


    Royalism is lazy by comparsion. If you have it, or if you’ve had it. We never did.

    However my restoration is childs play compared to a King or Strongman over America. This just King would have to rule over a cemetary.

    The vulnerabilties of the American State exist, as do it’s many strengths. Even now our Constitution still gifts us with powerful liberties, and democracy remains a potent symbol [although that’s weakening as the people realize they’re being ignored].
    But every government system has weaknesses . Certainly a monarchy, or a [either impossible without slaughter of tens of millions] Dictator.

    We’re already pretty self-policing ruthlessly vigilant if we’re pointed at something.

    Leaders should point the guardians of the state; organs, Tribunes, citizens* at the threats to freedom and the Republic. Which they already are .

    Currently we’re pointed at the wrong threats. Namely Americans The problem for the Progs is no one believes it anymore. And that the citizens/majority have become aware it’s pointed AT THEM. This realization is recent, but quite real. It’s consequences are only beginning to play out.

    There’s ample precedent. It’s normal when there’s an internal change of government for the victor to assume the old departments. Of which there will no matter what be less. In terms of budgets we’ll all get Libertarian government, it’s the only one we’ll be able to afford.

    It’s also normal in American History for the people to assume a religious zeal against their foes. In this case traitors who would enslave or ethnically cleanse them, have bankrupted us, and are…incompetent, cowardly, and weak. As Moldbug said if this were the bad ass New Deal government he’d be silent.

    The New Deal is dying anyway. It would be if none of us ever lived.

    Reaction knows this, for of course in America Reaction is now a small but highly intelligent faction of the Court Party that perceives correctly a mortal threat to the Court – and wishes for this just King to preserve their own stations .

    [*Citizens – a restricted franchise of power. The vote is restricted.]

    Posted on August 7th, 2013 at 5:25 am Reply | Quote
  • Thompson Says:

    In order to tax the liquidation value of net assets at the long-term GDP growth rate, tax the liquid value of artificial property rights at the risk free interest rate of modern portfolio theory. Establish liquid value via escrowed bids. The high escrowed bid for a property right receives interest at the risk free interest rate. Other bids do not.

    This gets rid of what might be called “private sector economic rent” as a corrupting influence on civilization.

    However, it leaves public sector rent seeking as a moral hazard. This is best dealt with by distributing revenues as a citizen’s dividend — equally to all citizens — and decentralizing national defense as it is with the Swiss.


    Posted on August 7th, 2013 at 5:43 am Reply | Quote
  • Thompson Says:


    Henry George was on the right track and it’s understandable that he focused on land due to its highly monopolistic value. His proposals certainly would have been better than any of the economic policies that were actually put in place over the past century.

    But note that every piece of wealth, be it gold, land or a corner grocery store, in society is, to degrees varying with their “monopoly” status as property rights, made more valuable by such systemic benefits from being plugged into the economy. Land only seems special to economic theorists because it is the classic case of a fixed asset that everyone needs but which “they’re not making any more of”—hence containing a large degree of monopolistic value.


    Doug Reply:

    The economic rationale for land taxes doesn’t directly have to do with its “monopoly” power, but rather its supply elasticity. Taxation should be prioritized on the most inelastic goods or sets of goods. Less elasticity equals less dead weight loss.Land’s the first in that list because of its perfect inelasticity. A revenue-maximizing government would essentially capture all rents on unimproved land. I.e. the Laffer maximum on land is indeed at 100%.

    A revenue-maximizing state would probably tax little beyond land, so as not to disincentive growth that leads to higher rents. Precious metals, bitcoin or any other monetary asset mining is a possibility since it has no impact on growth. Pigovian taxes are another possibility, though they’re noisy in their application, and I’d expect a rational state to lean on Coasean solutions harder. (Though Coasean property rights could be taxed like unimproved land). Labor income has a high elasticity, and capital income even higher. Maybe light consumption taxes in the form of VATs.


    Posted on August 7th, 2013 at 6:09 am Reply | Quote
  • Cimon Alexander Says:

    We could use a wiki similar to to summarize the work of important internet intellectuals like Mencius Moldbug and Steve McIntyre.

    Anyone have suggestions for wiki software? I’m thinking of copying what Less Wrong uses, or going mediawiki.


    admin Reply:

    Like this?


    Posted on August 7th, 2013 at 8:34 am Reply | Quote
  • admin Says:

    @ Handle
    I realize this is asking a lot, but do you have any kind of theory — however embryonic — to organize your technological slow-down model?


    Posted on August 8th, 2013 at 12:41 pm Reply | Quote

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