Economics Questions

Re: What is "wrong" with the logic and economics of this statement?

Autolykos — Tue, 08 Feb 2011 03:53:49 GMT

I agree, but with one caveat -- as capital flight increases, the likelihood of instituting capital controls also increases.

Re: What is "wrong" with the logic and economics of this statement?

nirgrahamUK — Tue, 08 Feb 2011 03:50:55 GMT

Good post Clayton.

Re: What is "wrong" with the logic and economics of this statement?

Clayton — Tue, 08 Feb 2011 03:48:19 GMT

"The larger a cities tax base is, the better services they (local government) can afford, such as police protection, as well as lower millage rates for property owners".

Leaving aside the fact that taxation is obviously immoral and taking the amoral stance that "what is is" - no one can know what the "correct" amount of taxation should be and, in the case of city-states, that amount could only be determined by the movement of capital away from cities that tax too much or too little to cities that tax the right amount. Just like no one knows what the "correct" price for oranges is, so no one knows what the "correct" tax rate is.

Bear in mind that the analogy between the price of oranges and the tax rate is misleading - a grocery stores cannot hold you hostage and force you into indentured servitude to pay for their oranges and prohibit you or punitively tax you for purchasing oranges from some other grocery store. Without free entry and exit of capital from a territory, there is no reason to believe that the "correct" amount of taxation will be attained, that is, taxation will be utterly irrational.

I think something very like this situation obtains in the modern world.

Clayton -

Re: What is "wrong" with the logic and economics of this statement?

BrianAnderson — Tue, 08 Feb 2011 03:40:55 GMT

Assuming the city remains the same size despite the number of inhabitants, they're trying to pretend that, since you only need 10 police per 10 acres of land (making this statistic up), creating a very dense population will allow people to pay less for the police protection and that crime is determined by land space and not people.

Re: What is "wrong" with the logic and economics of this statement?

nirgrahamUK — Tue, 08 Feb 2011 03:34:45 GMT

The atom of truth here is no more than that the richer a man be, the more his thief may afford to allocate to him.

Don't be satisfied with an atom; go the whole mole . (yes, I went there)

Re: What is "wrong" with the logic and economics of this statement?

Aristippus — Tue, 08 Feb 2011 02:38:27 GMT

How do you know people want those particular 'services'? To what extent should 'services' be provided? Would people prefer to spend their money on things rather these particular 'services'? The error is looking at the seen but forgetting the unseen, i.e. only looking at certain results of these policies (the provision of 'services'), without looking at others (e.g. what people are forced to forego in order for these 'services' to be provided). Essentially forcing someone to trade their wristwatch for a single apple and then claiming how great that 'service' is because it provides people with apples.

A simple reductio ad absurdum is to suggest that 'services' should be provided by the government and drawn from an even larger tax base.

Re: What is "wrong" with the logic and economics of this statement?

Lyle — Tue, 08 Feb 2011 02:34:49 GMT

Quality is dependent on cost rather than on demand.

What is "wrong" with the logic and economics of this statement?

John Q — Tue, 08 Feb 2011 02:29:30 GMT

"The larger a cities tax base is, the better services they (local government) can afford, such as police protection, as well as lower millage rates for property owners".