Selective Economic Understanding

Selective Economic Understanding

Hanlon’s razor states:

Never attribute to malice that which is adequately explained by stupidity.

I’m not certain that Hanlon to into account the seemingly willful stupidity of many on the American Left. When it comes to the area of basic economic principles I certainly can’t say if they simply refuse to apply them consistently or if they are just mentally incapable of doing so.

When the left wants to modify and control the behavior of individuals (i.e. a day that ends in “y”) on their favorite tactics is add a tax. When the left does not want us to enjoy a soda or other sugary beverage, they enact a soda tax. When they don’t want us to do things that require energy, they propose a carbon tax.

Thus if they make something more expensive, people will do less of it. Sugary drinks like soda can cause people to gain weight which can lead to health problems. It’s a crisis that can be solved by making soda more expensive so people drink less, gain less weight, have fewer health problems. Regardless of what you think about the appropriateness of a soda tax (and I think this is not something the government should be doing) they are least they are correctly applying the concept of economic incentives.

They don’t always do that

The most glaring example is of course the progressive income tax. The more money you earn the higher the tax cost they will impose on you. Books have been written about the perverse economic incentives this causes.

They also seem to lose sight of economic incentives when it comes to minimum wage laws. Here they assume that they can raise the cost of labor and there will be no economic incentive for employers to respond. They don’t seem to believe that increasing the cost of labor will force business to either increase costs to consumers, or reduce their labor costs by employing fewer people or reducing the number of hours employees work.

Is this out of malice toward employers? They certainly have been known to display that on occasion. Or is it just stupidity that does not allow them to apply one concept to a different set of facts? I think it a bit of both. Their malice toward employers makes them unwilling to think.

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