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Harvard Economist Endorses Giving Away Money to Everyone

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Via Economic Policy Journal

Bill Kristol and Greg Mankiw

In late November 2019, Harvard economist Greg Mankiw, who also happens to be the greatest economic textbook salesman ever, was interviewed by Bill Kristol on Kristol’s show, “Conversations with Bill Kristol.”

I watched the entire one-hour interview over the weekend, while sober, so you don’t have to. It hurt.

Mankiw is extremely bright. You can tell he has every free market argument down but while making free market arguments he tends to finish with a technocratic claim that some type of government intervention in the economy is required.

The only place he put his foot down against government intervention is when Kristol said something positive about Elizabeth Warren’s wealth tax. Mankiw attacked it good and hard. But then immediately, he went on to say positive things about Democratic presidential candidate Andrew Yang’s universal basic income proposal. The Yang income bang calls for giving every American, over the age of 18, $1,000 per month—$12,000 a year. That would be two trillion, three hundred fifty billion per year!

Mankiw called the idea “attractive.”

Yang wants to fund the Yang bang with the introduction of a value-added tax. Mankiw called the VAT “quite desirable.”

It should be noted that a VAT hits consumers very hard.

The Tax Policy Center writes:

A value-added tax (VAT) is a tax on consumption. Poorer households spend a larger proportion of their income. A VAT is therefore regressive if it is measured relative to current income and if it is introduced without other policy adjustments…

Although a value-added tax (VAT) taxes goods and services at every stage of production and sale, the net economic burden is like that of a retail sales tax. Sales taxes create a wedge between the price paid by the final consumer and what the seller receives. Conceptually, the tax can either raise the total price (inclusive of the sales tax) paid by consumers or reduce the amount of business revenue available to compensate workers and investors. Theory and evidence suggest that the VAT is passed along to consumers via higher prices. Either way, the decline in real household income is the same regardless of whether prices rise (holding nominal incomes constant) or whether nominal incomes fall (holding the price level constant).

Got that? Yang wants to take away from consumers and give it back to them.

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Mankiw told Kristol, “I have always been attracted to the UBI.”

I am really not sure how Mankiw could support such a massive government involved bizarre transfer of funds.

I don’t see any edge in his supporting this with the Republican elite that he generally is an apologist for.

My suspicion is that there is something similar to the Stockholm Syndrome at Harvard. Call it the “Harvard Interventionist Syndrome.”

I mean he knows every free market argument but then always comes down at the last minute in favor of some government intervention and then he is all in on the nutty Yang bang.

One has to wonder what is in the air at Harvard Yard.

RW

(ht to Bill Kristol for the title to this post)


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