Greg Mankiw’s Idea to Raise Taxes on the Poor

Greg MankiwJohn Whitehead wrote a very interesting article, Are All Tax Increases a Bad Thing? He started by quoting conservative economist Greg Mankiw who had written that he’s in favor of Pigovian taxes. These are taxes designed to correct for economic externalities. So, for example, a tax on lead pollution would deal with the fact that lead is toxic but that this fact is not included in its market price. But Mankiw claims that such tax increases can only be acceptable if they are revenue neutral. So if the lead tax raised a million dollars, other taxes would have to be reduced by a million dollars.

I have a major problem with this. (So does Whitehead, but that isn’t the focus of his article.) Is it the case that we should still have lead in gas, but that gas should be more expensive? Isn’t the remaining gas still spewing lead into the air and stunting the brain development of children? Doesn’t it make sense to use that money to keep children away from lead filled air? Or to encourage development of non-lead alternatives? Why is it that taxes must stay exactly the same other than the fact that Mankiw ultimately believes that taxes can only ever go in one direction: down?

One reason, I think, is that this is all part of a cunning conservative plan. Taxes on consumer products fall most harshly on the poor. The rich don’t use proportionally more gas than the poor. So the poor will end up paying a far higher percentage of their incomes on any new Pigovian taxes. But given that our existing tax system is barely progressive, we can depend upon the offsetting tax cuts going mostly to the rich. Thus: what Mankiw is advocating is for taxes to go down on the rich and up on the poor. What a surprise!

But Mankiw wasn’t happy with just proposing a tax system that does exactly what he is always in favor of. He had to use it to attack liberals. It’s funny that he provides a value judgement that he thinks is some kind of law of physics: increasing taxes must be offset with decreasing taxes. Therefore, the liberals who don’t want to do this are irrational or providing a “stalking horse for a broader, big-government agenda.” But given that the taxes will not be increased on the same people that the taxes will be decreased on, this is not valid. If it is the case that the poor (as usual) are going to get screwed, then a truly fair system would be to give some of the tax savings to them — or design the tax such that it doesn’t shift income from one class to another.

Whitehead brought up another aspect of this. Conservatives might be concerned that liberals just want to increase tax revenues. (But it is ridiculous to say that liberals want big government.) Just the same, liberals are very right to be concerned that conservatives will make this deal, and then later eliminate the tax increase. But is that really what Mankiw has in mind? Well, he’s a very smart guy. And given he’s pushing a system that clearly shifts the tax burden down the economic ladder, I can only assume that he doesn’t mind the idea that the conservatives might be able to get rid of the Pigovian tax, and end up with lower overall taxes that fall more heavily on the poor. That’s pretty much the history of the modern conservative movement.

Afterword

I know in this article that I am very harsh on Mankiw. The problem is that this is not the first time I’ve written about him. This is the main thing that I associate with him:

Look at Greg Mankiw — by all accounts a great economist who is conservative. Under Bush Jr, he was all for stimulus. Under Obama, he came up with some complicated ideas as to why stimulus wouldn’t work. And then, as the 2012 election was approaching (he was Mitt Romney’s economic adviser), suddenly he was walking back his anti-stimulus rhetoric to prepare for more Keynesian stimulus once Romney was president. It’s a game that all politicians play. But it is one that only conservative economists play.

This is what we are dealing with. In the economics profession, he has a great reputation. But I don’t care about that. He’s put himself out as a public intellectual. And as such, he talks about politics and uses his economics expertise in a very slippery way. I don’t doubt that he’s self-deluded. I’m sure that he thinks if only we did as he wishes, all would be well. But who cares? He’s still just an apologist for the power elite.

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

4 thoughts on “Greg Mankiw’s Idea to Raise Taxes on the Poor

  1. The essential gist of conservatism: government is a horrid imposition on the freedom of individuals, unless it’s targeting poor people. Taxes are theft, unless they are levied on poor people.

    It’s rather telling that the quality of conservative writing keeps slipping. Augustine is great, Burke is pretty good (although Paine whups him.) It’s a serious dropoff from Burke to Buckley (or Rand.) Even a stone racist who worships wealth has to admit “Letter From A Birmingham Jail” beats any conservative writing of the last 200 years. Baldwin beats them, too. As does Vidal. Or even Oscar Wilde, silly as he often was. John Stuart Mill and his wife were tremendous. The list can go on and on (Stuart’s namesake on 2000’s cable TV wasn’t half-bad, either.) The ratio of good conservative writers to good liberal writers is like, 100:1. Hunter Thompson at his drunkest outwrote P.J. O’Rourke senseless; that’s not even letting Hunter slip his hands through the ropes and tag-team Taibbi to come in.

    Or you, or me, or thousands of others. When the competition is George Will, one is not exactly aroused to a Burke/Paine level of debate.

    I appreciate how you always try to feature articles by the best conservative authors. That’s eminently fair; it’s their schtick to attack liberalism when they find the silliest exponents of it and portray that as the norm. (In some cases, I wish it were the norm; I liked the stuff that preacher said which Obama had to back off from.)

    Ah, babbling now.

    • That’s a great line there about King’s letter.

      The only reason I write about better conservative writers is that I can’t stand to read the lesser writers. I know there are some knee-jerk liberal writers out there, but there is a whole industry of knee-jerk conservative writers. To be honest, I’m jealous. If I were a conservative, I would certainly be writing for something like Red State. And that’s true of a lot of liberal writers I know. When you are doing the dirty work of the power elite, they pay you for it. It isn’t primarily even morality that stops me from doing that. I just couldn’t be that intellectually slippery. I get things wrong here — sometimes spectacularly. But it is at base an honest intellectual exercise. In fact, with Mankiw, I’m a little uneasy. Not long ago, I went back and made sure that he really did change his opinions to suit who was in the White House. And I have no doubt that if I were face to face with the guy, he’d run circles around me. Everyone says he’s scary smart. But being smart is often a precondition for delusion. Also: I’ve found a lot of his popular writing very slippery indeed — but brilliantly done.

      • There already are lots of blogs out there taking on the loonier conservative writers.

        We need more of this: the black-letter, unambiguous evidence that the most popular and smart con writers are a) incoherent, almost every time; b) unprincipled, almost every single one, to a much greater extent than liberal and leftist writers, and c) having much more to gain personally by their opinions than do liberal and leftist writers.

        In other words, on any halfway intellectual level, the con writers are loony. They are much the same as the UFO freaks, but more dangerous.

        • I think because of the 1960s, liberals are reticent to overstate their cases. When I look at the modern conservative movement, I see the old true believing communists who only want to see evidence that proves them right. The irony is that the Marxists I read today generally don’t overstate their arguments. Apparently, because we didn’t listen to overdone fascist rhetoric for 40 years of the Cold War, conservatives never learned the lesson. The only thing that has changed in the last 50 years is that the John Birch Society thinking has gone from marginal to central within our politics. It’s sad. Also: terrifying.

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