That’s an entirely separate issue. If you want people to make contracts, you don’t do it by making them desperate. You do it by making them keep their contracts.
That’s an entirely separate issue. If you want people to make contracts, you don’t do it by making them desperate. You do it by making them keep their contracts.
The claim is that it’s not an entirely separate issue, because bad legal systems are (in de Soto’s view, at least) the primary cause of poverty in the third world, and so fixing the legal systems will seriously reduce the poverty.
The phrase “too little incentive” may have been unclear; I meant it in the sense that income taxes reduce the incentive to put effort into earning income, not that the utilons that result from post-tax earnings are lower. A lack of legal protection for capital held by the poor makes it often irrational for the poor to invest heavily in capital that they are not sure will remain theirs, and so they remain poor. Adding legal protections changes the incentive structure, and thus changes rational behavior.
Claim: Primary controllable cause of poverty in the developing world is low incentive for the poor to develop formal wealth.
No, this is absurd. Poor people do not respond to complex tax incentives; in most cases they don’t have the education or information to even comprehend them. The primary causes of poverty in the developing world are lacks of resources of various kinds (capital, education, nutrition), which are themselves caused by past poverty, in a self-reinforcing cycle.
Poor people do not respond to complex tax incentives; in most cases they don’t have the education or information to even comprehend them.
Tax incentives aren’t the incentives I’m talking about here. I’ll point you to de Soto again, as he makes the argument much more convincingly than I can.
The primary causes of poverty in the developing world are lacks of resources of various kinds (capital, education, nutrition)
This agrees with de Soto’s view, but the resource he focuses on is “trust,” which can be developed by developing the legal systems.
That’s an entirely separate issue. If you want people to make contracts, you don’t do it by making them desperate. You do it by making them keep their contracts.
The claim is that it’s not an entirely separate issue, because bad legal systems are (in de Soto’s view, at least) the primary cause of poverty in the third world, and so fixing the legal systems will seriously reduce the poverty.
The phrase “too little incentive” may have been unclear; I meant it in the sense that income taxes reduce the incentive to put effort into earning income, not that the utilons that result from post-tax earnings are lower. A lack of legal protection for capital held by the poor makes it often irrational for the poor to invest heavily in capital that they are not sure will remain theirs, and so they remain poor. Adding legal protections changes the incentive structure, and thus changes rational behavior.
And what does that have to do with printing money and giving it to the poor?
Claim: Primary controllable cause of poverty in the developing world is low incentive for the poor to develop formal wealth.
Claim: Printing money lowers the incentive to develop formal wealth because it is a tax on formal wealth (in cash form, at least).
Conclusion: Printing money would exacerbate primary controllable cause of poverty in the developing world.
Now, this is not the total cost-benefit analysis, but it is the part that will dominate it given my values and discount function.
No, this is absurd. Poor people do not respond to complex tax incentives; in most cases they don’t have the education or information to even comprehend them. The primary causes of poverty in the developing world are lacks of resources of various kinds (capital, education, nutrition), which are themselves caused by past poverty, in a self-reinforcing cycle.
Tax incentives aren’t the incentives I’m talking about here. I’ll point you to de Soto again, as he makes the argument much more convincingly than I can.
This agrees with de Soto’s view, but the resource he focuses on is “trust,” which can be developed by developing the legal systems.