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snitko · 2011-10-26 · Original thread
One important thing I got from this book is that we should judge economic policies not for the intentions they mean, but for the incentives they create.

I read a few (not too much, probably) books on economy both from the left and the right wing economists. An especially interesting turned out to be this one: http://www.amazon.com/Basic-Economics-4th-Ed-Economy/dp/0465... (lots of interesting facts in it, valuable even if you disagree with the point of view). I don't have any strong opinion about which side comes closer to the truth, but so far free market economists seemed to have much better arguments and be more convincing.

The reason many people disagree with certain economic policies and favor others are usually quite obvious: it's less riskier than dealing with the unfavorable policy. Human nature is to try to resist radical changes, such as looking for a better job or taking risks of starting your own company or, in general, investing time or money in your own welfare. Thus, the poor would prefer to stay where they are and let the government do the job of taking them out of poverty slowly, by asking rich to pay more taxes, because it is less riskier than acting on their lives themselves. The rich don't want to be moving their assets elsewhere or invest in enterprises outside their usual boundaries, because it is riskier than actually lobbying for the tax breaks. The real question is not who is currently oppressed or "made" poor, but rather what the intended policies, be it tax breaks for the rich or their abolishment, do to help those oppressed.

My guess is that government getting more tax money will not necessarily put them to work effectively, because by definition government is less effective than businesses. It has no incentives to be so. One might say, that it's still better than rich holding all the money to themselves creating no jobs at all. Maybe, and maybe not. Would the society really benefit if the government took the money from the rich and waste them on creating artificial jobs the country doesn't really need, or, would it be better if the rich kept the money to themselves up until the time they could see the opportunity to spend it effectively, creating the jobs that the economy as a whole really needs?

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