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0 pointsjnicholasp9y ago0 comments

The 'deadweight' administrative cost is itself an economic benefit - it's money paid to some administrator, who will thus have extra money and will be able to return it to the market in turn. It just means that the $500 of benefits isn't actually $500, and doesn't just go the end recipient: it's actually $550 (or whatever) and goes to the end recipient as well as the administrators and other intermediaries who deliver the money to the end user. That extra money doesn't evaporate into the void.

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jnordwick9y ago

Under your interpretation there is no possible way taxation, waste, or even fraud is ever a losing proposition. You fall into one of those holes Keynes said you could dig and fill up to help the economy.

Unfortunately taxation itself reduces the incentive to produce and distorts the economy, and the Broken Window Fallacy is still a fallacy.

oceante9y ago

Taxation doesn't distort the economy. This is such a nonsense statement that it's difficult to say it's even "wrong" -- it's simply meaningless. Taxation and the fundamental ability of the sovereign to create demand for its money tokens is the very basis of any modern, capitalized economy. There is a strong argument to be made that taxes drive money and make economic exchange possible [1].

(BTW, Hacker News is simply terrible at discussing economics. This comment is hardly unique.)

> Broken Window Fallacy

The entire thread and discussion is a bit off-putting but it's worth noting that the question is, as always, what to do about unproductive assets. Nobody is advocating that healthy, able-bodied people should all receive free money from the government. That's why the Broken Window Fallacy is stupid. It's a fallacy against a straw man.

And yes, when it comes to unproductive assets there's good reason to believe that the government should step in and act as the "producer of last of resort." There's always work to be done. The government is never going to run out of money. And, in reality, you're going to end up giving these people money anyways (unless you want to see women and children starving the streets) so you might as well try to see some returns. I've never been a fan of basic income but a Job Guarantee[2] makes perfect sense. Finland would be far better off putting these people to work for the government. Basic income in this form (giving people free money while encouraging them to go to work for private producers) can, ironically, depress wages, unfairly subsidize badly managed firms, and ultimately hurt the economy. Unfortunately westerners are terrified by the spectre of communism so you don't get this sort of large scale public production any more.

[1] http://neweconomicperspectives.org/2011/07/mmp-blog-8-taxes-...

[2] https://en.wikipedia.org/wiki/Job_guarantee

aninhumer9y ago

>the question is, as always, what to do about unproductive assets.

If we consider the goal of society to be increasing overall utility, then someone enjoying their free time is not unproductive because they are producing utility (for themselves). There may be more productive things they could be doing, but we shouldn't ignore that baseline. If the work offered by a Job Guarantee scheme is not producing as much utility for society, then it would be more efficient to just give them the money.

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