Monday, April 2, 2012


In reading Chapter 10, I found some of the elements Frank brings up to be quite fascinating. Some of the ways in which he approaches various issues in this particular chapter, I agreed with. Other elements, I feel, he kicked to the curb rather without considering their potential.

It is well known that trickle-down theory is an idea which is often used to dispute the use of taxes because it provides a type of hypothetical comfort that all money spent will be dispersed among those with lower-incomes and not be held hostage in the upper-income brackets. To some extent, I think this theory holds true by emphasizing how funds may be distributed through the basic laws of supply and demand.

On the other hand, I am not naïve enough to think that the application of this idea, while it looks good on paper, is not drastically more complex to apply in real life circumstances. Not always will those funds trickle down the way they are expected to. In this respect I agree with Frank but on the other hand, I don’t think that just because those resources may not reach lower income brackets as effectively as they do in our heads, the concept should be abandoned all together.

Personal incentives are crucial in the shaping of a market economy, and in many of his examples, Frank seemed to be attempting to prove that because those incentives may appear inefficient, having those areas controlled with taxes will magically solve his personal perception of inefficiency. Sure, the tragedy of the commons is just what it is: a tragedy which everyone deals with in some respect on a daily basis, but there are other angles which I feel Frank purposely avoids. Community land and resource priviledges are abused primarily because there is no sense of ownership. If there was ownership, then someone would have the incentive to intervene in the preservation of resources and mediate between various self-interested users.

In reality, if public parks or fishing waters were privatized, the incentive structure would still exist, and the tragedy would not occur. Yet, Frank seems to believe that if something must intervene, it must be the government.  While I don’t entirely disagree with him, I feel he weakens his point by ignoring the positive possibilities which privatization may present.

Also, I was rather perturbed at the way in which Frank was so bold as to blame the state of the current economy on college graduates stating that if they had simply chosen different field of study,  curing life-threatening illnesses or working on solar panels, perhaps our economy would be in a better state instead of sending "the nation into the deepest economic downturn since the Great Depression.” (Pg. 167)

College students, just like any other individual, respond to personal incentives and will react accordingly. Fame and fortune go a long way in western culture, so can we really blame younger generations for responding to the incentive structure of those that came before them? I think not.

Personally, I feel taxes serve some relavant purpose in this day and may be necessary in some respects by allowing groups of individuals to put their collective resources to work to gain services which they value collectively. That being said, Frank still seems to believe that more diverse taxation is the prescription which cures all ills and that the government is the ultimate doctor which will generally guide the economy towards the most health-conscious outcome. While this may be true in some respects, I can’t help but wonder if Frank’s good-intentions will only lead to a governmental overdose, leaving me to ponder...

Is too much really better than none?

1 comment: