Department of "Huh?!"
Cheap Talk writes that Steven Landsburg's critique of Elizabeth Lesly Stevens is correct:
Cheap Talk: [Landsburg's] point being that... by taxing Mr. Kendrick... since he is consuming nothing any increase in consumption by the goverment must be taking resources away from somebody else.... Suppose Kendrick puts all of his assets into a pile of cash and burns it.... If at the same time the governement prints an equal number of dollars and spends it, consumption allocations have been altered but not Mr. Kendrick’s. Whatever goods and services the government consumes must come from somebody other than he. Now observe that there is no difference at all between the scenario in which the money is burned by one party and printed by another and the scenario in which it is handed over directly through a tax. Professor Landsburg makes a contribution by presenting these examples which force us to think carefully about concepts we normally take for granted...
Cheap talk writes that Steven Landsburg's critique of Elizabeth Lesly Stevens is irrelevant:
we should recognize that this exercise is really beside the point.
And Cheap Talk writes that Elizabeth Lesly Stevens is correct and Steven Landsburg is wrong:
The government certainly can raise revenue by taking Mr. Kendrick’s assets... his assets are a claim on goods and services that will eventually be exercised by whomever inherits the assets. Taxing his assets today means taking those claims away.... [T]he real allocation of resources will be altered in a way that is right in line with the spirit of the original columnist’s motivation. The government will consume more today, others will save more today. Those savers will consume more in the future and Mr. Kendrick’s windfall heirs will consume less.
Cheap Talk manages to make all three of these claims in one weblog post, in six paragraphs.
