What inferences can you draw from that concering the Laffer Curve? If you answered “lower taxes” you’d be right. Of course we can’t lower taxes now without cutting spending. I’m not sure which government programs that effect me, I’d prefer cut first. Would it be the DEA that I’d start with, the endless list of corrupt state bills, ag bills, corporate whore bills? If only I were king for a day.

Thanks for playing, but take your uneducated crap back to school (unless you can show your “empirical evidence”).

I mean, you could raise the tax rate for one bracket while lowering the tax rate for another one or adjust thresholds for various brackets; the function you’re trying to optimize should have a large number of arguments.

Hyde Park now has ice cream trucks? Now that’s truly freakonomic . . .

I got my real GDP numbers here http://www.eh.net/hmit/gdp/
And my tax income rates here http://www.infoplease.com/ipa/A0854973.html

I might accept that, too, although my acceptance would have to be based mostly on faith in the logic of the argument rather than on empirical evidence. One of the problems we have in debating which approach is best is our limited ability to do scientific tests where both approaches are tried in strictly controlled settings and we compare results. Usually, we are stuck with observing the results of the one approach actually adopted and making inferences about the possible results of alternative approaches that weren’t actually tried.

By the way, the examples you’ve given of market systems (Kyoto and gas taxes) are what I would call hybrid approaches. The “desirable outcome” is defined by some sort of deliberative process and then market-type incentives are imposed on the actual market by a governing body. It’s not quite laissez faire. I do agree with you that these hybrid approaches can be very effective, however, since they often allow us to take advantage of both deliberative decision making and the power of market-based incentives to influence behavior in desirable directions.

But who exactly is it that opposes CAFE standards? And what is the political likelihood of (self-)imposing higher gasoline taxes? (That’s something those damn socialist EU countries do!) The point about regulation is that implicitly or explicitly, formally or informally, all social processes involve (self-)regulation. Granted there are significant problems with bureaucratic schemes of regulation: aside from inefficiency, coerciveness or perverse unintended effects, they are quite simply redundant, requiring a reduplication of efforts, not to mention their susceptibility to regulatory capture by the interests ostensibly regulated. Yeah, it would be nice if alternative means could be found to reach socially desirable ends. Regulatory schemes are provoked and generated by the effects of concentrated “market”-based interests and the predatory externalities they generate with respect to generalizable social interests. And they precisely enable those interests to continue in operation, while effecting some modifications in their behavior. It would perhaps be nice if there were some ideal set of market solutions to market-generated problems in an ideal market world, but that is not the real market world in which we live. And if markets are an implicit mechanism of social self-regulation, then equally they are themselves dependent on basic regulatory requirements, as well as, limited by the self-regulatory requirements of other social domains.

Markets, provided the right incentives, aren’t the enemy of the common good, but are often (though not always) the most effective way of achieving it.

How about ‘usually (but not always)’? With the additional comment that, historically, regulatory schemes have been used where market-based approaches would have been better much more often than the reverse (in fact, I’m not sure I have a real-world counter-example where markets were used and regulation would have been better). It’s not hard, though, to point to inappropriate regulatory approaches. Take ‘CAFE’ fuel-economy standards in the U.S., for example. Simply imposing higher gas taxes and letting the market sort out how to respond to them would be far better. Higher mileage vehicles are one possibile choice, but so are working closer to home or living closer to work (possibly driving changes in housing development patterns), telecommuting, greater use of alternate forms of transport, cutting down on frivolous trips, sharing rides, paying closer attention to maintainence, replacing old gas guzzlers, driving the family’s smaller vehicle more and larger one less, and so on. The CAFE regulatory approach provides incentives for exactly NONE those latter possibilities.

In fact, the combination of high-mileage vehicles and cheap fuel are a perfect recipe for killer congestion—for large numbers of single-occupancy vehicles being driven on long and frequent commutes and other trips. Allow hybrids onto HOV lanes (as is being done) and you may create a perfect storm of regulatory stupidity. And congestion, of course, is a highly effective way to produce terrible fuel economy (not to mention increased pollution and lost productivity).