Insuring skills

by Henry on October 17, 2003

Via “William Sjostrom”:http://www.atlanticblog.com/archives/001196.html#001196, this rather remarkable “specimen of codswallop”:http://www.opinionjournal.com/editorial/feature.html?id=110004152 from Gary Becker, Edward Lazear and Kevin Murphy. These gathered luminaries argue in the Opinion Journal that cutting taxes has a double pay-off. It starves the beast, making cuts in welfare state spending more likely, and it also encourages workers to invest in “human capital,” i.e. job skills.

bq. The evidence is clear: Cutting taxes will have beneficial effects. Tax cuts will keep government spending in check and will provide the incentives necessary to produce a highly skilled, productive work force that enables high economic growth and rising standards of living.

This claim rests on some rather heroic assumptions which I won’t go into. It’s also, very possibly, self-contradictory; you can make quite a strong case that the two effects interfere with each other. Torben Iversen and David Soskice provide some decent “evidence”:http://www.people.fas.harvard.edu/~iversen/PDFfiles/SocialPreferences.pdf to suggest that people with high levels of specific skills actually want a beefy welfare state. More pertinently, where people don’t have such a welfare state, they may have a strong incentive to “avoid investing”:http://www.people.fas.harvard.edu/~iversen/VofCchapter.pdf in job-specific skills. If this result holds, then the benefits of tax cuts for human capital formation are _not_ clear at all. Starving the welfare state will deplete valuable forms of human capital.

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Inside the blogger’s studio

by Ted on October 17, 2003

If you look up “self-indulgent blog post” in the dictionary, you’ll find the following. You’re all excused from reading it.

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Libertarianism without inequality

by Chris Bertram on October 17, 2003

I’ve just started, as part of a reading group, Michael Otsuka’s “Libertarianism Without Inequality”:http://www.amazon.com/exec/obidos/ASIN/0199243956/junius-20 . Otsuka is a political philosopher at University College, London, and well published in journals like _Philosophy and Public Affairs_ , so I’m expecting this to be an important contribution to the literature on self-ownership and justice. We’ve covered chapter one so far, in which Otsuka outlines his claim that robust self-ownership is compatible with equality, understood along the lines of Richard Arneson’s equal opportunity for welfare rather than Dworkinian equality of resources. What I say here is therefore highly provisional, probably involves misunderstandings, and probably gets an adequate answer from Otsuka later in the book. But anyone else who has _either read the book, or is reading it_ should feel free to post comments (we’re doing about a chapter a week and I hope to post some remarks on each chapter as we read).

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