The one lesson I most want my students to learn is this: You can’t just say anything. It’s important to care about making sense. So I find it particularly galling when people violate this rule while presenting themselves to the public as economists. It undercuts the single most important lesson we have to teach.
THe latest culprit is the unchastened serial offender Robert Frank, writing in the Business section of the Sunday New York Times. His argument has two parts, one philosophical and one economic. In both cases he substitutes blather for analysis. I’m less concerned about the philosophical part, because it’s such obvious nonsense that I can’t imagine anyone will take it seriously. But the fact that he got the economics wrong, and more importantly, his implied message that it doesn’t matter whether you get the economics wrong, seems calculated to undermine the public’s faith in economists. That’s the part I take personally.
Frank’s subject this time is New York Mayor Bloomberg’s failed attempt to curb the sale of large sugary drinks. While acknowledging that such a ban would curb individual freedom in some dimensions, Frank argues that it would simultaneously enhance individual freedom in others — namely, it would enhance your “freedom” to prevent your child from drinking lots of soda.
Now, I do not doubt that for some parents, a ban on large sugary drinks would make it easier to prevent children from drinking lots of soda, but to call this an enhancement of freedom, you (or Robert Frank) would have to use the word “freedom” in a very unorthodox way. By Frank’s definition, a ban on Democratic campaign ads would enhance your “freedom” to prevent your children from voting for Democrats. Would Frank endorse such terminology? Or suggest that this effect, in and of itself, might suffice to consider the advertising ban a generally pro-freedom initiative?
Frank even goes so far as to warn us that “pro-freedom slogans provide no guidance about what to do when specific freedoms are in conflict, as they are here”. Well, one might as well say “as they are everywhere“. So in Frank’s world, you apparently can’t oppose slavery on general pro-freedom grounds, because your right to be free conflicts with my right to enslave you. Freedom of speech, freedom of the press, freedom of religion — as long as any of these conflicts with my freedom to restrict your freedom, they are not intrinsically freedom-promoting.
Well, maybe Frank’s got some general account of what “freedom” is, and maybe everything he says makes sense in light of that account, and maybe his column was just too short to hold it all. So I’m willing to let all this go. But when he gets to the bad economics, I draw the line:
In 2010, the mayor himself praised a proposal for a penny-per-ounce tax on soda in New York State…The case for reintroducing such a proposal is strong. We have to tax something, after all, and taxing soft drinks would let us reduce taxes now imposed on manifestly useful activities. At the federal level, for example, a tax on soda would permit a reduction in the payroll tax….
AAAAAAAAAAAGH! First of all, the payroll tax is equivalent to a broadbased consumption tax. If you earn a dollar and use it to buy a dollar’s worth of goods, it really doesn’t matter whether we tax the dollar as it enters your pocket or as it leaves. So what Frank is saying is equivalent to this:
At the federal level, for example, an increase in the sales tax on soda would permit a reduction in sales taxes on other goods.
Alright, let’s grant him that if we raise the tax rate on soda, we’ll probably increase the tax revenue from soda (though this is at least not certain). In that case, taxing soda more does indeed mean we can tax something else less. But by and large, it’s good policy to tax all goods pretty much equally (though there are multiple subtleties here). After all, if we tax sodas more and (say) orange juice less, then some people who prefer soda will choose to buy orange juice, just to avoid the tax. This does nobody any good, and leaves the consumer less satisfied. That’s what economists call a “distortion”. So let’s reword Frank yet again:
At the federal level, for example, we can always increase taxes on some goods while decreasing taxes on others, thereby increasing the distortionary effect of the tax system.
In other words, Frank’s argument for increasing the tax on soda is also a (bad) argument for increasing the tax on anything. Hey, if we raise the tax on newspapers, we can lower the tax on sodas. But we don’t want to do that, because we don’t want to create an artificial incentive to relax with a Coke instead of reading the New York Times — even when the Times sinks this low.
