Si, this is very true. I’d figured that was what you were doing – and the blurt about communication was my attempt to state where I believe the primary issue is.

We should be able to communicate where something is an actual physical trade-off, rather than a value-judgement. Then people can apply value judgements to these trade-offs. People are definitely smart enough to get that, so I just don’t think that we as economists are communicating it quite right.

Which reminds me, I have to get to writing this frikken paper for NZAE. I need to carry around my laptop, as I think of ways to phrase certain things when I’m outside and then keep forgeting them!

In a normative sense I agree with you, of course; however, I meant my comments in a more descriptive sense. If you don’t agree with my hypothesis as a description of people’s motivation then you need a good alternative explanation of persistently incorrect beliefs about prices. Only with a good description of the reasons for those incorrect beliefs can we start to properly address them.

Have to say I disagree with this, in a moral sense.

Society shows it cares about people by forcing someone else to pay more for that persons labour – or by ensuring that the person can’t find work. I find it more conceivable that we achieve our social contract by giving people access to goods and services, or by providing them directly. Of course, this is part of the reason why I advocate those policies no doubt.

Now, it would be easy to say “you are only saying that because your economic ideology already states that” – but then we are going to get into a tautological argument where whenever I say what I actually believe, it will be subject to that criticism. As I don’t want to avoid saying what I actually think, I’ll just say it 😉

Economists are painted as “monsters” and people get annoyed as people don’t understand things such as tax incidence and markets. This isn’t their fault, but it shows economists need to get clearer and more compelling arguments rather than relying on appeals to authority. The purpose of the post here is to illustrate how counter intuitive tax can be, and the scale of the assumption around a “costless” minimum wage – by doing that I’m trying to explain why economists feel the way they do, which I believe will change the implied moral content for the audience.

By just changing the way it is communicated we can help deal with the moral trade-off you are discussing, without having to choose policies with worse outcomes to “show people how much we care”.

Just consider the way that economists are painted as monsters when they tend to advocate minimal wage controls and larger transfers to low-income people. The pecuniary outcome for low-income people might be better but the low wages make them feel less valued by society. That hurts people who care about the signal bout moral worth sent by the low wages, so they advocate for wage controls. Your framing of the debate as being about money sidelines the core of the matter, which is social justice.

My first bullet point reservation is:

“If the tax money is only returned if the employee is working, then we don’t get this result.”

It is also implicitly a fixed sum, just talked about in an effective per hour way – so that is a good point.

Also, my call that the reservation wage is some function of satisfaction they get from their vege garden (so a different form of employment in a sense) rather than based directly on the idea of diminishing marginal utility pulls out the way the reservation wage would be influenced by a benefit.

I mainly wanted to make a super oversimplified example to show how tax incidence might make our intuition about how changing taxes hits groups different from reality – it is a point that economists see as self-evident, but I suspect many non-economists do not see … which of course comes from the idea of where prices come from!