[Paleopsych] Ibn Khaldun and the Laffer curve

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Mon Apr 25 14:16:37 UTC 2005

This reminds me of the late Mancur Olson's distinction between roving and 
stationary bandits. He was one of the few Public Choice scholars who were 
strong political Democrats. Sarah and I talked with him many times at 
various get togethers. Great sense of humor. I'll put together a 
Stationary Bandit Package and send it later.

The idea behind the Laffer curve is that, at a tax rate of 0%, the state 
will get no money. At a rate of 100%, the state will get no money either, 
since no one will work. The revenue maximizing tax rate is therefore 
between 0% and 100%. Champions of current tax cut commonly argue that the 
current rate of taxation is greater than the revenue maximizing rate and 
should be lowered. I don't know what the evidence says, but I reject that 
the gov't should rake in as much as possible, that is, act like a 
stationary bandit.

Khaldun was arguing that the state did a poor job of maximizing its take, 
in that its tax rates were too high.

The paleopsych question is what can restrain bandits generally. Howard?

On 2005-04-24, Lynn D. Johnson, Ph.D. opined [message unchanged below]:

> Date: Sun, 24 Apr 2005 22:14:13 -0600
> From: "Lynn D. Johnson, Ph.D." <ljohnson at solution-consulting.com>
> Reply-To: The new improved paleopsych list <paleopsych at paleopsych.org>
> To: The new improved paleopsych list <paleopsych at paleopsych.org>
> Subject: [Paleopsych] Ibn Khaldun and the Laffer curve
> In the early stages of the state, taxes are light in their incidence, but 
> fetch in a large revenue...As time passes and kings succeed each other, they 
> lose their tribal habits in favor of more civilized ones. Their needs and 
> exigencies grow...owing to the luxury in which they have been brought up. 
> Hence they impose fresh taxes on their subjects...[and] sharply raise the 
> rate of old taxes to increase their yield...But the effects on business of 
> this rise in taxation make themselves felt. For business men are soon 
> discouraged by the comparison of their profits with the burden of their 
> taxes...Consequently production falls off, and with it the yield of taxation.
>   -- Ibn Khaldun, 1332-1406 C.E.

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