Welfare reform?

A split off the "ecstasy capital" thread.

Interesting point: Australia's welfare system has $80 billion dollars of "churning". Churning is where the people who pay into the system get their money back, but that's more or less it.

If instead we abolished the churned welfare payments (family tax benefits, baby bonus, there are dozens of others) and gave the money back as tax cuts, we could raise the tax-free threshold to $20 000 and impose a simple flat 10% income tax for money earned over $20 000.

An introduction to welfare churning and what it means for Australians:
http://www.cis.org.au/IssueAnalysis/ia57/IA57.pdf

Even if you aren't a raving looney radical liberal like I am, anyone who sees the figures must agree that reform is desparately needed.

heh, i'm sure you can gather from the other thread that I agree :)

also, they need to change the criteria for disability benefits. currently basically anyone can claim them if they're longish-term unemployed.

The redistribution of income from the rich to the poor ie the poor getting more service value than the amount of taxes they pay and the rich getting less, is, imo, a good thing. in australia, the CEO's earn like 2.6x the average income. in america this is something like 13-15x.... i'ld prefer our system.

also, that whole, lets let the taxpayers save the money for themselves, works if the taxpayers are smart and are fiscally responsible. however this is why most economic theory fails. ppl dont follow the path that is the best fiscal option. if you give the tax back to the ppl, there is no guarantee that they will invest sufficent amounts for a "rainy day" fund, unless the governement set a contribution thing like super

That being said, i think we have to put some responsibility back to the individual, not just hold the governments hand while they do what they 'think' is right, or rather what they 'think' will benefit their election chances.
Should person A(fiscally responsible) have to suffer because person B(fiscally unresponsible) cannot handle his cashflow?

Also the model where user saves\pays, ensures that one predominantly pays for the services they require, and are not funding an upper voltarian weevil herders art exhibit.

if you had ppl managing their own service provision for every thing, medical, schooling, fund incase you get hurt etc, you would be supprised the number of ppl who are "fiscally irresponsible". To maintain the same level of the governement safety net, each person would have to save ....20% ?? (not sure) of thier income, above any savings they already do. australia has a net negative level of savings. taxation in this form is simply forced savings.

although yes, user pays would bring in a higher standard of service.
...i can only think of an american example but im sure there are aussie examples of this. defence contractors in the US overcharged the government like 200 mill, the governement found out but arnt demanding it back... so sue the government for wasting you tax dollars....lol you could have a class action involving all the taxpayers in the country.
my point being, the service standard could be increased wihtout a user pays thing.

also, presidents linkage promotes a flat tax system... (why it has to be flat tax im not sure but it does)
i disagree on flat tax as a matter of principle, again its the whole equality thing. sure with a flat tax, the rich still get taxed for a larger amount than the poor, but if ur on 100k a year, you can afford to lose 10k in taxes, you still have a 90k income, no real change to ur standard of living. if you are on 20k a year, 2k in taxes brings you down to 18k, a big change to ur standard of living.
progressive tax system brings about more equality than flat tax at the price of complication and beurocracy.
progressive tax ftw imo

Quote from swamp rat:
if you had ppl managing their own service provision for every thing, medical, schooling, fund incase you get hurt etc, you would be supprised the number of ppl who are "fiscally irresponsible". To maintain the same level of the governement safety net, each person would have to save ....20% ?? (not sure) of thier income, above any savings they already do. australia has a net negative level of savings. taxation in this form is simply forced savings.

Peter Saunder proposes a system of "Personal Future Funds" to handle this - a $5000 personal fund available for medical, educational and unemployment purposes. The initial few thousand could be funded out of the sale of Telstra. In one stroke you could dramatically lower private health premiums (by having much higher user contributions offset by the PFF) and abolish the first 6 months of dole payments (another huge saving).

It's still forced savings, but it's a darn sight better than tax-welfare churning.

http://www.cis.org.au/IssueAnalysis/ia66/IA66.pdf

Quote:
although yes, user pays would bring in a higher standard of service.
...i can only think of an american example but im sure there are aussie examples of this. defence contractors in the US overcharged the government like 200 mill, the governement found out but arnt demanding it back... so sue the government for wasting you tax dollars....lol you could have a class action involving all the taxpayers in the country.

Those sort of cost blowouts are common in the USA because the US Government awards "cost plus" contracts - "we'll pay the cost plus an additional percentage". Since the amount to be paid is not fixed, contractors have every incentive to game the system. And they do.

As for class actions, the courts would throw it out. You can't sue the government for policies, only for administrative decisions (and only sometimes). The courts take the view that elections are the proper way to punish or reward a government.

Quote:
my point being, the service standard could be increased wihtout a user pays thing.

Maybe, but it hasn't happened yet, not in a big way. The more we spend on health and education through public vehicles, the less we seem to be getting per dollar. Saunders points out that if you entirely abolished public health and education funding you could drive personal income tax to zero. As in no tax at all. However you'd come up short for welfare payments, so I don't see it happening soon.

Quote:
also, presidents linkage promotes a flat tax system... (why it has to be flat tax im not sure but it does)

Because flat taxes are simple: simple to understand, simple to pay, simple to enforce. It allows us to fire hundreds of ATO mandarins (and save a few billion dollars there) and to stop going to accountants every year (saving billions more). We also get to avoid late fees, adjustment fines etc etc from those cases when we muck up our return.

Quote:
i disagree on flat tax as a matter of principle, again its the whole equality thing. sure with a flat tax, the rich still get taxed for a larger amount than the poor, but if ur on 100k a year, you can afford to lose 10k in taxes, you still have a 90k income, no real change to ur standard of living. if you are on 20k a year, 2k in taxes brings you down to 18k, a big change to ur standard of living.

A few points.

First of all, Saunders proposes a tax threshold of $20000. People earning less than that pay no tax at all. This is based on a cost-of-living calculation plus about 20% wiggle room. Saunders elsewhere proposes that the tax free threshold should be raised for about "2000 per child, so that families don't get taxed on what they need for their kids.

Secondly, progressive taxes create disincentives to work. If you are near a tax threshold, you may not choose to earn more because the extra dollars will be taxed so savagely. This can interact with welfare churning to create effective marginal tax rates of up to 70% - 70c in the earned dollar being clawed back by Government. Is it any wonder people don't want to work?

Thirdly, in practice the costs of progressiveness vastly outweigh the advantages of flat taxes. Is the GST progressive? It is not, yet it does not seem to have drastically impoverished any class of persons (except small business, for whom it represents a loathful imposition).

off the top of my head i think there is empirical evidence which suggests flat tax rates benefit the economy for the exact reasons el prez has pointed out (progressive provides disincentives to labour hence productivity, is complicated and expensive while flat is simple, cheap and easy). i think it may have been russia or somewhere that did it and had a very sudden positive effect on gdp growth. i'll have a geez through the uni notes i haven't thrown out and get back to you

edit: replace productivity with production.

edit2: OMG 1500 posts <3 me

i stand corrected (on personal funding thing) . probably should look out for this book.

ok. my use of the number 20k was just something i pulled out of the air as an example. i have heard all the arguments about flat tax and progressive tax before (the economist magazine, Plug)

yes flat taxes make everything easy and reduce beaurocracy etc. however you are still taking 10c out of every " a person earns above 20k who earns 21k total aswell as taking 10c out of every " a person earns above 20k who earns 80k total.
as for making everythign simpler, you can do this wihtout flat tax. there is no reason why progressive tax has to be so complicated, its just happened cause there is no clean slate. if you wipe everything clean and started again with just the tax brackets (regularly adjusted to avoid bracket creep), you can cut a whole lot off the cost of management.

"If you are near a tax threshold, you may not choose to earn more because the extra dollars will be taxed so savagely"
.... you are still taking home more at the end of each day.
example. you earn 29k and are taxed 10% on everything above 20k. you pay...900 in tax. you take home 28.1k you can earn 31k and are taxed 10% on everythign between 20 and 30 (paying 1000) and 20% on everythign above 30, paying 200. you take home 29.8

...thats still more money. i dont see the disincentive to work as its only the money above the bracket that gets taxed at the new rate. you still take home more money

sure you can get some money taxed at 47%, the governemtn takes almost as much home as you...but when you are earning enough to fall into the highest tax bracket... its not like you will be severly affected. and yes i know the governement hasnt done mcuh about bracket creep so there are middle income families in the top bracket but this isnt a failing of progressive tax

"the costs of progressiveness vastly outweigh the advantages of flat taxes"

...i think you mean the costs of progressive outweight the costs of flat (not that i agree:grin:
or maybe im just not getting it

If the tax free threshold was 20k, wouldnt it just mean that you paid no tax up to 20k, and if you earnt 21k, youd still pay no tax on the first 20k and only tax on the 1k after that?

Quote from swamp rat:

...thats still more money. i dont see the disincentive to work as its only the money above the bracket that gets taxed at the new rate. you still take home more money

1. Not all people are same. Some will be deterred by a given marginal threshold, others will not. The underlying problem is that the labour market will be distorted in strange and difficult to predict ways around those brackets. It's been happening for years, and it encourages aggressive increases in complexity by, among other things, encouraging people to sit around thinking up new things they can claim as a deduction.

2. Wages are generally linked to demand for skill - or at least they should be in theory (industrial relations laws muddle the picture somewhat). If person X is being paid "00,000 it's probably because his or her skills are in high demand relative to unskilled labour. They are in high demand because the rest of society values those skills enough to stump up the cash to pay for it. If these things were trivial, easy and commonly known then that person wouldn't earn that much.

When wages go up in a given line of work, people in that industry have an incentive to work harder. People outside the industry have an incentive to move into it. So resources are diverted away from less-desired services to more-desired services. In the long run this creates greater competition and lowers prices a bit.

It's called "the price system" or "price signalling", and it's true for anything that can be bought, sold, traded or loaned.

Quote from Wrathlon:
If the tax free threshold was 20k, wouldnt it just mean that you paid no tax up to 20k, and if you earnt 21k, youd still pay no tax on the first 20k and only tax on the 1k after that?

Correct. You'd pay "00 income tax per year.

That's $2 a week or so.

Then that would be a pretty damn good system.

in terms of increase to gdp, flat tax is where it's at, i agree that the welfare system needs reform but i still hold by my view that progressive taxation done properly has a greater social benefit than any possible economic consequence

What social benefits are you referring to?

Hmm, sounds like this could turn into a debate about whether true equality means equality of opportunity or equality of outcome.

the social benefit of reducing massive disparities between the aftertax income of the rich and the poor. im not advocating that you have progessive taxation to the extent of making all after tax income the same, b/c yes then there would be no incentive to work harder. however, i belive that progressive taxation that makes the well off pay more as a percentage of income than the poor is of benefit. it can either increase the tax revenue (only good if used correctly, we are being theoretical here) or it can reduce the taxation on the low income earners (yes if there is a nontaxable threshold the really poor wouldnt pay any tax but there are degrees of how well off someone is).
if 20 k is enough to sustain someone and 30k is enough to do it comfortably,
then 20k should be tax free. up to 30k should be slightly taxed to help those under 20k and b/c the taxation wont be a large detriment to them. it should be taxed lower than someone earning 50k as there can be a higher taxation rate and still no large detriment to these ppl and the benefit of increasing stuff like education and health etc is a social benefit (note : number are made up)
also, getting more tax through progressive by taxing the rich more means that the gov can promote economic development more through better infrastructure etc, offsetting the economic benefit of flat tax.

Quote from swamp rat:
The redistribution of income from the rich to the poor ie the poor getting more service value than the amount of taxes they pay and the rich getting less, is, imo, a good thing. in australia, the CEO's earn like 2.6x the average income. in america this is something like 13-15x.... i'ld prefer our system.

also, that whole, lets let the taxpayers save the money for themselves, works if the taxpayers are smart and are fiscally responsible. however this is why most economic theory fails. ppl dont follow the path that is the best fiscal option. if you give the tax back to the ppl, there is no guarantee that they will invest sufficent amounts for a "rainy day" fund, unless the governement set a contribution thing like super

I think this new system is a good idea. Like Frenzy said, we can't depend on the government for everything, and I think people should be more responsible for managing their own money. What if the tax that is deducted under the current scheme was needed to pay bills, ect? Not everyone goes on a shopping spree with welfare or other government benefits money. Under the current scheme, the tax money that is held by the government (until the welfare payments are recieved) only prolongs the payment of bills and other debts and makes it more difficult to pay them on time. If the tax threshold was increased, it would mean that people would keep their own money for longer, could pay bills quicker and avoid overdue fees.

debts expand to fill the money available

and why is this in the media section??

Quote from swamp rat:
the social benefit of reducing massive disparities between the aftertax income of the rich and the poor.

What do you think rich people do with their money?

Quote:
debts expand to fill the money available

And I suppose we should allow taxes to expand to fill money available instead?

10% tax on earnings over 20k? where do i sign up.

bloody hell. a tax free thereshold of 20k is not something that can just be done with flat tax. it would work with progressive tax too if the loopholes and shit were closed

Quote from swamp rat:
bloody hell. a tax free thereshold of 20k is not something that can just be done with flat tax. it would work with progressive tax too if the loopholes and shit were closed

It is doable: the way to do it is to reform the welfare system to remove "churning", where taxes are taken with one hand and returned in the other. This frees up $85 billion in the federal budget, which is enough to completely fund a $20,000 tax free threshold and 10% flat tax.

See the papers by Peter Saunders.

you can undergo welfare reform and remove churning without going to flat tax. you can use the $85 bill for the increase in the threshold to 20k but dont have to introduce flat tax

Quote from swamp rat:
you can undergo welfare reform and remove churning without going to flat tax. you can use the $85 bill for the increase in the threshold to 20k but dont have to introduce flat tax

1. It rather defeats the point of flattening out EMTRs.

2. Quite seriously, what do you think people do with their wages?

Swamp rat... you really need to start putting grammar and punctuation into your posts. Everytime I read one it makes me want to bleed out my eye sockets and I die a little inside... You just can't argue on a forum like you debate. I've seen your palm cards and I swear these posts bear a striking resemblance... :p

That aside though, keep the arguments rolling in because its quite amusing once the bleeding stops and I can finish reading your posts... :p

Quote from leonami:
because its quite amusing

it apostrophe s.

If you're going to be anal, make damn sure you don't cock up your own post :-D

Hey at least I bother...

Swamp Rat.... Have you actually picked up that many people here would consider a flat tax SUPERIOR to a progressive system? You're going to need to back up your assumption that taking more money from the rich is inherently a good thing.

As established, a flat tax would enhance economic growth (as the letting the rich keep more of their money gives them more to invest in business ventures, and hence create more growth). Economic growth creates jobs and wealth, thus helping to make the quality of life better for everyone.

It's more a case of the current system being a monumental waste of resources, as well as distorting incentives to work. Whereas the flat tax would be transparent and efficient.

Everyone would benefit, not just the rich - though they would be directly affected more.

Quote from Aravi:
Swamp Rat.... Have you actually picked up that many people here would consider a flat tax SUPERIOR to a progressive system? You're going to need to back up your assumption that taking more money from the rich is inherently a good thing.

Quote from swamp rat:
the social benefit of reducing massive disparities between the aftertax income of the rich and the poor. im not advocating that you have progessive taxation to the extent of making all after tax income the same, b/c yes then there would be no incentive to work harder. however, i belive that progressive taxation that makes the well off pay more as a percentage of income than the poor is of benefit. it can either increase the tax revenue (only good if used correctly, we are being theoretical here) or it can reduce the taxation on the low income earners (yes if there is a nontaxable threshold the really poor wouldnt pay any tax but there are degrees of how well off someone is).
if 20 k is enough to sustain someone and 30k is enough to do it comfortably,
then 20k should be tax free. up to 30k should be slightly taxed to help those under 20k and b/c the taxation wont be a large detriment to them. it should be taxed lower than someone earning 50k as there can be a higher taxation rate and still no large detriment to these ppl and the benefit of increasing stuff like education and health etc is a social benefit (note : number are made up)
also, getting more tax through progressive by taxing the rich more means that the gov can promote economic development more through better infrastructure etc, offsetting the economic benefit of flat tax.

and also because the rich can afford it.

the only problems with progressive tax as i can see are the complexity...but this only comes with the additional stuff in the tax system, not inherently that complex with progressive
and also the churning, but if you raised the tax threshold, this would work just as well as it does in flat tax

Quote from swamp rat:
and also because the rich can afford it.

For the third time, I must ask you: what do you think rich people do with their money?

for buying fancy cars..j/k
yes the rich use thier money for investment...but you know what?? when anybody puts money into the bank, the bank then lends that money out to other poeple for investment, and the government, well the government invests also! and they are the ones who can invest to pull the economy out of recession, b/c they can invest without worrying about profit, invest with a nationwide outlook. They are also the ones who invest to raise the general level of infrasturcture which promotes more investment from the private sector. The large industries can make their own infrastructure but small industy or developing industry require already developed infrastructure

Stage 2 Economics + Circular Flow of Income model ftw eh?

too right! :P

Uh oh, another DIY economist.

Quote:
when anybody puts money into the bank, the bank then lends that money out to other poeple for investment, and the government, well the government invests also!

congrats, you just passed grade 10 business studies.

Quote:
they are the ones who can invest to pull the economy out of recession, b/c they can invest without worrying about profit, invest with a nationwide outlook.

Haha. Please show me one example where a government has caused an economy to come out of recession. Then have a look and see how many recessions were caused/worsened by poor policy.

Quote:
They are also the ones who invest to raise the general level of infrasturcture which promotes more investment from the private sector.

Without clarifying that statement, you just failed basic macroeconomics. Go google "crowding out". I'll give you the benefit of the doubt and assume you mean over the long term. In which case what you said is debatable - as many economists would argue that the private sector can provide most infrastructure far more efficiently than governments can.

Quote from swamp rat:
i belive that progressive taxation that makes the well off pay more as a percentage of income than the poor is of benefit.

And I do not

Quote:
it can either increase the tax revenue (only good if used correctly, we are being theoretical here) or it can reduce the taxation on the low income earners (yes if there is a nontaxable threshold the really poor wouldnt pay any tax but there are degrees of how well off someone is).

Given that the taxable threshold is set high enough to cover basic living costs, what moral reason exists to take more from the rich purely because they can afford it?

Quote:
well the government invests also! and they are the ones who can invest to pull the economy out of recession, b/c they can invest without worrying about profit, invest with a nationwide outlook.

Profit is perhaps the most effective indicator of economic usefulness, as it is produced by providing something that is needed.

Quote:
They are also the ones who invest to raise the general level of infrasturcture which promotes more investment from the private sector. The large industries can make their own infrastructure but small industy or developing industry require already developed infrastructure

If there is a sufficient need for what the new industry provides, then the profit to be made will motivate investment in this new industry. Government intervention is unnecessary.

If there is not a sufficient need, then the resources and money are best spent elsewhere.

Quote from swamp rat:
too right! :P

OK, now I can see where you are coming from. I too studied economics in high school. Then I studied it at University, and I still read economics books and articles for fun. I've just returned yesterday from a seminar with some of Australia's leading economists and social policy wonks (including the Peter Saunders I linked above).

Let me let you in on a secret: highschool economics is frozen in time, circa 1951. It's unconscionably fixated on the (incorrect) theories of John Maynard Keynes, probably because those theories justify interventionist, tax-and-spend government.

Actual economics is light years ahead of what you are being taught at highschool. It is almost a different subject. You hear very little about aggregate demand functions and a lot more about entrepreneurial discovery processes, price systems as a distribution of knowledge, agent-principal problems, moral hazard problems ... I could go on and on.

So the short version is: highschool economics is wrong. The long version is that it is embarassingly, depressingly, almost-criminal-that-they-continue-to-peddle-that-crap wrong.

But I advise you to master it - so don't go outside your readings yet. You will get no points in an exam for busting out an Austrian, Insititutional or Chicagoan answer to a question begging for a Keynesian answer. I do advise that once you have graduated highschool that you go back to the economics of the Austrians, the Insitutionalists and the Chicagoans. They are related but distinct schools, and they have utterly overturned Keynesianism.

Quote from uber tard:

Haha. Please show me one example where a government has caused an economy to come out of recession. Then have a look and see how many recessions were caused/worsened by poor policy.

Without clarifying that statement, you just failed basic macroeconomics. Go google "crowding out". I'll give you the benefit of the doubt and assume you mean over the long term. In which case what you said is debatable - as many economists would argue that the private sector can provide most infrastructure far more efficiently than governments can.

The US government during the great depression undertook huge projects such as the hoover dam that helped to lessen the effects of recession by putting massive injections into the economy to stop it falling further.
another example. hitler pulled the german economy out of recession :P

and what I meant about the government investing is that large industry will invest in infrastructure it needs far more effectively than the government. However, what about industry that is either marginal or is only just starting. having them raise the capital to increase the quality of infrastructure would be unfeasible. so the government needs to do it for them.
or industry that doesn't get developed b/c poor infrastructure makes it unprofitable to set it up.

edit:
oh well. presidente just smacked down my stage 2 economics gooda learingz

Quote from swamp rat:
The US government during the great depression undertook huge projects such as the hoover dam that helped to lessen the effects of recession by putting massive injections into the economy to stop it falling further.
another example. hitler pulled the german economy out of recession :P

Mises Institute - The New Deal Debunked (again)

Quote:
and what I meant about the government investing is that large industry will invest in infrastructure it needs far more effectively than the government. However, what about industry that is either marginal or is only just starting. having them raise the capital to increase the quality of infrastructure would be unfeasible. so the government needs to do it for them.
or industry that doesn't get developed b/c poor infrastructure makes it unprofitable to set it up.

Quote from "Aravi":

If there is a sufficient need for what the new industry provides, then the profit to be made will motivate investment in this new industry. Government intervention is unnecessary.

If there is not a sufficient need, then the resources and money are best spent elsewhere.

Profitability is the free markets way of directing resources and labour to where they do the most good. If developing a given industry (eg. Replica Albanian Basket Weaving) is unprofitable, society is better served by those resources and labour being used elsewhere.

Also, you might want to read:
Mises.org - Ten Recurring Economic Fallacies, 1774–2004

Quote:
The US government during the great depression undertook huge projects such as the hoover dam that helped to lessen the effects of recession by putting massive injections into the economy to stop it falling further.

See aravi's link. Sums it up better than I could. It's pretty easy to argue that poor economic policy (at least in part) caused the Great Depression. It definately worsened it. Citing war or the new deal as curing the depression just ain't right. Keynesians ftl.

Quote:
and what I meant about the government investing is that large industry will invest in infrastructure it needs far more effectively than the government. However, what about industry that is either marginal or is only just starting. having them raise the capital to increase the quality of infrastructure would be unfeasible. so the government needs to do it for them.

If the potential for profit is there, the investment will follow. Have a read about Adam Smith's "invisible hand". If the private sector isn't willing to invest, chances are it's not a good decision (except for certain public goods, though the extent to which public goods should be funded by the government is debatable. I side with Friedman who argues that there are only about 3 legitimate public goods that the government should provide)

If there's one book you'll ever read about economics, make it Free To Choose by Milton Friedman. <3<3<3

ps. 2nd year eco student here, possibly looking to major in econometrics. How much eco you do @ uni prez?

oh i cbf. flat tax is a bad thing in my own ****ing opinion.

Quote from uber tard:
If there's one book you'll ever read about economics, make it Free To Choose by Milton Friedman. <3<3<3

That is a good book. I'd also recommend Liberalism: The Classical Tradition by Ludwig von Mises, For a New Liberty: The Libertarian Manifesto by Murray Rothbard, and possibly The Road to Serfdom by FA Hayek as others to look at.

Quote:
ps. 2nd year eco student here, possibly looking to major in econometrics. How much eco you do @ uni prez?

I did Usyd's first year units and I think some second year micro (hard to recall at this point). For contrast I also studied government and sociology (ugh).

But to be honest, a lot of my real learning has been subsequent to university. Many economics professors are highly skilled at sucking any interest out of the subject, leaving it a dessicated husk of concentrated boredom.

Quote from swamp rat:
oh i cbf. flat tax is a bad thing in my own ****ing opinion.

You should bf - economics is an important subject which too few people take the time to look at seriously.

Like I said above: focus on your studies, then when you have graduated, give consideration to reading some of the more modern and substantiated theories of economics. It is fascinating and quite rewarding.

the main difference between flat tax and progressive tax is "should the rich be taxed more just because they are rich?" and as avari said, its a moral thing. i believe it's not immoral so i support progressive tax. you obviously dont and i cbf explaining myself anymore

Quote from swamp rat:
i believe it's not immoral so i support progressive tax. you obviously dont and i cbf explaining myself anymore

You haven't explained yourself at all. How is it not immoral?

Quote from El Presidente:
You haven't explained yourself at all. How is it not immoral?
imo, it comes down to whether you believe redistribution of wealth to be a good thing. call me the ignorant philosopher, but I think the jewish seven-year system worked quite well.

I think that as long as everyone has equality of opportunity, an unequal distribution of wealth is not only desirable - it's an integral and fundamental component of capitalism.

The hard part is ensuring equality of opportunity. The US has taken a great step in semi-privatising the education system in certain states with the introduction of school vouchers. I think that would do wonders for the terrible state of our education system, though I don't see the politicians going for it.

Quote from uber tard:
I think that as long as everyone has equality of opportunity, an unequal distribution of wealth is not only desirable - it's an integral and fundamental component of capitalism.
of course it is. if your goal is ultimately to make the next dollar, trampling the little guy to get there is just savy business sense. to have the rich, you must inevitably have the poor. capitalism at its finest.

how's that "desirable" again?

It provides incentives.

explain more later, gtg work :'(

Quote from doyen:
it comes down to whether you believe redistribution of wealth to be a good thing. .
EXACTLY!!!
Im sure i said some shit along those lines previously
Quote from swamp rat:
the social benefit of reducing massive disparities between the aftertax income of the rich and the poor.
there it is.

Quote from uber tard:
I think that as long as everyone has equality of opportunity, an unequal distribution of wealth is not only desirable - it's an integral and fundamental component of capitalism.

this is fanciful. so flat tax is all good aslong as there is equality of opportunity. sounds like a system firmly grounded in reality

Quote from doyen:
of course it is. if your goal is ultimately to make the next dollar, trampling the little guy to get there is just savy business sense. to have the rich, you must inevitably have the poor. capitalism at its finest.

how's that "desirable" again?

I'm not sure that we're reading from the same page here. The rich get their money from somewhere - and in fact there are only two real sources of income for wealthy individuals:

1. Income from savings, and
2. Income from trade.

Now category 1 encompasses trust fund babies, wealthy families etc. As a rule such concentrations of wealth don't last. Eventually somebody stupid is born into the family who wrecks it. Indeed, if you consider the list of the top 500 richest people alive, that list is not stable from generation to generation, or even year to year. People become rich, then flounder and lose all. A few decades ago Rockefeller and Carnegie were bestriding capitalist titans. Today they are just names attached to a few buildings.

Category 2 means that the rich are trading something. Their skills, experience etc. Essentially this means: making or producing something people want, be it service or goods. This is indeed how the very wealthy originally became very wealthy (with the exception of certain English noble houses, but you can hardly blame that on capitalism). Messrs Rolls and Royce hawked to the wealthy and the upper class, they died penniless. Mr Ford created a car that the working fellow could afford and became, in today's standards, richer than Bill Gates.

So the rich don't "trample" on the poor. Quite the reverse: they improve the living standards of all people because they have a buck to make doing so. I realise that there are some genuine bad eggs who are capitalist zillionaires, but there are plenty more bad eggs in politics, government and even the odd charity. Take it from someone who's seen it from the trenches.

I think you should also understand that wealth is not "zero sum", it is not fixed. It is not true that Ben Billionaire, upon earning an extra "00,000, has deprived someone somewhere else of that money or those resources. The availability of wealth is not fixed. This is easily proved: if wealth were fixed, we would be much poorer than our distant ancestors, because we are far more numerous. Yet this is not so. If anything, the growth of wealth has outstripped the growth of population.

Where does redistribution come into this? If I understand you, it comes in as the idea that perfect equality is just. Now I don't happen to agree from a purely propertarian-liberal viewpoint, because the achieve that end requires a lot of violence, directly or implicitly. But more to the point, perfect equality leads to perfectly equal starvation and deprivation. It cannot be created, and to try means destroying the engine of wealth, and after that, it's a short nasty slide to hell. See Zimbabwe for an example.

So regardless of the moral desirability of redistibution, it is unworkable and unsafe. This seems to fall on a continuum, so if anything it becomes wise to move as far from redistributionism as practicable. In Australia we have a long way to go in this respect: see my parent post.

Quote:
this is fanciful. so flat tax is all good aslong as there is equality of opportunity. sounds like a system firmly grounded in reality

No a flat tax is preferable to progressive in all situations, in my opinion (any many other economists). And equality of opportunity is desirable in all situations - I'd like to see you argue to the contrary. That was a very poor attempt at deliberately trying to skew what I was saying.

Also, el prez is spot on with the wealth gig - it's stupid to argue that the rich have a larger share of the g&s pie when they help to increase the size of the pie. Sure they might be relatively better off, but in real terms everyone is better off.

But then you can raise the argument of positional goods, and I'll pre-emptively (sp?) say that they generally arise in special cases so aren't too relevent to the whole argument.

Capitalism as a system of economic organisation is by far the most successful. Sure it has it's faults, but the net gain to society far outwieghs the negatives - so it should stay (coase theorem ^_^) now i gtg again, thursday night 1$ drinks, bye economics debating buddies!

......uber tard...... yes equality of opportunity is deirable in all situations. your statement about how unequal income is a good thing aslong as equality of opportunity exists... what i was calling fanciful was that equality of opportunity exists. Sure if everyone started at the same level, those who get above should be left to the fruit of their labour.... notice the if..

edit: reply to prez:
i cant speak for doyen but i never advocated a complete redistribution of income.
Quote from swamp rat:
im not advocating that you have progessive taxation to the extent of making all after tax income the same
oh look, there it is.

basically what im advocating is that the poor get extra money to get them to a decent living standard. Those at a decent living standard get left alone. Those above a decent living standard get taxed enough to pay for the extra money to the poor.
and i guess you are advocating that too (you dont seem to be for completly getting rid of welfare).
What we disagree on is how those above a decent living standard get taxed. Everyone at 10% (or whatever percent is required) or progressive taxation (btw uber tard, no one said anything about getting rid of capitalism... i'll leave communisim to leonami, however unrestricted capitalism gets you the stuff in the industrial revolution..all the slums and shit cause there needs to be moderation)
Progressive tax has a symmetry to it. Those who are very poor may have to get like.. 40% of thier income through welfare. THis is matched by 40% tax on the very wealthy (or a different percentage depending on how many very rich to how many poor and how much is required etc). Those who are only slightly below the decent living standard only need like 5% of thier income as welfare so those who have more than the decent living standard are taxed at a low rate to pay for the slightly poor. etc
It comes down to
a) a multimillionare (say 10 mill) taxed at 10% down to 9 mill and someone on 40k a year taxed at 10% down to 36k (shut up about tax free thresholds, they exist in both systems so they are cancelled out). Taxman gets 1 mill 36k.
b) same millionare taxed at 15%, down to 8.5 mill. someone on 40k a year taxed not at all or taxed at a very low rate. Taxman gets 1.5mill
Increasing the tax rate on the very rich slightly brings in a lot of money. Yes, i do realise there are more ppl on 40k than those on 10 mill. However, the question remains, who can most afford to pay more? The very rich or the moderaly well off?

One thing I have found interesting about the whole 'welfare reform' debate in general, is that no matter which country you're looking at, you can pick the sides a mile off.

Liberals are all praising the large economic growth, the wonderous profits and success of business and industry. More money means more funding.

On the other hand, the socialists/democrats are all pointing out the fact that employment conditions are worsening, the decline of services, taxation on high income earners is consistently being lowered (in systems in which there are already myriads of loopholes open for tax-bypassing).

If the higher income threshold payers have their tax lowered, someone, somewhere, is having to pick up that slack. The government isn't going to put policy in place that will inevitably give them less funding with which to function.

So who's making up the difference?
(No, I haven't read any of the links :p)

edit: // the seven year system did work for centuries, but it also looks like it's centuries old, with some kind of regilious emphasis.
so conceding the point on redistribution being good, unless I can find whatever it was I think I'd read.

... what 7 year system are you talking about?

I don't know that it has a name - but it was basically a system used in jewish culture on a seven year cycle, whereby the government reclaimed wealth every seven years and redistributed that wealth back among the populace, leveling out the playing field.

Quote:
Sure if everyone started at the same level, those who get above should be left to the fruit of their labour.... notice the if..

I never said we have it atm. We could be close if politicians cared more about people and less about politics, but as if that will ever happen. Policies like school vouchers are designed to provide exactly that.

Quote:
basically what im advocating is that the poor get extra money to get them to a decent living standard.

They do. They have a tax-free threshold that ensures they have a minimum standard of living. If they have a decent minimum standard of living, why the hell should people who work hard to become wealthy have to give up more of their earnings because you think it's a little unfair? That just provides disincentives to work harder or get better education.

Quote:
however unrestricted capitalism gets you the stuff in the industrial revolution..all the slums and shit cause there needs to be moderation

Economists of the Austrian school would disagree. They argue that exploitation is never sustainable and imperfect competition is not only unavoidable, it's necessary for progress. I won't go into the specifics, but if you're interested grab the book el prez mentioned "Road to Serfdom" by Von Hayek - he's the main man of the Austrian school.

Quote:
employment conditions are worsening, the decline of services

I know you're not arguing that yourself, but I would be very interested to see any figures on any of that. People are always quick to claim these things but they don't often have much data to back themselves up :)

A flat tax combined with other welfare reform would improve working conditions as people would have to pay less tax! Decline of services, what exactly do you mean?

Quote:
So who's making up the difference?

At the moment the g'ment wastes huges amounts of money through 'churning' and beurocratic crap. $80b worth of churning. If there was a flat tax this waste would be tiny, hence requiring less tax overall.

Quote from uber tard:
I know you're not arguing that yourself, but I would be very interested to see any figures on any of that.
that I couldn't find. however, I think what the general consensus is, is that this form of governing leads to the individual managing their own future, as opposed to the government holding their hand through to retirement.

recent examples in australia could be:
changes to superannuation
the freedoms in contractual law that businesses now have over their employees.

perhaps it's simply that people will take time getting used to the idea that the government no longer wants to govern its people, it wants them to take some onus on governing themselves. except where tax is concerned.
i.e. where it gets paid :p

call me the cynic, but I think the moment you place the governing of peoples' long term welfare into their own hands, you're setting yourself up for failure.

Quote from uber tard:
We could be close if politicians cared more about people and less about politics, but as if that will ever happen.

has this degenerated into a debate on the theoretical? cause if it has then its completly pointless

Quote from uber tard:
They have a tax-free threshold that ensures they have a minimum standard of living. If they have a decent minimum standard of living, why the hell should people who work hard to become wealthy have to give up more of their earnings because you think it's a little unfair? That just provides disincentives to work harder or get better education.

not taxing the poor is not hte same as helping them out. even without taxation they can still be below a decent standard of living. once they are at a level where they are not jsut surviving on day to day income, once they are at a level where they can afford to get more training etc, then they dont get anymore assitance. and the benefit they get from the extra training etc that goes to pay for the other ppl who need the same assitance.

and about this churning, i have dealt with it before. removal of churning is not something restricted to flat tax. If the basic living standard is 20k and the tax free threashold is 16k, that is 4k being churned. flat tax solution is to raise the threashold to 20k, affording that by the money saved by removing churning. there is not reason y progressive tax cant do the same.
and the beurocracy of the current system is not required for progressive tax. it has been made needlessly complicated by the fact that it is not built of a clean slate but off reform built on reform built on reform

Quote from doyen:
call me the cynic, but I think the moment you place the governing of peoples' long term welfare into their own hands, you're setting yourself up for failure.

Haha, maybe :) I would say it's more giving people control of themselves, if they set themselves up to fail who are we to force them not to. Governments can't be expected to protect people from their own stupidity.

Quote:
has this degenerated into a debate on the theoretical? cause if it has then its completly pointless

Nice attempt, but no. Did you read what I said? Policies like school vouchers are designed so that everyone, rich or not, has the same opportunities to get education etc.

And you're still missing the point re: progressive vs. flat.

Flat: simple, transparent, will stimulate growth.

Progressive: provides disincentives to work, complicated.

The reason you are advocating progressive is because you have a moral stance where you think it's more 'fair'. You still haven't answered why it is more fair.

If everyone has the opportunity to create wealth and some create more than others, why should the they be penalised? Because that's exactly what a progressive system does. Please, answer me that question.

With policies which create equality of opportunity (which we have to some degree at the moment, but more reform is needed in areas such as education & healthcare) a progressive tax is not only makes bad economic sense, but in my opinion is immoral. I've explained why, now please enlighten us as to your objections.

Quote from uber tard:
We could be close if politicians cared more about people and less about politics, but as if that will ever happen.

yeah i did read what you said. and if you think school vouchers are going to make everyone have the same educational opportunities then this debate is in the relms of the theoretical.

and as to that i havent answered y i think progressive is more fair, read this thread from the begining cause i cbf goign through and copying what i have already written about 5 times already

i will agree that if everyone has equal opportunities, we should have a flat tax system.
....i'll be waiting for that to happen

Quote from uber tard:
who are we to force them not to.
see, I don't think it's about forcing anyone to do anything. it's about responsibility and duty of care of those in power to provide that welfare to their populace, and to ensure that they get it.

if the purpose of government is purely to sell assets off to the private sector and allow them to manage those services instead (because they're better equipped to provision and maintain), then isn't it a logical step that we're headed down a path that actually removes power from government?

what's the end game here? to be corporately managed?

Quote from doyen:
see, I don't think it's about forcing anyone to do anything. it's about responsibility and duty of care of those in power to provide that welfare to their populace, and to ensure that they get it.

Peoples welfare should be their own responsibility. The government should ensure that individuals private property is protected by the rule of law, and stand out of the way.

Quote:
if the purpose of government is purely to sell assets off to the private sector and allow them to manage those services instead (because they're better equipped to provision and maintain), then isn't it a logical step that we're headed down a path that actually removes power from government?

You say that like it's a bad thing.

Quote:
what's the end game here? to be corporately managed?

To be self-managed - to each individual the freedom and responsibility of managing their affairs.

ok, well I'm still sitting in the realm of uncertainty. something just isn't adding up :shrug:

looking at this from a business perspective: you're basically saying welfare is not an essential service. it's something individuals should be responsible for themselves, something that does not necessarily need to be provided to everyone.

bearing that in mind, let's take the example of the telecommunications industry. a landline to your home is an essential service. if it's not working, you have some rights as to what you can or can't expect (and deserve to receive) from that service. most importantly, that it's there and available when you need it.

a mobile phone however, is not an essential service.

if my mobile phone carrier calls me tomorrow, and says: look doy, we're no longer interested in keeping your business - for whatever reason - then they're quite within their rights to stop providing me that service.

currently, welfare has a safety net. - i.e. the government and its democratic policy towards providing welfare.
private industry needs no such net, and is empowered to deny non-essential services.

you're essentially placing more power - and your money - in the hands of fewer people, who don't necessarily have to answer to a democratic system while conducting your affairs.

Quote from doyen:

if my mobile phone carrier calls me tomorrow, and says: look doy, we're no longer interested in keeping your business - for whatever reason - then they're quite within their rights to stop providing me that service.

No they wouldn't. I don't think anyone has proposed abolishing freedom to contract. If they breach the contract, you can get damages or force performance of their obligations. They can enforce the contract against you too, which is why they were prepared to take the risk.

Quote:
currently, welfare has a safety net. - i.e. the government and its democratic policy towards providing welfare.
private industry needs no such net, and is empowered to deny non-essential services.

But there's a buck in those very services. If there is demand for a thing through government, then there is demand. Remove government and there is still demand. Where there is demand, people will pay for it. Where people will pay for it, someone will supply it for a quid.

Besides, alternative safety nets exist and have existed. Peter Saunders shows that before the welfare state, people essentially looked after their own welfare, health and education to an adequate degree - with average real wages three times lower than today's.

Quote:
you're essentially placing more power - and your money - in the hands of fewer people, who don't necessarily have to answer to a democratic system while conducting your affairs.

Democracy is not intrinsically good. It's just one way of choosing who leads the government. We are not talking about who leads, we are talking about what gets done. These are separate issues.

they can and do. let's take non-payment as one example, it's common enough to advise a customer that their service will cease, and that a mercantile agent will be pursuing said payments. ergo, termination of service.

can be read as: denial of welfare, based on a person's ability to afford the welfare in the first place, or their continuing ability to be able to meet the cost of their own welfare. that's cute, so only those with money afford what most would consider to be a necessity.

what happened to equality of opportunity?
you're denying welfare service to those lacking the means to pay for it.

and 'what gets done', the choices made and the actions taken, will ALWAYS be directly affected by 'who' is holding the reins.

don't get me wrong, I live by my means, I earn a modest wage and can afford to save for my rainy days and future plans.
but by the same token, there's just as many people I know (both friends and family) that work hard and yet are scraping by without that freedom or luxury.

all I can see here is the wanton desire to breed aristocracy, driving the wedge deeper into both our culture and society, only lengthening the gap between 'those with' and 'those without'.

call it what you will, but something about that just doesn't sit right.

Quote from doyen:
they can and do. let's take non-payment as one example, it's common enough to advise a customer that their service will cease, and that a mercantile agent will be pursuing said payments. ergo, termination of service.

can be read as: denial of welfare, based on a person's ability to afford the welfare in the first place, or their continuing ability to be able to meet the cost of their own welfare. that's cute, so only those with money afford what most would consider to be a necessity.

Denying welfare? Hardly. Enforcing contractual obligations? Certainly. It's silly to conflate these two things.

One question.

Why is it incumbent on governments to protect "contractual arrangements" and not human rights, religious beliefs etc?

Seems to me that most free market facists seem to think that governments sole responsibility is to protect their little wealth pile. Whereas others believe that government is just a manifestation of the common values that most aspire to.

Take a step to the left and now to the right...

one question.

why do we argue about this? its like banging your head against the wall. nice when it stops.

Quote from iscariot:
One question.

Why is it incumbent on governments to protect "contractual arrangements" and not human rights, religious beliefs etc?

This is a false dichotomy. It's not "either-or", it's "and". But whereas people of most quarters and creeds understand religious toleration or security of the person from assault, oppression etc (incidentally, these ideas were invented/discovered by liberals), only "free market fascists" understand that freedom to contract is also essential.

Without contract the cost of trade is unacceptably high for most transactions. If every transaction is completely unprotected by mutual agreement, who will trade anything? Nobody, that's who. Fast path to mass starvation and massive misery.

If anything, freedom to contract is instrumental in securing human rights and religious freedoms. It's pointless to pray when you're starving to death.

Quote:
Seems to me that most free market facists seem to think that governments sole responsibility is to protect their little wealth pile.

And it seems to me that you don't know what the word "fascism" actually means. Let alone the ability to spell it.

Quote:
Whereas others believe that government is just a manifestation of the common values that most aspire to.

What if I don't agree? Am I to be declared Unmutual?

Quote from HeReTiC:
one question.

why do we argue about this? its like banging your head against the wall. nice when it stops.

Because these are important questions. The fruits of civilisation are not accidental. It can be lost or destroyed if no due care is paid to the tree which nurtures it (ie freedom).

Quote from El Presidente:
This is a false dichotomy. It's not "either-or", it's "and". But whereas people of most quarters and creeds understand religious toleration or security of the person from assault, oppression etc (incidentally, these ideas were invented/discovered by liberals), only "free market fascists" understand that freedom to contract is also essential.

Without contract the cost of trade is unacceptably high for most transactions. If every transaction is completely unprotected by mutual agreement, who will trade anything? Nobody, that's who. Fast path to mass starvation and massive misery.

If anything, freedom to contract is instrumental in securing human rights and religious freedoms. It's pointless to pray when you're starving to death.

And it seems to me that you don't know what the word "fascism" actually means. Let alone the ability to spell it.

What if I don't agree? Am I to be declared Unmutual?

And it seems to me that you have no idea how absurd you sound. Read it, go to a dictionary, F A S C I S T, one who believes in their own rubbish.

Heres a tip dude, stop reading books that reinforce your own beliefs and start reading books that argue against your beliefs so that you can develop a rounded perspective.

THEN

Move out of home and start practicing your beliefs, ie Pay for your entire medical expenses AND your families, pay the dollar value of the education you enjoy, pay for the roads you so readily use...

THEN

Get a grip.

The only difference between a free market FASCIST :) and a looney leftie as you would put it is this....

No one really gives a f%#k, your both losers.

no offence, but i seriously doubt your big headed opinions are going to change "The fruits of civilisation".

ok iscariot, we were having a decent debate till you came in with all your shit. debate ie no personal attacks. if you cant back up your points with facts and logic, then its not a debate, its a flame

One question: If you aren't interested why read/post?

Now back to it...

Quote:
seems to me that you have no idea how absurd you sound. Read it, go to a dictionary, F A S C I S T, one who believes in their own rubbish.

Haha, don't know what dictionary you're reading but heaping liberals and fascists together shows you don't have much of a clue. Now stop the personal attacks and add something meaningful to the debate. El Prez answered your question about government completely in my opinion, and your only response is to try to flame him. He's totally right, it's not human rights OR property rights, they aren't mutually exclusive. Both are essential in my opinion - you can't have economic freedom without political and social freedom. For an example of this problem look no further than China.

Quote:
yeah i did read what you said. and if you think school vouchers are going to make everyone have the same educational opportunities then this debate is in the relms of the theoretical.

Theoretical??? They've already been implemented and shown to improve the quality and choice for parents in regards to education. And you know who's benefitted the most? Low-income families.

Quote:
and as to that i havent answered y i think progressive is more fair, read this thread from the begining cause i cbf goign through and copying what i have already written about 5 times already

Well you've said you support progressive because you believe redistributing income is the right thing to do. I've explained why I believe it is immoral; because it is a penalty on those who succeed with no logical reasoning behind it. So that leads to the question, why should be redistribute income, if everyone has the same opportunities to create income? (Your right in saying that the opportunites aren't perfectly equal but the opportunites are there for everyone, rich or poor, to get education, training and employment)

Ok then,
http://en.wikipedia.org/wiki/Fascist_(epithet)

That was the intended usage. Like when little Pres says loonie lefty etc I like to use Far Right Fascist. Strictly incorrect yes, but I'm sure most understand the desired imagery.

I think you constrict the debate to a narrow perspective in terms of the redistribution of wealth and the foundations upon which that debate stands. The argument really is about the role of government or possibly in your case whether or not there is any role.

Personally, I can see both the arguments for socialist regimes and capitalist regimes, the pluses and minuses, however I do not see either as the pure truth.

The human condition is not scientific and is prone to irrational behaviour and as such seeking absolute theories is a foolish endeavour.

So.... A flat tax? Why not just raise the threshold and put the "churnings" back into health care and education?

Or is the point of such debates to put the money back into your pockets?

I would say another reason to get rid of churning is that every time money is moved/handled or whatever people will take a slice of the action. If the money stays in one's own pocket they will still have ", not 80c(from the " taxed) in refunded 'churned' money that has had fee's and wages taken out for this simply to happen.

Quote from iscariot:
Ok then,
http://en.wikipedia.org/wiki/Fascist_(epithet)

That was the intended usage.

The entry notes that this "intended usage" has about zero real descriptive value. The Orwell quote is illuminating, coming as it does howling directly from the 1940s.

Quote:
Like when little Pres says loonie lefty etc I like to use Far Right Fascist. Strictly incorrect yes, but I'm sure most understand the desired imagery.

Perhaps. Though at least loonie leftie has fair descriptive power and precision. You know that they're inclined towards leftist policies (ie statism) and exactly what I think about that.

Quote:
I think you constrict the debate to a narrow perspective in terms of the redistribution of wealth and the foundations upon which that debate stands. The argument really is about the role of government or possibly in your case whether or not there is any role.

I don't think that this is an entirely divisible question. When the word "redistribution" is raised in discussion of social policy, the word "forcible" is implied and the words "the government should/must" are not far away.

Quote:
Personally, I can see both the arguments for socialist regimes and capitalist regimes, the pluses and minuses, however I do not see either as the pure truth.

Gosh, if only I were as enlightened and Solomonesque as you are. I suppose that thousands of clever persons - socialist, liberal and otherwise - who have pursued the understanding of their ideologies just needed to learn less in order to see "the pure truth"?

Incidentally - what is this "pure truth" of which you speak? Inquiring ontologists and metaphysicists wish to know.

Quote:
The human condition is not scientific and is prone to irrational behaviour and as such seeking absolute theories is a foolish endeavour.

It might also be argued that the human condition is not scientific and is prone to irrational behaviour, and as such seeking empirical proof is a foolish endeavour. This is the argument made by Austrian economists, by the way.

Quote:
So.... A flat tax? Why not just raise the threshold and put the "churnings" back into health care and education?

Because then people will be, in absolute terms, worse off. The churning of income tax is inefficient, wasteful and lashes more and more people into welfare dependence. Simply removing the welfare and restributing it into other areas is an effective income tax rise of about 80 billion dollars - hundreds to thousands of dollars per earner per week.

Quote:
Or is the point of such debates to put the money back into your pockets?

Mine, yours, everyone's.

Quote:
It might also be argued that the human condition is not scientific and is prone to irrational behaviour, and as such seeking empirical proof is a foolish endeavour. This is the argument made by Austrian economists, by the way.

Aha, but the Chicago school would argue that everyone behaves rationally, maximising their happiness whether consciously or not. They'd say that if you don't think someone is behaving rationally you just don't understand the rationale behind the decision.

Quote from uber tard:
Aha, but the Chicago school would argue that everyone behaves rationally, maximising their happiness whether consciously or not. They'd say that if you don't think someone is behaving rationally you just don't understand the rationale behind the decision.

That's not quite true - as I recall it the Chicagoans argue that we can observe human behaviour empirically - through "revealed preferences" (fancy way of saying "what people actually do"). Hence their love affair with statistics.

Yeah, revealed preferences is part of consumer theory, basic microeconomics. But Chicago economists (the more extreme ones anyway) argue that people behave rationally all the time, consciously or not. Gary Becker one of the more famous Chicago microeconomists along with others has written some interesting stuff about things like the economics of suicide, economics of crime, economics of marriage etc.