Wednesday, June 22, 2011

Time Horizons

FLG knows he's beaten this horse well and truly dead, but he found another clear example in favor of his time horizons theory (that political leanings aren't caused by values, as most people understand it, but rather at the core it's largely a product of the relative emphasis of present versus future in each individual's time horizon. Or, to put it another way, each individual's personal discount rate).

Here's Greg Mankiw:
I am also skeptical that across-the-board tax cuts increase tax revenue (although, unlike Paul, I think that tax cuts do generate a significant dynamic effects and therefore are not as costly as static estimates suggest).

FLG'll translate this into normal English:
I doubt cutting taxes raises government revenue, although, unlike Paul, I think they create long run benefits and therefore think they are not as bad as short-term estimates suggest.

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