Thursday, October 16, 2008
Property Right Intuition
My 17 month old daughter is very cute, of course (is it possible for a parent to think otherwise?), but as she is becoming more intelligent it is fun to see her inchoate intuitions. I go to pick her up from the child center, and she's in tears because a much older 2 year old took her diaper bag and is throwing it around. The women there can't understand why she's crying, but I know that it's because she always gets her diaper bag out of her cubby when I pick her up, and she sees that when others take her diaper bag it is 'not right'. The ladies think that kids are basically like caricatures of savages, people who don't care about who owns what. Thus, those in charge completely misdiagnosed the situation because they did not appreciate my baby's intuition for property rights, making my baby very unhappy, adults clueless.
I get the sense that lowering taxes on the bottom 95%, raising it on the top 5%, also does not appreciates peoples' intuition for property rights. Currently the top 5% of earners make over about $150k, and they pay about 60% of the income taxes. I think they will respond by gaming the system, and their will be a huge elasticity in reported income.