About the dead

After thinking about nudes and pyramids, our thoughts naturally converge on the dead. It is amazing how much time we spend with them. Aristotle, Spinoza, John Maynard Keynes, Shakespeare, … they stare at us from the bookshelves, as perfect advisors who only speak when asked. And the children, who don’t sit on the bookshelves, fortunately, and who speak even when asked not to, don’t get that same attention as these dead (so that we should be grateful that they call for it).

The Royal Economic Society Newsletter, no 160, January 2013, has two obituaries that we must discuss. For the living, there is also an article by Tony Atkinson on the Mirrlees Review of taxation in the UK, and a Letter from France from Alan Kirman with also some attention to high marginal tax rates and the tax flight of Gerard Depardieu to Russia.

The Economist called France the ‘time bomb at the centre of Europe’. Apparantly the François Hollande government is in statis, trying to maintain some social peace but unable to generate investments and environmentally sustainable growth and jobs. I also indicated his in an earlier weblog entry on France, and apparently there hasn’t been progress.

Professor Atkinson’s text on taxation in the UK cannot make anyone happy either. We may be satisfied that the Mirrlees Review gives the state of the art in a particular section of the profession. However, the key notions of the tax void and the dynamic marginal tax rate, see my book DRGTPE, are still missing. Isn’t anyone on the British Isles able to see little Holland across the Channel, and this little figure waving this colourful flag ? A problem is, though, that professor Richard Blundell who took part in the Mirrlees Review also was part of the 1997 CPB Audit Committee chaired by Anton Barten, who neglected to look into the censorship of science at the CPB since 1990, with the argument that it was ‘old history’, even though that censorship continues to this very day, and which censorship also concerns those notions of the tax void and dynamic marginal tax rate. The Mirrlees Review is half-baked and only partly useful, but essentially misleading since it suggests to offer more than it does. Most notably, on the optimal tax and VAT and the top income tax rate, the Mirrlees Review leaves much to be desired.

When Atkinson considers the impact on taxes and tax-earnings, he refers to the research by Robin Marris on imperfect competition and principal-agents. The issue of the RES Newsletter also contains an obituary of Robin Marris, by Adrian Wood (see also the Guardian). Marris has done much, but I would like to mention that his book Reconstructing Keynesian Economics with Imperfect Competition (1991) deserves consideration. In this context I want to mention also Connell Fanning & David O Mahony, The General Theory and the Entrepreneur Economy, 2nd edition, MacMillan 2000, The economic profession on the British Isles can somehow still capture the mood of Keynesian thought and bring fresh insights.

The problematic point now is the obituary of Jules Theeuwes (1944-2012), by Joop Hartog, both from the University of Amsterdam, and both among the founding editors of Labour Economics, the official journal of the European Association of Labour Economists (EALE).

Are we allowed a word of criticism on the dead ? If we may criticise Aristotle, are we allowed to do so with Jules Theeuwes ? My point is that labour economists can be expected to be interested in an analysis on unemployment, and in particular how taxation affects it. This paper Tax structure, inflation and unemployment benefitted from comments by Jules, was published by Guido den Broeder of Magnana Mu 1994, ISBN 90-5518-208-7, and included in the archive EconWPA at St. Louis ewp-mac/9508002. It explains the notions of the tax void and the dynamic marginal tax rate, though I introduced the particular term ‘tax void’ a bit later to better transfer what is explained there. Unfortunately, Theeuwes apparently did not understand the analysis, broke off further discussion, and didn’t want to consider the censorship at the CPB. In 1990 the directorate had accused me of some points, that Theeuwes helped neutralise, see this exchange of letters (in Dutch), which is how he and I met in the first place. So I have been grateful to him for that neutralisation and the comments on my analysis, and everyone will agree that he has been a fine man overall indeed. Yet, it is unclear to me why he could not understand that analysis, and why he did not protest against the censorship of science at CPB. These points of course hang together. The same holds for Joop Hartog. Hartog doesn’t indicate that the labour market is as badly managed as the financial market. Dutch professors of economics have failed on the integrity of science since 1990, and perhaps also on competence. Sorry for these words. Writing about the dead is easier when there isn’t this sad emphasis that their life story has ended.


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