Anyone who has followed the literature of economics knows that articles in the professional journals tend to take a standard form. If the article is purely theoretical, the setup will be something like: introduction, literature, model, and policy implications. If the article is empirical, it will go something like: introduction, literature, model, data, econometric estimates, and policy implications. In either event, those “policy implications,” at whose pronouncement the whole effort seems dedicated, generally take the form of recommendations for the government to do something. Articles that conclude either that the government should do nothing or that it should close up shop completely are, shall we say, uncommon.
Thus, the presumptive role of adviser to the powers that be seems almost inherent in the practice of economics in the past century. To call the practitioners “court economists” would not be wholly off base. To imply that every economist who follows the standard forms is ipso facto a prostitute of the state would be unwarranted, of course. Even some who serve on the faculties of state universitiesâ€”you know who you areâ€•dedicate themselves to preserving and protecting the free market. A handful are even anarchists working at public expense (imagine that!). Think of these pro-market economists as, to borrow the old commie expression, boring from within.
Sometimes, however, the inclination to indict the economists as complete sellouts to the state is almost irresistible. Which brings me to the burr under my saddle today.
While looking through the June 2005 issue of the Journal of Economic Literature, I came upon the listing (p. 563) for a book called Taxing the Hard-to-Tax: Lessons from Theory and Practice, edited by James Alm, Jorge Martinez-Vazquez, and Sally Wallace and published by Elsevier in 2004. The journal’s just-the-facts-ma’am description of the book reads as follows: “Eleven papers, originally presented at a conference held in Atlanta in May 2003 and sponsored by the Andrew Young School of Policy Studies at Georgia State University, provide an international perspective on the problem of taxing hard-to-tax activities, sectors, or individuals and explore policy options for taxing the hard-to-tax.”
Now, when I hear about anyone who is managing to escape the tax collector, my personal inclination is to break out the champagne for a celebration. My professional inclination as an economist is to note that in this case many of the inefficiencies that accompany taxation are being avoided (in my value-free professional guise, I say nothing about avoiding the injustice of transferring wealth from the creators and the justly entitled to the wreckers and the looters). Why would any economist want to assist the state in carrying out more extensively an activity whose upshot is distortions of resource allocation, deadweight costs, administrative costs, and wastes of countless sorts, all of which might be bundled within the concept of inefficiency? Does the question answer itself?
The JEL’s description notes that Taxing the Hard-to-Tax deals with, inter alia, “the costs and benefits of a marginal reallocation of tax agency resources in pursuing the hard-to-tax; sales taxation in a global economy; a possible approach to taxing agriculture in a developing country; . . . taxing the urban unrecorded economy in sub-Saharan Africa; and strategies for taxing the hard-to-tax in the twenty-first century.” As the poker player holding the winning hand might say as he reveals his cards, “read ‘em and weep.”
I have not seen this book. All I know about it comes from the JEL’s description. I don’t expect to order the book or to have any further contact with it. Just thinking about the members of my profession cranking out this sort of thing makes me want to retch.