Per-Olof Samuelsson On Richard Salsman's Anti-Austrian Views
Apparently, Richard Salsman has written some kind of list detailing 12 complaints he has about Austrian economics, published on Facebook. Per-Olof Samuelsson has now written a point by point response to it which you can read here.
I basically agrees with most of Samuelsson's responses, though I would like to make a few additional points:
1) Contrary to what Samuelsson writes, praxeology per se is not linked to Mises' Kantian epistemology. Praxeology is a deductive system based on a few axioms, most importantly the action axiom. While praxeology like all other sciences of course needs some form of epistemological justification, it does not in itself contain any epistemology, and certainly not Kantian epistemology. It can just as well, or actually better, be justified with epistemological Aristotelianism or Objectivism.
2) I believe in Mises' view, as opposed to Reisman's, theory of the basic rate of profits. I similarly do not agree with Reisman's rejection of the concept of opportunity cost.
3) As Samuelsson notes, Austrian economícs do not "disdain" math in general. It only disdains its use where it is unnecessary or for other reasons improper. Mathematical techniques like Matrix algebra and Lagrange multipliers reduces, not increases, our understanding of for example consumer choices, and are moreover a distraction from the real issues. For more on this subject see my post "The Real Problem With Non-Austrian Economics".
4) Samuelsson comments on Salsman's criticism of Austrian economics for quote "10) their neglect (or ridicule) of the marginal tax-rate theory of supply-side economists." by saying he is not familiar with that issue.
My comment on this is that (most) Austrians do recognize that higher marginal rates of taxation reduce productive activities. I certainly do. And most Austrians would probably also agree that when tax rates are high enough, tax rate reductions can in fact increase tax revenues because of for example increased productive activities and decreased tax avoidance. It is highly likely that the Kennedy tax cuts of the 1960s (which reduced the top rate of taxation from 91% to 70%) in fact increased revenues.
But it is a lot less likely that at the more moderate tax rates we have today, tax cuts are self-financing. Bush's reduction of the top federal rate of taxation from 39.6% to 35% probably increased economic growth, but not by enough (even also considering decreased tax avoidance) to increase tax revenues.
I basically agrees with most of Samuelsson's responses, though I would like to make a few additional points:
1) Contrary to what Samuelsson writes, praxeology per se is not linked to Mises' Kantian epistemology. Praxeology is a deductive system based on a few axioms, most importantly the action axiom. While praxeology like all other sciences of course needs some form of epistemological justification, it does not in itself contain any epistemology, and certainly not Kantian epistemology. It can just as well, or actually better, be justified with epistemological Aristotelianism or Objectivism.
2) I believe in Mises' view, as opposed to Reisman's, theory of the basic rate of profits. I similarly do not agree with Reisman's rejection of the concept of opportunity cost.
3) As Samuelsson notes, Austrian economícs do not "disdain" math in general. It only disdains its use where it is unnecessary or for other reasons improper. Mathematical techniques like Matrix algebra and Lagrange multipliers reduces, not increases, our understanding of for example consumer choices, and are moreover a distraction from the real issues. For more on this subject see my post "The Real Problem With Non-Austrian Economics".
4) Samuelsson comments on Salsman's criticism of Austrian economics for quote "10) their neglect (or ridicule) of the marginal tax-rate theory of supply-side economists." by saying he is not familiar with that issue.
My comment on this is that (most) Austrians do recognize that higher marginal rates of taxation reduce productive activities. I certainly do. And most Austrians would probably also agree that when tax rates are high enough, tax rate reductions can in fact increase tax revenues because of for example increased productive activities and decreased tax avoidance. It is highly likely that the Kennedy tax cuts of the 1960s (which reduced the top rate of taxation from 91% to 70%) in fact increased revenues.
But it is a lot less likely that at the more moderate tax rates we have today, tax cuts are self-financing. Bush's reduction of the top federal rate of taxation from 39.6% to 35% probably increased economic growth, but not by enough (even also considering decreased tax avoidance) to increase tax revenues.
posted by stefankarlsson at 12:16 AM
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