Friday, March 31, 2006

When Women Copy Governments

During our class break in macroeconomics on Wednesday, I faced a classic economic problem: Should I buy Starbursts, knowing I'd be paying for flavors I didn't like, or go hungry but retain 85 cents? Standing with me in front of the vending machine, Michael Thomas chirped up and offered to shoulder the burden. He paid me 35 cents in exchange for whatever flavors I didn't want.

This was quite gutsy on his part, for I could have easily discovered all the flavors looked appealing. Luckily for him, about half--eight total--weren't for me, so I passed them on. We were both satisfied with our decisions.

Walking back into class Michael's girlfriend noticed our gains. "Oh candy!" she said. Michael reflexively passed her a Starburst and she happily consumed it. I stopped in my tracks as Michael crossed the room to sit down.

She and I discussed the events that just happened, particularly the exchange between her and her boyfriend. She didn't see anything at all wrong with it. About halfway through this conversation, she promptly stood up and declared she wanted more candy. Seconds later she returned with two Starbursts. She gave one to Brian, who was sitting next to her and also not seeing the connection between what transpired and taxes.

If you don't see it either, then considered what Michael told me after I asked him why he gave up his hard-earned candy: "My life is easier if she's happy." Ah, there's the rub. Most women reading this might think he's talking about nice things she does for him, but most men know he referring to all the ways she can make his life harder, but holds back if she's happy.

Taxes are the same way. I could choose not to pay them, but I will find government will make my life harder as a response. When I pay them I'll find my money distributed to others, just like the Starburst that went to Brian. And when I comply with the enforced rules, I give the rule-makers every reason to tighten their grip; on a whim, her "tax rate" increased from 12.5% to 37.5%!

Keen readers will quickly note that unlike governments, you can opt out of a relationship. Yet many people can change citizenship and even more can move within a country, escaping local injustices. Economists usually don't focus on that option because it's unreasonable to require people to uproot their entire lives just to escape a transfer payment. (Note that when those costly demands escape the costs of moving, people try to, despite the risks. The curreny debate over immigration is an obvious example, as are the countless who brave the Caribbean to leave Cuba.) Similarly, as relationships move forward, it becomes more costly to end them, so the tolerable level of extortion increases. Marriages are thus potentially the most oppressive of relationships, a theory justified by countless testimonies of married folk.

The couple have been seeing each other for some time now (I want to say six months, but I don't know the exact number). It would be costy to end it. She knows this so she exploits it with some annoying, but not tremendously burdensome, punishment. While early in the relationship, Michael would have handed her candy to demonstrate he's a good guy (and thus get something out of it), he now does it out of fear of reprisal. Michael is living under tryanny.

I suppose it's reasoning like this which explains why my longest relationship was three months.


jeremy h. said...

Maybe it's just being at the end of an 11-hour (or so) drive (aka ride), but this sounds a lot like the "actions have consequences" hypothesis. Also, it kinda sounds like this on MR.

mthomas1776 said...

See, this is the problem with the knee-jerk libertarian responce to increases in government taxation, we seldom see the increase in government spending. Clearly it is POSSIBLE that the expenditure of government actually improves your life (I am willing to be that anyone besides a libertarian would assume that the government provision of roads is cheaper than would be private). Consider "national defense" this is a particular thorny example to explain to the non-libertarian as to what exactly is possible in the minimal government world. In fact many libertarians would seek a government that supplies only property rights enforcement and national defense. The only problem being that these are some of the largest expenditures.
I figure it is likely that governments (those of some parlimentary or of democracy) have large rent burdens, but those rents of monarchy have been seen through history as at least lower in terms of tax burden. So it is possible that your citizen here is rationally maximizing subject to the opportunity costs of a more oppresive government option. I do agree however, 37.5% marginal tax rates seem a little high -- but according to Tyler Cowen´s class last semester that percentage is possibly the right number.

Anonymous said...

I think it's a bit misleading to compare buying candy to taxes. With taxes all our money goes into a pool from which different expensives are withdrawn. Because of that I can at least pretend my own contrabution only goes towards things I like (parks, schools, police, fire, roads) and none of it goes for things I don't like (faith based initiaves, Iraq War, corporate welfare). I can assume there's someone else out there who has the oppositte priorities who's paying just as much taxes. That way we cancel each other out.

But with Starburst you know you're getting everything when you pay. You get the lousy watermelon in addition to the tasty strawberry. I think a more apt comparison is cable TV. I know a large piece of my bill goes to ESPN and Disney because of a recent price increase and how they are there when I channel surf. I don't want those channels, but I'm paying for them anyway. How about writing about that?

My rent is like that too. I pay for a pool I don't want, parties I can't attend, and a maintenance crew that does a crappy job.

Plus you got "best of" CDs. Some tracks rock, some track suck but you're paying for all of them.

Taxes are NOT the same way, businesses are. Any time they bundle things together from a copy of Windows, to a magazine, to a chinese buffet you will have things you like and don't like and on a per individual basis. But taxes are different, they are paid in bulk. The Army does not get checks from each individual taxpayer so you can't trace your single payment to a single service. The oppositte of what you experienced. Those Starbursts can be traced right to you and your friend, not everyone who bout Starbursts.


PS I will remember your comment about marriage if you ever send me your girlfriend's email address. That and how you think it's OK to discriminate against women because they may get pregnant.

Anonymous said...

If my boyfriend just gave me candy, I'd assume it was because he wanted too, not because he felt like it was to keep me happy. I know that things don't usually work that way...but I'd give him candy too if he seemed excited about it - and not just to keep him happy.

Then again, I think if I was dating someone and I had to do certain things to keep them happy to make my life easier I wouldn't date them - but you can't do that with the government I guess. And I'm definately not trying to say anything about your friend and his girlfriend, even though it sounds like it.

Your entry was really interesting, even though I commented a little off point.

PB (a friend gave me the link to your blog)