Die Gegenfinanzierung von Steuerreformen: Eine Pi-mal-Daumen-Rechnung

Vor der anstehenden Nationalratswahl haben die wahlwerbenden Parteien ihre Steuerpläne vorgestellt. Sowohl SPÖ als auch ÖVP und FPÖ versprechen Steuersenkungen, hauptsächlich bei der Lohn- und Einkommenssteuer. Wie immer bei solchen Versprechen stellt sich die Frage der Gegenfinanzierung, d.h. an welcher Stelle im Staatsbudget Ausgaben eingespart werden soll. Und dabei sorgt ein Punkt immer wieder für Verwunderung: das Volumen der vorgeschlagenen Einsparungen ist immer geringer als das Volumen der Steuersenkungen. Zum Beispiel: Im Reformvorschlag der Volkspartei steht eine Senkung der Steuern und Abgaben von 12 Milliarden einer Ausgabensenkung von 8 Milliarden gegenüber. Woher sollen die restlichen 4 Milliarden kommen? Die Antwort lautet: aus Mehreinnahmen durch höheres Wirtschaftswachstum.

Wie soll das gehen und sind Mehreinnahmen in dieser Höhe realistisch?

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Steedman’s ‘critique’ of the isoquant

Ian Steedman from Manchester Metropolitan University was in Graz this week. Yesterday he gave a paper in our research seminar. I couldn’t find the paper he presented online, but he published a shorter version of it here.

Prof. Steedman is a well-known figure in Sraffian economics, a school of economic thought initiated by Piero Sraffa’s 1960 book on production theory. (Sraffians are also known as Neo-Ricardians for reasons that need not concern us here.) The primary research agenda of Sraffians is to show that the simple neoclassical models which dominate modern textbooks are fundamentally flawed. Steedman’s presentation is a fairly typical specimen of that research program. I have long been looking for an excuse to write about Sraffians. Here it is.

The paper deals with the capital-labor isoquant in the consumer good sector in the context of simple multi-sector production models. Steedman shows that “simple models of production […] can give rise to ‘capital-labor isoquants’ in the consumer good sector that are utterly unlike those so often presented in the textbooks […].” They can slope up, bend backwards, run in circles, or else behave in almost any imaginable way. He concludes: “There really is no excuse for blithely assuming that [the isoquant is downward sloping and convex to the origin].”

What should we make of such an argument?

First, the negative slope of isoquants in neoclassical models is not an assumption, it’s a result. Take any production function F(K,L) that monotonically increases in K and L. Holding output constant K falls as you increase L and vice versa. There is no logical flaw in this theorem. Neither is there a flaw in another theorem: If F(K,L) is concave in K and L, the isoquant is convex to the origin.

Why, then, does Steedman get those weird-looking isoquants? The answer is pretty simple: What he calls isoquants has nothing to do with the homonymous curves in our beloved textbooks. They are quite different beasts.

A textbook isoquant is a purely technical relationship between physical inputs. It shows how producers can trade off one physical input against another. It’s a technical constraint in the firm’s cost minimization problem. A Steedman ‘isoquant’ is a relationship between the market value of capital goods (what Steedman calls K) and the quantity of labor (what he calls β) employed in a given sector. It shows how K varies with β as the relative cost of those inputs change. It’s an outcome of the firm’s cost minimization problem.

The strategy followed by Steedman’s paper is, as I said in the beginning, typical of the general strategy of Sraffian economics: Write down a model that is completely different from textbook models. Introduce a variable whose label is known from textbooks (‘capital’, ‘isoquant’, etc.). Show that the variable does not behave in your model as it does in the textbook model. Claim that this proves the textbook model is utterly wrong.

Imagine a schoolboy who calculates 1+2=3. Then Prof. Steedman comes along saying: “My dear boy, your 1 is really a 2, and 2+2=4!” At first, the schoolboy will be confused. Maybe he will stop adding 1+2 for a while. But eventually he will ignore Prof. Steedman’s lecture, realizing that there is no point arguing whether a 1 is really a 2 or not.

The Difference Between Healthy Competition and Monopoly

I’m currently doing some work on evolutionary economics without really having gotten far beyond the basics. I am certain this stuff is great and important, but all the books always kind of loose me at the point where too many “statistical moments” come in, I am asked to solve non-linear differential equations and I find myself spending most of my time reviewing how the rules of integration work. I’m terrible at math, is what I’m saying. But the book by Stanley Metcalfe on my desk at the moment still seems a really terrific introduction into the topic. What really fascinated me, however, is something only marginally related to the models themselves. Something so blatantly obvious when you think about it yet so cleverly hidden that I had never noticed it with this clarity. One of economists’ favorite words is actually nothing but a farce in most standard economic models: we speak of competition where there really is none!

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