Bob Murphy objects to my recent defense of Jonathan Gruber. I have two questions for Bob.
Suppose a newly elected Republican president wants to exempt all investment income from taxation. There are two ways to do this:
1) Retain the income tax, but exempt all interest, dividends, and capital gains (while also abolishing the corporate and estate taxes).
2) Scrap the income tax and replace it with a national consumption tax.
The president’s chief economic advisor, like all economists, is well aware that these two policies are essentially equivalent in the sense that, once prices, wages and interest rates adjust to the new policies, each individual taxpayer is burdened exactly as much by policy 2) as by policy 1). More precisely, at least following an initial adjustment period each individual taxpayer enjoys exactly the same lifetime stream of consumption under policy 2) as under policy 1).
Let’s suppose also that the chief economic advisor believes that policy 1) is vulnerable to scurrilous class-warfare-themed attacks and therefore cannot be sold to the American people. Policy 2), however, stands a chance of passage. He therefore goes around honestly touting what he perceives to be the clear virtues of policy 2), choosing not to mention that it’s equivalent to policy 1).
Question 1: Has that chief economic advisor behaved reprehensibly?
Question 2: Is there any essential moral difference between the strategies employed by that advisor and by Jonathan Gruber?
Note: An opponent of the ACA could, of course, argue that unlike this economic advisor, Gruber used his powers for evil. But if that’s your argument, note that we knew all along that Gruber was promoting the ACA, and therefore the recent revelations do not add to his culpability.
