

Deadweight Loss - lionhearted
http://www.marginalrevolution.com/marginalrevolution/2010/10/popularizing-deadweight-loss.html

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btmorex
This kind of ignores the fact that most taxes beyond income/property are
actually there to modify behavior, not necessarily to generate revenue.

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gwern
Really? What's sales tax there for?

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dantheman
Or the VAT

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brandonkm
This is a good way of showing what deadweight loss is. Another way of
explaining it could be anytime you have an economic loss with no gains
elsewhere in the economy. For example: trade quotas and tariffs create
deadweight loss in a economy because they transfer value from the consumers to
the producers by raising prices.

Also, anytime you have a market where theres a monopoly, deadweight loss will
typically occur.

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jozo
I don't get why we need ten line Q&A simplifications on hacker news, other
than using theories for justifying opinions. Economic theory is already
generalized and simplified enough as is. There's plenty of better source for
information like this e.g.
[http://www.google.se/search?tbs=bks:1&tbo=1&q=deadwe...](http://www.google.se/search?tbs=bks:1&tbo=1&q=deadweight+loss)

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chrismealy
It takes a heap of Harberger triangles to fill an Okun gap.

BTW, in the real world almost nothing is sold at marginal cost.

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Luyt
You can of course decide to skip the bus ride, but what if the government
taxes stuff you can't skip as easily? Like food, water or housing, or air to
breathe?

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jerf
You either pay the tax or you take the penalty for not taking the tax, in
which case you lose pretty much everything and the government is now laying
out money to incarcerate you. You can try to take a lower quality food or
water but there's a limit on that too.

You can actually show that taxing is inefficient and inevitably (in practice)
take more out of the economy than the government actually gets:
[http://www.daviddfriedman.com/Academic/Price_Theory/PThy_Cha...](http://www.daviddfriedman.com/Academic/Price_Theory/PThy_Chapter_7/PThy_Chapter_7.html)
though I mean this merely as an interesting fact, not a conclusion or an
argument about "proper" taxation.

Taxing air is particularly pointless on Earth. It is however more interesting
to consider the question of taxing air in a space environment where air is not
free. Heinlein in particularly was known to play games with that concept.

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billswift
Jerry Pournelle also spent some time on it in _Birth of Fire_. In most SF,
though, it is not treated or only implicitly.

