3 Perfect Markets and the ‘World of Truth’
Note:La verità: la preferenza rivelata dai comportamemti.La sincerità conduce all' efficienza: le tasse sono un' interferenza nel mondo della verità. ovvero cambiano i comportamenti e impediscono alle preferenze di emrrgereI prezzi informano x' sono pagati volontariamentePrezzo + competitività => verità precisaCompetenze nella scuola pubblica e nella scuola privataLiberismo e verità: metti i soldi dove metti la lingua (la doppia funzione dei prezzi)Tassa ottima: lump tax (impraticabile di fatto)
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3@@@@@@@@@@@@@@preferenza rivelata ...comportamentismo.interiorità...olimpiade...ipocrisia...fisco ideale
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Consider the film Liar, Liar, which tells the story of Fletcher Reede. As a result of his son’s birthday wish, Fletcher Reede finds that he is compelled to tell the truth for twenty-four hours. This is problematic for Fletcher because he is a lawyer – or a liar, as his son understands it
Note:LIAR LIAR CON JIM CARREY....HOMO BHYPOCRITUS
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free markets are just like Fletcher Reede’s son – they force you to tell the truth.
Note:MACCHINA DELLA VERITÀ
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we will discover that a world of truth leads to a perfectly efficient economy,
Note:LA VERITÀ È EFFICIENTE
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As we’ll see, taxes are like lies: they interfere with the world of truth.
Note:LE TASSE. DEMONIETTO MENZOGNERO
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So, let’s buy a cappuccino in the world of truth.
Note:UN CAPPUCCINO NEL MONDO DELLA VERITÀ.....DISCRIMINAZIONE DI PREZZO
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‘What’s the most you’re willing to pay for this coffee?’
Note:SCANNER
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‘How much did those coffee beans cost?’
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more killer question:
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‘Are any other places within thirty yards selling coffee like this?’
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Prices are optional, which means they reveal information
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There’s a basic truth incorporated into any system of prices. That truth comes from the fact that stores and consumers do not have to buy or sell at a given price – they can always opt out.
Note:OPT OUT
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Now you can begin to see why I say that prices ‘tell the truth’ and reveal information. In a free market, all the buyers of coffee would prefer to have coffee than the money the coffee cost, which is shorthand for saying they prefer coffee to whatever else they might have spent 60p on.
Note:COSTO OPPORTUNITÀ
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anything that is paid for outside the market – for example, the Olympic Games in London in 2012. The Games will cost around £10 billion, most of which will come from taxpayers. Maybe this is a good use of money, and maybe not. It’s not clear how we find out.
Note:FUORI DAL MERCATO. NEBBIA.....OLIMPIADI
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Perfect markets: the truth, the whole truth and nothing but the truth
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the price is not conveying a vague fact (‘this coffee is worth 60p, or more, to the buyer, and it cost the coffee bar 60p, or less’) but a precise truth (‘this coffee cost the coffee bar exactly 60p’).
Note:FATTO VS VERITÀ....VERITÀDI PREFERENZA + VERITÀ DI COSO
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Companies are making things the right way. Any company that wastes resources, over-produces or uses the wrong technology will go out of business.
Note:INFO => EFFICIENZA...VERITÀ
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IL PREZZO GIUSTO
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Things are being made in the right proportions. If too much coffee were being produced, manufacturers would cut prices;
Note:QUANTITÀ
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Things are going to the ‘right’ people. The only people who buy products are the people who are willing to pay the appropriate price.
Note:A CHI
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you can’t get more efficient than a perfectly competitive market.
Note:SPRECO ZERO
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Life without markets
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the non-market system also has some disadvantages. For instance, if a police officer is rude or incompetent, you don’t have the option to shop for a different police force. If you think that the level of police protection you receive is excessive, it’s not up to you to cut back a bit. Neither can you spend more if you decide that you’d like extra service. No, you have to lobby your local politicians and hope they consider your demands.
Note:NO EXIT STRATEGY
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Government-provided schooling is another example of a non-market service that many of us use.
Note:ESEMPI SCUOLA E POLIZIA
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In Britain, government-run religious schools often have the best academic records, so atheists take their children to church every Sunday in order to get good references from priests and get their children into these schools.
Note:DISTORSIONE ATEI IN CHIESA...UN ESEMPIO D IPOCRISIA DA CARENZA DI MERCATO
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It seems that there is a willingness to pay for good schools, and we see it emerge because house prices are higher in the areas of schools with the best reputation. The non-market system, which gives preference to local children, channels the money that parents are willing to pay for a good school into the hands of property owners near existing good schools. This hardly seems sensible. A market system would simply direct the money to pay for more good schools.
Note:L IMMOBILIARISTA E LA SCUOLA
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The signalling function of prices
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In a market system, prices provide a way of deciding who gets to enjoy a limited supply of schools: whoever pays most gets to send their children to the best schools, an uncomfortable state of affairs, which the government-school system is designed to prevent. But prices also give the signal to build more schools, hire more teachers or raise their wages if they’re in short supply, and buy better materials. In the longer term, a price system will transform a high willingness to pay for good schools into a lot of good schools, just as surely as it will transform a high demand for coffee into a lot of cappuccino.
Note:COSTRUIRE NUOVE SCUOLE?
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The difficulty is that politicians hear that we want good schools, but they also hear that we want more police on the streets, a better health service, lots of big roads, excellent welfare benefits, low taxes and a double-shot caramel Venti latte. It’s easy for us to demand all of these things, but prices, by forcing us to put money where our mouths are, uncover the truth. Taxes have their advantages, but many don’t contribute to truth
Note:LE TASSE SPINGONO A MENTIRE
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Efficiency versus fairness: can we handle the truth?
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it’s hardly surprising we sometimes prefer the cosy white lies: it is expensive, for example, to heat the house of an elderly lady in Middlesbrough, but we may prefer to subsidise the fuel, not wanting her to face the truth of that expense.
Note:BUGIE BIANCHE
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Why are taxes inefficient? Because they destroy the information carried by prices
Note:IL VULNUS DELLE TASSE
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Cost of cappuccino: 60p Price of cappuccino in perfectly competitive market: 60p Price of cappuccino after tax: 66p Willingness to pay for cappuccino: 63p Cappuccino sold: none Tax raised: zero
Note:ESEMPIO DI DISTRUZIONE VERITÀ
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Taxes are often higher when price-sensitivity is low. For example, the government charges high taxes on petrol and cigarettes, not for environmental and health reasons but because people who buy these products need to drive and are addicted to smoking;
Note:IL FUMATORE TARTASSATO
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(If you think that taxes on petrol are motivated by environmental concerns, think again: despite the environmental impacts of air travel, electricity and domestic heating, 90 per cent of all ‘environmental’ taxes in the UK in 2009 were paid by motorists.)
Note:L AUTOMOBILISTA TARTASSATO..m..AMBIENTALISTA ILLUSO
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Can we enlist markets to help with fairness?
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He proved that not only are all perfect markets efficient, all efficient outcomes can be achieved using a competitive market, by adjusting the starting position.
Note:ARROW
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instead of interfering with the markets themselves, the trick is to adjust the starting blocks by making lump-sum payments and levying onetime taxes.
Note:TASSARE I TALENTI. COME SPOSTARE I BLOCCHI DI PARTENZA AI 100METRISTI A SECONDA DEL LORO TALENTO...NN TASSE SUL LAVORO MA SULLA NATURA
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a lump-sum tax doesn’t affect anybody’s behaviour, because there is nothing you can do to avoid it.
Note:IL BELLO DELLA LUMP TAX
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an example of lump-sum redistribution would be to give £500 to everybody whose name starts with H, a policy for which I would be happy to vote.
Note:ES. SI LUMP TAX
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The implication is that in a world of perfect markets, the only thing needed to ensure both fairness and efficiency is a ‘head start’ strategy: a programme of appropriate lump-sum taxes and subsidies that puts everyone on an equal footing.
Note:IL MONDO IDEALE...MA È POSSIBILE?
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The question is, can this be done in practice?
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Impractical examples
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political philosopher Robert Nozick deployed a famous argument against taking a view of ‘justice as fairness’.
Note:O DUBBI DI NOZICK
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Chamberlain’s talents made him wealthy; Nozick felt this was ‘just’ because Chamberlain’s wealth was the outcome of legitimate decisions by fans happy to pay to see him play. The situation may have been ‘just’ in Nozick’s sense of the word, but can any situation that leads to a highly unequal distribution of cash be considered ‘fair’?
Note:CASO CHMBERLIN
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Thanks to Kenneth Arrow, we now know that, when faced with a modern-day sports star like Tiger Woods, the solution is to levy a one-time lump-sum tax of several million dollars on him.
Note:TIGER WOOD....SOLUZIONE TASSA SUL TALENTO
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President Franklin Roosevelt introduced an income tax rate of 79 per cent, but the threshold was so high that the tax was paid by only John D. Rockefeller.
Note:FALLIMENTO DELLA TASSA SUI REDDIT
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we shouldn’t abandon the head start theorem quite yet. While we can’t always use lump-sum taxation and redistribution, we can sometimes:
Note:CONCLUSIONE
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A practical example
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In a typical winter in Britain twenty-five thousand old people die as a result of inadequate heating. To address this concern, domestic fuel is subject to lower taxes than many other things.
Note:IL TIPICO PROBLEMA E LA SOLUZIONE SBAGLIATA
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Because customers cannot easily cut down on fuel consumption, they are not very sensitive to the price of domestic fuel, hence the government should levy a bit more tax on fuel and a bit less on other goods: customers would not change their behaviour much and so the inefficiency would be small.
Note:TASSARE LA RIGIDITÀ E SUSSIDIARE I POVERETTI
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The simple policy remedy is to raise fuel tax but give extra money to the elderly, money that they could use to switch that heating on and stay warm.
Note:+ REDSISTRIBUZIONE
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The lesson of the head start theorem is that when a problem arises, it’s worth asking whether the problem can be addressed by rearranging the starting blocks rather than interfering with the race.
Note:LAVORA SULLA PARTENZA NN SULLA GARA...TASSA LA NATURA NN LO SFORZO
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