Saturday, July 07, 2012

Incentives and Economist are fallible?

This short story was on a rerun on Freakonomics;

The quick version is an economist and his wife are trying to potty train their three year old. The Economist uses M&Ms as an incentive for her to use the potty. A few days later she can control her bladder to maximize how many bags of M&Ms she can get in a day.

A three year old getting over for a couple extra bags of candy is funny.

When we are talking about 1 Trillion of tax payor dollars; not so funny any more.

Subsidies                                         $681,000,000,000
Small Business Tax Credits            $021,000,000,000
Uninsured Penalties                        $045,000,000,000
Employer Penalties                         $096,000,000,000
Cadillac Tax                                    $079,000,000,000

Total                                                $922,000,000,000

300,000,000 million Americans have a one trillion dollar incentive to outsmart a group of economist who aren't half as smart as they believe they are. It is beyond naive to think they wont figure out how to get far more then 681 billion in subsidies, every government program to date proves they can and do. Further every tax ever implemented makes it clear they will never pay the full 241 billion in expected taxes.

Cost go up, revenue goes down and this projected 1.083 Trillion increase to our deficit is now a 2-3 trillion dollar increase to our deficit.

The opening to the clip sums up the situation perfectly.
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