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The high price of static analysis obstinacy

If I had my druthers, one of them would be enforcement of that very basic rule-of-justice used by the retail antique industry: if you break it, you've bought it. I'd apply it to a particular mode of breakage caused by the political class as they continue to use a practice which, by now, you'd think, they'd have to recognize doesn't work.

It's called static analysis, and it's based on the law-makers' interesting notion that, if they change some of their laws, the citizenry subject to those laws won't change some of their own behaviors in response.

Scottish economist Adam Smith knew (and wrote) better in the 18th century, when he codified in print the observeable truth that, in trade for example, changing the rules-the price for a product or service- triggers an inverse change in the buyer response.

In Economics 101 I was taught to call it the supply-demand curve. I wasn't taught anything about its applicability to taxation; back then, the Laffer Curve's illustration of lower tax rates producing higher tax revenues was still a couple of decades in the future.

At about the same time that Laffer was doodling charts on restaurant napkins, professional economists began using the labels "static analysis" for law-makers' policies which don't recognize predictable tax-avoidance behavior, and "dynamic analysis" for policies which do.

On the "you-break-it-you-bought-it" side, if I had my druthers, there'd be suitable penalty, fiscal preferred (beyond mere capitol-building defenestration) for law-makers who get their taxpayers into deep-debt by increasing spending (and tax levels) by refusing to recognize (static analysis) that revenues won't rise just because marginal rates do, or new targets are selected.. And the same goes for the universal health-care problem. Here, Tennessee has posted a classic case-study example, and Vermont is about to.

The Tennessee example, called TennCare, is now some 17 years old.

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