Those of us who teach courses in psychology must constantly battle the notion that human behavior is common sense. While we are perfectly capable of observing our world and creating personal models to explain what we observe to ourselves, there are simply things beyond our understanding AND things personal biases prevent us from considering in our analysis.
This is obviously the height of the political season and as such we are encouraged by the those attempting to influence us to accept various positions. The notion that lowering taxes across the board will stimulate the economy is one such position. This logic has been presented over and over. Despite the consistent lack of evidence to support this position, there is some intuitive appeal – more money in my pocket and I will spend more providing greater opportunity for others.
I am not an economist, but I do believe in the data. If I would be asked but someone demanding an explanation why lowering the taxes for all does not improve the economy I guess I would propose the following. The wealth that is created in this country is far from equally distributed and this inequity is increasing rather than decreasing. Those with great wealth do not distribute their wealth in proportion to what they take in. They collect resources and consolidate their assets. Those with lesser wealth tend to spend in proportional to what they take in. This differential situation means the discrepancy increases rather than decreases. Taxes provide basic services and those without wealth are in far greater need of such services. Lack of basic services and opportunities also exacerbates the spiral that concentrates wealth.
We tend to accept anecdotal evidence to refute the spiral I describe. We want to believe in rags to riches stories. Clearly such stories exist. However, one must also take into account the more frequent stories of those who lack the resources to invest in themselves and their children necessary to even approximate a fair game. Talent is randomly distributed, but the resources and opportunities necessary to develop and apply talent are not.