PHIL 270 Lecture Notes - Lecture 5: Earned Income Tax Credit, Pareto Efficiency, Party System
4 May 2018
School
Department
Course
Professor
PHIL 270: Business Ethics
1.27 Lecture Notes
Breaking down into 3 PDs
Gathering information by consumers and citizens is costly
Gathering information = public good
PD1: Gather info v. do not gather info
o Not gatheig ill alas doiate uless ou’e a political scientist
PD2: Processing relevant information through an unbiased lens v. processing in a biased way
o Confirm preexisting beliefs = psychologically comforting = benefits you
o Biased beliefs = costs spread across everyone
o Maybe morality helps us oeoe pisoe’s dileas
o Motivated reasoning – benefits group cohesion, status in group, group status
o Political information can be seen as a type of gossip, direct benefits of socially signaling
intelligence
o No punishment for forming false beliefs as long as that belief is consistent with the group belief
o MT: benefits of social cohesion – does it outweigh the benefits of processing information
unbiasedly
o Assumes that the presence of good voters translates into good candidates who follow through
with similarly unbiased/top-notch legislation
PD3: Acting on our unbiased beliefs after we gather them v. not acting on our unbiased info
o Costly to protest, so not acting on the information will dominate because the costs for picketing
are high and the effect of it is small
o Remember = not justifying, just explaining
Whole model leaves out altruism = people still join environmental groups even if their individual
contribution will not make much of a difference
Democracy has an anti-consumer bias
Yandle: Bootleggers and Baptists
· Shifting coalitions come together temporarily to extract resources from the minority
· Regulation costly
· Ex: corporate income tax – ad idea eause it’s essetiall a ta o osuptio poo people – bad
idea yet politicians love it eause it looks like the’e goig agaist opoatios
o Makes it uncompetitive because small businesses will not open with the high taxes, high prices
consumers go to Walmart
o Impression that the action is in the interest of the public interest
· Ex: Healthcare – eploes euied to suppl healthae fo okes Milto Fieda Ho to Cue
Healthae – hides the tax, the employer pays you less
· Corporations love regulation to keep out potential competition
o Need to hire tax lawyers and spend a lot to comply (which is a heavy burden to small
businesses) but is not a big deal for large corporations as a start-up cost
· Tax code – the more complex, the more it benefits the wealthy
o They can hire tax lawyers and have the funds to lobby for tax breaks
o The siple, the ette IR“ does’t hae to e state fuded
· Transaction costs, fairness costs (if you care about the poor)
· Earned income tax credit – elfae poga fo poo people that a lot of poo people do’t ko
about
· Rent (in economics): return on an investment; an amount paid to a factor of production (worker)
find more resources at oneclass.com
find more resources at oneclass.com
