Buttonwood: Polls apart

Posted: February 27, 2015 in economy
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Planet of the phones

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Voters face constraints on their economic choices

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THE row about whether to modify Greece’s bail-out has provoked claims that democracy is being ignored. The electoral mandate of the Syriza party, it is said, is being overridden by Greece’s creditors.
In fact, there have always been limits on voters’ freedom to pursue their desired economic policies. The first is on the ability of the majority to tax the minority, be it high-earning individuals or companies. Clearly there is some point beyond which higher taxes lead to lower revenues, as effort is discouraged. There is no general agreement over the point at which diminishing returns set in, but in an age of mobile people and firms, the threshold is probably lower than it used to be.

The second limit occurs when countries become dependent on international creditors for finance. They cannot force those creditors to roll …<div class="og_rss_groups"></div>

via Economic Crisis http://ift.tt/1wjK5dN


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