There’s an awful lot of things out there that are the accepted wisdom and yet are still wrong. Take, for example, the reason the Mongols came swarming out over the Steppes:
The traditional view has been that the Mongols were desperately fleeing harsh conditions in their craggy, mountainous homeland. The Lamont-Doherty team, however, found just the opposite: Between 1211 and 1225—a period that neatly coincides with the rise of Genghis Khan and the Mongol empire—central Mongolia enjoyed a spell of sustained benign weather unlike anything the region has experienced during at least the past 1,100 years and probably much longer.
Pretty logical really: you’re not going to get huge population movements without there being population gorwth and thus pressure for population movement.
But that’s just an interesting historical curiosity. What interest us rather more is that we can look around us and see that a new “conventional wisdom” is being created right now. The conclusion is goin to be the same as the old one, that there must be vast and punishing taxes on anyone who actually has anything. It’s only the reasoning that is changing. Last time around it was that socialism would be more efficient than capitalism and markets, therrefore we must confiscate all the capital so that the State can deploy it in that more efficient manner.
No, really, don’t laugh, socialists right up into the 1950s and 60s really did believe this. Now, the one under construction, appears to us to be the one about inequality. The Spirit Level told us that inequality was bad for a society, bad for everyone in it. Diamond and Saez told us that the peak of the Laffer curve is 80% for the taxation of income (actually, they said 54%, but it gets read as 80% as people forget the caveats in their model) and Thomas Piketty now says that inequality will only get worse unless there’s an 80% income tax plus a whacking wealth tax.
We’re back where we started in policy terms, take all the money off anyone who has the temerity to have any. It’s only that reasoning that has changed.
That reasoning itself being highly suspect: the Spirit Level was amusingly taken apart by Chris Snowdon. The 80% income tax result was brought down by many who read the paper. And Piketty’s arguments are being sifted through and thoroughly taken apart as well. Won’t stop many people searching for yet another reason why taxes must be much, much, higher. We just have to remember that the validity of the policy position depends on the arguments and logic that are used to get to it. And they’re not right yet, at least.