John Stewart Mill was homeschooled
by his father. Though it may have been to his social detriment, it is plain to
see that he was able to achieve abnormal academic feats. By the age of 8 he had read more in Greek
alone, than the average person from our culture might read in their lifetime.
By the time he was 14 he was done with his education. I’m 29! I’m such a
slacker!
I relate
well to his feelings of uncertainty about what would bring him “true happiness.”
In my early twenties I was very ambitious and wanted to retire by the age of
thirty. I often feel like I have not accomplished enough and fear that I will
not reach my ambitious goals. However, since the age of twenty, I have learned
a lot about life and what brings true happiness. I believe that it is different
for everyone and no one can answer that question for you. It is one of the most
important things a person must decide, what they want out of life.
I am amazed by the many
contributions that John Stewart Mill made toward progressing the science of
economics, and to think he probably didn’t consider himself an economist. He spent most of his adult life as a
businessman for the East India Company. However, his first major work, A System of Logic, was published twenty
years into his thirty-five year career at the East India Company. It was
favorably accepted and so was his second major work, Principles of Political Economy. These two works established him as
one of the great thinkers of his time.
He made strong contributions to the
principles of supply and demand, economies of scale, and although flawed added
to the principle of joint supply. I like that he wasn’t afraid to challenge the
principle of land rents, and he pointed out several limitations to Say’s law. It seemed the more I read, the more he had
contributed.
As I read, I got the impression
that Mill sometimes thought himself in logical circles. He seemed to consider
everything from both a philosophical and methodological point of view. He
supported both deductive and inductive methods of economic science. He felt
that society was too complicated to rely purely on inductive methods to find
solutions, but it would be wrong to accept deductive conclusions without facts
to support them. I can understand this
kind of thinking. I can easily separate my thoughts on economics into different
categories: positive, and normative. I
can also easily think myself in circles.
Our main reading seemed to classify
his contributions in these same two ways. Mill was both a normative and a
positive economist, so his contributions were separated into theories that
advanced the science, and into opinions on public policy. From other readings
it seams that this confused some people and they didn’t want to classify him as
either a normative or positive economist. Also, it seemed that many people never
made the distinction between what Mill saw as theoretical analysis and actual
opinion on public policy.
From our main reading it seemed
that Mill actual opinion on public policy and what should be implemented leaned
toward classical ideas. It seemed that
he stood firmly in his belief of Laissez-faire, and that it should be the rule.
Any departure from it “unless required by some great good, is a certain evil.”
Although he did list numerous exceptions to the doctrine of laisez-faire, for
the most part he believed in minimal government interference in the market. He
also believed strongly in supply-side economics. As he did with most of his
works, he was able to admit certain exceptions to the rule. When thinking about
who in the last 50 years believed in similar doctrine, the person that came to
mind was President Ronald Reagan.
President Reagan believed strongly
in supply-side economics as opposed to Keynesian demand-stimulus economics. His
economic ideas focused on reduced government regulation, reduced income tax, reduce
federal spending and minimizing inflation. He believed in personal liberty, and
that the individual should reap the rewards of their success or failure. In Mill essay On Liberty (1859), he expressed similar views, and stressed the
importance on personal liberty. It is interesting to note that although Mill
felt that the individual deserved to enjoy the fruits of their labor, he was
strongly opposed to accumulating wealth for the sake of doing so. He was not
opposed to limiting the amount of money one could inherit, i.e. death tax. This
goes back the fact that he often expressed opinions from both sides of the
spectrum.
On
Liberty also included large doses of classical economics similar to the
opinions expressed by President Reagan. They both believed strongly in the free
market and minimal government intervention. Milton Friedman, a large proponent
of similar economic ideas, actually served in the Reagan administration on the
Economic Policy Advisory Board. I found it interesting that as I read about
Milton Friedman, I also observed many similarities between him and Mill.
As a side note, President Reagan’s
taxation policies were based largely on Laffer Curve created by Arthur
Laffer. Arthur Laffer’s model suggests
that excessive tax rates actually can reduce tax revenue because it reduces the
incentive to produce. Christina Romer, a former economic policy advisor for
President Barack Obama, published an article entitled “The Macroeconomic
Effects of Tax Changes: Estimates Based on New Measure of Fiscal Shocks” (American Economic Review, 100(3): 763-801.
Although she doesn’t directly mention the Laffer Curve, her article does
suggest the optimal tax rate is somewhere around 33%. The highest taxpayers
(federal, state and other taxes together) pay more than 33% depending on the
state they live in and the source of their income. Considering the growing
wealth inequality in the United States, should we increase taxes on the highest
earners? Would this lead to lower GDP and lower tax revenue? I can speculate,
but in this text it would only benefit as a mental exercise. However, I will
say that I believe if we want to reduce the income inequality it will not be
done through the income tax.
In conclusion, I believe that J.S. Mill
was a great man. He contributed a lot to the evolution of economic thought. He
owes a lot to his parentage and the way he was educated. I argue that if we all
had parents like his did, then his level of achievement would not be so
abnormal. However, we don’t, and so his achievements are quite remarkable. He
remarked that his education gave him an advantage of “a quarter century” over
his contemporaries. Life is short, and there is only a short amount of time we
have to educate ourselves before society demands we put our knowledge to work.
He had a great advantage that few people do. Great thinkers like him continue
to educate themselves throughout their lives. Knowledge is a continual pursuit.
Maybe I will homeschool my children. Which, by the way is another similarity
between Milton Friedman and Mill. Friedman was not homeschooled, but he was an
advocate for school choice and he founded Friedman Foundation for Educational
Choice.
J. S. Mill Laissez Faire
Intervention Socialism
The Macroeconomic Effects of Tax Changes : Estimates Based
on New Measure of Fiscal Shocks, Christina and David Romer
http://www.aeaweb.org/articles.php?doi=10.1257/aer.100.3.763
