Let's start off the blog's new incarnation with a fresh installment of the Non Sequitur of the Month.
The largest oppisition party in Poland, called Law and Justice, has recently put forward a vague proposal of a new tax which they call "banking tax". No details are available, but judging from media rumors, it's essentially supposed to be some sort of tax on financial transactions. Predictably, the proposal has been criticized on the grounds that, contrary to Law and Justice's rhetoric, this new tax will be a burden not only on rich financial executives, but also on ordinary customers of banking institutions, since those institutions will most likely respond by raising prices of their services.
Now for the non sequitur part. In a TV interview, Law and Justice's press spokesman responded to this criticism by saying that the whole argument is a "myth," and that the critics must not really trust free markets as much as they say they do because if we have free markets in the banking sector, then banks have to compete for customers and will therefore not try to shift the burden of the new tax on them.
This is exactly like saying that the belief that an increase in world prices of crude oil will drive up prices of gas at the pump is a "myth". After all, car fuel is sold on a free market by multiple distributors who have to compete for customers.
The beauty of this argument is that it's such a pure example of a non sequitur: the conclusion does not follow from the premise. If the Polish banking sector is indeed a competitive free market, then prices of banking services are always equal to their marginal costs. A new tax on a service increases its marginal cost. The end.
The largest oppisition party in Poland, called Law and Justice, has recently put forward a vague proposal of a new tax which they call "banking tax". No details are available, but judging from media rumors, it's essentially supposed to be some sort of tax on financial transactions. Predictably, the proposal has been criticized on the grounds that, contrary to Law and Justice's rhetoric, this new tax will be a burden not only on rich financial executives, but also on ordinary customers of banking institutions, since those institutions will most likely respond by raising prices of their services.
Now for the non sequitur part. In a TV interview, Law and Justice's press spokesman responded to this criticism by saying that the whole argument is a "myth," and that the critics must not really trust free markets as much as they say they do because if we have free markets in the banking sector, then banks have to compete for customers and will therefore not try to shift the burden of the new tax on them.
This is exactly like saying that the belief that an increase in world prices of crude oil will drive up prices of gas at the pump is a "myth". After all, car fuel is sold on a free market by multiple distributors who have to compete for customers.
The beauty of this argument is that it's such a pure example of a non sequitur: the conclusion does not follow from the premise. If the Polish banking sector is indeed a competitive free market, then prices of banking services are always equal to their marginal costs. A new tax on a service increases its marginal cost. The end.
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