Fiscal Rectitude, Greg Mankiw Style

Mankiw’s at it again with an insightful piece on the possible futures for the US.

Keep in mind his oft-repeated pithy meme about disincentives to work with higher marginal tax rates. Then think back to Colbert’s dig.

Economists debate whether higher taxation in France and other European nations is the cause of the reduced work effort and incomes there. Perhaps it is something else entirely — a certain joie de vivre that escapes the nose-to-the-grindstone American culture.

We may soon be running a natural experiment to find out. If American policy makers don’t rein in entitlement spending over the next several decades, they will have little choice but to raise taxes close to European levels. We can then see whether the next generation of Americans spends less time at work earning a living and more time sipping espresso in outdoor cafes.

To be honest, I’d prefer a bit more joie de vivre and less grinding. Immigrant Sikhs can do that.