Here is another installment of the questions I asked as discussion leader of a colloquium on Ken Rogoff's and others' proposals to abolish $100, $50, and possibly $20 bills. I've previously posted here, here, and here.
(1) On page 64, Rogoff, in discussing German opposition to a proposal to cap cash payments at 5,000 euros, writes:
"Curiously, the opposition's rallying cry seems to be 'Money is coined liberty' from Dostoyevsky's The House of the Dead."
In explaining why he thinks this is curious, Rogoff writes:
"To draw an analogy between life in a Tsarist prison and life in the modern liberal state as a defense of large-denomination notes borders on the absurd."
This leads to two questions:
(i) When one uses the statement "Money is coined liberty" to argue against a policy that is far less onerous than life in prison, does that mean that one is claiming an analogy?
(ii) Imagine you had never heard where the quote came from, as I had not. Is there an important sense in which money is coined liberty?
(2) On page 66, in discussing underreporting of income for tax purposes in Canada, Rogoff writes:
"It [this observation] is important not only for fair distribution of the tax burden but also because political support for redistribution policies (e.g., a negative income tax) would presumably be stronger if there were greater confidence in truthful reporting of incomes."
This raises two questions:
(i) A factual question: Is it clear that people would support redistribution more if they thought it was much more difficult to avoid taxes? (I'm thinking of a friend who, year ago, had a mainly cash and check business for providing a service that wasn't tax deductible to the customers, who was and is a strong believer in redistribution. Would have supported it even more had he been paying more taxes?) Possibly, my friend example is not the right example. Is it possible that he's thinking that people who pay all their taxes due would support redistribution more if they thought that those who previously underreported cannot as easily do so and, therefore, will pay more taxes?
(ii) Is there another side to this? Could you argue that if Rogoff is right factually, then underreporting of income has an unintended beneficial side effect on taxpayers, even those who don't underreport?