Second Thoughts on Confiscation

Abstract

The genesis of the Appeal of Confiscation exercise is of some significance in this connection. There was in the spring of 1954 a meeting of specialists on taxation problems in underdeveloped countries at the Harvard Law School. (My own invitation came on the strength of having worked on taxation in Japan [not an underdeveloped country] and on income distribution [not taxation] in Thailand.) At this meeting there was indeed a law, albeit golden rather than iron, which ruled out any reference to confiscation. The law was that confiscation never paid, because it killed the goose that laid the golden eggs. This seemed largely nonsense to me, even then, in view, for example, of what General MacArthur and Dr. Ladejinsky had done to the Japanese agrarian landlord class. The analytical part of my exercise was an attempt to show how confiscation might make economic sense on a larger scale in a reasonably representative underdeveloped country, 1 and by no means to set up an iron law of my own. Had I indeed carried my determinism half so far, I should certainly have relied on something more sophisticated than arithmetical examples, and included a certain number of the variables which Garnick reproaches me for omitting. 2