CONVERSABLE ECONOMIST: Furman Reflects on Eight Years of Economic Policy-Making

Jason Furman was an economic policy insider through all eight years of the Obama administration, with “oughly the first half of them as Deputy Director of the National Economic Council and the second half of them as Chairman of the Council of Economic Advisers:

I once sat through what felt like an endless meeting on the topic. What came out of that meeting was a proposal to raise the tax rate on roll-your-own tobacco by more than $20 a pound while leaving the tax rate on pipe tobacco largely unchanged. What followed was a huge decline in the sale of roll-your-own tobacco and a huge increase in the sale of pipe tobacco … It turns out that roll-your-own tobacco and pipe tobacco are highly substitutable—not because people have shifted to smoking pipes, but because you can still put pipe tobacco in a piece of paper, roll it up, and smoke it.

Source: CONVERSABLE ECONOMIST: Furman Reflects on Eight Years of Economic Policy-Making

Another example of “idiots at work”.  What makes an academic economist an ex-post idiot is not his or her skill level but his or her rejection of a simple heuristic that you can’t regulate a system of infinite complexity by turning a few knobs and switches.