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Comment by billforsternz | Hacker News Reader

I think there is quite a lot of related irrationality outside the corporate world. You see it in environments like a committee of volunteers running a club for hobbyists. "Subscription income is down therefore we must raise our subscription fees" seems to be obvious and common sense to many, maybe most people. Pointing out that this is most likely to have the deadly unintended consequence of driving current members away and further reducing income often seems to be fighting against the tide.

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The tide you are fighting probably isn't irrationality but limited resources. If you have zero resources to ramp up marketing yet have fixed costs that must be met then its basically raise fees or close the club. Companies can take on debt\sell equity but that door is not open to everyone and doesn't stay open forever. If you have a way out of downward spirals caused by lack of resources please share!

"Tax revenue is down so we must raise taxes"

Yep, definitely happens a lot outside the corporate world.

It also works as "Tax revenue is up, so this is proof that taxes are not too high, so we must raise taxes".

You get the reverse too. Tax revenue is down, so we must help the economy grow by reducing taxes. Tax revenue is up, so clearly we are taxing more than we need to and we can reduce taxes.

Taxation doesn't quite fit the pattern we're talking about here, anyway. If a TV channel increases its ads, the obvious failure mode is that viewers go elsewhere instead (and hence advertisers spend less and revenue falls). But inter-country mobility is small enough that even quite large changes in tax rates aren't likely to make a lot of taxpayers go elsewhere. You occasionally hear rich famous people threatening that if some potentially tax-raising party comes into power they'll leave the country, but they don't generally actually do it.

(That may be different for corporate as opposed to individual taxes. Large multinational companies may be willing and able to move their operations around to minimize the taxes they pay.)

I believe he was thinking of runway economic effects -- e.g. tax revenue is down so 'Let's increase taxes!', while doing so could lead to further economic slowdown and less taxes; this effect is less obvious and doesn't necessarily happen imo.

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