Why have so many teachers, police officers, firefighters and other public workers been laid off since the financial crisis hit — and why are so few being offered new jobs now? …
It is not as if many Americans say they want this to happen. …
Why, then, did governments do what they did? One answer comes from the field of behavioral public finance, which applies psychology to the world of taxes. What actually happens with tax policy in the political marketplace may be entirely different from what we would choose if, as a community, we focused on salient questions. [cont.]
Robert J. Shiller, Yale (NYT)