Economics Dictionary of ArgumentsHome
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| Cost principle: The cost principle in economics, also known as historical cost, states that assets should be recorded and valued based on their original purchase cost rather than their current market value. This principle ensures consistency and objectivity in financial reporting, though it may not reflect the asset's current worth in rapidly changing markets. See also Calculation, Costs, Benefit principle._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Murray N. Rothbard on Cost Principle - Dictionary of Arguments
Rothbard III 922 Cost Principle/taxation/Rothbard: A uniform tax [e.g., for police protection] would be below market price in the dangerous areas and above it in the peaceful areas. To approach neutrality, then, a tax would have to vary in accordance with the costs of services and not be uniform.(1) This is the neglected cost principle of taxation. >Neutral taxation/Rothbard, >Neutral taxation/Economic theories. RothbardVsCost principle: The cost principle, however, is hardly neutral either. Apart from the inexorable taxpayer—tax-consumer problem, there is, again, the problem of how a "service" is to be defined and isolated. >Service/Rothbard. What is the "service" of redistribution from Peter to Paul, and what is the "cost" for which Peter is to be assessed? >Bureaucracy/Rothbard. VsCost principle: And even if we confine the discussion to such common services as police protection, there are grave flaws. 1) In the first place, the costs of government (…) are bound to be much higher than those of the free market. 2) Secondly, the State cannot calculate well and therefore cannot gauge its costs accurately. Thirdly, costs are equal to prices only in equilibrium; since the economy is never in equilibrium, costs are never a precise estimate of what the free-market price would have been. 3) And finally, as in the equal tax, and in contrast to the free market, the taxpayer never demonstrates his benefit from the governmental act; it is simply and blithely assumed that he would have purchased the service voluntarily at this price. >Benefit principle/Rothbard, >Progressive tax/Rothbard, >Excess Profits Tax/Rothbard, >Poll tax/Rothbard. 1. We are not here conceding that "costs" determine "prices." The general array of final prices determines the general array of cost prices, but then the viability of firms is determined by whether the price that people will pay for their particular products will be enough to cover the costs, which are determined throughout the market._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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