Book III Economics ‘as usual’ 36 12. Introduction 36 Stylized history 38 Structure of the argument 41 The difference that it means 42 13. Unemployment via taxes and minimum wage 43 The earnings distribution 44 Analysing the minimum wage 44 The Tax Void 47 Cause of the Tax Void 48 Development of the Tax Void 51 Marginal tax rate & VAT 53 Marginal tax rate & dynamics 54 Spillover and domino effects 56 Diagnosis and Therapy 56 Stagflation resolved 57 14. The 1974 Duisenberg disaster 59 Book IV Presentations for the general public 60 15. Unemployment solved ! 60 16. Enable Russia to help itself 64 Parallel 64 Risk not chance 65 Internal not external 65 Conclusion 66 17. Will the West repeat Versailles ? 66 Book V Methodology: Definition & Reality 69 18. How to check ? 69 19. Dealing economically with concepts 70 Maximising information power 70 Pythagoras and the circle 73 Falsification 76 Determinism and free will 78 From stylized fact to definition 82 Relating to Hicks 1983 83 20. Structural and reduced form 84 21. Direct application to the Economic Supreme Court 85 22. Methodological summary 85 Book VI Structural models 87 23. A textbook macro-economic model 87 The IS-LM model 87 The production function 89 Dynamics versus statics 90 Phillipscurve 90 Macro-economic interactions 91 24. Heterogeneity and nonlinear taxation 92 Heterogeneity versus homogeneity 92 Nonlinear versus proportional taxation 93 Some literature 93 25. Summary of current views 94 A simple view 94 A complex view 96 Efficiency wages intermezzo 96 A more sophisticated view 97 Confusions 98 26. Heterogeneous labour 99 Dromedary supply 99 Dutch income distribution data 100 Definitions and formulas 102 Amendment to the textbook model on the Phillipscurve 106 27. Subsistence 106 Definitions 107 Economic literature 109 Types of indexation 109 Formal development 110 28. Phillipscurve 115 Concepts 115 A homogeneous Phillipscurve 118 On expectations 121 Heterogeneous Phillipscurves 122 More factors that cause a shift 122 Crowding out 123 Poverty 124 The submarket Phillipscurves 125 Shifting back 125 29. Tax basics 126 Taxes and premiums 126 Common structure 127 Nonlinear tax function 128 Exemption 129 The marginal rate 140 Balanced growth 143 Off balanced growth 144 30. Dynamic curvature of the tax wedge 145 Introduction 145 Formulas 145 Graphs 147 31. Differential impact of the minimum wage on exposed and sheltered sectors 149 Introduction 149 Model 151 Graphs 152 Tables 154 Conclusion 155 32. Dynamic optimality 155 The Phillipscurve revisited 155 Investment, growth and productivity 156 Book VII Social Choice 158 33. Introduction 158 34. The solution to Arrow’s difficulty in social choice 159 Introduction 159 Basic concepts 162 Restatement of Arrow’s Theorem 165 A note on the name of APDM 167 A lemma 167 Rejection of the Arrow Moral Claim (AMC) 168