The topic of these Lectures is, I hope, an appropriate one to honour Erik Lindahl, an economist whose contributions have been of lasting importance. In the area of his interests to which I shall be referring--public finance--the issues with which he was concerned are very much alive today. This applies particularly to the field of public choice theory, which to a considerable extent owes its origins to Scandinavian scholars such as Wicksell and Lindahl.
The aim of the Lectures is to take one particular problem of policy interest in the field of taxation and social security and use it as a basis for assessing the current state of public economics. That is, I would like to review some of the different areas in which there has been active research in recent years--notably the theory of optimum taxation, general equilibrium analysis of incidence, the theory of public choice, numerical tax-benefit modelling, and econometric studies of incentives--and to ask how these contribute to our understanding of one concrete policy reform. What can be said on the basis of current knowledge and what are the promising directions for future research?
The particular policy proposal that I take as a case-study would affect both personal income taxation and the social security system, replacing the one by a flat-rate income tax and the other by a guaranteed basic income. The proposal of a basic income/flat tax, or variations on its central elements, has generated wide interest in a number of countries. The idea is being actively discussed by a number of political groups. It is not my purpose to argue for or against the introduction of such a scheme, but it is certainly my view that it should be on the agenda for any serious discussion of tax and social security reform for the twenty-first century.
The structure of the Lectures when presented in Uppsala took account of the well-attested sociological fact that many