Some say he is a great market macro economist. He may be. I dont care, though. If he makes a mistake, I point it out. For society´s sake and because the guy, apparently, needs some humbling.
His piece in the Estadão today (sonntag) is a fine one. And I agree with all criticisms he puts forth.
Now, once again (I lost count) his microeconomics is defficient. On the labor tax thing this time. He suggests entrepreneurs incurred in a "fallacy of aggregation" when pressed the government to reduce taxes on hirings. What was supposed to be good for one individual firm, he argues, was untrue for the whole of them because labor demand shifted to the right thus putting pressure on economy-wide wages.
This, of course, is wrong. Yep, by cutting labor taxes the government generated a shift in labor demand. However, in the worst case possible -- an infinitely inelastic labor supply schedule -- this shift cancels the tax reduction out completely in terms of final wage bill (INCLUDING TAXES). In all intermediary cases, some wage reduction is achieved. So the argument does not hold: firms are better off after the bill (you may argue the impact was small, but not that the policy achieved the opposite of the intended result).
Make no mistake: it was a terrible policy choice, reducing labor taxes. But that is not the point here. I want you -- and hopefully Pastore -- to understand the theoretical error in the article.
ps. in my last post, a funny anonymous mentioned I was cesg. That cant be true, since cesg flunked his german exam. By now, most people know my real name is Antoninho de Botucatu.