Monday, July 31, 2006

I grant you one wish

A recent debate over drinks...

If you had the power to eliminate one and only one umbrella economic policy, which one would it be?

The first topic that came up was tariffs. With gains from trade pushing billions out of poverty, anything working against such progress causes incalculable damage.

A friend of mine settled on the minimum wage. The existence of the minimum wage distorts prices in the labor market, and this effect multiplies the inefficiency across the economy. Tariffs may prevent comparative advantage wealth generation across economies, but minimum wages prevent that singular economy from operating where it should.

I settled on eminent domain. While both of the above would certainly be beneficial to any economy, even tariff- and minimum wage-free economies wouldn't be terrifically prosperous without secure property rights.



David said...

Interesting question, Matt. I like abolishing tariffs or eminent domain, but I'm not sure that eliminating minimum wage will have a very wide spread impact compared to other economically inefficient policies.

Could the umbrella economic policy be as broad as "taxation for redistribution"? Despite any of the proclaimed ends, this certainly affects economic activity.

KipEsquire said...

A tie between farm subsidies and Social Security.

Thomas said...

You guys know that in general I'm all for free trade and near-anarchocapitalism but I'm going to side with Buffett & Gates on this one and say I'd like to eliminate a small estate tax in favor of a very large, progressive estate tax.

David said...

Interesting proposition, Tom. I have thought about the issue for a total of one minute in my entire life. Maybe be you could fill me in on your thoughts?

Anonymous said...

Let's try all three!