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Though, you mention there might be other policies that might be more/just as effective and less distortionary....care to share?Garth A Brazeltonhttps://www.blogger.com/profile/15769889043950844781noreply@blogger.comtag:blogger.com,1999:blog-4644418472886415157.post-76685467055213618152010-04-29T20:03:11.979-07:002010-04-29T20:03:11.979-07:00(cont'd)
This is near and dear to my own work...(cont'd)<br /><br />This is near and dear to my own work on labor law. Worker's compensation has very specific dollar values for various body parts that may be harmed/lost on the job. Is this the best way of reforming job conditions? What kind of distortionary incentives does it provide the employer?<br /><br />Just some more food for thought on the very-controversial subject of Pigovian taxes and negative externalities!Daniel MacDonaldhttps://www.blogger.com/profile/07546752099879983120noreply@blogger.comtag:blogger.com,1999:blog-4644418472886415157.post-38140780905204079512010-04-29T20:01:24.997-07:002010-04-29T20:01:24.997-07:00Interesting post!
I think you hit the nail on the...Interesting post!<br /><br />I think you hit the nail on the head when you asked how much the salt costs in terms of negative externalities. As I'm sure you're aware, Mankiw LOVES Pigovian taxes because, unlike other price interventions by the government (say the minimum wage), Pigovian taxes actually move us CLOSER to the social optimum level of (P,Q).<br /><br />The policy prescription depends crucially on the ability to accurately calculate the total amount of externality (positive or negative) and then enact the appropriate per-Q (subsidy or tax). <br /><br />So in addition to the "what defines sin?" idea (a REALLY great point!) you might also talk about how health interests are swayed by corporations and how THESE affect government information about externalities. <br /><br />A more fundamental critique, which judging from your first paragraph is something to which you are not sympathetic, is the question, can you place a value on a human life or body part? The theory and practice of Pigovian taxes rests crucially on the ability to do so, but I would assert that there are other methods of devising policy than by trying to assign a dollar value that will be a good proxy for a negative externality. (cont'd next comment)Daniel MacDonaldhttps://www.blogger.com/profile/07546752099879983120noreply@blogger.comtag:blogger.com,1999:blog-4644418472886415157.post-28507203201496069682010-04-28T12:41:33.980-07:002010-04-28T12:41:33.980-07:00Who says government doesn't impose moral judgm...Who says government doesn't impose moral judgments! Especially if government can tax it and promote it and subsidize it all at the same time.<br /><br />Danny L. McDaniel<br />Lafayette, IndianaAnonymousnoreply@blogger.com