Readers of this blog know that I am no fan of the Pigouvian tax scheme (nor, for that matter, Pigouvian welfare economics). Advocates of such taxation often ignore the problems of attempts to aggregate preferences and valuation given the inherent difficulty in doing so because of the fact that knowledge is dispersed and cannot be communicated to a single mind. Thus, I was delighted to see this challenge from Peter Klein:
Please name the activities you believe deserve Pigouvian subsidies. For each activity provide the efficient subsidy amount, explain how this was calculated, and say how the revenues should be raised.
Any takers?
1 response so far ↓
jk // May 7, 2008 at 11:36 am
Outstanding! I have high regard for Gregory Mankiw, but his Pigou club drives me mad. I think he (and many economists) get captivated by the efficiency of a Pigouvian tax, then lose site of first principles. Taxes are to raise revenue, not control the populace.
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