Monday, February 13, 2012

Frank's Wedgy

In competitive markets, relative position is more important than absolute position and individual agents will work in the best interest of their relative position notwithstanding a disadvantaged absolute position. Individual's make irrational decisions, weight costs and benefits differently, weight short-term and long-term interests differently, are motivated by interests other than pure selfishness, etc. I agree with these points, but Frank is lacking in his evidence for why these observations should result in the marginalization of the invisible-hand theory.

It isn't just the invisible-hand theory that is based on overly-simplistic assumptions...

I agree that evidence-based, tangible, direct/indirect harm in society should be the centerpiece of taxation through representation. Furthermore I agree that concern with relative position may impose negative pressure on society's absolute position in some situations, but when Frank makes the final leap towards the governmentalization of morality, he loses my support. " remedies for collective action problems are no more an endorsement of envy than speeding tickets are an endorsement of driving too fast." (pg 29)

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