Chapters 6 and 7

I was pleasantly suprised to find myself largely in agreement with Robert Frank throughout chapters 6 and 7 of The Darwin Economy. For the better part of both chapters, Frank endorsed the Coase Theorem and discussed it's impliciations on regulatory and social policy. Here, he showed his pragmatic side, which was a refreshing shift from the dogmatism of the first five chapters. After arguing effectively for favoring efficiency as a value in public policy, he concluded that the case for wealth redistribution follows from that argument. Here, I disagreed with him. But I will withhold any further criticism of redistribution untill he makes his case more fully in the next few chapters. I was also partly subdued because the acknowledged the Earned Income Tax Credit to be a less-bad method of redistribution. The Negative Income Tax, which it was designed after, would be the least-bad policy because it deliberately seeks to minimise the higher marginal tax rates that are imposed on workers when welfare is means-tested. In essense, it makes sure that by earning two dollars of extra income, a worker forgoes no more than a dollar of welfare payments. The sound incentive structure of such a scheme is the reason it was favored by Milton Friedman in place of current welfare policies. Robert Frank is wise to recognise the value of such a policy.