Here’s an interesting hypothetical: why not make every service based on ability to pay? why not ration every pleasant detail of daily living with as fine a grain as possible to squeeze micropayments out of those who, say, want to be assured a clear sidewalk? an empty subway car? a parking space close to the store?

Consider this quote from a J. Dupuit, in Boyle’s essay on price discrimination:

“It is not because of the few thousand francs which would have to be spent to put a

roof over the third-class carriages or to upholster the third-class seats that some

company or other has open carriages with wooden benches ….What the company

is trying to do is to prevent the passengers who can pay the second-class fare from

travelling third class; it hits the poor, not because it wants to hurt them, but to

frighten the rich . . . . And it is again for the same reason that the companies,

having proved almost cruel to third-class passengers and mean to the second-class

ones, become lavish in dealing with first-class passengers. Having refused the poor

what is necessary, they give the rich what is superfluous.”

In other words, the rationing mechanism of price is quite a bit more manipulable and clumsy than the scalpel assured us by latter-day Hayekians.

As for the public good of mixing classes: I think Mickey Kaus’s book The End of Equality makes many good points on that score. Posner has a complacent blog post that purports to minimize the problems of inequality, and a 1998 paper that supposedly does the same, but I don’t really feel a need to argue with someone who’s recently made this point:

“[In ideal estate tax policy,] [t]he question would then be whether the taxpayers or the Gates foundation would spend the money more efficiently. I believe the taxpayers would. The foundation is an inherently inefficient allocative institution because, much like the government, it is not subject to market tests. There is no way to assess the value of the Gates foundation’s expenditures because the foundation is not competing in any product or capital market. (Colleges and most other recipients of charitable gifts, in contrast, compete in product markets.) Gates and Buffett are extremely able businessmen but the Gates foundation is engaged in activities, such as fighting Third World diseases, that are remote from their business experience.”

from

http://www.becker-posner-blog.com/archives/2006/07/the_gates_found.html

ah, the inherent inefficiency of the Beatitudes!

(I also love the pun madness.)

Oh, the puns in this sentence! “Under fire” is a nice deliberate pun, but the name of the senator is quite fitting too.