Interesting historical example is the Plymouth colony. The pilgrims started with a communal/communist system. The first winter those that survived the crossing all worked together to take care of those who cold not take care of themselves. This care was just not building shelters and growing food but required bed changing from sick people and other ugly tasks. The first harvest was minimal. But after the first year those that got used to being taken care off started to malinger and those that was working the hardest on the commmunal lots and doing the chores around the house started to resent this imposition.

The harder workers went to the Governor and petitioned to have independent/private plots so they could grow their own food that was their sole property. The workers continued to put some effort into the communal plots.

Surprise, surprise the next years harvest was much larger and capitalism started being the basis of the community.

Please understand this was self selected group of people imbued with the protestant work ethic and still the shirkers took advantage and engendered resentmant.

1) there are very few transactions costs associated with relocating to another bar (unless you’re driving drunk); the costs of immigration are quite substantial;

2) the other patrons at a bar might add some to your enjoyment, but it’s certainly nothing like an interconnected enterprise like a post-industrial market economy; our high standard of living is built on the backs of many of the less fortunate; and

3) the analogy simply doesn’t hold up to close scrutiny; look at Norway–one of the highest per capita incomes in the world, but also a strong social safety net, and a progressive income tax system (although Norway relies more on a VAT for overall revenues).

One of the points of this column is to illustrate a paradox: You can’t do serious economics unless you are willing to be playful. Economic theory is not a collection of dictums laid down by pompous authority figures. Mainly, it is a menagerie of thought experiments–parables, if you like–that are intended to capture the logic of economic processes in a simplified way. In the end, of course, ideas must be tested against the facts. But even to know what facts are relevant, you must play with those ideas in hypothetical settings. And I use the word “play” advisedly: Innovative thinkers, in economics and other disciplines, often have a pronounced whimsical streak.

It so happens that I am about to use my hot-dog-and-bun example to talk about technology, jobs, and the future of capitalism. Readers who feel that big subjects can only be properly addressed in big books–which present big ideas, using big words–will find my intellectual style offensive. Such people imagine that when they write or quote such books, they are being profound. But more often than not, they’re being profoundly foolish. And the best way to avoid such foolishness is to play around with a thought experiment or two.

In any event, Hillary Clinton seems to think we can have an optimal tax policy, just as she seems to think we can have perfect information if we only increase the cost of collection. She just gave a policy speech on “realtime data collection” that addresses the matter.

My quibble with your rip on Mankiw’s bar analogy is that you seem not to understand what bars are like. As someone who carouses in them, let me assure you that there is no limited pool of beer over which the various sundry patrons duel. There is plenty of beer for everyone. If I drink more beer it may be because I have more greenbacks in my billfold or it may simply reflect my superior thirst. But I’m not in essence or in fact swiping frothy, delicious beer out of the hands of rival patrons who are competing for the attention of the bartenders. The greater the demand for beer in the bar, the greater the number of barrels of beer rolled into the bar for sale. The more money spent on beer in the bar, the more beer in the bar there will be. So the perceived inequality in your take on the bar analogy may simply reflect the different preferences of the various patrons, but what is assuredly true is that the greater the consumer spending, the more beer there is available for any and all comers and partakers, which guarantees that the bar will remain an institution in the neighborhood so long as its landlord is kept satisfied. Why you fail to see the benefit of a bustling bar brimming with beer right there for easy access to even the most casual of slakers is beyond me. It is far more important that the process of getting drinks is fair and the access to the bar is there than it is important to criticize the distribution of Bud over the stomachs of bleary-eyed patrons.