Monday, 7 December 2009

Pigou on state action

This is from an article by Arthur Cecil Pigou in a 1954 issue of the journal Diogenes. (It was also reprinted in the third edition of the fantastic collection, Great Political Thinkers: Plato to the Present edited by William Ebenstein.)
It must be confessed, however, that we seldom know enough to decide what fields and to what extent the State, on account of them, could usefully interfere with individual freedom of choice. Moreover, even though economists were able to provide a perfect blueprint for beneficial State action, politicians are not philosopher kings and a blueprint might quickly yield place on their desks to the propaganda of competing pressure groups. ‘Fancy’ finance, like a fancy franchise, whatever its theoretical attractions, has, at all events in a democracy, dim practical prospects.
So according to Pigou you can't implement Pigouvian taxes.

(HT: Mario Rizzo at ThinkMarkets)

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