Sure, I agree with you regarding the wider implications of Barro's argument.
If one accepts that a person with a high marginal product and a high income
imposes negative externalities on a low productivity person then all kinds
of growth-destroying intervention in a competitive economy can be possibly
justified. As an aside it does seem very hard to square barro's acceptance
of intervention in the baseball labour market with his general opposition to
intervention in other factor markets.
Donald McCarthy
Centre for Post-Collectivist Studies
Social Market Foundation
[EMAIL PROTECTED]
T: +44 020 72227060
F: +44 020 72220310
> I believe that it is in the nature of people to judge their well being
> relative to the well being of those around them- which is why we can tend
> to
> feel "poor" even in the midst of material affluence. This feeling,
> however,
> does not reflect reality- because I feel poor does not mean I am
> materially
> worse off (or bad off). So long as I produce at the same level, nothing
> has
> changed in my case except that person B now has (or can do) more.
>
> What is being described here is natural competition, not a "negative
> externality"- someone gets better at producing good or service A, giving
> that person an advantage. So long as nobody else matches that advantage,
> wealth will accrue to that advantage, and everyone else will fail to make
> a
> profit. This is what drives normal businesses to continue innovating, etc
> etc.
>
> The negative externality argument here seems to be an apology for
> mediocrity/stagnation, and a defense of protectionism.
>
