Thursday, February 11, 2016

There are good and bad, or at least better and worse, distortions.

Place a universal 100 percent tax on all petrol/gas sold in the world, and then share all resulting revenues equally among all citizens of the world, and then let all that income be ploughed back into the economy without any distortion.

That would allow us to help the environment, fight inequality and promote the growth of the economy. 

Not bad eh?

But place a higher capital requirement on banks when they finance someone safe than when the finance someone risky, as is done now, and that does nothing for the environment, increases inequality and distorts the allocation of credit to the real economy, with serious consequences.

Bad eh?