The Poverty Business

A recent BusinessWeek article prompted me to struggle again with an issue that has vexed the libertarian in me for a long-time. I really struggle with the issues raised by the whole area of consumer finance targeted at providing credit to low-income consumers. On the one hand, choice is almost universally a good thing, especially for those who lack it, such as poorer customers. On the other hand, the educational responsibilities, and the inherent tension between the need to explain a product accurately and the desire to sell more of the product, make any concerted effort to build a large-scale business around subprime lending very difficult to manage. Even if the CEO or owner has only the best interests of the customer at heart, how do you drive these down into the sales force on the line, who work on commission and are driven by the need to put food on their own tables?

Tax the Tall!

N. Gregory Mankiw and Matthew Weinzierl have caused a stir with their recent paper, “The Optimal Taxation of Height: A Case Study of Utilitarian Income Redistribution.” Response was vigorous and overwhelmingly condemning to Mankiw & co’s suggestion that taxing tall people meet the two key criteria for a system of taxation: equality and efficiency. The upside of all this for those of us who are “vertically advantaged” (I am 6′ 7″ myself)? People standing above 6 feet tall tend to earn more than 16% more than people 5′9″ or less. Alaskans in particular seem all shook up by these findings and their implications for our tax code.