Fighting over the slice: leaves us all a smaller "economic pie.".

• Author: Hicks, Michael
• Position: INDIANA INDICATORS

ECONOMISTS WORRY most about what I call the 'size of the pie' problem. We like to see policies in place that provide more goods and services for all. The technical jargon for this process is 'welfare maximizing.' Now, before you anti-consumerists out there bemoan this objective, keep in mind by goods and services I also mean clean air and water, health, national security and a well functioning justice system, not just consumer electronics.

So, it is completely consistent with market economics for me to think that air pollution should be regulated or taxed to mitigate its negative impacts on a third party. Clearly, the size of the tax or the scope of the regulation matters, but the basic principle is one that is shared by all economists I know. The same is true with other issues involving public funding.

Economists also don't much like policies that distort individual behavior. We think folks are mostly rational, and can be left to make grown-up decisions. Fighting over the slice of the pie, or carefully redistributing the pieces so we all get the same size leaves us all a smaller "economic pie."

At least this economist is not so naive to think that everyone thinks this way. Interest groups exist solely to fight over their slice of the pie. The anti-property tax lobby wants lower taxes on them (even if it shifts the burden to others). The firefighters worry about their job security (even if many Hoosier cities have twice the national per capita average of firefighters). So I understand that people who straggle over their slice are going to be upset when they are scolded by an economist armed with...