Tuesday, September 23, 2008

How about those "non-economic factors"?

Walter Williams says:
A completely ignored aspect of restricting private property rights is the restriction on the right to profits. Pretend you own a firm and you can hire one of two equally capable secretaries. The pretty secretary demands $300 a week, while the homely secretary is willing to work for $200. If you hired the homely secretary, your profits would be $100 greater. But what if there were a 50 percent profit tax? The tax would reduce your profit, thereby reducing your cost of discriminating against the homely secretary. Before the profit tax, the cost of discriminating against the homely secretary would be $100. After the profit tax, that discrimination would cost you only $50. Discriminating against the homely secretary would be consistent with the predictions of the law of demand: the lower the cost of doing something, the more people will do it. Hiring the pretty secretary would put the profits in a non monetary and hence nontaxable form. Wherever private property rights to profits are attenuated, we expect more choices to be made on the basis of non-economic factors, such as race and other physical attributes. That’s especially the case where there is no profit motive at all, such as nonprofit entities like government and universities.

How government makes discrimination affordable.

Apropos of nothing, fifty bucks goes pretty damn quick if you spend it to look at pretty women.

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