Incentives

INCENTIVES….The Baseball Crank is annoyed: he can’t find any honest liberal bloggers. Actually, he can’t find any honest liberal people outside his own personal circle of acquaintances. So he’s proposing the first in a series of tests:

In an effort to focus on the things I see as litmus tests for honest commentary, I’ll be starting a periodic series on The Conservative Truths….

Today, we start with Conservative Truth #1: Incentives matter. Government initiatives that give rewards or punishment as a result of individual or corporate behavior will change people’s incentives and therefore, applied to a large population, will change behavior.

Hey, I’ll buy that! I guess I pass.

In fact, the tax code is his particular example, and since liberals are forever being accused of noodling with the tax code in order to promote desirable social change, I’d say we’re the world experts in this field. I wonder where he got the opposite idea?

Of course, you gotta be careful here, because incentives often work in perverse ways. Will a dividend tax cut motivate people to invest more in the stock market? Maybe, but it’s more likely that it will simply provide a quick bump to stock prices instead. And motivate managers to pay out more in dividends, which is not necessarily a good thing. And tilt the playing field between dividends and capital gains in unpredictable ways.

Or maybe none of those things. Who knows? Tricky stuff, those incentives.

OK then, back to baseball. How are the Dodgers going to do this year?

Support the Washington Monthly and get a FREE subscription