Silas and Jason, the insurance/hedging of redistribution policies would be valuable if the transaction costs could be made low enough. But are low transaction costs feasible? It appears that there are lots of issues where only special interest groups can afford to acquire information needed for hedging. E.g. the benefits to me of insuring against the harm I suffer from ethanol subsidies are small enough that I don’t want to estimate the value of those benefits, much less evaluate potential ways to buy the insurance.
If redistribution disputes could be simplified to be disputes over one or two numbers (e.g. the slope and y-intercept of income tax rates, with negative tax rates for the poor), then insurance might be feasible. But special interest politics seem to be firmly pushing us away from that goal.
Silas and Jason, the insurance/hedging of redistribution policies would be valuable if the transaction costs could be made low enough. But are low transaction costs feasible? It appears that there are lots of issues where only special interest groups can afford to acquire information needed for hedging. E.g. the benefits to me of insuring against the harm I suffer from ethanol subsidies are small enough that I don’t want to estimate the value of those benefits, much less evaluate potential ways to buy the insurance. If redistribution disputes could be simplified to be disputes over one or two numbers (e.g. the slope and y-intercept of income tax rates, with negative tax rates for the poor), then insurance might be feasible. But special interest politics seem to be firmly pushing us away from that goal.