Dig Up!

Last night before peaceful slumber, I found myself holding an imaginary debate about the merits of a federal minimum wage. At some point in this bedded reverie, I recalled Harvard economics prof. Greg Mankiw's aphorisim about a minimum wage:

1. A wage subsidy for unskilled workers, paid for by 2. A tax on employers who hire unskilled workers.

Now, if you think like an economist, you might wonder about the logic of part 2 of this proposal. You might say, "A tax on the hiring of unskilled workers would discourage their employment, offsetting some of the benefits they would get from the wage subsidy. It would be better to finance the wage subsidy with a more general tax, rather than with a tax targeted specifically on employers of unskilled workers."

But thinking that the point might benefit from further clarification, I thought of a few other examples illustrating the same logic.

  1. Provide better assistance to the homeless, paid for by
  2. A tax on homeless shelters
  1. Provide a voucher to help families pay for gasoline, paid for by
  2. A tax on companies that make gasoline

The self-evident ridiculousness of these two examples was so clear, I thought, that the point couldn't help but be understood. I fell asleep in a self-congratulatory mood.

But I sit bemused this morning after reading this:

That is why today Barack Obama is calling for an Emergency Economic Plan that will relieve the burden on families struggling with high gas and grocery bills or preparing for high heating bills...It has two parts:

  1. Forcing big oil companies to take a reasonable share of their record breaking windfall profits and use it to help struggling families with direct relief worth $500 for an individual and $1,000 for a married couple...

The implication seems to be that since it's only going to take a share of profit, a tax on gas to make it more affordable makes sense.

When faced with nonsensical policies like this one or the McCain gas tax holiday, my only thought is to hope that the campaigns don't turn their attention to anti-poverty measures any time soon--I'm afraid the poor just couldn't afford the attention.