Sacrifice Is Not An End In Itself
11 September 2006
Editor, The Washington Post
1150 15th St., NW
Washington, DC 20071
Dear Editor:
Why is Cornelia Strawser perturbed that the current war in Iraq, unlike WWII, features no military draft, gasoline rationing, and a "tax on excess profits" (Letters, Sept. 11)? Each of these policies unnecessarily raises the cost of war.
Conscription and rationing create inefficiencies by substituting bureaucratic decisions for market prices that allocate resources to their highest-valued uses. If the military wants more manpower and oil, government should raise taxes to buy these on the open market. A special tax on "excess profits," however, isn't advisable. Industries earning unusually high profits expand by attracting additional investment. By taxing away "excess" profits, government discourages investors from moving into precisely those industries most needed during wartime.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Editor, The Washington Post
1150 15th St., NW
Washington, DC 20071
Dear Editor:
Why is Cornelia Strawser perturbed that the current war in Iraq, unlike WWII, features no military draft, gasoline rationing, and a "tax on excess profits" (Letters, Sept. 11)? Each of these policies unnecessarily raises the cost of war.
Conscription and rationing create inefficiencies by substituting bureaucratic decisions for market prices that allocate resources to their highest-valued uses. If the military wants more manpower and oil, government should raise taxes to buy these on the open market. A special tax on "excess profits," however, isn't advisable. Industries earning unusually high profits expand by attracting additional investment. By taxing away "excess" profits, government discourages investors from moving into precisely those industries most needed during wartime.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Posted by Don Boudreaux on
Monday May 21, 2007 at 10:44am