Lindblom - The Market System - Afghan Journalists' Committee

Alternative Market Systems 261or physicians’ services, common in market societies. OrHolland’s remarkable subsidies to artists, Italy’s subsidiesto heavy industry, and Norway’s regional subsidies to keepnorthern Norway economically alive. And in many societies,taxes to protect consumers from their own incompetence.Although that requires some outright prohibitions aswell, as in food and drug regulation, it might call for a tobaccotax or, as has been proposed, even a heavy tax on aggregatefamily spending in order to curb the excesses ofkeeping up with the Joneses. Taxes and subsidies are sometimesdisguised. Subsidies to middle-class housing, for example,are obscured in tax deductions for home-ownershipexpenses or for interest on mortgages, although in magnitudethey may dwarf conspicuous outright subsidies to lowcosthousing.To supplement the trio, governments also use other devicesthat make use of prices rather than administrativecommands. For example, by issuing to enterprises tradableor marketable limited permissions to pollute, governmentcan raise the income and outputs of nonpolluting enterprises(they can sell their permits) and lower the incomesand outputs of polluting enterprises (they must buy additionalpermits). Or through a treaty, a group of nations canassign marketable pollution permits to each nation, thusencouraging each nation to curb emissions in order to beable to sell its permits and escape the necessity of buyingany.Purchase, subsidy, tax, and related devices can be usedwherever citizens or their rulers want the state to intervene.And they can be used to make precise choices, as insubsidizing the production of a specific pharmaceuticalproduct; or broader choices, as in subsidizing child care; orstill broader ones, as in subsidizing savings rather than con-