Monday, March 27, 2006

Why the Estate Tax Helps Our Competitiveness

Mr. Mallaby in today's Post didn't intend to endorse the estate tax in his column lauding American superiority over Europe in productivity, but I think he did in this excerpt:

Why U.S. Business Is Winning:
"The next explanation for American superiority is a healthy indifference to first sons. Bloom and Van Reenen report that the practice of handing a family firm down from father to oldest son is five times more common in France and Britain than in the United States. Not surprisingly, this anti-meritocratic practice does not always produce good managers. So even though the best European companies are managed roughly as well as the best American ones, there's a fat tail of second-rate firms in Europe that's absent in the United States."
As for the overall column, I'd apply a large grain of salt. Over the last 55 years I remember the many enthusiasms the chattering class had for the superiority of this system or that. As far as I can tell no one system maintained an edge for the whole time. That suggests to me that the factors that seem to make for greater productivity ebb and flow. It's like saying the CAA is better than the Big East in basketball based on this year's NCAA tournament.

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