Imagine that you have a series of plumbing problems in your house—clogged sinks, backed up toilets—and decide to hire a plumber. Which of these two incentive structures would you choose?

(A) The plumber only gets paid when the problems are fixed.
(B) The plumber will continue to be paid indefinitely for working on the problem, and will continue to get paid as long as the problem persists

Most of us would choose option A since we are more interested in functional indoor plumbing than we are in providing a paycheck for plumbers. Hard-working plumbers should prefer option A too since it respects their dignity and skills. The vocation of the plumber is to solve plumbing problems, not to latch onto make-work projects.

So if most people would choose option A, why does the government almost always adopt an incentive structure that reflects option B?
Read more on Why Government Workers Should Get Pay Decreases for Longevity…

The Washington Post recently reported on what looked like an interesting development in education reform going on in California:

Read more on The School Zone to Serfdom…

Over at Econlog, one of the best economics blogs around, Arnold Kling has been reading Acton Research Director Samuel Gregg’s latest and recently released book, Wilhelm Röpke’s Political Economy (Edward Elgar, 2010). Kling underlines how Röpke used ethical analysis to distinguish between the three ways of allocating resources: altruism, coercion, and what Röpke called “the business principle.”

Read more on Samuel Gregg’s New Book: Wilhelm Röpke’s Political Economy…