At first glance, I was skeptical that there was any meaningful policy point to be made about Rep Paul Ryan’s taste for expensive wine but I’ve actually reconsidered that view. Consider.

The essence of Paul Ryan’s political agenda is to reduce spending on domestic social programs in order to create budget headroom for reduced taxation of high-income individuals. One obvious critique one could make of this agenda is that it will seriously imperil the welfare of the least fortunate. But it’s also worth noting that Ryan’s agenda is likely to accomplish much less to improve the welfare of the most fortunate than you might think at first glance. After all, why would a bottle of wine cost $350 to buy? In part, that’s because fine wines are costly to produce. But that doesn’t explain the really really expensive wines of the world. It’s not like the grapes are fertilized with diamond dust or something. Very expensive wines are very expensive for the same reason that beachfront land and original copies of the Magna Carta are expensive. They’re rare. This has important implications. If you move to Hollywood and become a rich movie star, you’ll suddenly be able to buy beachfront property in Malibu. But if movie stars as a whole get richer, this doesn’t change the fact that there’s only so much beach in Malibu. All that happens is it gets more expensive.

But the same token, if every rich Manhattanite gets a tax cut from Paul Ryan there will be some increased overall consumption by rich Manhattanites. But you may find that there’s surprisingly little. You’re going to see an awful lot of bidding up of the price of supply-constrained commodities. Suddenly, the same bottle of wine is selling for $425. The main real world consequence of this is going to be to make it more difficult for middle class families to engage in the occasional splurge purchase. Like most people, I every once in a while go out and do something expensive that someone richer than me might do frequently. If the rich people all get richer, then they’ll bid up the price of those rich guys activities and put them further out of the reach of the middle class.

This Economist look at a new bus pricing scheme in Singapore is fascinating, but at the end it went in a direction I’m unhappy with:

Rewards-based schemes are more politically appealing than punitive charges. Several cities have tried to implement congestion charges (fixed fees to drive into crowded areas) but most have failed. Such charges are seen as little more than additional taxes, and if there is only one tariff, they hit the poor the hardest. Rather than fuel resentment, incentive schemes could encourage commuters to change behaviour voluntarily, and even gladly.

Conventional journalistic wisdom seems to me to have arbitrary biases around politically unpopular idea. Unrestricted unsubsidized free trade in agricultural commodities, for example, is not very popular and has failed politically in all major countries. But I don’t think you’d ever see an Economist article just dismissing the idea as unworkable. The idea is to keep working toward a better world!

On this particular idea of it being better to do subsidies than penalties, I think you run into the same problem as with the idea that it’s better to do clean energy subsidies than carbon taxes. The reason the alternatives to taxation are more popular is that people don’t like taxes. But if you’re going to spend money, you wind up needing to raise taxes to pay for it. The right issue to analyze is policy packages. Not “tax peak-time commuters” vs “subsidize off-peak commuters” but “tax peak-time commuters and cut sales taxes” vs “hike sales taxes and subsidize off-peak commuters.” And the same point recurs for the distributive issue. A congestion charge could be regressive in impact depending on what you did with the money. But since many poor people don’t own cars (cars are expensive) a congestion charge offset by lower sales taxes would be a very poor-friendly policy on net.

When I made the case that property tax codes shouldn’t exempt non-profits, the response I got was mainly from irate conservatives. I gather that the reason for this was that my example of unjustly untaxed landowners was churches. That was my example because I believe that in the vast majority of municipalities churches do, in fact, account for the bulk of untaxed nonprofit ownership of land and structures. But obviously churches are something that conservative valorize culturally, and conservatives also dislike taxes, so when they hear that some heathen liberal wants to start taxing churches they get upset.

So to take another cut at the issue, I see Reihan Salam touting a Vance Fried Cato paper (PDF) calling for reduced subsidization of college tuition that involves, among other things, trying to persuade us that even non-profit institutions have profits:

How can a nonprofit have profits? Simply put, it happens when the revenue the nonprofit derives from providing a service exceeds the cost of providing that service. This might seem obvious, but it is often assumed that putatively “nonprofit” schools, by virtue of their designation, never make a profit from providing a particular service. In addition, such schools never report that they have realized profits, even when the profits happen to be large. Why? Because profits are reported as expenses.

Without endorsing Fried’s particular policy conclusions about higher education (I haven’t even read the whole paper) that’s exactly right. And of course it applies in general to the concept of diversified nonprofits. The synagogues I’m familiar with treat High Holy Day services as profit centers, selling tickets and generating funds to subsidize other activities. Some of those activities are worthy social endeavors, but many constitute something like a private benefit for congregation leaders, rabbis, etc. Not that there’s anything wrong with that. It makes perfect sense for organizations to feature bundled services, cross-subsidization, etc. And it also makes perfect sense for the United States to offer a variety of forms of corporate organization, including a nonprofit designation.

But we should really think harder about the implications of writing a major preference into the tax code for ownership of land and structures by firms with a non-profit organizational form. Probably the least enlightening way of thinking about this is to focus on the short-term fact that absent the tax preference, non-profits would have higher expenses in the form of tax payments. That, in turn, would allow for lower levels of residential or commercial property tax or lower sales taxes or whatever. The larger issue, however, is the long term one. Failing to tax non-profit ownership of land and structures encourages non-profits to invest their revenue in ownership of land and structures. This ends up reducing the amount of space available for residences and commercial ventures, but also reduces the extent to which non-profits will actually recycle their revenues into programming. A school faces a choice at the margin between hiring more professors and building fancier buildings. A church faces a choice at the margin between serving more lunches to poor people and building a fancier church. Exempting schools and churches from property taxes encourages them to choose to invest in buildings. Why do that?

As I understand it, churches really are the main issue here since substantial universities can usually be coerced/cajoled into making PILOT payments by determined municipalities. But conservatives may be more comfortable with this idea if they think of it in Fried’s terms as a call for less valorization of nominal nonprofits in general.

Oftentimes, I think you can shed some light on important public policy issues by looking at issues that aren’t at all important. For example, instead of thinking about the skyrocketing cost of college, consider the skyrocketing cost of summer camp:

When Mickey Black’s grandfather, Hughie, opened Pine Forest in 1931, a two-month summer session here cost $85, about $1,264 in today’s dollars. The Black family’s camp survived the Great Depression and World War II, polio scares and hurricanes, Vietnam and Woodstock, its own Great Dining Hall Fire of 1984, 9/11 and now the Great Recession.

But in an age of hyperparenting, Facebook and Twitter, texting and sexting, running a traditional camp is far more complicated and expensive than it used to be. This year, a seven-week session at Pine Forest costs $9,700, a big-ticket price for a rustic canoe-and-campfire experience. (Some camps charge even more.)

That’s a 767% real increase in the price and for what appears to be a reduced level of service. A “two month” session should contain about 61 days of camping. A “seven week” session is only 49 days, so you’re only getting about 80 percent as much camp as you used to get. Whatever you think of this, it surely doesn’t reflect the perverse consequences of government subsidies. Rather, over time attention has become increasingly expensive to provide. And people value it.