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Bureaucrats later assembled a monopoly over the industry, eroding incentives to produce high-quality cacao.
A less flattering explanation is that he has had only one big project ever, which was to redistribute money to the poor without eroding incentives to work.
Equally alarmingly for the government, the report, Counting the Costs of Childcare, by the politically independent Resolution Foundation, also says that childcare costs are eroding incentives to work for those on higher incomes.
Economists normally think that eroding incentives (as they call it, raising marginal labor income tax rates) depresses the labor market rather than expanding it, and that it would be tough for the labor market to get back to its 2007 form without returning incentives to what they were back then.
The report says childcare costs are also eroding incentives to work for those higher up the income scale.
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But almost four years later, an empirical economist should have noticed that the legislation eroded incentives to work and eroded incentives for employers to hire or avoid layoffs, and that these parts of the act by themselves are likely to have reduced employment and certainly did not expand it as much as government purchases would.
Yet Professor Krugman asserts that he would end this depression now with an even bigger stimulus — with more help for the poor and unemployed — that would further erode incentives and further penalize success.
This erodes incentives at the lower end of the labour market, leading to a vicious circle of falling wages, as well as lower and more conditional benefits, and to workfare.
The government also faces the dilemma that leaving price controls in place could erode incentives for farmers and others to produce more goods, while lifting price controls could result in even higher inflation.
Ultimately, the benefits of delinquency erode incentives for mortgage companies to dispose of troubled loans quickly, say experts, allowing distressed houses to decay and fall in value — a fact of little interest to the servicer.
Pearlstein posits that the relentless drive to meet quarterly expectations erodes incentives for firms to "do the right thing".
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com