What would Mill say about consumption taxes, then? On Liberty doesn't really concern itself with where regulation IS justified; its endeavor is to show where it CANNOT be justified, and the only thing we can infer about anywhere else is that regulation MIGHT be justified. If Mill were privy to recent “keeping up with the Joneses” happiness scholarship, he might be convinced that consumption taxes would lead to a higher utility for virtually everyone, and that they would be justified. Interestingly, the justification Mill gives for competitive trade (which harms other people) is that “it is, by common admission, better for the general interest of mankind,” and that defense cannot be used for conspicuous consumption.

On the other hand, Mill was generally suspicious of governmental interference in marginal cases, and may have disliked consumption taxes on those grounds. It's likely that in a case like this, Mill would call for social opprobrium of conspicuous consumers. “The acts of an individual may be hurtful to others, or wanting in due consideration for their welfare, without going the length of violating any of their constituted rights,” he says. “The offender may then be justly punished by opinion, though not by law.”

What would Mill say about consumption taxes, then? On Liberty doesn't really concern itself with where regulation IS justified; its endeavor is to show where it CANNOT be justified, and the only thing we can infer about anywhere else is that regulation MIGHT be justified. If Mill were privy to recent “keeping up with the Joneses” happiness scholarship, he might be convinced that consumption taxes would lead to a higher utility for virtually everyone, and that they would be justified. Interestingly, the justification Mill gives for competitive trade (which harms other people) is that “it is, by common admission, better for the general interest of mankind,” and that defense cannot be used for conspicuous consumption.

On the other hand, Mill was generally suspicious of governmental interference in marginal cases, and may have disliked consumption taxes on those grounds. It's likely that in a case like this, Mill would call for social opprobrium of conspicuous consumers. “The acts of an individual may be hurtful to others, or wanting in due consideration for their welfare, without going the length of violating any of their constituted rights,” he says. The offender may then be justly punished by opinion, though not by law.”

These are all on a more fixed scale, i.e. you can't get better looking than Megan Fox. Whereas you can always get a newer or better or more expensive car.

Indeed, pecuniary externalities are so valuable that there is a whole body of antitrust law ostensibly intended to promote them.

These are kind of dumb examples. Artisitic or athletic feats may primarily benefit the individual who performs them, but we allow them precisely because they also have extremely strong positive externalities. Which is what happens in economics too? The positive externalities are way stronger than the negative externalities to the person who now faces competition.

Frank's point is that conspicuous consumption doesn't have enough positive externalities to balance out the negative externalities. So, that's why we might consider luxury taxes etc.?

Sure, the person facing a steep tax on luxury may be helped by a fiscal inducement to stay off the conspicuous consumption gerbil wheel, but that’s by the bye. The point is to prevent “harm” to others through individual consumption choices.

Actually there are two motives for the tax: prevention and redress.
Prevention occurs when the full marginal cost of the activity exceeds the full marginal benefit. Redress (you could also call it redistribution) occurs when the full marginal cost is less than the full marginal benefit. In cases of pure redress, the amount of “harming activity” is no less than before, but money is being shuffled around (at least theoretically) to compensate the losers (sometimes it's just being given to the government, which is very theoretical redress given that the government's payout profile may not match the profile of those harmed).

The argument that stay-at-home moms ought to be stigmatized, or at least be extended decreasing levels of social esteem, is basically an argument for the cultural version of a tax on choices that have negative spillover effects for others.

This example and the example of the hot dog stand are very sharp.

IMO the right way to put this is that static analysis of externalities is insufficient to justify Pigouvian taxation. Every instance of a Pigouvian tax is not an isolated decision but rather part of a comprehensive policy of Pigouvian intervention. The benchmark of a good Pigouvian redistribution is not that it redresses an externality but that it is organically connected to a comprehensive policy that maximizes well-being.

So, you don't have to compensate the hot dog vendor for his broken monopoly, because such an intervention is not organically part of a comprehensive policy of intervention which maximizes well-being. (The comprehensive policy would be “always compensate people for their broken monopolies”, which does not have wellbeing-maximizing effects).

Taxing stay-at-home moms is a subtler case. In order to justify it, someone would have to state the general principle at work here. Who else do we tax, once we tax stay-at-home moms? If the general principle is “always tax negative externalities,” then our answer is “this is not a principle that maximizes well-being.”

Often it will be unclear which policy maximizes well-being. In such a case it would probably be wise to “back off” to a fallback position of allowing maximal liberty, since that is a very general principle that has a good track record of promoting well-being.

There are some slights we are just going to ask others to suck up and deal with.if we are to live peaceably together. The libertarian coercion heuristic seems to be the best rule of thumb we've found. Arguments that taxing consumption is no more regressive or harmful than taxing income is another issue.

“And then suppose you, like Robert Frank, have a strong view about consumption externalities. . . . If our investments in appearance, mate selection, Bourdieuian cultural capital, and children are not equally harmful, then why not?”

It shouldn't be too surprising that people with lots of non-pecuniary capital like Robert Frank think we should levy high taxes on income and material wealth. Frank and those like him are well-positioned to reap large status gains if it becomes more difficult to gain status via conspicuous consumption.

“…Robin endorses an endless list of bizarre moral claims. For example, he recently told me that “the main problem” with the Holocaust was that there weren't enough Nazis! After all, if there had been six trillion Nazis willing to pay $1 each to make the Holocaust happen, and a mere six million Jews willing to pay $100,000 each to prevent it, the Holocaust would have generated $5.4 trillion worth of consumers surplus.”

http://econlog.econlib.org/archives/2009/04/are...

This seems to be a reductio of your position. If you accept it, I can't figure any good reason that you would except if you were ignoring some crucial set of moral intuitions, ones that we require people to weight appropriately to consider them … not corrupt. That said, 'corrupt' is a word I wish, in retrospect, to not have used. But that was what I had in mind.

As for the point about moral philosophy – I take it when you're talking about harms, you're talking about something normative, which falls within the domain of moral philosophy.