rather than market failure. Government
policy often tended to increase rather than reduce the divergences between
private and social valuations. For example, public policies have raised
the level of wages above labor’s shadow price or scarcity value by various devices
such as minimum-wage legislation, tying wages to educational attainment,
and structuring rates of remuneration at higher levels on the basis of international
salary scales. Similarly, investment depreciation and tax allowances,
overvalued exchange rates,