16.2.12

PIGOUVIAN TAXES ON THE STRIPPERS' POLE.

I'm not making this up either.
The legislation is in an early form and could change, but it would require strip club owners who serve or allow liquor to be consumed on the premises to pay the $5-a-person tax. The money would go into a special new state sexual assault prevention fund, and the state would make grants to organizations that provide community-based programs designed to reduce sexual assault or help to crime victims.

During the past few decades, Chicago and suburban towns have passed a series of ordinances to close topless bars and push those that remain into industrial areas. The patchwork of rules means some establishments can operate only if they don't serve booze, others permit alcohol to be brought in and the amount of nudity varies as a result.
As with any corrective tax, there's a tension between raising revenues and reducing the externality-producing activity.  Take as a working hypothesis that the presence of gentlemen's clubs objectifies women, and some of the clientele aren't gentlemen.  A tax reduces the provision of gentlemen's clubs -- in the article, those clubs operating on slimmer margins, which tend to be smaller establishments -- are raising the most objections to the proposal, and there might be a provocative paper on raising rivals' costs (here's a variant involving pollution markets) that might be corroborated by the silence of larger clubs on the issue.

On the other hand (in economics, there is always the other hand), the absence of gentlemen's clubs does not imply the absence of cads and yobs, suggesting the crime reduction and victim assistance programs will still require resources.  The harder problem, left to the reader as an exercise, is to produce conditions less conducive to the production of cads and yobs.

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