Take medicine, for example. To the extent that we use medical spending to show how much we care (and are cared for), there are very few positive externalities. The caring function is mostly competitive and zero-sum, and—perhaps surprisingly—we could therefore improve collective welfare by taxing extraneous medical spending, or at least refusing to subsidize it. Don’t expect any politician to start pushing for healthcare taxes or cutbacks, of course, because for lawmakers, as for laypeople, the caring signals are what makes medicine so attractive.
