Tuesday, July 29, 2014

Float Baby — Houston's new infant day spa makes the case for higher taxes

Float Baby is a new Houston-area day spa for babies. Single sessions are $65. A discounted (15%) package of 4 weeks can be purchased for $220, or 8 weeks (20% discount) for $415. In addition to the floating, they offer infant massage.

It's also a great example of how large levels of economic inequality are a socially inefficient outcome.

When a relatively small number of people have all the economic resources, clever individuals do manage to dream up more and more goods and services to sell to them. For example, perhaps you want to send your baby to a day spa? Or maybe you'd be interested in a $10,000 phone from Vertu? People are pretty good at thinking up weird things to sell.

But the actual value of these items to consumers is relatively low. Sure, if you've got the cash and time to burn you might well take your kid to the Floating Baby spa. After all, even if the claims about benefits sound dubious you worry that some other yuppie family is secretly getting an edge. But if your $65 a week were instead in the hands of one of the nearly one in five American children who live in food insecure households, it would do a lot more good.

With any kind of redistributive taxation you do want to keep an eye on economic growth impacts. But living in a country where some kids go hungry while others go to the day spa is a very poor overall allocation of resources.

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