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Loans for peerages

While not taking a view on the current police investigation into the alleged sale of peerages, or the arguments surrounding political donations and loans, the affair has provoked me to ask the following question.

Should economists who believe in market forces believe that selling honours should be decriminalised? After all, we sell personalised number plates. Why not peerages?

The two main arguments in favour are very simple.

• First, the honour makes the purchaser happy, and it gives money to the rest of us. It's a win-win.

• Secondly, if markets work well, then the people with the most talent are the ones that will have the most money, and hence the most ability to buy an honour. By deduction, the people with the most talent will end up with the honours. (Which is more than happens at the moment, a cynic might say!)

If like me, however, you find these two arguments unconvincing, why?

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