This is an important point. To pick an example which is both low-stakes and topical: many, probably most, of the 11,000 Facebookers who just got canned, were m

This is an important point. To pick an example which is both low-stakes and topical: many, probably most, of the 11,000 Facebookers who just got canned, were misallocated. Zuck was just paying them not to work for anyone else, whether that was explicit in his mind (as it was for Brin and Page), or not. Does that layoff reduce human productivity? Rather the opposite: the majority will be hired by companies which expect them to actually deliver value (not saying FB employees are lazy, far from it, just that they mostly do useless and harmful things), which is good. As long as we stay out of broken window territory, banning or tax-restricting harmful practices will increase productivity, especially if (as I do) you don't consider actions where the eternality outweighs the profit to be productive. Obvious example: if California struck down the traditional water rights system and replaced it with auctions, this would do good things for water conservation. It would also increase the productivity and market value of California's agriculture, I would bet a lot of money on this. The land currently used for alfalfa, an insultingly poor crop for the central valley, would be converted for other uses. The tragedy of alfalfa in California is that it's barely profitable, even with robbing the commons of enormous amounts of water they should have to pay for.