Being able to steal the equipment of the corpses would be nicer, although it would FUBAR the economy.
The fact that the entire economy of a city only produces enough to buy one sword and some armor etc. I think means that the economy is FUBAR to begin with...(how many turns does it take to make 30 gildar in WOM? lol) Equipment in general is overpriced in WOM when comparing it to the rest of the economy. Lets be honest here... costs for one piece of basic non magical equipment being more than it costs to produce buildings etc is just silly.
Maybe FE has a better sense of scale in this regard, if it does looting equipment wouldn't be an issue as it regards the economy. Looting a 3 gildar sword doesn't mean much if a building costs 500 gildar to build. But if its like WOM.. and a sword costs 10 gildar and a building only costs 4...**
**its been awhile since I played WOM so I imagine those prices aren't exact but are in the general range.