Time to finally toss the efficient market hypothesis? A Yale (sorry Mankiw, Harvard really ISN'T best at everything) econ PhD has consistently beat the market in terms of rate of return.
"He's made an average 16% annual return over 21 years..."
Wow.
Someone should have taught me THAT brand of economics.
Thursday, September 27, 2007
Religious Zealotry, Evil, and Barriers to Economic Growth
Archbishop Francisco Chimoio , who is head of the Mozambique Catholic Church, recently said the following:
"I know of two countries in Europe who are making condoms with (the) virus on purpose, they want to finish with African people as part of their program to colonize the continent. If we are not careful we will finish in one century."
“People must choose what they want between death and I propose to them that (abstinence) is the best way to fight HIV/AIDS.”
(From Reuters)
Of course, the Bishop failed to cite which European countries were supposedly doing this. He also failed to clarify how different condom companies are able to collude to systematically kill off the very population to which part of their revenues are dependent. And of course, the Bishop failed to cite what amazing new technology these companies employ to allow for HIV/AIDS to remain active and alive airborne and outside bodily fluids.
The HIV/AIDS epidemic in Africa is one of the largest barriers to economic growth that that continent faces. Using ones religious viewpoints to spread such 'fear' of using protection is not just disgraceful, it is evil and extremely harmful. It is evil because this Bishop is indirectly a murderer for spreading obvious lies that will kill countless more Africans. It is harmful (beyond the human element) because of the countless more deaths and lower standards of living caused by the indirect effect on economic growth.
"I know of two countries in Europe who are making condoms with (the) virus on purpose, they want to finish with African people as part of their program to colonize the continent. If we are not careful we will finish in one century."
“People must choose what they want between death and I propose to them that (abstinence) is the best way to fight HIV/AIDS.”
(From Reuters)
Of course, the Bishop failed to cite which European countries were supposedly doing this. He also failed to clarify how different condom companies are able to collude to systematically kill off the very population to which part of their revenues are dependent. And of course, the Bishop failed to cite what amazing new technology these companies employ to allow for HIV/AIDS to remain active and alive airborne and outside bodily fluids.
The HIV/AIDS epidemic in Africa is one of the largest barriers to economic growth that that continent faces. Using ones religious viewpoints to spread such 'fear' of using protection is not just disgraceful, it is evil and extremely harmful. It is evil because this Bishop is indirectly a murderer for spreading obvious lies that will kill countless more Africans. It is harmful (beyond the human element) because of the countless more deaths and lower standards of living caused by the indirect effect on economic growth.
Tuesday, September 25, 2007
Monday, September 24, 2007
Volatile Gas
I try to answer Mike Moffatt's post regarding the volatility of gas consumption (and hence revenue from taxes) compared to other goods. It appears gas is quite volatile esp. when you look at the mid/late 70s shock period.
I use BEA NIPA table data from their set called "Table 2.3.5. Personal Consumption Expenditures by Major Type of Product" to compute % change. The data is nominal.
I tend to agree with Mike though that this may not be that important in the long run since gas tax revenues are so relatively small. But could it be an issue year-to-year in certain circumstances? I think it could. Thoughts?
There are only 2 things that can cause this relative volatility: volatile changes in quantity consumed, or volatile changes in prices. Since the former is unlikely given the inelasticity of demand, the latter likely makes up most of the volatility. This makes sense theoretically since prices are dependent on behavior of cartels, and supply-chains that are tied to highly volatile conditions (like weather etc)
UPDATE 9/25: Mike correctly points out to me that my above graph doesn't really directly address the question of volatility of revenue of a gas tax since the above is likely mostly price volatility. Since a gas tax, unlike a typical sales tax, is a tax on a set quantity (40C per gallon) as opposed to a % of sales, a more appropriate graph would show the volatility of just quantities, not price changes.
In an attempt to do this, I use BEA's quantity index comparing the same items. Notice gas quantity is not really much more or less volatile than other goods (actually household goods is quite a bit more volatile swinging up and down from slightly negative growth from the previous year to as much as 15% growth). Though the point made above still holds; it is subject to huge spikes (supply shocks etc):
Friday, September 21, 2007
Becker on Rules vs. Discretion in Monetary Policy
Gary Becker provides a one-sided argument in favor of fixed rules governing monetary policy. He doesn't actually mention what rule he is exactly in favor of (inflation targeting, GDP growth targeting, factoring in unemployment...). He just says some rule is better than no rule, and while is arguments in favor of a rule-based monetary system make sense, he fails to mention any of its drawbacks.
Monetary rules are implicitly track long-run targets based on some aspect of NAIRU or whathaveyou. Of course, monetary policy is our government's chief way of tweaking the economy to alter business cycles (speeding up the economy to prevent a bad recession, or slowing it down to prevent runaway inflation). Take that away and all you are left with is politics (government spending and taxes) to tweak the economy. And THAT is a scary thought. Beyond that, taking away a monetary policymaker's discretion to change money supply / set interest rates, takes away the 'fudge' factor and assumes that we can set accurate rules - which may in fact not be the case.
But one would expect a Chicago school economist to be in favor of rules for precisely the above reasons. There is a certain unnatural comfort some economists find in the grand supposedly 'intuitive' assumptions and math models required to use such rules in the real world as opposed to relying on human behavior. There is a comfort in believeing that there are no big short-run market problems.
Sometimes what is comfortable is illusion.
Having said all that, I found Richard Posner's response to Becker a bit more even-handed and thoughtful:
"On the broader issue of rules versus discretion, I doubt that generalization is possible. Rules have great virtues, but they are limited because they are necessarily based on information possessed by the rulemaker when the rule was made. No rulemaker is omniscient. After the rule is promulgated, unforeseen circumstances are likely to arise to which the rule will be maladapted. The inflexibility of rules has to be traded off against the benefits in simplicity, clarity, and ease of compliance and application that rules confer. The tradeoff will not always favor rules."
Monetary rules are implicitly track long-run targets based on some aspect of NAIRU or whathaveyou. Of course, monetary policy is our government's chief way of tweaking the economy to alter business cycles (speeding up the economy to prevent a bad recession, or slowing it down to prevent runaway inflation). Take that away and all you are left with is politics (government spending and taxes) to tweak the economy. And THAT is a scary thought. Beyond that, taking away a monetary policymaker's discretion to change money supply / set interest rates, takes away the 'fudge' factor and assumes that we can set accurate rules - which may in fact not be the case.
But one would expect a Chicago school economist to be in favor of rules for precisely the above reasons. There is a certain unnatural comfort some economists find in the grand supposedly 'intuitive' assumptions and math models required to use such rules in the real world as opposed to relying on human behavior. There is a comfort in believeing that there are no big short-run market problems.
Sometimes what is comfortable is illusion.
Having said all that, I found Richard Posner's response to Becker a bit more even-handed and thoughtful:
"On the broader issue of rules versus discretion, I doubt that generalization is possible. Rules have great virtues, but they are limited because they are necessarily based on information possessed by the rulemaker when the rule was made. No rulemaker is omniscient. After the rule is promulgated, unforeseen circumstances are likely to arise to which the rule will be maladapted. The inflexibility of rules has to be traded off against the benefits in simplicity, clarity, and ease of compliance and application that rules confer. The tradeoff will not always favor rules."
Monday, September 17, 2007
Mankiw's Manifesto (II)
My response to Mankiws latest gas tax manifesto:
CAFE still isn't perfect, but as the reports on my blog discuss, the revisions to the program help rectify most of the SUV substitution issues. There are many issues that I don't like about the gas tax idea, but one thing I like about CAFE when compared to it is that increasing CAFE stanadards every few years FORCES gradual technological improvement and gas use reduction over time.
A gas tax, as an incentive only, does not force anything. There has been some evidence that car companies are increasingly collaborating and using oligopoly status to create lasting partnerships - both domestically and across borders. And given that for the vast majority of the US geography, consumer substitutes to vehicular transportation and commuting is low, vehicle producers have a good degree of market power and do not have to change its vehicle makeup much at all in response to a gas tax and changes in demand. Partially because, the cost of getting over the instituional hurdles and adopting cleaner technology far exceeds any marginal profit loss of keeping the same technology and makeup. So much of any potential profit loss can be mitigated by passing the buck to consumers, who largely have little choice in the matter. Marginal changes in supply makeup and fuel efficiency will surely occur due to demand changes for gasoline and fuel efficient transporation - but these are likely to be slight (given a politically feasible gas hike dollar value) and likely to effect different sets of the population drastically differently (see other comments). Some of the benefit of those small effects, again, are mitigated by the oligopoly power of the OIL industry.
Beyond that, sometimes, real change doesn't happen unless someone is there to push and prod. It's like a 30 year old who won't leave their parents' house. You can offer to help pay a portion of their rent of an apartment, ...or you can just say, "Hey, you are 30 years old, get out my next month or else I will kick you out." ...The son might not have ever been aware of what existed out in the world if the parents had not forced his eyes open.
CAFE still isn't perfect, but as the reports on my blog discuss, the revisions to the program help rectify most of the SUV substitution issues. There are many issues that I don't like about the gas tax idea, but one thing I like about CAFE when compared to it is that increasing CAFE stanadards every few years FORCES gradual technological improvement and gas use reduction over time.
A gas tax, as an incentive only, does not force anything. There has been some evidence that car companies are increasingly collaborating and using oligopoly status to create lasting partnerships - both domestically and across borders. And given that for the vast majority of the US geography, consumer substitutes to vehicular transportation and commuting is low, vehicle producers have a good degree of market power and do not have to change its vehicle makeup much at all in response to a gas tax and changes in demand. Partially because, the cost of getting over the instituional hurdles and adopting cleaner technology far exceeds any marginal profit loss of keeping the same technology and makeup. So much of any potential profit loss can be mitigated by passing the buck to consumers, who largely have little choice in the matter. Marginal changes in supply makeup and fuel efficiency will surely occur due to demand changes for gasoline and fuel efficient transporation - but these are likely to be slight (given a politically feasible gas hike dollar value) and likely to effect different sets of the population drastically differently (see other comments). Some of the benefit of those small effects, again, are mitigated by the oligopoly power of the OIL industry.
Beyond that, sometimes, real change doesn't happen unless someone is there to push and prod. It's like a 30 year old who won't leave their parents' house. You can offer to help pay a portion of their rent of an apartment, ...or you can just say, "Hey, you are 30 years old, get out my next month or else I will kick you out." ...The son might not have ever been aware of what existed out in the world if the parents had not forced his eyes open.
Friday, September 14, 2007
Odd Results, interesting discussion
hat tip Mankiw for the post of a study that says a $1 increase in gas prices will likley lead to a 15% reduction in obesity.
The study seems solid to me, though I'm certainly not the foremost expert on any of it.
And yet, I just can't buy the results. It doesn't pass the sniff test. Mike Moffatt agrees.
One thing - the author uses data from a decade and more ago. A paper (see the right side of my blog) on gas price elasticity says that there is evidence in a dramatic decrease in the elasticity of gasoline demand. Obviously the author's results would be sensitive to elasticity changes. ....
Either way, there is a Great discussion about it on Mankiw's blog though. The author even makes a cameo!
The study seems solid to me, though I'm certainly not the foremost expert on any of it.
And yet, I just can't buy the results. It doesn't pass the sniff test. Mike Moffatt agrees.
One thing - the author uses data from a decade and more ago. A paper (see the right side of my blog) on gas price elasticity says that there is evidence in a dramatic decrease in the elasticity of gasoline demand. Obviously the author's results would be sensitive to elasticity changes. ....
Either way, there is a Great discussion about it on Mankiw's blog though. The author even makes a cameo!
Monday, September 10, 2007
Mises.org's naive view of Capitalism
Ben O'Neil has today posted a blog on the perfectness of Capitalism. While I think Capitalism a more realistic model than Socialism, I do not share his utopic view of it.
He correctly asserts:
"Indeed, there has been a recent resurgence of academic critiques and self-help literature lamenting excessive "materialism" and "consumerism," much of which lays the blame squarely at the feet of free-market capitalism and its lifeblood, money, " and then spends a very long blog post trying to debunk this statement. Let's go through it point by point.
Mises Point 1:
"the analysis of inalienable nonmaterial goods [personal achievement, relationships, broad knkowlege...] is well within the province of economics and does not present any particular problem for economic analysis.... Of course, there are none who desire only alienable goods and hence none who act in this absurd manner. Rather, we rationally weigh alienable and inalienable goods against one another, according to our particular preferences and with a view to achieving the greatest possible happiness over the course of our lives." [ie, the decision between inalienable and alienable goods is an economic one]
Counterpoint:
I 100% agree with the above statement, but fail to see how it at all addresses the concerns that Capitalism leads to an onverly consumeristic society. Few would disagree that Economics can concern itself with such topics. Few would disagree that people face tradeoffs with regards to inalienable goods (purusing relationships etc) just as much as alienable goods. The point is that the system itself - its very framework - by its very definition - forces people to consume and consume some more, and accumulate more and more wealth- less for real happiness and more for status and social norm and the need to feel superior (the best competitor in a competing world).
To its credit, Mises.org does note that retort.
Mises.org response:
"... the level of social status derived from wealth and the satisfaction derived from this social status are themselves subject to diminishing marginal returns....it does not matter why we gain satisfaction from material goods."
Counterpoint:
The problem with the above idea of diminishing returns is, while true, it does not paint a full picture. I may be a guy who wants a Ferrari solely for status, so I buy one. My value of a second high-end luxury/sports car is diminished. Fine. But maybe now I see that my neighbor Tim just bought a Lamborghini, in addition to a Ferrari he just bought last year. Well now I feel really small. I have to have one too lest I be laughed at behind my neighbors' backs. I have strut my wealth for all to see....
In this sense, Capitalism is a big form of overcompensation.
Mises.org might disagree on the reason:
"But in truth, this behavior is nothing more than a manifestation of diminishing marginal returns. The highly wealthy person desires these more opulent goods only because his desire for basic accommodation and other more fundamental goods is already satisfied."
Again, technically correct. Again, missing the big picture. When you combine the need for status maintainence and social norms with the above mention of diminsihing returns, you realize that at some point returns must hit a constraint. At some point, using just the idea of diminishing personal returns, you would ordinarily decide not to buy your 21st car. But you do anyway - money, status, norms ---they are all powerful motivators in and of themselves and can often cloud what might otherwise be our wants, absent capitalism.
This is not to say such consumption is irrational. I think Mises.org makes good points about that - afterall, status etc can be thought of as part of ones utility too. The point is that the Capitalist model causes consumption and materialism over and above what might occur in an identical society without such motivations. In other words, these concepts work together - they are not incompatible. And, Capitalism - ie a community-wide system of markets - in and of itself can create motivations that distort wants. To deny this without seeing the full picture is naive.
Mises might respond by saying, "so what. Economics does not care about 'why' people do what they do."
I would respond: "That's the problem. Because it is often the 'why' that matters most."
Having said all this, the positives of capitalism far outweigh the negative. And many of the negatives can be tempered with personal restraint, government assistance, and a sense of community.
He correctly asserts:
"Indeed, there has been a recent resurgence of academic critiques and self-help literature lamenting excessive "materialism" and "consumerism," much of which lays the blame squarely at the feet of free-market capitalism and its lifeblood, money, " and then spends a very long blog post trying to debunk this statement. Let's go through it point by point.
Mises Point 1:
"the analysis of inalienable nonmaterial goods [personal achievement, relationships, broad knkowlege...] is well within the province of economics and does not present any particular problem for economic analysis.... Of course, there are none who desire only alienable goods and hence none who act in this absurd manner. Rather, we rationally weigh alienable and inalienable goods against one another, according to our particular preferences and with a view to achieving the greatest possible happiness over the course of our lives." [ie, the decision between inalienable and alienable goods is an economic one]
Counterpoint:
I 100% agree with the above statement, but fail to see how it at all addresses the concerns that Capitalism leads to an onverly consumeristic society. Few would disagree that Economics can concern itself with such topics. Few would disagree that people face tradeoffs with regards to inalienable goods (purusing relationships etc) just as much as alienable goods. The point is that the system itself - its very framework - by its very definition - forces people to consume and consume some more, and accumulate more and more wealth- less for real happiness and more for status and social norm and the need to feel superior (the best competitor in a competing world).
To its credit, Mises.org does note that retort.
Mises.org response:
"... the level of social status derived from wealth and the satisfaction derived from this social status are themselves subject to diminishing marginal returns....it does not matter why we gain satisfaction from material goods."
Counterpoint:
The problem with the above idea of diminishing returns is, while true, it does not paint a full picture. I may be a guy who wants a Ferrari solely for status, so I buy one. My value of a second high-end luxury/sports car is diminished. Fine. But maybe now I see that my neighbor Tim just bought a Lamborghini, in addition to a Ferrari he just bought last year. Well now I feel really small. I have to have one too lest I be laughed at behind my neighbors' backs. I have strut my wealth for all to see....
In this sense, Capitalism is a big form of overcompensation.
Mises.org might disagree on the reason:
"But in truth, this behavior is nothing more than a manifestation of diminishing marginal returns. The highly wealthy person desires these more opulent goods only because his desire for basic accommodation and other more fundamental goods is already satisfied."
Again, technically correct. Again, missing the big picture. When you combine the need for status maintainence and social norms with the above mention of diminsihing returns, you realize that at some point returns must hit a constraint. At some point, using just the idea of diminishing personal returns, you would ordinarily decide not to buy your 21st car. But you do anyway - money, status, norms ---they are all powerful motivators in and of themselves and can often cloud what might otherwise be our wants, absent capitalism.
This is not to say such consumption is irrational. I think Mises.org makes good points about that - afterall, status etc can be thought of as part of ones utility too. The point is that the Capitalist model causes consumption and materialism over and above what might occur in an identical society without such motivations. In other words, these concepts work together - they are not incompatible. And, Capitalism - ie a community-wide system of markets - in and of itself can create motivations that distort wants. To deny this without seeing the full picture is naive.
Mises might respond by saying, "so what. Economics does not care about 'why' people do what they do."
I would respond: "That's the problem. Because it is often the 'why' that matters most."
Having said all this, the positives of capitalism far outweigh the negative. And many of the negatives can be tempered with personal restraint, government assistance, and a sense of community.
Thursday, September 6, 2007
Toucha Toucha Toucha Touch Me, I wanna feel dirty!
So, I just bought the new (as of yesterday) iPod Touch.
It is basically a thinner iPhone minus the "Phone" and (worthless) camara part, plus 8GB.
I think that is ideal.
I was on some Mac blogs and many are complaining about the fact that the iPod Touch is 'only' 16 GB, so why would anyone want it. Well, I want it because that is 8GB MORE than the iPhone, for the exact same price (now), and it is sleeker, AND I don't have to deal with AT&T (I hated this service when it was Cingular and I refuse to go back), AND I don't have to pay a minimum of $55 a month for two years (which is $20 more than I pay currenly - which amounts to a waste of almost $500 over the contract) for no added value over my current phone service.
That sounds like a pretty substantial deal to me.
I think most of the compaliners on the Mac boards are those with currently large-capacity ipods. They don't want to downsize. But that isn't the part of the market the iTouch is for. If you want a music powerhouse, and you absolutely need 7,000 songs at your fingertips, buy/keep the big traditional iPod. I for one don't even personally like 7,000 different songs.
But then, that's just how my utility rolls.
It is basically a thinner iPhone minus the "Phone" and (worthless) camara part, plus 8GB.
I think that is ideal.
I was on some Mac blogs and many are complaining about the fact that the iPod Touch is 'only' 16 GB, so why would anyone want it. Well, I want it because that is 8GB MORE than the iPhone, for the exact same price (now), and it is sleeker, AND I don't have to deal with AT&T (I hated this service when it was Cingular and I refuse to go back), AND I don't have to pay a minimum of $55 a month for two years (which is $20 more than I pay currenly - which amounts to a waste of almost $500 over the contract) for no added value over my current phone service.
That sounds like a pretty substantial deal to me.
I think most of the compaliners on the Mac boards are those with currently large-capacity ipods. They don't want to downsize. But that isn't the part of the market the iTouch is for. If you want a music powerhouse, and you absolutely need 7,000 songs at your fingertips, buy/keep the big traditional iPod. I for one don't even personally like 7,000 different songs.
But then, that's just how my utility rolls.
Wednesday, September 5, 2007
blog worth
This site claims to tell you aproximately how much money your blog is valued at. They base pretty much their entire analysis on the fact that AOL paid $25 million for a portal site that hosted/linked etc to hundreds of other blogs. From that sale, and using link data, they determine aprox values of each individual blog. The applet above applies that to other sites as well. There are a whole host of assumption that make this a flawed way to determine market value. Below are a few, though feel free to come up with your own:
1. Uh, the values aren't determined by individual markets
2. It assumes the value of the blog conglomerate can be linearly disaggregated (think opposite of the sum of parts - it's alot like saying the value of an individual link is just some proportionate value of Google Corporation's search engine, and we KNOW the reverse ain't true!)
3. My blog sure as hell doesn't have a value of $4,000+. If someone offered me $100 to stop blogging tomorrow and give them my URL, I would gladly do it (and then start up a new one under a different name).
1. Uh, the values aren't determined by individual markets
2. It assumes the value of the blog conglomerate can be linearly disaggregated (think opposite of the sum of parts - it's alot like saying the value of an individual link is just some proportionate value of Google Corporation's search engine, and we KNOW the reverse ain't true!)
3. My blog sure as hell doesn't have a value of $4,000+. If someone offered me $100 to stop blogging tomorrow and give them my URL, I would gladly do it (and then start up a new one under a different name).
Tuesday, September 4, 2007
Tax Incentives Debate
Two titans of the Indiana blogosphere butt heads over tax abatements. I'll reserve my opinions on this specific issue.
Jen said...
As much as you'd like to make this about me (which I know amuses your trolls) or about partisan politics, Gary, I think you'll find pretty widespread support across party lines for these types of incentives.After all, who got the Circle Centre ball rolling?Who brags all the time about bringing Honda here -- with incentives?The "wingnuts and fringies" comment was directed at the Scott Schneiders and Jim Bradfords of the world, who think it ought to be enough just to cross your fingers and wish real hard that businesses would locate here.They've got other options, and we have to be competitive. That means trading off a little money on the table for long-term investment.If a business fails to meet its incentive requirements, it doesn't get the incentive. And TIF district money goes back into developing the district itself. (If you'll recall, the City clawed back quite a bit of money when United backed out of its commitment at the airport several years ago.)Also, you conveniently overlooked the fact that Eschbacher's article clearly states that abatements and TIF districts don't cost as much as fully exempted property, such as churches and non-profits.If this isn't even the largest part of the problem, why are you so obsessed with it?Or is it just that we're within 90 days of an election, and you're doing your best to shore up another losing candidate with blind allegiance and weak arguments?
8:53 AM EST
Advance Indiana said...
The incentive game has gotten completely out of hand. When tax abatements were first conceived, they were reserved for special circumstances. Today, they are handed out as a matter of course. Virtually every business on the canal received a tax abatement. Office buildings are receiving tax abatements, a Jimmy John's sub shop gets a tax abatement as does a Gold's Gym. Every hotel built in the downtown area is given a tax abatement. Aren't we already subsidizing those hotels by building a huge convention center, Conseco Fieldhouse and the Colts Stadium at taxpayer's expenses? And the fact is that government does not reclaim those incentives when the business fails to live up to the promises. Do you think the city plans to take back anything from Lilly because it's been reducing its workforce in the city instead of expanding it as promised? This really is a constitutional issue. If our courts enforced the equal protection clause in the area of taxation as it should, these types of benefits would not be possible because they would be declared unconstitutional. They simply breed mistrust and animosity among taxpayers towards their government. Government arbitrarily picks winner and losers. Every time a business is given another tax break, everyone who didn't get that tax break has to pay more money to the government. Indianapolis is losing businesses at a faster rate than it can hand out incentives to new businesses. And as for those NFPs, the city shares in the blame. It has actually gone out of its way to lure NFPs to the city.
Jen said...
As much as you'd like to make this about me (which I know amuses your trolls) or about partisan politics, Gary, I think you'll find pretty widespread support across party lines for these types of incentives.After all, who got the Circle Centre ball rolling?Who brags all the time about bringing Honda here -- with incentives?The "wingnuts and fringies" comment was directed at the Scott Schneiders and Jim Bradfords of the world, who think it ought to be enough just to cross your fingers and wish real hard that businesses would locate here.They've got other options, and we have to be competitive. That means trading off a little money on the table for long-term investment.If a business fails to meet its incentive requirements, it doesn't get the incentive. And TIF district money goes back into developing the district itself. (If you'll recall, the City clawed back quite a bit of money when United backed out of its commitment at the airport several years ago.)Also, you conveniently overlooked the fact that Eschbacher's article clearly states that abatements and TIF districts don't cost as much as fully exempted property, such as churches and non-profits.If this isn't even the largest part of the problem, why are you so obsessed with it?Or is it just that we're within 90 days of an election, and you're doing your best to shore up another losing candidate with blind allegiance and weak arguments?
8:53 AM EST
Advance Indiana said...
The incentive game has gotten completely out of hand. When tax abatements were first conceived, they were reserved for special circumstances. Today, they are handed out as a matter of course. Virtually every business on the canal received a tax abatement. Office buildings are receiving tax abatements, a Jimmy John's sub shop gets a tax abatement as does a Gold's Gym. Every hotel built in the downtown area is given a tax abatement. Aren't we already subsidizing those hotels by building a huge convention center, Conseco Fieldhouse and the Colts Stadium at taxpayer's expenses? And the fact is that government does not reclaim those incentives when the business fails to live up to the promises. Do you think the city plans to take back anything from Lilly because it's been reducing its workforce in the city instead of expanding it as promised? This really is a constitutional issue. If our courts enforced the equal protection clause in the area of taxation as it should, these types of benefits would not be possible because they would be declared unconstitutional. They simply breed mistrust and animosity among taxpayers towards their government. Government arbitrarily picks winner and losers. Every time a business is given another tax break, everyone who didn't get that tax break has to pay more money to the government. Indianapolis is losing businesses at a faster rate than it can hand out incentives to new businesses. And as for those NFPs, the city shares in the blame. It has actually gone out of its way to lure NFPs to the city.
Subscribe to:
Posts (Atom)