Iran is one of the world's largest sources/exporter of oil, and yet, doesn't have the capacity to refine its own oil to make domestic gasoline. That is funny.
Iranians are getting fed up with the domestic policy of gasoline rationing
Wednesday, June 27, 2007
Monday, June 25, 2007
Sub-Prime Morgages - Becker/Posner
Becker and Posner discuss Sub-Prime housing markets.
...And I try to argue against the Chicago-school-as-usual line of thinking they offer up:
"However, intentional misleading presentations to families who were clearly unqualified to take on home ownership was not the norm but rather were exceptions."
How do we know that? And, what are defining "norm" as? 20% of cases? 50%? A large majority???
The foreclosure rates keep rising and rising - ie - we haven't even seen how extensive this problem is yet. We just know that it is bad now, and getting worse.
Also, you lump 'congress' into one entity that presumably wants to prevent poor people from home ownership. I don't think I've heard that from anyone - all I've heard is talk about putting some restrictions on the blatant smoothtalking and in some cases all out lying that obviously has been happening --- whether they be 'exceptional' or not.
...And I try to argue against the Chicago-school-as-usual line of thinking they offer up:
"However, intentional misleading presentations to families who were clearly unqualified to take on home ownership was not the norm but rather were exceptions."
How do we know that? And, what are defining "norm" as? 20% of cases? 50%? A large majority???
The foreclosure rates keep rising and rising - ie - we haven't even seen how extensive this problem is yet. We just know that it is bad now, and getting worse.
Also, you lump 'congress' into one entity that presumably wants to prevent poor people from home ownership. I don't think I've heard that from anyone - all I've heard is talk about putting some restrictions on the blatant smoothtalking and in some cases all out lying that obviously has been happening --- whether they be 'exceptional' or not.
Thursday, June 21, 2007
The Indianapolis Star reports on a part of the Indiana Budget recently passed into law that would make motorcyclists pay a $10 fee to go to research to prevent spinal / brain injuries. The part of the bill was buried and not even the Governor was aware of it. He says motorcyclists have a right to be upset. And they are.
But interestingly, commenters are comparing this fee to the tax hike on cigarettes also passed in the previous legislative session. To them there are no differences.
To me there is a big difference:
Cigarette users create a substantial social cost via second-hand smoke related health problems, cigarette promotion of to our youth, the smell of cigarettes in our public areas, etc. The tax acts to account for those social costs - to make the smokers pay for the costs not internalized by themselves or the manufacturers.
However, a fee (tax or whatever) on motorcyclists to promote brain/spinal injury research is completely different. Let's just assume that motorcycling is the highest risk category (on a % of use basis) for brain injuries etc. Presumably, the bikers are already internalizing that risk. Presumably bikers that don't wear helmets are more risk-seeking than those that do. Regardless, head injuries etc are costs that apply mostly directly to the motorcyclists and their families (financial and psychological pain of loved one's death/injury). Externalities are minimal. So really, with a fee on motorcyclists alone, while ignoring all other groups of people where brain/spinal cord injuries might be high (like auto racers), just seems unfair to me.
But interestingly, commenters are comparing this fee to the tax hike on cigarettes also passed in the previous legislative session. To them there are no differences.
To me there is a big difference:
Cigarette users create a substantial social cost via second-hand smoke related health problems, cigarette promotion of to our youth, the smell of cigarettes in our public areas, etc. The tax acts to account for those social costs - to make the smokers pay for the costs not internalized by themselves or the manufacturers.
However, a fee (tax or whatever) on motorcyclists to promote brain/spinal injury research is completely different. Let's just assume that motorcycling is the highest risk category (on a % of use basis) for brain injuries etc. Presumably, the bikers are already internalizing that risk. Presumably bikers that don't wear helmets are more risk-seeking than those that do. Regardless, head injuries etc are costs that apply mostly directly to the motorcyclists and their families (financial and psychological pain of loved one's death/injury). Externalities are minimal. So really, with a fee on motorcyclists alone, while ignoring all other groups of people where brain/spinal cord injuries might be high (like auto racers), just seems unfair to me.
Tuesday, June 19, 2007
Incentives for the Poor - for doing their social duty
I ran across an interesting Canadian Press piece (oddly enough) about New York's new incentives for poor people.
From the piece:
"Poor New York City residents will be rewarded for good behaviour - like US$300 for doing well on school tests, $150 for holding a job and $200 for visiting the doctor - under an experimental anti-poverty program city officials detailed Monday. "
So it seems that basically, New York will now give incentives to people for "living" - doing things that people should be doing anyway, as part of being human beings.
Holding a job? You shouldn't have to be paid for trying to do good work at work. You shouldn't be paid for not calling your boss names, etc.
Visiting the doctor? Wait. Let me get this straight. Some bloke doesn't care about his health, so I the tax payer should? Oh wait, that's our existing health care system ;)....
But the kicker is "doing well on a school test." So now we have to pay people to study? You know I'm fine for supporting education financially, in fact, IMOP, it should be the largest outlay the government makes. But giving people money for doing what normal people do on an everyday basis is offensive to me. Not only that, but it should be offensive to poor people, because it implies that the only reason they are poor is because they are trying their best not to live normal lives. It further implies that a little bit of cash could change years of ingrained behavior. I'm not so sure - seems like this kind of spending would be the kind of thing people look for loopholes to get around.
Finally, this kind of incentive focuses on the incentive it provides to the poor, but what about the incentive it provides to the middle class.
Consider: "The World Bank model for cash reward programs in other countries is that the value of the incentive should equal about one-third of a household's income to have any lasting influence on changing behaviour. "
Sign me up! I'll gladly become a part-time worker and do all the other 'hard-work' of being a human being in order to get 1/3 of my earned dollars essentially for free!
From the piece:
"Poor New York City residents will be rewarded for good behaviour - like US$300 for doing well on school tests, $150 for holding a job and $200 for visiting the doctor - under an experimental anti-poverty program city officials detailed Monday. "
So it seems that basically, New York will now give incentives to people for "living" - doing things that people should be doing anyway, as part of being human beings.
Holding a job? You shouldn't have to be paid for trying to do good work at work. You shouldn't be paid for not calling your boss names, etc.
Visiting the doctor? Wait. Let me get this straight. Some bloke doesn't care about his health, so I the tax payer should? Oh wait, that's our existing health care system ;)....
But the kicker is "doing well on a school test." So now we have to pay people to study? You know I'm fine for supporting education financially, in fact, IMOP, it should be the largest outlay the government makes. But giving people money for doing what normal people do on an everyday basis is offensive to me. Not only that, but it should be offensive to poor people, because it implies that the only reason they are poor is because they are trying their best not to live normal lives. It further implies that a little bit of cash could change years of ingrained behavior. I'm not so sure - seems like this kind of spending would be the kind of thing people look for loopholes to get around.
Finally, this kind of incentive focuses on the incentive it provides to the poor, but what about the incentive it provides to the middle class.
Consider: "The World Bank model for cash reward programs in other countries is that the value of the incentive should equal about one-third of a household's income to have any lasting influence on changing behaviour. "
Sign me up! I'll gladly become a part-time worker and do all the other 'hard-work' of being a human being in order to get 1/3 of my earned dollars essentially for free!
Friday, June 15, 2007
I'll use all the GD water I want, thanks!
It was only a matter of time, but the city of Indy has finally formally asked thousands of residential water users in the city to conserve their use and not water their lawns etc.... Just north of us, in the city of Noblesville, there is an enforceable mandate in place banning the use of water for such uses and is punishable by a fine.
It's true we are going through a heck of a dry spell, but I don't see what all the fuss is about. First of all, I pay for my water and I'm going to use it. The water company's failure to plan or add capacity is not my problem, and it is not business of the government sticking it's nose in my business.
Secondly, if people are willing and able to pay for water, then let them. The market won't let the well run dry - it'll just make water expensive. If you think about it, water from your faucet is not really a necessity in the short-run. You need a bath? Jump in the river once a week. You worried about dishes? Use paper plates temporarily. You want clean clothes? Have your drycleaners send them out of state. You thirsty? Buy bottled water.
Now you might say to me, "But I shouldn't have to go to those extremes." My response is, every use of water that you aren't using for thirst (in the short-run) is just a frill, a non-necessity - a need to fulfill a personal aesthetic (to smell good, to have cleaner clothes, etc - all frills) . And thirst (and even some frills) can easily be taken care of by the market with bottled waters from areas that are not experiencing drought.
Having a nicely manicured lawn is also a frill - but it is not necessarily a lesser or greater frill. It's relative importance to overall cleanliness etc is in the eye of the beholder. And how dare the government try to make us choose cleanliness over household aesthetic. If they want to conserve water and be fair about it - they just need to turn off the spigot altogether.
Otherwise, keep your nose out of my business.
It's true we are going through a heck of a dry spell, but I don't see what all the fuss is about. First of all, I pay for my water and I'm going to use it. The water company's failure to plan or add capacity is not my problem, and it is not business of the government sticking it's nose in my business.
Secondly, if people are willing and able to pay for water, then let them. The market won't let the well run dry - it'll just make water expensive. If you think about it, water from your faucet is not really a necessity in the short-run. You need a bath? Jump in the river once a week. You worried about dishes? Use paper plates temporarily. You want clean clothes? Have your drycleaners send them out of state. You thirsty? Buy bottled water.
Now you might say to me, "But I shouldn't have to go to those extremes." My response is, every use of water that you aren't using for thirst (in the short-run) is just a frill, a non-necessity - a need to fulfill a personal aesthetic (to smell good, to have cleaner clothes, etc - all frills) . And thirst (and even some frills) can easily be taken care of by the market with bottled waters from areas that are not experiencing drought.
Having a nicely manicured lawn is also a frill - but it is not necessarily a lesser or greater frill. It's relative importance to overall cleanliness etc is in the eye of the beholder. And how dare the government try to make us choose cleanliness over household aesthetic. If they want to conserve water and be fair about it - they just need to turn off the spigot altogether.
Otherwise, keep your nose out of my business.
Thursday, June 14, 2007
I just can't keep my opinion to myself (blame Mankiw)
Mankiw today says the following in response to a report regarding social welfare / utility:
"They believe:
1. Tax policy should be set to maximize a social welfare function.
2. The social welfare function has strong aversion to inequality.
3. The tax-setting social planner must take into account that taxes are distortionary, but elasticities are small enough that the distortions are not much of a problem until tax rates reach much higher levels than we have today.
Note that points 1 and 2 are about political philosophy rather than economics. Economists can have opinions about these matters, but our opinions are not much better or worse by virtue of our training than those of anyone else. One can even reject the whole idea of a social welfare function. ..."
I read that, then shook my head in shamed dissapointment at this expression of how closed-minded Econ is and has been for years. My response:
I don't buy your logic Prof. Mankiw.
First of all points 1 and 2 are not at all about a 'political philosophy' - it's about common sense (the field of psychology also has a good deal to say about this). The fact that comprisons of interpersonal utiltiy is not wholly possible in the real world doesn't mean that these differences don't exist - it just means we aren't sophisticated enough yet to measure it well.
So we fall back to what we can measure well, despite the fact that pareto efficiency has severe drawbacks (precisely because it ignores equality).
I also disagree that we as economists should continue to shrug this stuff off as 'outside our realm.' That's very closed minded thinking and it's the kind of thing we econ nerds get bashed for. Econ at its core is just the study of behavior under constraints and scarcity. It's time we start advocating a more mulidisciplinary approach to economics and stop falling back on useful yet severely limited metrics.
"They believe:
1. Tax policy should be set to maximize a social welfare function.
2. The social welfare function has strong aversion to inequality.
3. The tax-setting social planner must take into account that taxes are distortionary, but elasticities are small enough that the distortions are not much of a problem until tax rates reach much higher levels than we have today.
Note that points 1 and 2 are about political philosophy rather than economics. Economists can have opinions about these matters, but our opinions are not much better or worse by virtue of our training than those of anyone else. One can even reject the whole idea of a social welfare function. ..."
I read that, then shook my head in shamed dissapointment at this expression of how closed-minded Econ is and has been for years. My response:
I don't buy your logic Prof. Mankiw.
First of all points 1 and 2 are not at all about a 'political philosophy' - it's about common sense (the field of psychology also has a good deal to say about this). The fact that comprisons of interpersonal utiltiy is not wholly possible in the real world doesn't mean that these differences don't exist - it just means we aren't sophisticated enough yet to measure it well.
So we fall back to what we can measure well, despite the fact that pareto efficiency has severe drawbacks (precisely because it ignores equality).
I also disagree that we as economists should continue to shrug this stuff off as 'outside our realm.' That's very closed minded thinking and it's the kind of thing we econ nerds get bashed for. Econ at its core is just the study of behavior under constraints and scarcity. It's time we start advocating a more mulidisciplinary approach to economics and stop falling back on useful yet severely limited metrics.
Tuesday, June 12, 2007
Differing views from differing blogs
The Mises Institute says that government is worthless:
"There is no such thing as public investment, only public consumption. This conclusion follows immediately once we clearly recognize the distinctive character of government's economic position within a division-of-labor economic system."
Brad DeLong longs for Econ professors that tout the governments ability to enhance economic welfare:
"Instead of carrying around an Austrian model in their heads in which we assume total selfishness, zero transactions costs, and conclude that transfer payments are suspect, they’d be hearing about Possible efficiency gains due to taxes and transfers"
I'll let you decide which argument makes the most sense.
"There is no such thing as public investment, only public consumption. This conclusion follows immediately once we clearly recognize the distinctive character of government's economic position within a division-of-labor economic system."
Brad DeLong longs for Econ professors that tout the governments ability to enhance economic welfare:
"Instead of carrying around an Austrian model in their heads in which we assume total selfishness, zero transactions costs, and conclude that transfer payments are suspect, they’d be hearing about Possible efficiency gains due to taxes and transfers"
I'll let you decide which argument makes the most sense.
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