Becker wants to tax the really rich.
...I'll check his post again tomorrow to make sure it's real and not some figment of my imagination ;).
Tuesday, November 13, 2007
Tuesday, November 6, 2007
Mankiw Confused about Health Care
Mankiw's new post is about his views on Health Care Reform..........................
I take issue with his following statement (he answers some questions from somebody):
Q: Do you think the pundits of the left are similarly confused?
A: Some are, but others have an altogether different motive. Observing dissatisfaction with the U.S. healthcare system, they are using reform as a Trojan Horse to push for more redistribution of income. Almost all sweeping health reform proposals involve higher taxes on the rich to provide benefits for those farther down the economic ladder. The redistribution, rather than health reform, is sometimes the main objective.
To judge whether my conjecture is correct, ask your favorite pundit of the left the following: What health reform would you favor if the reform were required to be distribution-neutral? That is, you can change the rules of the health system but you cannot change the distribution of economic resources between rich and poor. My guess is that your favorite pundit would either object to the question or answer by retreating to more modest reforms. If so, this suggests that calls for sweeping reform are mainly motivated by the desire for increased redistribution.
...............
I think Mankiw grossly mis-characterizes some peoples' motivations for Health Care. It is true that many that want sweeping reform would call on a larger burden to be shared by the wealthy. And yes, that would by definition result in a redistribution away from the rich toward the poor. But that does NOT mean that that is the reason unto itself. It simply makes sense. Rich people can pay for health care far easier than can the poor. Health care is not like buying beer - most everyone needs decent health care to live a decent life nowadays. One can do without beer. If there was a debate about "Beer Care" and someone suggested taxing the rich to ensure that everyone had adequate amounts of beer available on a weekly basis, I can see many people not being for paying for that by taking an inordinate amount of wealth from the rich. But since we are talking about Health Care, and Health Care is a vital necessity to some, I can see how it could makes sense to make those that can pay the most with the least negative consequences do so.
So, Mankiw has the cause and effect all wrong. He thinks people want Health Care Reform in order to cause a more progressive distribution. In fact, people want to use a more progressive distribution to pay for Health Care Reform by taking money from those who can do with out a marginal amount the easiest.
I don't necessarily agree with all Health Care reforms put form by those on the left, but I think I understand their points of view better than Mankiw does. I personally can see how it could be considered ok to 'force' those whom society / God or whomever had blessed with a rich and healthy life to help pay for those less fortunate souls that were not blessed that way. Is that a bit anti-market? Sure is. Is it efficient in the narrow-minded text book sense - probably not. But to suggest that people that legitimately care about the health of US citizens are only doing so for redistribution motives, is, I think, out-of-touch.
Mankiw is not the devil. But he is certainly one-track-minded on this point.
I take issue with his following statement (he answers some questions from somebody):
Q: Do you think the pundits of the left are similarly confused?
A: Some are, but others have an altogether different motive. Observing dissatisfaction with the U.S. healthcare system, they are using reform as a Trojan Horse to push for more redistribution of income. Almost all sweeping health reform proposals involve higher taxes on the rich to provide benefits for those farther down the economic ladder. The redistribution, rather than health reform, is sometimes the main objective.
To judge whether my conjecture is correct, ask your favorite pundit of the left the following: What health reform would you favor if the reform were required to be distribution-neutral? That is, you can change the rules of the health system but you cannot change the distribution of economic resources between rich and poor. My guess is that your favorite pundit would either object to the question or answer by retreating to more modest reforms. If so, this suggests that calls for sweeping reform are mainly motivated by the desire for increased redistribution.
...............
I think Mankiw grossly mis-characterizes some peoples' motivations for Health Care. It is true that many that want sweeping reform would call on a larger burden to be shared by the wealthy. And yes, that would by definition result in a redistribution away from the rich toward the poor. But that does NOT mean that that is the reason unto itself. It simply makes sense. Rich people can pay for health care far easier than can the poor. Health care is not like buying beer - most everyone needs decent health care to live a decent life nowadays. One can do without beer. If there was a debate about "Beer Care" and someone suggested taxing the rich to ensure that everyone had adequate amounts of beer available on a weekly basis, I can see many people not being for paying for that by taking an inordinate amount of wealth from the rich. But since we are talking about Health Care, and Health Care is a vital necessity to some, I can see how it could makes sense to make those that can pay the most with the least negative consequences do so.
So, Mankiw has the cause and effect all wrong. He thinks people want Health Care Reform in order to cause a more progressive distribution. In fact, people want to use a more progressive distribution to pay for Health Care Reform by taking money from those who can do with out a marginal amount the easiest.
I don't necessarily agree with all Health Care reforms put form by those on the left, but I think I understand their points of view better than Mankiw does. I personally can see how it could be considered ok to 'force' those whom society / God or whomever had blessed with a rich and healthy life to help pay for those less fortunate souls that were not blessed that way. Is that a bit anti-market? Sure is. Is it efficient in the narrow-minded text book sense - probably not. But to suggest that people that legitimately care about the health of US citizens are only doing so for redistribution motives, is, I think, out-of-touch.
Mankiw is not the devil. But he is certainly one-track-minded on this point.
Thursday, November 1, 2007
A Looming Recession?
Here are some headlines from my newsline feeds on my google homepage:
"Foreclosures jump 30 percent"
"Stocks plunge amid surging oil"
"Chrysler to cut up to 12,000 jobs"
"Rash of Reports Exposes Vulnerable Economy"
And then there is this seeming counterpoint from some IU economists...:
http://www.insideindianabusiness.com/newsitem.asp?id=26238
Not being versed in the specific econometric modelling used for such forecasts, I can only use my best educated guess as to where the economy for the US (and Indiana) is headed. But given the plethora of negatives that have happened this year, and given the fact that hardly anyone expects that to turn around soon, AND given that the Fed can only go so far in loosening the money supply without risking inflation given rising energy prices etc, I don't know if I would be as optimistic as the IU economists. The economy HAS been resilient to date, but let's not be fooled by that whole "New Economy" schtick. Resiliency has its limits.
"Foreclosures jump 30 percent"
"Stocks plunge amid surging oil"
"Chrysler to cut up to 12,000 jobs"
"Rash of Reports Exposes Vulnerable Economy"
And then there is this seeming counterpoint from some IU economists...:
http://www.insideindianabusiness.com/newsitem.asp?id=26238
Not being versed in the specific econometric modelling used for such forecasts, I can only use my best educated guess as to where the economy for the US (and Indiana) is headed. But given the plethora of negatives that have happened this year, and given the fact that hardly anyone expects that to turn around soon, AND given that the Fed can only go so far in loosening the money supply without risking inflation given rising energy prices etc, I don't know if I would be as optimistic as the IU economists. The economy HAS been resilient to date, but let's not be fooled by that whole "New Economy" schtick. Resiliency has its limits.
Monday, October 29, 2007
You are such a capitalist!
"You are such a capitalist." Depending on emphasis, the phrase can mean:
You are a pig who doesn't care about human beings and only cares about the bottom-dollar and making a profit.
or
I'm pleasently surprised you recognize the fact that, in many cases, capitalism increases efficiency and lowers costs and matches needs/wants to payment. Capitalism insures that businesses stay in business long enough to make many lives better off, as opposed to what would happen if they started giving hand-outs to a select few.
Here's the thing. When used in every-day conversation with friends or loved-ones, "Capitalism" almost ALWAYS means the former - ie, it has a very negative connotation. Why? Because economists have not explained benefits well enough? Or maybe because the negatives of capitalism are more visible?
BUT, economists and people with an econ background may often mean the latter more positive meaning of capitalism.
SO, now imagine you get a gathering of three veterinarian friends (one who may be your significant other) and one economist -- and the vets explain why it annoys them to no end how many clients expect free pet services and actually get upset when the vets don't cut huge deals for them and their sick pet. They exclaim that they charge whatever is necessary to make the pets better off. Now imagine, that the economist responds (because he/she has to relate the situation to what they know), "You are such a capitalist."
... FYI, if you are in a gathering of non-economists, don't use the word "capitalism." No matter your inflection, no matter your tone --- sparks will fly.
You are a pig who doesn't care about human beings and only cares about the bottom-dollar and making a profit.
or
I'm pleasently surprised you recognize the fact that, in many cases, capitalism increases efficiency and lowers costs and matches needs/wants to payment. Capitalism insures that businesses stay in business long enough to make many lives better off, as opposed to what would happen if they started giving hand-outs to a select few.
Here's the thing. When used in every-day conversation with friends or loved-ones, "Capitalism" almost ALWAYS means the former - ie, it has a very negative connotation. Why? Because economists have not explained benefits well enough? Or maybe because the negatives of capitalism are more visible?
BUT, economists and people with an econ background may often mean the latter more positive meaning of capitalism.
SO, now imagine you get a gathering of three veterinarian friends (one who may be your significant other) and one economist -- and the vets explain why it annoys them to no end how many clients expect free pet services and actually get upset when the vets don't cut huge deals for them and their sick pet. They exclaim that they charge whatever is necessary to make the pets better off. Now imagine, that the economist responds (because he/she has to relate the situation to what they know), "You are such a capitalist."
... FYI, if you are in a gathering of non-economists, don't use the word "capitalism." No matter your inflection, no matter your tone --- sparks will fly.
Friday, October 19, 2007
Mankiw and comments
I was over at Mankiw's Place today (blog) and realized that he has permanently disabled his comments section for all posts. His reasoning:http://gregmankiw.blogspot.com/2007/10/why-comments-are-gone.html
This is really sad to me. While I certainly understand his reasons, I always found commenting and reading others' comments on his blog to be not only fun, but extremely enlightening. I've learned a lot from his blog. And, as a former active poster and reader of his blog, I found the vast majority of comments to be civil (if a little heated at times). Since the comments are a big draw for me (to get a variety of opinions on Mankiw's topics/take) I doubt that I will continue to visit his blog as often. I also doubt I will learn as much. But given that, I should say thanks to Mankiw for all the fun, while it lasted - and for a while, providing an indirect dialogue with such an intelligent economist. The opportunity is rare, and has just gotten sadly rarer.
This is really sad to me. While I certainly understand his reasons, I always found commenting and reading others' comments on his blog to be not only fun, but extremely enlightening. I've learned a lot from his blog. And, as a former active poster and reader of his blog, I found the vast majority of comments to be civil (if a little heated at times). Since the comments are a big draw for me (to get a variety of opinions on Mankiw's topics/take) I doubt that I will continue to visit his blog as often. I also doubt I will learn as much. But given that, I should say thanks to Mankiw for all the fun, while it lasted - and for a while, providing an indirect dialogue with such an intelligent economist. The opportunity is rare, and has just gotten sadly rarer.
Wednesday, October 17, 2007
Long Lines for Spaghetti
Sorry it's been over a week since my last post....I haven't found any interesting econ news lately. Three Americans won the Econ Nobel on Monday (blah blah blah;) )
Anyway, me and some friends from work heard about Spaghetti factory (whose spaghetti dishes are usually about $7 a pop) was celebrating its 25th anniversary of being in Indianapolis. So, my friends invited me to go out and enjoy the "special price" spaghetti of $2 a plate. That is a significant reduction. I thought there would be a line since I know a thing or two about supply and demand, but I was not expecting a line that was over 2 blocks long to basically pay $5 less for a plate of a food that I can make at home in 10 minutes for about $2.
One of my friends went to the front of the line while the rest of us stayed behind to inquire how long the line was going to take. He talked to some people at the front who had already been there for 40 minutes and were just about to enter the restaurant....to stand in ANOTHER Line (to be seated). So now this got me thinking.... how worthless do these people value their time? Or, is there some added benefit to be gained by the "experience." I'm sure there is something to the latter - and I'd like to think that hundreds of peoples' value of time isn't so cheap.
But I don't know. I know my time ain't THAT cheap. So I convinced my friends to ditch the line after about 15 minutes of barely moving to go eat at a nearby restaurant featuring happy hour prices ----$1.95 for a huge cheeseburger and seasoned fries. I think I made a good choice.
Anyway, me and some friends from work heard about Spaghetti factory (whose spaghetti dishes are usually about $7 a pop) was celebrating its 25th anniversary of being in Indianapolis. So, my friends invited me to go out and enjoy the "special price" spaghetti of $2 a plate. That is a significant reduction. I thought there would be a line since I know a thing or two about supply and demand, but I was not expecting a line that was over 2 blocks long to basically pay $5 less for a plate of a food that I can make at home in 10 minutes for about $2.
One of my friends went to the front of the line while the rest of us stayed behind to inquire how long the line was going to take. He talked to some people at the front who had already been there for 40 minutes and were just about to enter the restaurant....to stand in ANOTHER Line (to be seated). So now this got me thinking.... how worthless do these people value their time? Or, is there some added benefit to be gained by the "experience." I'm sure there is something to the latter - and I'd like to think that hundreds of peoples' value of time isn't so cheap.
But I don't know. I know my time ain't THAT cheap. So I convinced my friends to ditch the line after about 15 minutes of barely moving to go eat at a nearby restaurant featuring happy hour prices ----$1.95 for a huge cheeseburger and seasoned fries. I think I made a good choice.
Friday, October 5, 2007
Music Piracy Consequences
Scenario 1. Go to Best Buy. Steal 2 or 3 CD's then go home and copy the songs to your computer to distribute to all your friends and family as Christmas gifts. If Best Buy somehow finds out you have stolen their stuff, you may have to pay them a nominal amount. Stealing a few CDs is typically thought of as a minor offense - many unruly teens do it all the time (not that I have first hand knowledge myself).
OR
Scenario 2. Go on Kazaa or some file-sharing program. Download a couple dozen songs and let the program run so many people can download your illegal copies at will.
And then you pay $222,000.
It seems scenario 2 is a clear violation of fitting the punishment to the crime. It seems obvious the price differential here must be due to the fact that, using a computer program, each illegal transaction is traceable which adds to the "cost" of her illegalities. Whereas, with scenario 1, you just got a slap on the wrist for the initial crime itself and unless a family member(s) complained to RIAA about your gift, that would be it.
In fact, one could argue, in scenario 2, she is actually paying part of the cost for the initial illegal uploader's burden of guilt, in addition to the burden of guilt cost of those who willingly downloaded those songs from her. .... Not that the cost the court imposed was market-determined (it wasn't - point is maybe that's the problem) - but it seems as if the entire burden of guilt was placed on this young lady whose life is now likely really $&%*ed up all for downloading some music.
IE, the judgment fails to take into account the supply chain of illegal activity that led to her illegalities, and it fails to take into account the consumer chain of illegal activities that ensued by other song stealing individuals who subsequently downloaded her acquired songs.
And even IF all the true cost of the illegal transactions were taken into account, I still have a hard time believing that would equate to the sum demanded of this woman.
UPDATE: It would appear I'm not the only one with an econ background to share this view.
OR
Scenario 2. Go on Kazaa or some file-sharing program. Download a couple dozen songs and let the program run so many people can download your illegal copies at will.
And then you pay $222,000.
It seems scenario 2 is a clear violation of fitting the punishment to the crime. It seems obvious the price differential here must be due to the fact that, using a computer program, each illegal transaction is traceable which adds to the "cost" of her illegalities. Whereas, with scenario 1, you just got a slap on the wrist for the initial crime itself and unless a family member(s) complained to RIAA about your gift, that would be it.
In fact, one could argue, in scenario 2, she is actually paying part of the cost for the initial illegal uploader's burden of guilt, in addition to the burden of guilt cost of those who willingly downloaded those songs from her. .... Not that the cost the court imposed was market-determined (it wasn't - point is maybe that's the problem) - but it seems as if the entire burden of guilt was placed on this young lady whose life is now likely really $&%*ed up all for downloading some music.
IE, the judgment fails to take into account the supply chain of illegal activity that led to her illegalities, and it fails to take into account the consumer chain of illegal activities that ensued by other song stealing individuals who subsequently downloaded her acquired songs.
And even IF all the true cost of the illegal transactions were taken into account, I still have a hard time believing that would equate to the sum demanded of this woman.
UPDATE: It would appear I'm not the only one with an econ background to share this view.
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