Obama's "Bank Tax" - good idea that could be poorly executed

"The president is proposing a levy of 15 basis points, or 0.15 percent, on the liabilities of large financial institutions. The tax, which officials are calling a "financial crisis responsibility fee," would apply only to financial companies with assets of more than $50 billion. Those firms — estimated to amount to about 50 institutions — would have to pay the fee even though many did not accept any taxpayer assistance and most others already paid back the government lent to them."

I like the first part - the basic idea that 'we want our money back' by X point in time. That is reasonable for the reasons the President cited alone. This was supposed to be loan money anyway - it SHOULD be paid back at such point in time that banks have recovered sufficiently to do so.

What I don't like is the second part - the fact that this tax could/would be levied even on those banks that have already repaid the loan or even on those that didn't seek government assistance. I think that would set a dangerous precedent that a huge tax could all of a sudden be levied on banks regardless of whether or not they are 'good' banks or 'bad' banks. We shouldn't tax all large financial institutions, since at least some of them did not heavily engage in damaging lending. Put the tax where the damage came from and where our money is still owed.

I also don't like that GM, who I argue shouldn't have received any direct financial assistance in the first place short of helping an orderly bankruptcy, gets off Scott-free in this. That was a supposedly temporary government takeover of ownership. If/when the finally dumps its shares of GM this year, we should recoup all of our money with interest. If not, we need to try to get ours.

More harmful Chinese imports: no surprise.

I've said it before, I'll say it again - the United States needs to get tough with the Chinese on this kind of stuff.

Great Blog Post on Problem with Mainstream Concept of Constant or Increasing Marginal Utility

"Thus, one cannot talk about preferences for risk independently of the real human activity that has risk as one of its attributes."

This article discusses how marginal utility and utility analysis cannot be disaggregated into risk and monetary payoff because utility analysis was devised to discuss preferences of activities (goods and services, etc.), not about preferences of singular attributes of those activities (like risk etc. which can change depending on other attributes or even depending on other activities, and therefore would make little sense to try to reduce to a static mathematical model).

Of course there are other problems even with the Austrian interpretation of static subjective utility (which arguably is the more correct since they invented it), such as the fact that even utility functions for activities can change over time, and, as mentioned in the article, mathematical utility can not be compared across people (which kind of calls into question the breadth of usefulness of utility functions to start with).

I do disagree with some statements in the post. Particularly: "....Answering such questions may be a job for psychologists, but it is not one for economists."

It's that kind of un-wholistic "I'm for me, you are for you" attitude, that we do not need anymore. Much like you can't disaggregate utility into money and risk, you cant disaggregate the study of human behavior into psychology and economics (etc.).

Planet Money Continues to be Amazing

Thank You Planet Money for delving into this issue. As usual, they let the listener draw their own conclusions - and I think most (especially younger) persons will, and hopefully they will recreate the profession.

IUPUI accepting applications for Ph.D in Economics, Fall 2010

The specialization area, and the heavily quantitative nature of the degree probably aren't my cup of tea... but for those in the Indianapolis area with strong economics and math backgrounds with interest in non-profit or health economics, here you go. Many of the teachers are exceptional - you would get a good bang for your buck here.

The N-Effect

This is a really neat study. The basic point is summed up as: "the motivation to succeed decreases as the number of [people, or, N] rises.

I can say from personal experience that strikes me as being accurate. When I used to work out at LA Fitness if it were the middle of the week and only a hand-full of people who were working out hard, I would tend to focus on them and work hard. But if I went on a busy weekend I would just do what I thought was my 'typical' workout.

This is true for classes I've been in too. In a small class of 20 or 30 people, I remember focusing on really doing my best to 'compete' with others in terms of class participation (yes, I was one of those annoying students) - because I loved the feel of 'debate' and the personal competition. Groups of us would even compare grades and we would feed off each other. But with a large lecture of 100+ students, there is little motivation to even attempt to compete/compare with so many people.

Uh Oh. Looks like the Cap and Trade Would Remain Regressive and Disproportionate (No surprise here)

US Sec. of State Clinton pledges up to $100 Billion annually to help foreign countries pay for climate change controls. "Clinton said the funding would come from a mix of public and private financing, including revenue raised from the auctioning of emission allowances under a possible U.S. cap-and-trade system still under development on Capitol Hill."

So, basically, any (or a good chunk of) government revenue raised from cap-and-trade wouldn't be filtered back to low-income Americans, or persons/geographies disproportionately affected by the cap-and-trade system. The money wouldn't even stay in the United States. A sizable chunk would go outside of the United States to poor nations - many of which have corrupt government that would more than likely waste the money or use it to further impoverish their people.

BAD policy. BAD, BAD policy.