Happy Moon Day
July 20, 2009 |
Posted in: Uncategorized |
By: Charles | 
Print
|
No Comments
How the Recession Affects Me
On my bike ride this morning, I passed through several of Chicago’s northern suburbs, and I noticed the horrendous condition of many of the roads. Over the 50 miles of riding, I had to pass over pot holes, rough patches, and cracks that are worse than any time in recent memory. Of course, this should not be surprising. State and local governments, who are largely responsible for maintaining the roads, are undergoing severe budget problems — high deficits resulting in large spending cuts. It is quite clear to me that one of the cuts is road maintenance. Now I understand that Illinois roads are never going to be in good shape because of the large temperature swings in the spring, but it is now mid-July, and it is clear that no repair attempts have been made in many of the towns.
There are lots of places that spending has been cut, and repairing roads can probably wait, but this is a great example of what happens in a recession. As the economy becomes depressed, incomes drop, and tax revenues drop, and government coffers empty — leaving the roads in shambles. This affects state governments the most, as local government earn most of their income from property taxes. Local governments are not immune, however, as tax assessments often drop in during recessions, and another large source of income, grants from the state and Federal government disappear.
July 18, 2009 |
Posted in: Politics |
By: Charles | Print
|
No Comments
One Small Step for Man
July 20 marks the 40th anniversary of the Apollo 11 moon landing. The New York Times has a nifty little interactive piece which gives a short account of the recollections of the landing by 24 different people. All the people are either famous (Tom Seaver, Gloria Steinem, Barney Frank) or otherwise involved with space, physics, and NASA. The recollections are interesting because they range from awe to anger — large amounts of money being spent to send someone into space when there are so many problems on Earth.
There are lots of justifications for the space program, manned, and un-manned space travel. The normal ones revolve around scientific justification; the technology from the space program filters its way down to the rest of the world, and we get to benefit. I am pretty sure that this is how we got Teflon. There are probably other technologies from the space program, but I have never seen a credible cost-benefit analysis of the Apollo Program that says we received anything close to a positive return on sending men to the moon. Perhaps Tom Wolfe’s royalties on The Right Stuff serve to make it all worthwhile. Read the rest of this post »
July 15, 2009 |
Posted in: Politics |
By: Charles | Print
|
No Comments
Not All Taxes Are Equal
Oh Canada!
In an editorial in the Globe and Mail Jeffrey Simpson reported that Canadian Prime Minister (yes, Canada!) Stephen Harper stated that he doesn’t “believe that any taxes are good taxes.” While this is a fun political statement, and a nice sound bite, it’s hard to believe that the Prime Minister of Canada does not believe that some taxation is good. After all, most reasonable people — and many unreasonable ones — acknowledge that we need some form of government (see Somalia), and governments must be funded by taxes. His hyperbole deserves some discussion, however.
Economists understand that, except in special cases, taxes do create an initial economic loss. Taxes distort the price mechanism, and the result is that some money simply disappears from the economy. In this sense taxes, though not all taxes, are bad. Of course, we know that taxes can do all sorts of good, on net. Without taxes government would not have the money to fund roads, schools, national defense, research, police, social services, and all the other things that it funds. These things are paid for by taxes, and this is the real object of those “bad” taxes. Read the rest of this post »
July 14, 2009 |
Posted in: Economics, Politics |
By: Charles | Print
|
No Comments
Cap and Trade Carbon Markets
"The Smoke of Chimneys is the Breath of Soviet Russia"
There is an interesting post on Slate’s “The Big Money” website that points out what it believes to be a hidden secret about the recently passed (in the House) climate bill. It is a well-thought-out piece, and it makes many good point — though I think it requires some discussion. To recap, the House bill establishes a cap and trade program for carbon emissions as a method to eventually limit CO2 emissions` to a level scientists tell us are environmentally sustainable.
In general, a cap and trade system is the system preferred by economists. In an influential article (JStor access required) in the Journal of Economic Literature, Maureen Cropper and Wallace Oates cover cap and trade systems in their original form, which were SO2 permits. Quickly, let us review how the cap and trade system works (I have detailed the system in this post). We start from the premise that there is some lesser amount of emissions that we want reach. There are lots of ways to arrive at this amount, we could tax the pollution, we could give ownership of the air to somebody that would charge polluters, or we could simply state –by law — that polluters can only emit so much junk into the air.
July 13, 2009 |
Posted in: Economics, Policy |
By: Charles | Print
|
4 Comments
