The Economic Way of Thinking

Assorted Links

(1) So this is Christmas?  When everyone has a right to something...

(2) A very good interview by Jan Helfeld about health care.  (HT: Sam Sholander)

(3) Why you should watch Fox News.  I'm sympathetic to Jim's point, but I find Fox, MSNBC, and most other news programs to be doing too much yelling.  I'll stick with Stewart, Colbert, and a newspaper for most of my news.  Though Stewart's biased as heck, he still get's a huge free pass from me because of this memorable CNN moment. 

(4) Speaking of Colbert: congrats to my friend and Red State blogger, Erick Erickson, for landing an interview on Colbert!   

(5) Alex Tabarrok and Bryan Caplan discussing the future of higher education.     

Where Have All The Big Bucks Gone?

One of the recurring conversations that comes up with folks who have hunted for a long time is that the racks (i.e., the number of antlers and their size) on deer are nowhere close to what they were "back in the day."  I have no clue if this claim is true, but it seems like it could be--there's more pressure and easier access to "swamp buck" today than there has ever been before. 

The "commons" problem is huge with the deer population, and there's absolutely no incentive to let the deer get bigger for next year's harvest when the guy a few 100 yards down from you is going to blast it anyway.  So, we're left with 6 and 8 point bucks being really big deer today when 10, 12, and 14 point bucks were commonplace not that long ago.  (Let's put modern-day privately farmed bucks aside). 

If the big bucks are in decline for commons problem reasons (again, I have no clue if they really are in decline), I'm left wondering: Why hasn't something similar to the catch and release ethic of fishing caught on with hunting?  To a great extent, it's the same sportsmen in both sports.  It's the same basic logic at work (i.e., "If I let it go, someone else will take it.").  Yes, it's true that you can't shoot and revive a deer like you can catch and release fish, but why hasn't a "no shooting spikehorns" (i.e., deer with just two antlers) ethic, for example taken off the way catch and release has for fishing?

Polar Bears For Global Warming?

A controversy is, once again, heating up in Alaska over the federal government's effort to expand polar bear protection.  Like Sarah Palin before him, Alaska's new governor, Sean Parnell, intends to sue.  According to the Associated Press, his legal team will protest the science behind polar bears being listed as an Endangered Species:

Alaska's lawyers will argue that the research was flawed, that federal officials looked too far into the future and that modeling is uncertain. Especially troublesome, Alaska Attorney General Dan Sullivan says, is that for the first time, the federal government listed a species with high population numbers — 20,000 to 25,000 worldwide, up from 8,000 to 10,000 in the 1960s.

"Never before has a species been listed when the population of that species is at its highest, most robust," Sullivan said. "It's at all-time historical highs."

As the world has supposedly gotten warmer, here'e what appears to be happening to the polar bear population (the link with the relevant citations can be found here):

 

Of course, all of the disagreement surrounds the future direction of these lines. 

Remembering

The coverage of the 20th anniversary of the fall of the Berlin Wall on the blogosphere has been stellar.  Since I was barely 12 years old at the time and hadn't been exposed to the economic way of thinking, I remember the pictures on television more than anything else.

However, while in Prague with Pete in the early 2000s, we interviewed people involved in the transition.  Here's one of my favorite passages from an interview we conducted with a Czech citizen who was a teenager when communism collapsed in Czechoslovakia:

I went to Vienna with my mother.  I wanted to cry when I looked in the shop windows.  There were so many things in the windows that I could only dream of owning before that day.  By the end of our trip, my eyes were sore from looking at so many different goods, and my feet were sore because we could not afford public transportation around Vienna. 

We Made Another Top 10 List!

Earlier this week, a local reporter tried to catch up with me for an interview regarding Macon being in the Top 10 for "Most Impoverished Cities in America" according to Forbes.com.  Most of the cities on the list are Southern cities and/or manufacturing cities in decline. 

I turned down the interview for three main reasons: (1) I was given 20 minutes notice from the time I was made aware of the Forbes story (!); (2) there are issues related to Macon's poverty that I don't know enough about to comment on off the cuff; and (3) race invariably comes up in these discussions, and I'm one for avoiding that topic altogether when being recorded.

Now that I've had a few days to think about the issue and look at the study, here are a few points I would have made:

(1) I'd much rather be poor in America than anywhere else;

(2) I'd much rather be poor and in a metropolitan area in America than be poor in rural America;

(3) The poverty line is a misleading benchmark to be using when talking about poverty.  In addition, the per capita income levels used in the study look low to me, and it'd be nice to see household income alongside the per capita figures;

(4) Demand curves slope downward and supply curves slope upward!  Clearly, this has something to do with 25% of people in Macon, under the age of 65, being on public health care.  Same story for our high food stamp dependence. 

(5) Our poverty problem cannot be separated from bad city-level policies.  The never-ending solution to every revenue challenge of raising taxes has left the downtown dilapidated and has resulted in further cuts in city services. 

As I look at the above points, what I'm saying about Macon's poverty problem can probably be said for most of the cities on the list. 

(For earlier posts on poverty, here are some answers I gave to our student newspaper about poverty many months ago.  Here's one of my earliest EWOT posts, which offers up my silver bullet recommendation for poverty alleviation in the US: privatize public housing).   

Feeding the Beast

Last weekend I attended a great Liberty Fund conference in Santa Fe, NM.  The conference was on the theme of "Deficits, War, and Liberty," and my pals, Chris Coyne (co-director of conference with Gerald O'Driscoll) and Pete Boettke were there.

The first reading assigned for the conference was the final chapter of Smith's Wealth of Nations on public debt.  In the chapter Smith tells us politicians won't raise taxes in the present to finance spending on wars and crises, so they instead push burdens off into the future.  Time and again, however, these burdens turn into large debts, which get debased; Smith tells us he'd prefer debt repudiation, but the State resorts to financial "juggling tricks" instead.  The end result is the "deficits, debts, debasement" problem Pete Boettke frequently brings up in posts about the current financial crisis on The Austrian Economists blog. 

During this session I raised the question of whether expanding R (tax revenue) is really as difficult as Smith and politicians suggest.  Couldn't simple tax reforms, such as the flat or "fair" tax, promise higher revenue for the state?  Couldn't auctioning off of state resources, such as interstate highways and the military, raise tremendous wealth in the here and now?

While Dave is correct that drug legalization probably isn't especially stimulative, legalizing drugs and other victimless crimes could be a small source of tax revenue as well.  And, finally,why not go ahead and raise revenue by allowing seats in government and rights to citizenship to be auctioned off?  In sum, there are creative ways to increase R without inflicting much harm on people in the present.   

To be clear in concluding: I view starving the beast and letting the State die as the first-best solution.  But, if we're in the world of second-best, I'd rather have a State raising revenue by pursuing reforms like the above versus taxing us a lot more later and/or monetizing in the future.  

Gimme Gitmo?

Many of our readers have probably seen the Jeff Daniels commercials promoting business investment in Michigan.  For a while cable news networks and business channels were saturated with the Michigan ads.  Many of the Michiganders I roll with scoffed at the ads and asked the practical question (in Yooper dialect), "At what cost are dem der ads being run?"  My peeps hated the way Michigan was being presented and couldn't believe this was the best idea Michigan's governor, Jennifer Granholm, could come up with for attracting business to Michigan.

The financial crisis of 2008 and the collapse of the US auto market has forced Michigan officials and Granholm to consider making deeper budgets cuts.  It's also forced Granholm to become more entrepreneurial about the state budget and think big about alternative uses of public resources.  In Standish, MI, for example, a prison is set to close on October 1st.  Rather than leave it vacant, officials are working with the federal government to bring jobs to MI by bringing Guantanamo detainees to town.  Many locals in Standish are strongly opposed to the idea out of principle; others worry that a federal prison, which has different job requirements, won't employ the Standish prison guards displaced by the closure.

The New London Stink Bomb

Check out this excellent post by Ed Lopez over at the Division of Labour blog. 

I knew Kelo was going to be a raw deal for citizens, but the outcome in New London is almost too good (and too sad) to be true. 

Boettke's Best

My friend, EWOT co-author and co-blogger Pete Boettke rarely posts here, and for good reason.  His opportunity cost is simply too high.  But from time to time I promise to link his best posts from our other blog, The Austrian Economists, onto this blog. 

Take a look at this -- Pete's take on the political economy of our current crisis. 

Someone in the USPS Forgot His Seinfeld

The US Postal Service will be increasing rates in May.  Stamp prices will increase by two cents to $.44 and many other rates are also set to increase. 

Like movie theater prices, the USPS is moving in the wrong direction with their prices and, it seems to me, something akin to what Kozmo Kramer describes in the “Junk Mail” episode of Seinfeld is actually going on:

Postal Employee: "May I help you?"
Kramer: "Yeah, I'd like to cancel my mail."
Postal Employee: "Certainly. How long would you like us to hold it?"
Kramer: "Oh, no, no. I don't think you get me. I want out, permanently."
Newman: "I'll handle this, Violet. Why don't you take your three hour break?
Oh, calm down, everyone. No one's cancelling any mail."
Kramer: "Oh, yes, I am."
Newman: "What about your bills?"
Kramer: "The bank can pay 'em."
Newman: "The bank. What about your cards and letters?"
Kramer: "E-mail, telephones, fax machines. Fedex, telex, telegrams, holograms."
Newman: "All right, it's true! Of course nobody needs mail. What do you think, you're so clever for figuring that out? But you don't know the half of what goes on here. So just walk away, Kramer. I beg of you."
Supervisor: "Is everything all right here, Postal Employee Newman?"
Newman: "Yes, sir, I believe everything is all squared away. Isn't it, Mr. Kramer?"
Kramer: "Oh, yeah. As long as I stop getting mail!"

I Am Currently Re-Reading

Socialism, by Ludwig von Mises.  This is my favorite book in all of Austrian economics, and one of the most important books of the previous century, in my opinion.

We're Number 20!

            In the latest release of “America’s Most Dangerous Cities” (available here: http://www.morganquitno.com/cit07pop.htm#25), Macon comes in as the 20^th most dangerous city in America.  For towns of comparable population, it’s the third most dangerous place.  When we turn to U.S. Census Bureau data (http://www.census.gov/prod/2008pubs/acs-09.pdf), Macon is the third poorest city in America in its population category (65,000 to 249,999); 33% of Maconites live below the poverty line.

            Granted, there are problems with the statistics.  But, rather than try to talk down the numbers, let me offer my silver bullet solution to Macon’s problems: let’s make Hernando de Soto’s The Mystery of Capital (available here) required reading for all city employees and administrators.  After reading de Soto (and maybe getting some consultation from a fine local economist at Mercer University), let’s begin to privatize all publicly owned housing as quickly as possible.  And, do it as de Soto recommends: make all de facto owners of public housing actual owners.  Tell them it’s their property to keep and their bill to pay.  Ownership will make them more invested in the place they live and more interested in preventing and reporting crimes.  The transition may be ugly for a while, but could things get that much worse?!

 Hat tip: Tyler Cowen. 

Paulson: Certainty and Common Stock Gains

Yesterday Henry Paulson said:

This is an investment, not an expenditure, and there is no reason to expect this program will cost taxpayers anything. They will not only own shares that should be paid back with a reasonable return, but also will receive warrants for common shares in participating institutions.

His distinction between expenditure and investment is rather unique.  How can he separate the two?

He says there's no reason to expect that the Treasury's investing tax-payer dollars into shares of common stock won't pay off.  How can he be so sure that investing tax revenues will generate positive returns? Is the future that certain? 

Finally if he's so sure that these "investments" will pay off, then why doesn't he say that the government's "expenditures" in other areas will also surely pay off?  Perhaps he knows the historical results of typical spending programs, assuming those results can be measured appropriately.

I wonder what his own Schedule D capital gains tax form looks like over the past five to ten years.