Friday, December 18, 2009

More Superfreaky Controversy

Is Levitt really surprised when he attracts controversy anymore or is he just a glutton for it. He insists in Superfreakonomics, and on his blog, that for a given distance traveled, it's safer to drive drunk than to walk drunk, and that it might be a tossup between driving drunk and taking a cab. Couple things: First, the option of driving home drunk, may lead to a longer distance to travel, thus eliminating the option of walking. In other words, as Andrew Gelman points out, it's stupid to assume that "all else is equal."
Here's another thing. Drunk walking has few, if any, negative externalities. Drunk walkers are unlikely to careen off the road and do harm to an innocent bystander. So, even if there is a tossup between the two in terms of private benefits, the public cost is nowhere close.

Taxing Tuition

Pittsburgh has a dumb policy idea: Taxing Tuition. For one thing, since we already subsidize tuition through grants, scholarships, and state funds, it's like robbing Peter to pay ... Peter? For another thing, do we really want to tax education? Shouldn't we tax stupid instead? Oh, wait. That's called The Lottery.

Thursday, December 17, 2009

Hohoho & the WTO

Sorry Santa, your below-cost toy distribution and genetically modified reindeer violate several WTO clauses.

Dumping, Ag Subsidies and Bias in the WTO

A new paper shows that US ag subsidies allow US farmers to "dump" on Mexico by selling below per-unit production costs. Under the rules of the WTO, Mexico could theoretically raise a dispute case (although, it may not have much credibility since Mexico and the US are partners in NAFTA and that would seem like the best place to start). One interesting tangent here is that many countries' farmers are probably being harmed by the same policies. A number of studies show that there are surprisingly few disputes by developing countries against developed countries because there are some inherent asymmetries in terms of the likelihood of getting a favorable decision and the incentives for pursuing the disputes.
Smaller, developing countries are more dependent on trade than bigger, industrialized ones. Because of economies of scale a small country naturally finds it more difficult to diversify than a large one and a fair argument can be made that this is not a bad thing. But, when it comes to unfair trade practices, the only dispute-settling authority the WTO has is retaliation. I suspect that even if a small(er) country like Mexico has a gripe with the US, it has to ask itself "what's gained?" When the roles are reversed, the raising of the dispute, and the lost gains from trade are not as big of an impediment to a larger, richer country. Besides, sometimes raising the case will get the smaller country to change track and get in line, creating a "free lunch" for the larger country.
While we are talking superfund for climate, maybe we should think of a superfund for WTO disputes, instead of the counterproductive mechanism of retaliation.
HT: Elizabeth Malkin at Economix

Just for Grins

Turns out...
Although southerners rebelled against growing centralization of the federal government, they had no qualms about establishing a strong national state of their own.  Scholars have classified the Confederate central government as a form of "war socialism."  The Confederacy owned key industries, regulated prices and wages, and instituted the most far-reaching draft in North American history.  The Confederacy employed some 70,000 civilians in a massive (if poorly coordinated) bureaucracy that included thousands of tax assessors, tax collectors, and conscription agents.
- John Majewski, Modernizing a slave economy: The economic vision of the Confederate Nation.
Folks around here celebrate "Lee-Jackson Day" (which, ironically, is the same day as the rest of the country celebrated MLK Day), call the Civil War "The War of Northern Aggression," and proudly fly the Stars 'n Bars.
So.... I guess it isn't about less government vs. more government, more about government my way or the highway.
HT: TC at MR.

Bernie Sanders and Glen Beck

Glen Beck wants an audit of the fed. Bernie Sanders wants an audit of the fed. Bernie Sanders is a socialist. Ergo, Glen Beck is a socialist?

Wednesday, December 16, 2009

The Pelzman Effect and Moral Hazard in Mountaineering

I caught the update on NPR on the search for three missing mountain climbers in Oregon this morning at about 6:50am while driving to work. I don't have any real comment on that search, as it is terrifying and sad to think of their fate.

However, the story had an add-on about a proposed policy: Republican John Lim has rallied around a group of Oregonians supporting mandatory radio beacons. The policy effects of such beacons are unclear, however. First, they might not be very effective. The current leader of the search effort says in the clip that no one is saying, "if only they had a radio beacon." Second, as the piece suggests, amateur climbers will feel safer about their odds of surviving the difficult climb, and be more likely to get into an accident. This is a specific type of moral hazard known as the Pelzman Effect. Essentially, more beacons may mean more total accidents, and, even if they rescue success rate improves marginally, more total accident deaths.

Sunday, December 13, 2009

Remembering Paul Samuelson

Paul Samuelson left us today. He was a unique figure in the field because his work touched so many of the subfields: His mark can be found on microeconomic and macroeconomic theory, international trade, monetary economics, public finance, welfare economics, and economic pedagogy. He literally wrote the book on Economic His theorem with Wolfgang Stolper, the Stolper-Samuelson Theorem, explains which interest are likely to lose out in the opening to trade, even though there are net welfare gains at the national level.
He was sharp and witty to the end, evidenced here in an interview for the Atlantic Monthly where he makes keen insights into the financial crisis, recession, and fiscal response to it. He was an intellectual giant who will be sorely missed.

The Supply-Side Approach to Kindness

A tongue-in-cheek holiday card by Uwe Reinhardt at Economix makes an interesting point about American charity. It's not that we're less generous, it's that generosity (on the issue of health care for example) might be more expensive in the US:
Namely, thanks to the expensive and often wastful manner in which our country's
health care providers and insurers have managed their affairs, they have helped
price kindness out of America's soul.

Hmm. Agree or disagree, it's a damned interesting statement.