Category Archives: Economics

Economics, Media Criticism, Political Commentary, Social Commentary

Shocking News

34 Comments

It’s cheaper to own a car than to use mass transit. When you take all the costs into account (and even ignoring the convenience factor) it’s not really surprising at all:

Anti-car people will argue that the high cost of living in New York City or San Francisco is some kind of anomaly, and that proper government action could magically create low cost of living dense urban areas. I am doubtful. Government regulations usually drive up costs rather than reduce costs (with the exception of regulations carefully thought out to prevent value transference). In fact, the rent control laws in New York City, which liberals think are making housing more affordable, are actually contributing to the high cost of living here. I’ve previously suggested two reasons why dense cities are so expensive: (1) dense cities create transportational and space inefficiencies; and (2) dense cities attract liberal voters who elect liberal politicians who enact dumb laws which increase the cost of living. Maybe there is some third or fourth reason as well. Until someone can demonstrate a place where it’s reasonable to be carless and it doesn’t cost a fortune to live there, one has to assume that such places are inherently economically inefficient.

The arguments against cars and sprawl are aesthetic (and elitist), not economic.

[Saturday update]

Randall Parker has further observations.

[Bumped]

Business, Economics, Political Commentary

“Revenue Neutral”

20 Comments

Sorry, there’s no such thing as a “revenue neutral carbon tax.” Or if there is, you’d stumble on it by pure luck:

The most important point is that revenue neutrality is most likely a mirage. We would have to maintain the carbon tax for decades in order to generate the consumption reductions that advocates argue will occur, but FICA rates aren’t static over decades. In 1950 the FICA rate was 1.5%; by 1970 it was 4.8%; by 1990 it had risen to its current rate of 7.65%. It has been stable for about two decades, but meanwhile the programs that it (in theory) funds are in crisis.

Over the next few decades, we should expect to be in bitter political fights over changing retirement ages, benefit levels, access to publicly-funded medical care, tax rates, and other measures designed to make these programs financially stable. The FICA rate will not be insulated from this process. Who could possibly say that when it has increased in irregular and unpredictable steps to, say, 15.3 percent between now and 2028 in response to various political crises, that, but for the carbon tax, it would otherwise have been 16.5 percent?

I’ve previously discussed this conceit of politicians that they can predict the economic effects of their nostrums:

When a politician says that he’s going to either cut or increase your taxes, he is engaging, wittingly or not, in a conceit and a deceit. He says it as though he has the power to do any such thing, when in fact he does not. He has no power except to reduce or increase the rate at which you pay taxes, whether on property, income, or whatever.

Think of it as the difference between a joystick and a mouse. With a computer mouse, you can point directly to the place that you want to be on a screen. With a joystick, you can only control the rate at which you move toward it, and in so doing, the target may move, and it may move faster or in a different direction than you can keep up with using your rate control. Politicians talk about tax cuts as though they have a computer mouse that allows them to pass a law and a specified amount of revenue will roll in, but the reality is that they have a slow joystick, with a nebulous relationship to the eventual goal.

As Manzi says, TANSTAAFL. I think that dropping both sides of the payroll tax until the economy recovered would have been a hell of an instant stimulus, but eventually, that money’s got to be put back into the system.

Business, Economics, Media Criticism, Political Commentary, Technology and Society

College Is For Suckers

16 Comments

In many cases, it is. I’m glad I made it through without any student loans, though I was paid fairly well upon graduation as an engineer in the early eighties. But it’s really crazy to spend as much money as a degree costs when the degree has no marketable value.

I think that overrated higher education is the next government-financed bubble to pop.

[Update mid afternoon]

Derb has some more reader emails:

I made the same mistake myself: a BS in Geography is worth nothing on the job market. If I had it to do over again, I’d have taken shop classes in high school (assuming that they existed) and gotten a 2-year blue-collar technical degree. Other than engineering and business degrees, most college BSs and BAs are worthless.

and this:

Higher education is the biggest scam going. I don’t think that’s news to you (or Charles Murray). What’s really disheartening is that the business world plays along — demanding four-year degrees for positions that shouldn’t require them. It’s just a lazy way for them to make their “first cut.”

That is the problem. As Derb says, an aptitude test would do a better job, but it might not provide enough “diversity,” so the degree has become a poor surrogate. And it reminds me of NASA’s astronaut selection policy. It likes to select PhDs, or at least grad degrees, not because they are necessary for the job, but because they have so many more applicants than positions, it makes a handy filter.

But if I were a businessman, and I was just looking for a degree as evidence that the holder at least had the stick-to-it-iveness to get a degree, I’d be just as happy, and perhaps happier, with a technical associates degree than a bachelor’s in French Lit. Or even English.

Business, Economics, Media Criticism, Political Commentary

Medicare Is Going To Bankrupt Us

7 Comments

…therefore, we need universal care. Megan McArdle, on the insanity of that “argument”:

I hear this argument quite often, and it’s gibberish in a prom dress. Any cost savings you want to wring out of Medicare can be wrung out of Medicare right now: the program is large and powerful enough, and costly enough, that they are worth doing without adding a single new person to the mix. Conversely, if there is some political or institutional barrier which is preventing you from controlling Medicare cost inflation, than that barrier probably is not going away merely because the program covers more people. Indeed, to the extent that seniors themselves are the people blocking change (as they often are), adding more users makes it harder, not easier, to get things done.

It’s not an argument. It’s sophistry in the service of socialism.

Business, Economics, Media Criticism, Political Commentary

Choking Off Recovery

14 Comments

One of the disengenuous tactics of the Democrats in support of Porkulus was to imply that conservative economists agreed with it, and in fact they actually lie about this. For instance, the other day, I heard Governor Rendell defending Arlen Spector’s vote on it by saying that. But what conservative economists agreed on was that some sort of stimulus was needed, not that legislative atrocity. One of the economists slandered thus was Martin Feldstein, who has a piece in the Journal today on the potentially disastrous effects of upcoming tax cutsincreases on the economy.

The current outlook for an economic recovery remains precarious. Although the stimulus package will give a temporary boost to growth in the current quarter, it will not be enough to offset the combined effect of lower consumer spending, the decline in residential construction, the weakness of exports, the limited availability of bank credit and the downward spiral of house prices. A sustained economic upturn is far from a sure thing. This is no time for tax increases that will reduce spending by households and businesses.

As Tigerhawk notes, “You cannot spread wealth that hasn’t bee created in the first place.” But so-called liberals think that wealth is something that just happens, and that all that need be done is to properly distribute it.

Business, Economics, Media Criticism, Political Commentary

Keep Bleeding The Patient

15 Comments

The Democrats want to return to the days of bad loans and too-easy credit:

Am I missing something here, or have our elites already erased from their consciousness the fact that easy credit and the lack of responsible budgeting by consumers contributed mightily to our current economic mess? In the fourth quarter of 2008, 13.9% of consumers’ disposable income went to servicing credit-card debt, reports the Wall Street Journal. No shortage of credit there.

Apparently the self-righteous glow that comes from forcing capitalists to make bad bets on preferred victim groups is too strong a legislative addiction to be reined in by the prospect of further economic collapse.

The problem was that it was never in their consciousness to begin with. They find it politically convenient to lie to us and themselves (as they did throughout the campaign) that the problem was caused by “deregulation” and “tax cuts.”