After Corbu » economics

Sin Taxes for the Financial Industry

Quixote — Sat, 05 Sep 2009 18:35:07 +0000

I really wished Jeff Frankel blogged more since economists have established an (undeserved) reputation in the media as John Hodgman-style general experts, but the prominent ones who aren’t named Krugman skew decidedly right and reinforce the laissez faire conventional wisdom. That said, Frankel came through today with a post on the head of Britain’s financial regulatory agency coming out for transaction taxes in order to shrink the trading volume and raise funds.

Transaction taxes are of course a pet policy of mine (a better economy via better systems design!), and they have a lot of potential to raise government funds while creating positive secondary effects, in the same vein as other proposed ‘sin taxes’ such as on soda or pollution. While it may be hard to quantify the behavioural impacts of these taxes, what matters from a policy-making perspective is that, regardless of size, the impacts are positive.

I have yet to see anyone argue that transaction taxes could shrink the time-horizon of investors or increase market volatility. The debate, when it occurs (which is rare, since opponents do not seem willing to engage the issue), is over the significance of the impacts. But of course the impacts aren’t the primary reason to enact the policy; you pass it to raise money for something useful. Something like health care or supertrains or robot gladiators. Any behavioral impacts are gravy.

I really wish that public anger over the bailouts and bonuses to the financial industry could be harnessed into passing a transaction tax — it would certainly be a more productive use of the anger than the abortive attempt to pass special bonus taxes.

Business Opportunities in Reading

Quixote — Sun, 16 Aug 2009 23:22:33 +0000

I think it’s more evidence for Cheap Talk’s application of the binding constraint to the pricing of writing (usually free) that when an author can identify a desired class of readers (lefty professors and journalists) and verify they have read the work (force them to write reviews), they are willing to pay. And I like the idea that Horowitz is as desperate for readers as your average blogger.

Charitable Quantz

Quixote — Tue, 20 Nov 2007 04:31:06 +0000

I once had a very long philosophical conversation about this very issue with a homeless man at a greyhound station. He was not amused; he was hungry. I still don’t understand the best behavior. There’s too many tradeoffs involved:

immediate vs long term action
individual vs collective efforts
personal vs structural change

Of course, right now I buy bread with blood money made from gentrifying poor neighborhoods, so right now I’m going with give a dollar to the poor guy who’s apartment you just helped bulldoze.

Trickle-Down Charity

Quixote — Sun, 14 Oct 2007 23:25:12 +0000

Pax Americana, in defense of deductable charitable donations for the arts:

The first [reason] is that deductions are an indirect subsidy to lots of people who aren’t rich, including the middle class, artists, and those that benefit from the research done by universities, which might end up including poor people. The second is that if we eliminate these indirect subsidies (or make them costlier), some of the slack is going to be picked up by demands for direct subsidies, which would be bad for the arts.

The fact that when rich people give to ~~other rich~~ “middle-class” people, a poor person might eventually benefit is a bad reason to support that kind of charitable donation. It relies on the same logic as Bush’s tax cuts: if you want to help the subaltern, give money to the wealthy. There’s a better plan: we could just subsidize the poor directly!

I think the country is ready for trickle-up economics. If the consumptive power of the poor increases, they’ll buy more stuff, sales will rise, rich people will make more money. Everyone wins!

Pax’s second argument is better, but it’s not clear that charitable donation policy couldn’t be tailored in such a way that poor artist infrastructure is supported, while MOCA-type galleries for high end artists are not. But even if this was not the case, and donations to the arts did decline significantly (while the poor bathed in bling), direct subsidy wouldn’t be all that bad, provided we actually did increase the budget of the NEA or some equivalent organization.

As Corey mentions, the NEA now gives institutional grants, so money-distributing could rest in the hands of thousands of organizations, not an all-powerful Art Czar with no appreciation for anything after Impressionism. And, under Democratic administrations, the NEA has shown willingness to fund non-Victorian works (Mapplethorpe being the most obvious example). Moreover, wouldn’t it be more democratic (read: less elitist) to take art funding out of the hands of a cadre of wealthy donors and put into small local galleries/publications/institutions, able to support all kinds of idiosyncratic artists (even poets)?

Freegans

Quixote — Tue, 11 Sep 2007 18:23:38 +0000

LA Times does a profile of Freegans living in…New York! Similar to the NY Times longer, better article from back in June. Now I’m a fierce defender of LA against the New York evangelists, but the LA paper makes it hard when they get scooped by 3 months. Plus, I know LA has it’s own dumpster-diving culture. A little local documentation, please?

Newspaper complaints aside, dropping out of the economy has a strong appeal. Combine urban hunting-gathering with squatting abandoned buildings and you have the perfect, non-parasitic lifestyle. There’s a scale at which Freeganism would cease to work, but at present it just increased the efficiency of our resource consumption.

Freegan.info has some great information, but in my head I’m envisioning a more comprehensive free-living destination site. I need a map of Los Angeles overlaid with wireless hotspots, prime dumpsters, Food not Bombs distribution spots, the routes of bus drivers cool with fareless passengers, abandoned buildings, accessible dormitories and other shower sources, etc. Who has some venture capital?

The Nonviolent Extermination of the Rich

Quixote — Fri, 07 Sep 2007 14:04:59 +0000

Mike Meginnis cracks me up:

…my preference would be the version that doesn’t require murdering the ruling class and anyone else who gets in our way. At least we could fail humanely.

My alternative would be capitalism with limits — allow people to seek profits, but under serious guidelines and with tremendous, progressive taxation. A hybrid of Socialism and Capitalism — much like the one under which we already live, but tilted considerably away from facile Adam Smith-isms.

Mostly I think its funny that discussions of economic change require disclaimers that we don’t mean killin’ folk. Such is the extent that non-capitalists have been smeared. But I also have Serious Thought on economic systems:

A lot of wonderful writings on new economic systems can be found here. There are hundreds of different proposals, of course, but the two big schools of thought are Participatory Economics and market socialism, compared well here. To summarize:

The basic model of market socialism is that enterprises are cooperatives owned by their workers, who hire management and govern their business. These coop businesses compete with each other in normal markets for goods and services. The government (often in a very decentralized form) invests and provides venture capital to firms as well as performing its normal welfare state roles. Many have proposed industry-specific guilds to set product standards and mitigate excessive competition among businesses.

ParEcon takes the market socialism devices and adds a Participatory Planning process to replace traditional markets. Everyone is members of a consumer council (in addition to the worker council at their workplace). These worker and consumer councils bid on the price and quantity of goods to be produced in an iterative process to arrive at an ideal production amount, eliminating overproduction, and various other market inefficiencies. The process isn’t very complicated, but Albert and Hahnel (the creators) explain it better than I can here.

Generally, I think our reformist path to utopia starts with the kindler, gentler capitalism (more unions, higher wages, less hours, more workplace safety laws, etc.). Then certain policies can transition us to market socialism (incentives/mandates for worker cooperatives, establishing state investment funds, progressively outlawing forms of corporate investment and ownership). If markets are still a problem at that point, we can try to pursue participatory planning. I doubt I’ll live to see the market socialist vs. ParEcon debate become relevant, so I don’t worry about it too much.

The important thing to note is that even a change of economic systems can happen via small, evolutionary changes. No punctuated equilibrium necessary; no mass die-offs required.

Plastic not Paper

Quixote — Wed, 05 Sep 2007 21:16:21 +0000

That using cash encourages people to save more than credit cards strikes me as largely generational. There’s no inherent reason that a green piece of paper is less abstract as a representation of money than a white one. Plus you’re less likely to make compulsive purchases if it requires the whole approval, signing process and the inanity of your spending will be recorded on your bank/credit statement.

Drowning the Patriarchy…or something

Quixote — Sat, 01 Sep 2007 11:41:23 +0000

Before this site was founded with the goal of becoming the web’s #1 source for phallic building news, Litbrit was on the case. From back in July, she brings us mocking of the Hydropolis Underwater Hotel, which breaks with the angular phallacy of the past to explore a more organic kind male structural forms. The project would be earth shattering…if it wasn’t in the ocean.

This hotel is to be built in Dubai, alongside dozens of other major projects (Dark Roasted Blend has a good visual overview here and here). I find the scale of the whole thing shocking, especially as shown in this picture, where the entire city skyline is a mass of cranes (Apparently, Dubai is using 1/4 of the world’s construction cranes). How is this amount of development sustainable? Are there really that many rich people in the world? It strikes me that this must be the limit case of capitalism because it strains credulity that there could exist a more over the top demonstration of waste/greed/opulence/machismo.

Part of me wants the eschatological predictions of the Peak Oil crowd to be correct so that Dubai may become a vertical ghost town; a cautionary tale about evils of the religion of uninhibited growth. It would feel like justice, or at least the stuff of William Gibson novels.

Turning Arnold Blue

Quixote — Wed, 15 Aug 2007 09:21:57 +0000

I haven’t been paying enough attention to this, but the California budget continues to be deadlocked one vote shy of the 2/3′s required to pass. The problem is the Republicans, naturally, who are borrowing plays from their US Senate brethren and trying to dictate policy despite the fact that the public has chosen to keep them out of power.

Now, however, Arnold has started visiting the districts of obstructionist Republicans to pressure them to pass the budget. I have no idea whether this will work, as the curse of California’s districting is that the few Republicans that do get elected come from very conservative districts and are consequently, completely nutty.

However, this does further alienate Arnold from his party, making it increasingly hard to imagine him winning the Republican senate primary in 2010. And since he’s the old star the GOP has in California, Boxer looks safer every day. That’s the best I can do to come up with a bright side to the budget catastrophe…

Men loooooved Nuclear Families

Quixote — Thu, 09 Aug 2007 02:05:27 +0000

In reading Family Structure, Institution, and Growth(link to pdf) by Avner Greif, I happened upon this fascinating little tidbit:

Relative to the kinship family structure, the nuclear family has both growth-enhancing and growth-retarding properties. For example, while the nuclear family enhances flexibility in economic decision-making, kinship groups can better provide social safety nets than the nuclear family. European corporations, however, enabled non-kin to benefit from safety nets while retaining the nuclear family structure. In the contemporary west, the state — a corporation — fulfills this role.

Basically, Greif says the welfare state allowed men to have nuclear families (wherein they have more freedom) rather than larger kinship groups (which provided economic security, but were stifling). I think these limited conclusions about the economic reasons for the switch may be correct, but there’s a lot here that’s not being said.

Men are the economic actors in patriarchal societies and they benefited from the increased decision-making freedom without a loss of security that comes with the switch from kinship to nuclear families. However, women were screwed.

Many domestic tasks benefit from economies of scale (especially watching + educating children) and dividing these up by family unit makes them more difficult and time-consuming. States (then and now) rarely provided much support to women and children who lose a breadwinner to death, injury, abandonment, etc, which is exactly the situation where kinship groups excelled — keeping women and children in a larger family of support. In many kinship groups women had a certain amount of power based on the norms and structure of the group. This disappeared, as nuclear families allowed men to directly control ‘their’ woman, a situation that could be benevolent or tyrannical.

So men didn’t gain more economic freedom at no cost, as Greif’s paper implies. Rather, the expense was women’s safety net. Of course, from a patriarchal point of view, that was another plus.