Celebrating humanity's flourishing through the spread of capitalism and the rule of law
09 May 2016 Leave a comment
in applied price theory, applied welfare economics, politics - New Zealand, politics - USA, public economics, rentseeking Tags: universal basic income
Running around saying that Universal Basic Income will make work optional leaves open the question of who will be the suckers who actually do the work and pay enormous taxes to fund the idyllic lifestyle of the bohemian rest.
Source: What If Everybody Didn’t Have to Work to Get Paid? – The Atlantic.
08 May 2016 Leave a comment
in applied price theory, applied welfare economics, economics of regulation, Public Choice, rentseeking Tags: economics of housing, economics of mandates, expressive voting, fatal conceit, rent controls, The pretense to knowledge
Opposition Leader Andrew Little accepts that mandating insulation and heat pumps into rental properties will increase their value. But he denies that this will affect rents!
Source: Healthy Homes Bill won’t up rents Little | Politics | Newshub.
An upgrade increases the value of a rental property if the improvements that increase its rental value. You cannot have the increase in the value of the asset without the increase in rent.
I will contract out the rest of my answer to David Friedman’s superb book Laws Order:
For an application of economics to a different part of the law, consider the nonwaivable warranty of habitability, a legal doctrine under which some courts hold that apartments must meet court-defined standards with regard to features such as heating, hot water, sometimes even air conditioning, whether or not such terms are provided in the lease—indeed, even if the lease specifically denies that it includes them.
The immediate effect is that certain tenants get services that their landlords might not otherwise have provided. Some landlords are worse off as a result; some tenants are better off. It seems as though supporting or opposing the rule should depend mainly on whose side you are on.
In the longer run, the effect is quite different. Every lease now automatically includes a quality guarantee. This makes rentals more attractive to tenants and more costly to landlords. The supply curve, the demand curve, and the price, the rent on an apartment, all shift up. The question, from the standpoint of a tenant, is not whether the features mandated by the court are worth anything but whether they are worth what they will cost.
The answer may well be no. If those features were worth more to the tenants than they cost landlords to provide, landlords should already be including them in their leases—and charging for them. If they cost the landlord more than they are worth to the tenant, then requiring them and letting rents adjust accordingly is likely to make both landlord and tenant worse off. It is particularly likely to make poorer tenants worse off, since they are the ones least likely to value the additional features at more than their cost.
A cynical observer might conclude that the real function of the doctrine is to squeeze poor people out of jurisdictions that adopt it by making it illegal, in those jurisdictions, to provide housing of the quality they can afford to rent.
If my analysis of the effect of this legal doctrine seems implausible, consider the analogous case of a law requiring that all cars be equipped with sunroofs and CD changers. Some customers—those who would have purchased those features anyway—are unaffected. Others find that they are getting features worth less to them than they cost and paying for them in the increased price of the car.
07 May 2016 Leave a comment
in applied price theory, comparative institutional analysis, constitutional political economy, economics of information, Public Choice Tags: behavioural public choice, growth of government, rational irrationality, size of government
Source: Gary Lucas and Slavisa Tasic‘s "Behavioral Public Choice and the Law" (West Virginia Law Review, 2015) via Bryan Caplan
07 May 2016 Leave a comment
in economics, income redistribution, Public Choice, rentseeking Tags: bribery and corruption
06 May 2016 Leave a comment
in applied price theory, health economics, income redistribution, politics - USA, Public Choice, rentseeking Tags: 2016 presidential election, do gooders, heavy-handed Samaritans, meddlesome preferences, nanny state, regressive taxes, sin taxes, soda taxes, sugar taxes
06 May 2016 Leave a comment
in comparative institutional analysis, constitutional political economy, economics of bureaucracy, economics of regulation, financial economics, Public Choice Tags: behavioural public choice, rational irrationality
“Psychological Bias as a Driver of Financial Regulation,” David Hirshleifer, European Financial Management, 14(5), November, (2008):856-874.
04 May 2016 Leave a comment
in applied price theory, development economics, economic history, economics, economics of crime, economics of regulation, entrepreneurship, Gordon Tullock, growth disasters, growth miracles, income redistribution, law and economics, Public Choice, rentseeking Tags: bribery and corruption, Tullock paradox
30 Apr 2016 Leave a comment
in comparative institutional analysis, constitutional political economy, energy economics, environmental economics, global warming, Public Choice, rentseeking Tags: European Union, expressive voting, green rent seeking, Italy, renewable energy, solar power, wind power
Massimo Tavoni and Caterina Gennaioli published a nice paper showing that corruption and violence was higher in the high wind provinces of Italy after the installation of wind generators. They built on earlier work about countries with abundant renewable resources and weak institutions. The main question in their paper
… is whether an increase in the expected returns of investments in wind energy, following the introduction of the new policy regime based on a green certificate system, has driven economic agents, namely bureaucrats and entrepreneurs, to engage more in rent seeking activities.
As they studied Italy, there is no surprise about the answer which was yes. High winds ensure high returns of the wind farm investment, but whether this translates into more bribery depends on institutional quality. There was more corruption, and so especially in high-wind provinces of Italy.
Source: Green policy and corruption | VOX, CEPR’s Policy Portal.
The construction of an average wind park is associated with an increase of criminal association activity of 6%. Italy will have more corruption than elsewhere in the old European Union.
The wider problem is renewable energy is a celebrity technology. In the context of expressive politics, so many cheer for solar and wind power that standards drop in terms of who qualifies for subsidies and who should lose support when their investments do not turn out as promised.
https://twitter.com/CountCarbon/status/715136022414299138
Wind power is not new, it is intermittent, is unsuitable for modern work, and is land constrained but it is still subsidised. Green rent seeking is a real risk even in countries with the best political institutions.
29 Apr 2016 Leave a comment
in labour economics, labour supply, Public Choice Tags: lottery winners, voter demographics
28 Apr 2016 Leave a comment
in applied price theory, applied welfare economics, environmental economics, global warming, Public Choice Tags: carbon pricing, carbon tax, climate alarmism, cost benefit analysis, expressive voting, mitigation and adaptation, rational irrationality
Source: Global Warming, Cost-Benefit Analysis, and The End of Doom, Bryan Caplan | EconLog | Library of Economics and Liberty from Ron Bailey (2016) The End of Doom: Environmental Renewal in the Twenty-first Century.
27 Apr 2016 Leave a comment
in applied price theory, business cycles, economics of bureaucracy, economics of regulation, fiscal policy, macroeconomics, monetary economics Tags: anti-market bias, antiforeign bias, expressive voting, lags on monetary policy, makework bias, rational rationality, tax incidence, The fatal conceit, The pretense to knowledge
I used to argue that the quality of public policy making would double if public policy analysts remembered the first 6 weeks of microeconomics 101 but on reflection more than that is required.
Could we economists today ever show such self-restraint about our own expert recommendations? https://t.co/2UE12JuIgn—
William Easterly (@bill_easterly) November 24, 2015
I picked up my initial insight out when working as a graduate economist in the Australian Department of Finance. That was a few years ago.
I am now concluded that policy analysts also need to know the basics of the economics of tax incidence. Who pays the tax depends on the elasticities of supply and demand rather than who writes the check to the taxman.
The number of times that I have read media and public policy analysis saying who pays the tax is the writer of the cheque to the taxman is beyond counting.
There is also what to do about unemployment and inflation. Do not just do something, sit there might be good advice on most occasions. As Tim Kehoe and Gonzalo Fernandez de Cordoba explain in the context of first do no harm:
Looking at the historical evidence, Kehoe and Prescott conclude that bad government policies are responsible for causing great depressions.
In particular, they hypothesize that, while different sorts of shocks can lead to ordinary business cycle downturns, overreaction by the government can prolong and deepen the downturn, turning it into a depression.
26 Apr 2016 Leave a comment
in constitutional political economy, development economics, Public Choice Tags: The Philippines
26 Apr 2016 Leave a comment
in applied price theory, development economics, economic history, growth disasters, growth miracles, Public Choice, rentseeking Tags: anti-market bias, economics of socialism, rational irrationality, The Great Escape, The Great Fact
A new World Bank study shows the dramatic reductions in global poverty and inequality as a result of the spread of market institutions and freer trade.
Source: Capitalism, Global Trade, and the Reduction in Poverty and Inequality | Cato @ Liberty
24 Apr 2016 Leave a comment
in economics of regulation, energy economics, environmental economics, global warming, Public Choice, rentseeking Tags: antimarket bias, antiscience left, green rent seeking, Greenpeace, nuclear power, pessimism bias, rational irrationality, wind power
24 Apr 2016 Leave a comment
in economics of education, human capital, income redistribution, labour economics, minimum wage, poverty and inequality, rentseeking Tags: Director's Law, IQ, rational irrationality, social justice warriors
The majority of New Zealanders do not qualify for university. Perhaps Labour and the Greens should spend more time worrying about those who do not achieve university entrance standard.
Source: School leavers with NCEA level 3 or above | Education Counts.
Anyone who achieve university entrance standard is among the intellectual elite. They have a head start in life. Labour and the Greens are preoccupied with giving those with a head start in life more freebies.
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
Celebrating humanity's flourishing through the spread of capitalism and the rule of law
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