In case you are not following my Buzz feed, I have some new photo sets available. Over the next couple of days, I will also have a couple of Peking sets up as well. The next couple of weeks will be the primary travel weeks, so that’s when I’ll start putting up photos daily (internet connection permitting).
April 30, 2011
April 29, 2011
John Hinderaker notes that Americans are “ready to take on the deficit.” The numbers are extremely high, but the problem is in the details. In other polls, respondents have been against cutting pretty much anything except foreign aid (which makes up a laughably small percentage of the deficit). To get anywhere near fiscal solvency would require cuts on the order of 15-20% for pretty much all programs and the elimination of a number of others. Once you start talking about what it would take to get the public fisc in order, approval ratings drop considerably.
On the other hand, given the inability of the Left to stick Republicans as being monsters for wanting to engage in a limited form of fiscal sanity, maybe things are changing just a little bit.
You fools! You foolish fools! Now the Browns are doomed, if there is football.
April 28, 2011
Everything’s peachy-keen for Boeing when they’re on the winning side of government handouts, but now that the NLRB has decided where Boeing may set up shop, the company is not too happy. Par for the corporatist course.
This is a pretty crappy situation brought upon us by our “betters.” This administration wouldn’t be called Gangster Government if it weren’t for corporatism (well, that and punishing its “enemies” and avoiding taxes, just like Scarface). And we could easily extract ourselves from messes like this by getting rid of the corporatist philosophy of stealing from taxpayers to give to corporations and then lording over those corporations with ridiculous policies.
April 27, 2011
His predecessor at the Horse Race Blog, Jay Cost, adds some perspective on the success that President Obama has had in the political world. Cost argues that the Obama team did a remarkable job of putting together an effective bandwagon campaign in 2008, and they want to repeat it in 2012, even though the circumstances have changed.
April 26, 2011
Mickey Kaus has a wonderful scheme for President Obama to raise some more money: promise not to visit places. It beats the recommended alternative: telling the denizens of LA simply to stay home. Unlike President Obama, people don’t get 180 vacation days a year and they can’t stay home and go golfing or hob-knobbing whenever they feel like it; some of us actually need to work for a living.*
But then again, given the results when President Obama does show up to work, this puts me back in the “Yeah, go play some more golf” camp. Maybe he should just stick to the links, where the Presidential motorcade won’t bother as many people. Most golfers are Republicans anyhow, so their inconvenience won’t cost him many votes…
* – Others of us gripe for a living.
April 25, 2011
He is very, very wrong on this. Let me count the ways, noting any points regarding myths about gas prices:
- Reduce federal taxes on gasoline. They currently make up 18.4 cents per gallon.
- Reduce state taxes on gasoline. In Ohio, these make up 26 cents per gallon.
- Remove regulations preventing drilling in the US.
- Either go all in or leave Libya; in either event, wrap it up quickly. Rapier argues that this is not a major mover in prices, and I am willing to concede that, but it does have some effect. Oil is a fungible commodity, so even though Libya does not sell much oil to the US, US prices are still tied in with global prices.
- Remove regulations preventing refinery expansion in the US.
- Remove governmental requirements on using Ethanol and required gasoline blends.
You might argue that some of these would not “immediately” reduce prices, but keep in mind that the actors in markets, acting as a whole, are extremely quick and efficient at reacting to information. Prices change not when an event occurs, but rather when people estimate that an event will occur. This is why the FOMC and other agencies tend to be mum until they make their decisions, for example. So a commitment to perform the above actions would cause prices to move even if it takes a bit longer for the event actually to occur.
These wouldn’t cause prices to drop to $1 a gallon, but I was working under the “right away” constraint. Most of these, if governmental officials credibly committed to following through, would have the effect of lowering gasoline prices immediately. This doesn’t include long-term changes which would affect long-run supply or demand, but it’s not like there’s absolutely nothing that these politicians could do to reduce the cost of gasoline; they could simply reverse some of their regulations and that would go a pretty fair way.
April 24, 2011
I am a big fan of the Socialist Calculation Debate. I think it was the Austrian school’s finest hour, and although they ultimately lost in the eyes of most economists, I believe that history has vindicated the arguments that Mises and Hayek brought forth against socialists of all stripes. Jan Hanousek and Randall K. Filer found an interesting case study for trying to turn the Socialist Calculation Debate into an empirical matter, in a paper they entitled Lange and Hayek Revisited: Lessons from Czech Voucher Privatization.
A fundamental question in economics since the 1930s has been whether an administrative price system could simulate the results of perfect competition even without a true market for the means of production. The theoretical possibility of such a system has been known since the introduction of market socialism by Oskar Lange. We have used the artificial bidding market involved in the Czech voucher privatization process to test whether a sequential process of trial-and-error can set administrative prices close to equilibrium. It would appear from this natural experiment that Robbins and Hayek were correct in doubting the real-world feasibility of market socialism.
The basic idea is that the Czech government, after the collapse of the Union of Soviet Socialist Republics (as the joke went, the Russians went 0-for-4 in naming that day), introduced an artificial form of money which could be used to purchase shares of privatized companies at an auction (2). The government used administrative price committees to set the share prices (2).
The government’s goal, ironically enough given what they were just exiting from, was to create a socialist market economy: a set of government allocations which would mimic the end results of the market process, skipping the whole competition part and leaving out the messy bits. Unlike a full-scale socialist experiment, this would be pretty constrained, as the endowments (amount of artificial money per person and numbers of shares of government enterprises) were fixed and a small number of stages of bidding set.
The question the authors ask is, was the administrative authority able to establish equilibrium prices? In other words, could they clear the market without excess supply or demand? (3) In the case of this auction, the voucher mechanism provided for bidding across several rounds, and the government set up two distinct auction periods (4-5).
To kill the suspense, the pricing authorities were not able to find an equilibrium price vector—they always had excess demand (7-8). In the early rounds, 50-67% of the demand was unsatisfied, and even by the final rounds, that amount was still 12-17%. This governmental authority could not, even in a simple example with fixed endowments and resources, come up with a set of share prices which would satisfy consumer demand. This should make it even more obvious why a socialist market economy as Lange envisioned could never exist: no small group of actors has enough information to satisfy the needs and desires of an entire population. In this case, they couldn’t even do it in a constrained scenario for a short period of time.
April 23, 2011
Scott Wallsten has a very interesting paper out, entitled Understanding International Broadband Comparisons 2009 Update.
This paper updates my May 2008 analysis of cross-country broadband data where new information is available. Household broadband adoption continues to increase quickly in all OECD countries. U.S. household broadband penetration increased from 47 percent in March 2007 to 63 percent in April 2009, meaning the U.S. ranks somewhere between 8th and 10th in household broadband penetration among OECD countries. If current trends continue, the U.S. and nearly all wealthy OECD countries will reach a saturation point within the next few years. Speeds continue to increase around the world. Four OECD countries — Korea, Japan, Sweden, and the Netherlands at 18, 15, 12, and 9.4 mbps — had average download speeds well above others in the first quarter of 2009. Another 12 countries had average download speeds between 6 and 8 mbps, including the U.S. with an average of 6.4 mbps. Though the U.S. has, on average, slower download speeds than some other countries, consumers in the U.S. download far more movies and music per capita via the Internet than do consumers in the U.K, France, Germany, Italy, Canada, or Japan (the only countries considered in a recent Ofcom study), suggesting that these speeds are not seriously hindering growth in online video. In terms of prices, the U.S. appears to have among the least expensive low-end broadband plans but among the more expensive high-end plans. More broadly, the U.S. remains at or near the top of many other ICT indicators including the latest estimates of IT investment.
Just looking at OECD broadband penetration rates, the US is at 63% of households as of April 2009, which puts them somewhere in the 8th to 10th position (1). Interestingly, the US also has very inexpensive low-end and very expensive high-end plans (1). Aggregating the EU25 together, they have 36% broadband connection coverage in terms of households, primarily because the coverage rates in central and eastern Europe are rather low (2). US consumers tend to download more music and watch more movies online, indicating that even though US low-end plans are rather, well, low-end, they are still sufficient to watch Netflix (7-8). Finally, one trend that is common across all OECD countries: broadband expansion rates are increasing rapidly (18).
April 22, 2011
Patricia Funk and Christina Gathmann ask, How do Electoral Systems Affect Fiscal Policy? Evidence from State and Local Governments, 1890 to 2005.
Using a new data set from 1890 to 2000, we estimate how the adoption of proportional representation affects policies in Swiss cantons. We show that proportional systems shift spending toward broad goods (e.g. education and welfare bene fits) but decrease spending on targetable goods (e.g. roads and agricultural subsidies). We find little evidence that proportional representation increases the size of government. We also demonstrate that compositional changes of the legislature, i.e. party fragmentation and better representation of left-wing parties, are associated with more spending. The direct electoral incentives of proportional rule appear to reduce government spending.
Their analysis focuses on Swiss cantons (independent voting districts) and the difference between proportional representation and plurality vote with respect to government spending (2-3). They found that proportional representation shifts from local to “broad” categories, with education going up 12%, welfare up 50%, roads down 50%, and agricultural subsidies down 21% (3-4). In addition, proportional representation has an interesting characteristic: it leads to more left-wing governments (with spending up 66%), but also more party discipline, which leads to less overspending (4). In a plurality system, there is more buying of votes (4).
Aside from these, the authors also found policy differences to be smaller in a proportional system (7-8), that proportional rule governments are more likely to run deficits (20), and that their results hold for the local level as well as the canton level (30).
All in all, this is an interesting analysis, as many Swiss cantons have moved from plurality to proportional representation over the past century. I am still not enamored by the concept, though, and despite their findings, I still harbor suspicions that a PR system leads to higher government spending and more logrolling, especially as the number of parties grows large (because there are only so many portfolios you can hand out to party leaders, so in a country like Israel, where a ruling coalition could have up to a half-dozen parties, moolah and decision-making authority are the glues that bind parties together).