"We saw a lot of road kill and thought of you." —my sister
For more information on oil prices, click here. Podcasts of My Intro Economics lectures (in .wma format) For my 2005 Radio Economics MP3 podcasts, go to the bottom of the page that lists the lecture podcasts.
Canada
United States
Israel
My email address: [email protected] My 2005 post about the housing crisis, before it happened, is here.
This brief post by Don Boudreaux captures why I reject the economic theories that are used to justify big gubmnt:
The economic theory: the state intervenes in the economy in order to prevent free-riding – in order to internalize externalities – in order to better ensure that all private parties pay the full marginal costs of their activities, and that all private parties reap the full marginal benefits of their activities – in order to promote competition – in order to protect the weak from the strong.
The political reality: the state intervenes in the economy in order to promote free-riding – in order to externalize costs and benefits that the market has reasonably internalized – in order to better ensure that politically powerful private parties escape the full marginal costs of their activities, and that politically disfavored groups be stripped of much of the marginal benefits of their activities – in order to promote monopoly – in order to render some people weak who are then pillaged by the strong.
Any economics course that teaches the economic theory without including something on public choice and the political realities is seriously deficient.
And anyone who wants bigger gubmnt to correct the evils described in the above "political reality" is living in la-la land.
Results.... Compared with placebo, cannabinoids were associated with a greater average number of patients showing a complete nausea and vomiting response ..., reduction in pain ..., a greater average reduction in numerical rating scale pain assessment ..., and average reduction in the Ashworth spasticity scale... . There was an increased risk of short-term AEs [adverse events] with cannabinoids, including serious AEs. Common AEs included dizziness, dry mouth, nausea, fatigue, somnolence, euphoria, vomiting, disorientation, drowsiness, confusion, loss of balance, and hallucination.
Conclusions and RelevanceThere was moderate-quality evidence to support the use of cannabinoids for the treatment of chronic pain and spasticity. There was low-quality evidence suggesting that cannabinoids were associated with improvements in nausea and vomiting due to chemotherapy, weight gain in HIV infection, sleep disorders, and Tourette syndrome. Cannabinoids were associated with an increased risk of short-term AEs.
It's time to let consumers decide whether they want to try marijuana to treat some of the symptoms.
Today's NYTimes has an article about the battle over bridge sites in Windsor, Ontario. The article seems pretty one-sided to me.
A different take on the situation is that an (albeit aggressive) private entrepreneur wants to build a six-lane bridge parallel to the current bridge and has amassed most of the resources necessary to do so. But he is being blocked by gubmnt officials who want the bridge located elsewhere despite the fact that it might cost the taxpayers maybe twice or three times as much to put a second bridge in a different location. And despite the fact that it would require destroying other areas not mentioned in the NYTimes article. Some have wondered if certain politicians are in the pockets of certain other landowners and developers who want this private initiative blocked.
As one friend from Windsor wrote,
Wow, everything is wrong with this article. A scary example of abuse of power and government cronyism abetted by bad, linked-in media. The Times needs to do better.
I'm old enough to have experienced major paradigm shifts in many areas. And so I wonder, which theoretical models make predictions most in line with future events?
Macroeconomic models?
Keynesian stuff we were taught and then retaught ourselves was way off because it tended to understate the importance of money.
Monetary models have let us down somewhat because they often missed the importance of expectations.
Rational expectations models were a big bust because they ignored the time costs of search and adjustment.
Climate Change Models?
In the 1970s, it was global cooling we were concerned with.
In the 1990s, it was global warming. The forecasting models for both have both been wildly inaccurate.
Nutrition Models?
Remember how fat was bad and carbs were ok?
Remember how maybe unsaturated fats were ok, but certainly saturated fats were not?
And the most recent evidence is that there is no identifiable connection between saturated fats and premature death rates.
Astronomy Models?
Geocentric models
Solar models
Milky Way
Black Holes
Big Bang
Dark Matter and Energy (we have lots of black boxes in the social sciences, too)
And for each model, there have been people who claim "It's settled science!"
What's worse, throughout history the proponents of the settled science have persecuted and prosecuted the questioners, the skeptics. And it is still happening. From George Will:
Authoritarianism, always latent in progressivism, is becoming explicit. Progressivism’s determination to regulate thought by regulating speech is apparent in the campaign by 16 states’ attorneys general and those of the District of Columbia and the Virgin Islands, none Republican, to criminalize skepticism about the supposedly “settled” conclusions of climate science. ...
“The debate is settled,” says Obama. “Climate change is a fact.” Indeed. The epithet “climate change deniers,” obviously coined to stigmatize skeptics as akin to Holocaust deniers, is designed to obscure something obvious: Of course the climate is changing; it never is not changing — neither before nor after theMedieval Warm Period (end of the 9th century to the 13th century) and the Little Ice Age (1640s to 1690s), neither of which was caused by fossil fuels. ...
The leader of the attorneys general, New York’s Eric Schneiderman, dismisses those who disagree with him as “morally vacant.” His moral content is apparent in his campaign to ban fantasy sports gambling because it competes with the gambling (state lottery, casinos, off-track betting) that enriches his government.
Yesterday Jack sent me this piece. Everyone who holds up Scandinavian countries as some sort of big-gubmnt ideal needs to think about these points.
At one time, Sweden, a small nation, had the fourth-largest economy in the world. That was in 1970. Twenty-five years later, the economy had tumbled to 14th and the private sector stopped creating jobs, according to Organization for Economic Cooperation and Development data. This wasn’t caused by Sanders’ demonic duo of capitalism and free markets. It was caused by the very policies he idolizes.
“Sweden got rich first with free trade and an open economy, before we had the big government,” Swedish economist Johan Norberg explains ...
“In the 1950s, Sweden was already one of the world’s richest countries, and back then, taxes were lower in Sweden than in the United States.”
It was only after that, says Norberg, “did we start expanding the government dramatically.” ...
“It all ended in a terrible crisis.”
As we have noted before, Sweden has been repealing its welfare state post-crisis. Norberg says the country has become “successful again, but only after a new reform period, with more deregulation and free trade than in other countries.” Taxes have been cut, school vouchers allocated, and the pension system partially privatized as Sweden distances itself from its welfare-state past.
Norberg’s rebuke of Sanders — he never calls him by name, but it’s clear who he has in mind — is reminiscent of Danish Prime Minister Lars Lokke Rasmussen, who said he had enough of Sanders slurring his country with the “socialist” label.
Sanders needs more lessons such as these, because he simply doesn’t know what he’s continuously spouting off about. Yet he’s been invited to the Vatican to talk about building a “moral economy,” as if he’s an authority on that subject. Simply put, there’s nothing moral about the economic system Sanders favors — it destroys jobs and snuffs out opportunities to rise higher. What was the Vatican thinking when it extended the offer?
The Vatican was being no less obtuse than Sanders’ American supporters, though, because what they are advocating are policies that in the end will create a terrible crisis in this country.
I have written before that if you care about the potentially poor of the future as well as the poor of today, you tend to favour economic policies that promote economic growth. As Tyler Cowen once opined, "Economic growth is the best anti-poverty programme there is."
Former student, Gerry Nicholls, is very witty. I've enjoyed reading things he writes for years. Here's a brilliant example. The conclusion:
Sure, I get the concept in theory: government-subsidized companies will invent something amazingly innovative and environmentally friendly, such as machines that run on the warmth generated by Trudeau’s “Sunny ways”.
Yet, the sad truth of economics is that companies which rely on government handouts are usually only good at innovating one thing: new ways to get government hand outs. [emphasis added]
So you see, for all our sakes we better hope the climate change alarmists are wrong or else we’ve had it.
It’s not that I’m not a “climate change denier” so much as I’m a “government competence denier.”
Too bad Gerry hasn't learned that the correct spelling is "gubmnt".
Don Boudreaux says it so well in his "Bonus Quotation of the Day [March 22]" from a passage by Paul Krugman and in his rhetorical questions that follow that:
[I]t’s hard to make sense of actual trade policy if you assume that governments are genuinely trying to maximize national welfare. On the other hand, actual trade policy does make sense if you assume that special-interest groups can buy influence.
Because special-interest groups – cronies – play a significant role in setting and fashioning the details of trade “policy,” shouldn’t we assume that they also play a significant role in setting and fashioning the details of all other policies? Why are the same politicians who sell out the public welfare when drafting, negotiating over, and voting on trade policy to be trusted to defend the public welfare when, say, drafting, negotiating over, and voting on labor legislation, health-care legislation, immigration policies, tax policies, or foreign policies? Or campaign-finance ‘reforms’?
The Premier of Ontario is selling access to her and to top-ranked politicians in the province for thousands of dollars per event. No foolin'. From Andrew Coyne at the National Post,
Another leader caught selling preferential access to the highest bidder might have folded under pressure and abandoned the practice. But there’s a principle at stake here, and Kathleen Wynne is drawing a line in the sand. The principle? A little thing called democracy.
“It’s part of the democratic process,” she said, of the $6,000-a-head cocktail reception and three-course dinner at Toronto’s Four Seasons Hotel scheduled for this Thursday. Organized by a major lobbying firm, it is advertised as a “small event with a limited number of tickets,” allowing for intimate “one-on-one conversations” with the premier, Energy Minister Bob Chiarelli and senior staff. A similar event last month charged $5,000 to speak to Chiarelli and the premier’s chief of staff, Andrew Bevan.
Well, what could be more democratic than that?
This news should surprise no one. When gubmnt controls allocation of scarce resources, firms and individuals have an increased incentive to try to influence how those resources get distributed. It's an inevitable result of big gubmnt. And we certainly have big and growing gubmnt in Ontario.
Because of the warm winter, many North American cities spent far less than budgeted on snow removal during the 2015-16 winter.
Sadly, many politicians are rubbing their hands in glee: "Oh good, we have more money! What should we spend it on?"
And sadly many voters are putting forth pet projects for their consideration.
My recommendation to all city works departments and city councils:
Pay down the debt, or
Build up the reserves.
This has been an abnormally warm and low-snowfall winter. Prepare for and save for winters to come when there will be more snow. Don't spend now to try to buy more votes from various interest groups.
The savings this year are not "free money". They are savings that have been fortuitous. There will be other years when there will be greater demands on the local fisc.
And if you don't like my options above,
Cut taxes. Let taxpayers decide what to do with their own money and the savings.
Trump isn't winning because he's a buffoon. If anything, he is winning despite being a buffoon. He is winning because he understands that nationalism is more important to real-world conservative politics than free market dogma, and he offers what conservatives care about: a populist nationalism that is inflected with conservative policy commitments but by no means limited to them.
I cannot imagine that having a light rail transit system run from downtown London to Masonville through UWO would pass any reasonable cost-benefit assessment. And yet it looks as if the plan has a good chance of happening.
Tell you what: I'll get on board the proposal if they run the rail line up The Parkway.
The Parkway is a residential area of snooty trouble-makers right near the university. I had some serious run-ins with these clowns nearly 25 years ago and would be happy to see them all worked up. See this. In addition, at some point in the past two decades, the residents of The Parkway have managed to block off a trail along the Thames River, an amazingly social-welfare-reducing move on their part.
In econ-speak, I quite clearly have an interdependent utility function such that anything that makes the folks living on The Parkway worse off makes me better off.
According the rezoning proposals rubber-stamped by London City Council, the proposed 8-story and 28-story buildings at 50 King Street would have little or no impact on the heritage Middlesex County Courthouse.
Balderdash.
I took some photos today at 11am, showing the shadows cast by the current 3-story building at 50 King. I also took some photos of the shadows cast by the Renaissance Tower on King Street. The shadow from the Renaissance Tower stretches all the way from the south side of King Street north to the north side of Dundas, more than a block in length. Here is a photo of the north Renaissance Tower, 11am, Feb 18, 2016, casting its shadow onto the Budweiser Gardens.
And here is a photo of that shadow across the Bud Gardens (located directly east of the heritage Middlesex County Courthouse):
And here is a photo taken at the same time, showing the reach of the shadow from The Renaissance all the way up to and onto Dundas Street, more than a block north of the 20-story Renaissance Tower.
Quite clearly, a 28-story building located on the north side of King Street, slightly to the west of the current building at 50 King, would cover the heritage Middlesex County Courthouse in shadows much of the day, even in the summer when shadows are shorter.
But that's not all.
The other portion of the proposal includes an 8-story building where there is presently a 3-story building. Even this lower building will cast shadows that reach the heritage Middlesex County Courthouse much of time. Here are some photos I took at the same time. These show the shadow cast by the present 3-story building. You can see the shadows reach halfway or more to the heritage Middlesex County Courthouse.
An 8-story building, especially the planned building which would be even closer to the heritage Middlesex County Courthouse, would cast shadows that would reach the heritage building some of the time and would cover the space between the two buildings most of the time. Putting an atrium between the 8-story building and the 28-story tower would not provide much relief from these shadows.
This overshadowing will have a strong, negative effect on the heritage value of the Middlesex County Courthouse, but it will also greatly darken the space between the proposed building at 50 King and the heritage Middlesex County Courthouse. The entire heritage value of the property associated with the heritage block will be severely diminished.
These heritage issues need to be addressed by the London Heritage Advisory Committee and need to be considered by the Ontario Municipal Board.
A number of us living in the downtown area in London, Ontario, recently tried to object to a rezoning application for county land overlooking the Fork of the Thames River and adjoining the heritage-designated Middlesex County Courthouse [see this and this]. We lost.
My own, personal objection raised at the planning committee meeting was that during much of every day the proposed 28-story and 8-story buildings, joined by an atrium, would cast shadows over the best-known heritage building in London, Ontario: the Middlesex County Courthouse.
Not only did the presenters to the planning commission waffle (likely prevaricate) about the shadow effects of the proposed building over the heritage courthouse, they also neatly sidestepped the fact that (to the best of my knowledge) they did not do a heritage assessment of their proposal, as would be required of anyone else, nor did they hold open, public consultations with local residents, as would be required of anyone else.
I've written about those issues before.
Here is what really adds insult to injury
Today the residents of our building (and, I presume, thousands of other residents in the designated areas) received this postcard, sent out at a likely cost of $2 or so per card, to cover design, printing, postage, personnel work, etc.
I live downtown in the yellow area, the same area where the rezoning was approved by City Council and where the proposed high-rise building(s) would be erected.
Here is the back of the postcard:
I received this card because we own a unit in 30-year-old condo building; I doubt if our building is a "heritage property".
Apparently, though, one group of folks at City Hall is all about heritage, and anyone who wants to alter their property must get a "Heritage Alteration Permit".
Meanwhile, Middlesex County, which owns the property under discussion (yes, the county owns land inside the City of London) and which was just rezoned, has proposed alterations to their heritage-designated property. Where were the folks in the Heritage Permit office when all the rezoning proposals were being discussed?
I have strong doubts that they obtained a Heritage Alteration Permit. And if they didn't, I expect the entire rezoning process was bogus.
Middlesex County and the City Council of London, Ontario, have decided to proceed with rezoning plans that would involve tearing down the five-story Middlesex County Health building that is located at 50 King Street, just south of the heritage castle-like Middlesex County Courthouse building in the heart of London, and build a 28-story high-rise at that location. Here is an artist's rendition of their proposal.
That land is really valuable for this type of use. The units in the building would overlook the Fork of the Thames and have ready access to the parks along the Thames River and to all the downtown amenities -- theatres, Budweiser Centre, the market, and many nice restaurants.
And yet some people (not including me) have filed an objection with the Ontario Municipal Board [OMB] to the proposed zoning change that would allow this redevelopment of this plot of land (see this):
There were concerns voiced at the time that the original concept — a monolithic design — would block the view of the river for residents of the two Renaissance Towers. [EE: one and half of these are shown to the right in the above drawing]
Other concerns were that the tower, a design unseen in London, would overshadow the historic Middlesex County building, formerly the county’s courthouse. [not shown in the above drawing but immediately to the left of the proposed high-rise.]
But those are not the only objections (and let me add that I know of no one in the Renaissance Towers who raised the objection at the latest public hearing that the proposed tower would block their views. I don't know why the Freeps keeps mentioning this.).
The original plan was rejected by the former city council by a vote of 14-0. The new plan isn't all that different, no matter how the planners tried to dress it up, and yet the new council voted 14-0 to approve it. The consultation with neighbours was perfunctory at best, and there was no heritage assessment (as is ordinarily required) of the proposal.
As I wrote last year, the proposed high-rise would not only "overshadow the historic Middlesex County building", it would cast shadows over it much of the day. [see this earlier posting]. To address this issue, the latest proposal calls for the building to be a bit west of the original plan. But it will still cast shadows over the historic Middlesex Courthouse at least as much of the day. The city's planning committee and the full council brushed this fact aside.
Further, the proposed 8-story portion of the building (east of the tower) will also cast shadows over the green space between the building and the courthouse. The walkways and parkland between the current building and the historic courthouse are nice. With the proposed buildings, they will be smaller, and they will be in shadow much of the time; also, they will more likely than not become dark, dangerous places for people (see the walkways around the current courthouse and Bell Building).
Another point that has not been addressed adequately is that the proposed building will remove about 70 parking places and replace them with about 150 parking places. 80 or so additional parking places for who knows how many people working in the offices and/or living in the residential units? Surely there will be hundreds of residents, not to mention employees in the offices planned for the lower levels of the building. That is insane, and the reduced number of publicly available parking spades will greatly tax the available parking available in the downtown. Furthermore, this decreased number of publicly available parking spaces will substantially reduce access to the Fork of the Thames, in direct contradiction of the City Council's recently approved desire to increase access to and public use of the parkland there.
Yet another problem with this proposal is that it will greatly increase traffic on the narrow streets around the building, especially during rush hours in the mornings and evenings. As it is, the streets are often backed up a block or more in this area during rush hours. Extra office space and extra residential space, all with people expecting to gain entrance and egress to the building from a small side street, will spell zillions of Advil moments. It will also create even more problems for people trying to gain access to the parks along the river (again, so much to the city's "Back to the River" campaign). And it will play havoc with the various parking lots in the area that are designated for guest of the residents of the already existing residential buildings.
Finally, and this really frosts my cookies (and exemplifies the heavy-handed, unthinking processes of our city planning office and city council), a recently approved development only two and a half blocks away which would have done much more to help repopulate and rejuvenate the downtown has been canceled because some offices in the city (I'm not sure which) decided the developers of that plan would have to sacrifice loads of valuable space (but they weren't sure how much and wouldn't commit to how much!!) to form a hub for the city buses. This proposal would have provided considerably more residential and parking space and would be adjacent to a huge dying/dead mall that would provide tremendous retail space to serve the development. It is an ideal location for a massive development. ... and maybe one of it's residential towers could incorporate the fascinating and beautiful twist of the proposed building in the above photo.
If the City of London is serious about "Back to the River", here's what it should do:
Trade land elsewhere in the city to the County of Middlesex and let the county work with developers to put that neato-looking twisted building up somewhere else. Maybe even in south London along the South Branch of the Thames.
Put in truckloads (ok, carloads) of parking under that space where the current Middlesex County health building is at 50 King street.
Make sure the area where the building now is gets converted to additional parkland above the underground parking, facilitating and encouraging pedestrian and auto traffic access (with the additional parking) to the Fork of the Thames.
Put in more trails, footpaths, and (where necessary) boardwalks along the north side of the Thames west of the Fork of the Thames.
Disclaimer: Let me add that where I live, I would be affected by the congestion during the construction of the tower/buildings shown in the picture. I would also likely be affected by the traffic and parking issues that I have raised. But it will have absolutely no impact on my view.
Gubmnts have run up massive debts, increasingly so after 2007 and the Great Recession. A recent study by The Fraser Institute (reported here in the NatPost) points out that the total amounts currently being spent on just the interest payments on gubmnt debt now surpass the total amounts being spent on K-12 education in Canada. Imagine what the interest costs will be if/when interest rates rise back up to the 3-4% range that might be thought of as more "normal" (whatever that means). From the article:
Combined federal and provincial debt in this country will top $1.3 trillion this year, according to a new Fraser Institute report out Tuesday.
“It’s not a trivial amount,” said Charles Lammam, one of the report’s co-authors of the $450 billion in government debt that’s accrued since the recession. “There’s [sic] short and long-term consequences.”
In the short term, massive interest payments on debt gobble up revenues that could be better spent, Lammam said. Local, provincial and federal governments pay more than $60 billion a year to service their debt, money that could be better spent on services. Over the long-term, a growing body of research suggest [sic] heavy government debt loads dampen economic growth.
The current 90-day T-bill rate in Canada is about 0.50. Imagine what the numbers in the Fraser study would be like if interest rates were 3.5% or higher, as they were a decade ago!
Debt servicing is going to become a major issue for the future.
Central planners do not typically promote health and welfare. Rather, they tend to promote their own careers and their own bureaucracies at the expense of their citizens subjects. The failures of central planning in the soviet era and during Mao in China stand as classic examples. Modern-day examples would include Venezuela, of course.
Gubmnts do not necessarily do a very good job of dealing with what economists call "negative externalities".
A swathe of China was blanketed with acrid smog Monday after levels of dangerous particulates reached around 50 times World Health Organization maximums, in what environmental campaigners said were the highest figures ever recorded in the country.
Pictures showed smog so thick that buildings in Changchun, the capital of Jilin province in the northeast, were rendered invisible.
One image showed a restaurant's neon sign seemingly floating in mid-air above traffic, proclaiming in yellow: “Eastern Dumpling King”.
Levels of PM2.5, the tiny airborne particles considered most harmful to health, reached 860 micrograms per cubic metre in the city of around eight million.
The World Health Organization’s recommended maximum is a 24-hour average of 25 micrograms.
The health-care biz is definitely competitive.... for political favours. JR, my favourite drug dealer, sent me this chart from the WSJ recently:
The article was trying to make a point about all the lobbying being done about higher education, but the whopping number that stands out is that there were 3885 lobbyists in the health biz.
And when you realize that firms tend not to spend money unless they expect payoffs, imagine the payoffs they must be expecting from lobbying!
In commenting about other people's comments [see this, via Jack] about the economic and social disaster being perpetrated upon the people of Venezuela by the socialist gubmnt, JB [my favourite drug dealer] wrote:
"What kind of government does it take to bring a country with the largest oil reserves in the world to the brink of bankruptcy?"
It made sense back then to those of us who bought into the Malthusian nonsense: People were starving, so create fewer people was the logic.
We've since learned that people produce more, too. Julian Simon was an important proponent of this view. And certainly any economy that counts on younger, productive people to support the seniors (as is the case in most economies) is going to have major problems if there aren't many younger people coming along.
Population control is just part of what Hayek called, the fatal conceit: the sad fact that smart, intellectual people believe they can plan things and improve them when in reality a more laissez-faire approach works better.
From Mingardi (quoting Angus Deaton, the most recent Nobel Laureate in Economics):
In his book The Great Escape, Nobel laureate Angus Deaton (see here David's excellent article) argues that
The misdiagnosis of the population explosion by the vast majority of social scientists and policy makers, and the grave harm that the resultant mistaken policy did to many millions, were among the most serious intellectual and ethical failures of a century in which there were many.
Two days ago China's government announced it will relax the one-child policy, allowing families to have two. This is a very significant decision and will have a huge impact on the lives of millions. But, as Nick Eberstadt argues on The Wall Street Journal, the Chinese Communist Party has "no plans to relinquish authority over its subjects' birth patterns; rather, Beijing has simply changed the ration. Now two children per family will be permitted".
It is all still part of "The Fatal Conceit". Politicians say, in essence, "Okay we goofed with the former plan, so we're just going to tweak it a bit..." Arggh.
I spent too much time in my introductory economics classes trying to cover too many topics. Here is a good example.
I covered this topic in all my classes. I wish I had gone through it more, repeatedly, and made sure every student understood it well enough that they could explain it to their parents. From Scott Sumner:
One of the basic principles of public finance is that it makes no difference whether a tax is legally borne by the buyer or seller. The burden of the tax will depend on the relative elasticity of supply and demand, and the economic incidence of a tax doesn't depend at all on the legal incidence. Stephen Gordon did a post discussing this issue, and provided a nice set of graphs for comparison: In this case most of the burden of the tax falls on buyers, in the form of higher prices. But his post also shows the opposite case, which is more likely to apply to labor markets (where sellers of labor, i.e. workers, are believed to absorb most of the burden of a payroll tax, whatever its legal incidence (which is 50-50 in the US.))
I have often summarized this result as the "Bill Murray" result, quoting from his chant in the not-so-famous camp movie, "Meatballs",
It just doesn't matter! It just doesn't matter!
If all students learned this, and if they could see that it doesn't take long for the new equilibrium to be attained regardless of where a tax is imposed, they would likely understand a heckuva lot more economics.
Robert Samuelson's column in the Washington Post does a nice job of summarizing why and how small interest groups acquire political power.
Here’s an example: A company and its workers lobby for import protection, which saves jobs and raises prices and profits. But consumers — who pay the higher prices — don’t create a counter-lobby, because it’s too much trouble and the higher prices are diluted among many individual consumers. Gains are concentrated, losses dispersed. ...
[H]e argued that the proliferation of special-interest concessions could reduce a society’s economic growth.
“An increase in the payoffs from lobbying . . . as compared with the payoffs from production, means more resources are devoted to politics and cartel activity and fewer resources are devoted to production,” he wrote. “This in turn influences [a society’s] attitudes and culture.”
The dilemma for democracies is clear. Voters expect governments to cater to their needs and wants — and one person’s special interest is another’s way of life or moral crusade. But if governments cater too aggressively to interest groups, they may undermine (or have already done so) the gains in productivity and economic growth that voters also expect.
and the telling conclusion:
Even with a jobless rate of 5.1 percent — getting close to “full employment” — the Congressional Budget Office projects a 2015 federal deficit of $426 billion. That’s one measure of overcommitment: Americans desire more government than they’re willing to pay for in taxes.
Demand is dropping due to Russian embargoes and there has been a drop in the demand from China.
Supply restrictions and quotas have been lifted, leading to an increase in the supply.
Europe's dairy farmers were already reeling from the food embargo imposed by Moscow last year in retaliation for Western sanctions over Ukraine.
Russia was one of the EU's biggest markets for dairy products, accounting for 32% of cheese exports and 24% of butter exports.
A slowdown in demand from China, the world's biggest milk importer, is also hurting the dairy industry. China is a big buyer of powdered milk.
Europe's farmers are now calling for the reintroduction of production quotas to try to balance the market. The quotas were abolished earlier this year, leaving farmers free to produce as much as they like for the first time in 30 years.
The deregulation led to more oversupply, piling even more pressure on prices.
In the past, demand was high and supply was restricted. Then the demand curve shifted to the left (demand dropped) at the same time the artificial supply restrictions were lifted, leading to a rightward shift of the supply curve. Both these moves put downward pressure on the equilibrium prices of dairy products. From the link,
There is so much sloshing around the European Union that milk is often cheaper than bottled water. A liter bottle of water costs around $1.50 in the U.K.; a liter of milk $1.
In France, milk is also around $1 per liter, similar to the price of mineral water. And in German discount supermarkets such as Lidl and Aldi, a liter of milk can be as cheap as 55 cents, while a liter bottle of water costs around 72 cents. ...
While the price of milk in shops has fallen by around 5% this year, wholesale milk prices have collapsed by about 20% to around 37 cents.
And this may seem harsh: I feel a modicum of sympathy for the dairy farmers. But not much.
They have been cushioned by supply management and gubmnt programmes for years; they have been assuming market conditions and gubmnt regulations would remain unchanged.
Taxpayers and consumers owe them nothing. They made a bet and collected on it for years. Now they're losing on that bet.
when bad weather hits the production of an agricultural commodity, the supply drops [the supply curve shifts to the left].
That drop in supply brings about a shortage of the product at the old price (an excess quantity demanded at Po in econ-speak).
The shortage at the old price causes the price to rise.
As the price rises, there is an incentive for producers to produce (and/or import) more (increase the quantity supplied along the new supply curve), and
There is also an incentive for buyers to buy less (reduce the quantity demanded along the demand curve).
Unseasonal rains are named as one reason for the current shortage, sparking floods that destroyed crops earlier in the year -- while others blame the summer monsoon for disrupting supply. ....
The cost of India's staple vegetable -- an essential ingredient in curries and eaten daily by almost everyone -- soared in August to an eyewatering 60 rupees (90 US cents) a kilo on wholesale markets, up from 25 rupees in June.
And so people adjust:
Traders say there are imports ordered from Pakistan, Afghanistan and Iran in the past few days to ease the strain on prices.... [EE: increase the quantity supplied by importing now when it wouldn't have paid to import so much at lower prices.]
Tarkeshwar Kumar, who owns a small restaurant in Patna, said the price rise had a "huge" impact on his business.
"I cannot pass on the price hike on to the consumers and I cannot do without onions," said Kumar, who has started using magaj, a paste made from cashew nut and poppy seeds to flavour curries, and serving cucumber salad instead of onion. ...
In ordinary kitchens too, the shortage of the commodity is acutely felt.
"I reduced the quantity of onions I buy to half a kilogram from one kilo," said Usha Gupta, a Bihar housewife and mother of six. [EE: buyers find substitutes. They don't like the substitutes so much but they make do, responding to the higher prices and sliding up and to the left along the demand curve.]
And of course the higher prices lead to allegations of hoarding:
"The state should have gone cracking down on the hoarders and released tonnes of onions that were kept out of the market." [EE: a standard refrain about speculators who actually helped keep the supply larger than it would have been if they hadn't stockpiled some onions].
and clamouring for political solutions:
"Onions tend to be sensitive as there has been a history of onion prices worrying governments," Shubhada Rao, chief economist at Yes Bank in Mumbai, told AFP.
"In 1998 they shot up and the (New Delhi) government lost power and since then, governments have become wiser in terms of proactively handling such crises and taking action."
While Modi's administration has moved to address the shortage, raising the minimum export price by 65 percent to $700 a tonne in August, some say it has not gone far enough.
Groan.
The best solution to agricultural commodity "shortages" is the following:
teach people basic supply and demand analysis
teach people that speculation and so-called hoarding when prices are low perform valuable services to the economy by providing larger inventories than we would otherwise have during periods of reduced supply. If you crack down on "hoarders" and "speculators" during this shortage, people will have much less incentive to build up contingent inventories for the future.
elect politicians who say these things to the electorate.
For those of you who don't keep abreast of Canadian affairs, we are having a federal election next month. We have a parliamentary system, which means we will vote only to elect an MP (Member of Parliament) in our riding (voting district), nothing else.
As I watch the major newscasts on television, it seems to me that more often than not, the "journalists" refer to Stephen Harper as "Harper". And they refer to Justin Trudeau as "Justin Trudeau".
At the same time, they tend to refer to Thomas Mulcair as "Mulcair", but they refer to Elizabeth May as "Elizabeth May".
My perceptions may be incorrect, but I expect I'm right. Ms. Eclectic says she has the same impression.
It seems so jarring to me when newscasters refer to some politicians by just their last names. And the tone is quite different (or so it seems to me) when they say "Harper" vs when they say any of the other names.
I'd venture a guess (though I have no idea how to test this) that no more than 5% (if that) of all television newscasters would support Stephen Harper.
At least that's the impression I get before I mute the news.
Trono is a major market where UberX has been expanding rapidly and eroding the market power of licensed taxicabs. Trono is now considering bringing UberX into the fold:
Before any [UberX company] could obtain a licence, it would need to provide proof of insurance, confirm that drivers have had a criminal background check and driving record screening, and sign an agreement that protects the city against any losses related to the private vehicles-for-hire.
As only a quasi libertarian, I don't mind these possible regulations. But here is the kicker that had me cheering when I saw it:
Another of the report's recommendations is to reduce the starting fee for a taxi ride, also known as the "drop fee," from $4.25 to $3.25, effective Nov. 1 to make taxis more competitive with Uber.
I love this result. More competition, better and more available service, and slightly lower prices! Vive la competition!
Seems strange to be talking about entering recession when we’re already moving out of it. But only if you don’t understand the real point of recession talk, which is that: STEPHEN HARPER IS A WICKED, INCOMPETENT, EVIL LIAR AND IT’S TIME FOR HIM TO GO. ...
Certainly Harper has been a disappointment to many on the right, even driving some, such as John Robson, to HDS. But Uniting the Right involved a Big Tent that had to contain social conservatives and libertarians. Also, reaching, and staying in, power inevitably involves compromise. We should remember that compromise for free marketers involves kowtowing to populism while controlling the damage. Compromise for the left involves ignoring economic reality until it bites them in the rear. See Greece. ...
Please note that this applies equally to left-wing elitist interventionists (of whom Keynesians and big-gubmnt folk are a subset) who promise all sorts of gubmnt solutions.
Most of the OPEC countries seem to have budgeted with the expectation that oil prices would be up over $70US/bbl or higher. If the price of crude oil remains where it is, down under $50/bbl, these countries will have massive budgetary deficits. And so, btw, will Alberta (and Canada)
Furthermore, those of us in the rest of Canada, hoping for continued redistribution from Alberta via "equalization" payments will likely be disappointed and find our own provincial budgets facing greater shortfalls so long as oil prices remain low.
