PLCB. Unethical behavior.

Recall earlier how desperate liquor privatization folks were getting.  Well, its gotten worse.  With the actual legislative outcome still up in the air, we see dirty tricks everywhere.

The video says (or shows) it all ...  To think, all of this to avoid a free market.  Sad.

Increase in PA gasoline tax coming?

Pennsylvania is on the verge of adding 28 cents per gallon to the gas tax.  

This is part of the transportation bill legislation.  As someone in the Susquehanna Valley, this bill also contains a provision to build the new Susquehanna Valley bypass - a project that would alleviate some terrible congestion on a stretch of highway in this area.  This is good.  However, it contains a higher gasoline tax.

Using a higher gasoline tax to fund the bypass is interesting.  My overall thoughts:

1. In general, our tax rates our too high, and I don't want more taxes.  There is plenty of government waste that should be cut first before resorting to tax increases.

2. The Bypass is desperately needed.  The congestion it would relieve would be like a tax cut - especially for the thousands of people who take the route from Washington/Baltimore/Harrisburg to mid-NY state on weekends.  The decrease in time spent waiting in traffic has a huge value to society.  This is the type of project that should have been in the original US stimulus package, as it would provide employment for many while providing a useful product for society.  (But Obama was too busy funding failing "green" companies that produced nothing and are now out-of-business.)

3.  Gas taxes have pros and cons.  The pro is a higher gas tax could account for the negative externalities of pollution.  If you have to implement taxes to raise revenue, why not tax pollution?  Economists on the right who like the idea of a gas tax (e.g., Greg Mankiw) would want some other tax cut simultaneously.  The negatives are it is a) it's a tax, and taxes are already too high, b) It is a regressive tax.  It hurts working class and middle class families more than rich families, as they'll pay a higher percentage of their income in this tax.  Higher prices for gas also have devastating consequences for the rest of the economy.

Overall, based on the positives and negatives, I'm pretty indifferent over whether this bill should be passed if there are no changes.  The ideal outcome is the bypass is built without a gas tax (i.e., other spending is cut), but I doubt that will happen, unfortunately.

More on why online gambling (and online poker) should be legal ...

I got an email from someone from the site Cardschat.com about an open letter they wrote to Sheldon Adelson.  It challenges much of what he wrote in an oped to Forbes last week.

The letter is long but contains many useful facts, and can be read in its entirety here.

An excerpt:

Our industry, specifically online poker, is still relatively young, being about 19 years-old. However, its youth breeds innovation and attracts creative thinkers and visionaries. It contains people who can see the marketplace changing, encouraging them to jump ahead of the pack to predict the next big consumer stampede.

You’ve run over 50 successful businesses, Mr Adelson. You surely remember what it was like to be a visionary? Such as when you ripped down the Sands to make way for the Venetian? Or when you gained a foothold in Macau?

Of course that was because you had freedom. 

Assorted Links

1.  Want to be happy ... don't commute.

Contains this paragraph, which I agree with completely!

Money improves happiness only to a point, although you can get more happiness per dollar by spending money on experiences instead of possessions, spending on others, and buying many small pleasures instead of a few big ones.

I certainly don't think I've hit that "to a point", but I completely agree that spending money on experiences is so much better than on possessions.  At least that's the case for me.

2.  Another of Sowell's brilliant "Random Thoughts".

Has this tidbit:

Have you heard any gun control advocate even try to produce hard evidence that tighter gun control laws reduce murder rates? Does anyone seriously believe that people who are prepared to defy the laws against murder are going to obey laws against owning guns or large capacity magazines?

3.  Story on commissions for a song played on Pandora.

The story is interesting, but this comment, to me, was outstanding.

Your song was played to 1,159,000 times on Pandora (individual plays). This paid him $16.89 or 1.457 cents/1,000 times, but each play is only listened to by one listener

On Sirius it was played 179 times (to an unknown amount of listeners), paying you $181.04 or 101.14 cents/time. 69,416 times as much as Pandora. But to put it another way, if the average play on Sirius had more than 69,417 listeners, you were being stiffed by Sirius.

On terrestrial radio it was played 18,797 times (to an unknown amount of listeners), paying him $1,373.78 or 7.31 cents/time. This is 5,016 times as much as Pandora, but only 7.2% of what Sirius pays you. But here the average play only has to have 5,017 listeners for terrestrial radio to be stiffing you.

Now, since both Sirius XM and terrestrial radio are broadcasts, targeting multiple listeners at once, I’m not entirely certain that Pandora is cheating you out of anything – and it’s interesting that you’re not complaining about terrestrial radio only paying you a fraction of what Sirius pays you.

4.  Jayson Lusk on the John Stossel show. 

My oped on online gambling in Forbes

Link here

An excerpt:  

The case to prevent consenting adults from engaging in a game of chance, simply because it is over the internet, is the ultimate in nanny-state behavior.  With the July 4th holiday fast approaching, many Americans think about the ideals on which our country was founded.  For me, I think of freedom. 

Note 1 - I had written much more, as there were a couple iterations of this before Forbes accepted it.  More will be posted on my blog or in another oped soon.

Note 2 - for the opposite perspective, see casino owner Sheldon Adelson's oped in Forbes last week.

Clarence Thomas quote in SCOTUS race case ...

Link here.

Here is one quote from Thomas:

"It is also noteworthy that, in our desegregation cases, we rejected arguments that are virtually identical to those advanced by the University today. The University asserts, for instance, that the diversity obtained through its discriminatory admissions program prepares its students to become leaders in a diverse society... The segregationists likewise defended segregation on the ground that it provided more leadership opportunities for blacks."

How much of the college in Monsters U is based on Susquehanna University?

I'm very excited to see Monsters University, as I have three kids and I think this looks like one of the better kids movies to come out.  My family is going to see it in about a week.

There is a rumor going around that some of the traits of the college were based on Susquehanna University. When I saw this trailer, I could believe it.

Edit - More evidence ... Look at the building in the background on this picture ...

Look familiar?

Another prohibition that should be repealed

Man jailed for reselling baseball tickets.

Soon, however, I was approached from behind by a uniformed D.C. police officer and another guy, whom I presumed was a trainee. 

The officer wanted to know what I was asking. Not wanting to be labeled a scalper, I said, “Love to get face value.” These words started a Kafka-esque journey into the D.C. criminal justice system. 

Told to stand against a wall, I was informed that I was under arrest for “solicitation.” I explained that I was from out of town and that I was not trying to “scalp,” and I apologized for not knowing that what I was doing was a crime. As the officer ran a check on my Minnesota driver’s license, I wondered how bad the ticket would be. 

The officer came back and told the trainee to call for transport.  "You going to do this?” the trainee asked, somewhat incredulously. 

“Absolutely.”  “You’ve got to be kidding,” I said.

The drug war clock underestimaes the cost of our drug prohibition

I recently found out about the "Drug War Clock", which estimates the annual cost of the keeping drugs illegal.  The link is here.  This is based on the $40 billion annual estimates from Miron and Waldock's paper.  

However, I think this is dramatically underestimating the costs of the keeping marijuana, crystal meth, and other drugs illegal.  Here are other costs we incur:

1. Lost opportunity to tax marijuana, crystal meth, heroin, etc.  These could bring in additional billions in revenue.

2. Lost economic activity to the United States by having legal production here instead of importing from other countries.  Extra legal economic activity also equals more taxes, as well as more jobs.

3. Extra positive economic activity from those in prison for drug-related crimes but would otherwise be working. 

And more.

The true cost could easily be double that $40 billion estimate, or $80 billion annually.  While I am not a recreational drug user, it is crazy that these are illegal.  This would be enormous, and doesn't even factor in the extra value society receives in terms of freedom/liberty.  

Economics of fracking bans - two links

1. Is Environmentalism Hurting Economic Prosperity?

2. Ed Rendell bashes members of his own party for asking for a moratorium on fracking.

The two biggest environmentalists in the state, who are both running for governor, both approved of fracking, permitted it and moved to put in place changes that have dramatically reformed the fracking process.”

Rendell also warned that the vote didn't appear to take into consideration the economic boom that fracking has had for some of the commonwealth's most impoverished residents.
“It's created jobs and huge economic investment in Pennsylvania,” he said. “And it's helped create wealth in the poorest areas of Pennsylvania.”

Assorted Links

1.  Tabarrok on sperm donation shortages in countries with price controls.  This reminds me of the term Tim Sandefur told me: "supply-demand deniers".

2.  State of PA won't allow Obamacare insurance funded abortions.  This seems like common-sense.  Abortion is still controversial, and half the public thinks it should be illegal at least in some instances.  Why would you possibly take money from people who think it is murder to pay for other's abortion procedures.  This is another example of why government shouldn't control industries.  This is from an oped I wrote a few years ago on the benefits of the government reducing their role in schools:

Another benefit of a voucher system is that currently controversial issues no longer become controversial – like whether to allow prayer in school and mandatory school testing. Some families want prayer in school, while others do not. As a voucher system becomes more widespread, this won’t be a concern anymore. If you want your child to pray every day before classes, you can send him or her to a school that implements prayer. If you do not – you can choose that option. 

3. Monsanto executive wins a world food prize.  (Well deserved!)  Seeing how anti-science the left is on GM foods, despite being in the US for 20 years and not a single detrimental health outcome, makes me seriously doubt that the anti-fracking left will ever find sufficient evidence to support fracking.  That's sad.

4.  Vince Flynn, my favorite author, died today.  I feel like I lost a friend.  Also, is it any surprise that a great author would have majored in economics?

Edit - a couple great tributes to Vince Flynn:  One by Rush Limbaugh.  Another by Hugh Hewitt.  His books are amazing - I highly recommend that you read them if you haven't already.

Video - Journalist takes on NH Attorney General who went after conservatives

The video isn't too inflammatory, but the story is and really worth watching.

Some blog post stories about this are here and here.

Friedman on public housing

Another great video showcasing Milton Friedman.

"My objection to public housing is that its made the housing of the poor worse."

Mankiw defends the top 1%

Greg Mankiw writes a paper for The Journal of Economic Perspectives, titled "Defending the One Percent".

It is outstanding.  Here's an except:

A common thought experiment used to motivate income redistribution is to imagine a situation in which individuals are in an “original position” behind a “veil of ignorance” (as in Rawls, 1971). This original position occurs in a hypothetical time before we are born, without the knowledge of whether we will be lucky or unlucky, talented or less talented, rich or poor. A risk-averse person in such a position would want to buy insurance against the possibility of being born into a less fortunate station in life. In this view, governmental income redistribution is an enforcement of the social insurance contract to which people would have voluntarily agreed in this original position.  

Yet take this logic a bit further. In this original position, people would be concerned about more than being born rich and poor. They would also be concerned about health outcomes. Consider kidneys, for example. Most people walk around with two healthy kidneys, one of which they do not need. A few people get kidney disease that leaves them without a functioning kidney, a condition that often cuts life short. A person in the original position would surely sign an insurance contract that guarantees him at least one working kidney. That is, he would be willing to risk being a kidney donor if he is lucky, in exchange for the assurance of being a transplant recipient if he is unlucky. Thus, the same logic of social insurance that justifies income redistribution similarly justifies government-mandated kidney donation.

It also points out some shortcomings in Stiglitz's recent book, which I recently reviewed.

Review of Stiglitz's "The Price of Inequality"

In the Political Economic Thought class I taught this past semester, we read books from authors across the political spectrum.  One book we read and discussed was Stiglitz's "The Price of Inequality".  I chose this in large part as Stiglitz makes several arguments that are commonly made by left-wing economists.  Further, Stiglitz has won a Nobel prize, which gives him credibility (albeit for research entirely different than what he discusses here).

Stiglitz makes many points with which I disagree, however.  My short list:

* He discusses the large returns on R&D spending and implies all other government spending is as efficient.
* He disregards any possibility that the government programs create disincentives
* He seems to imply that those with high incomes generally don't deserve them while those at the lower end of the wage spectrum are there largely because of bad luck.  I think the evidence points to the fact that hard work in both education and the workforce plays a significant roll in both the high incomes generated by some and the low incomes generated by others.
* He completely ignores the negative effects of minimum wages.
* He does too much hand waving when economic theory clearly doesn't support his arguments (e.g., on discrimination)
* He worries too much about the the tiny fraction of the US population that is wealthy.
* He ignores the terrible government failures of the US government in the Great Depression and in other time periods.
* And more.

What this book lacks in strong arguments, however, it makes up for with his bashing the motives of those who oppose him.  

Example: On page 259, he refers to his opponents as seeking "a new religion consistent with their faith in minimal interventions in the markets."  Seriously?  The views of market reform are now a religion? Unfortunately, he has this type of attitude throughout the book.

Stiglitz seems to to what people do when they can't argue well enough on the intellectual arguments alone...  rely on name calling and demonizing the motives of their opponents.

I recommend this book for those who want to hear the case from a liberal on what the problems are with the economy and how to fix it.  I disagree with many of his conclusions and am saddened by the tone taken by this Nobel prize winner, but I still think this book can be worthwhile, as long as you also complement it by reading a book (or two) by Friedman, Sowell, Conard, etc.

Assorted Links

1. Poll shows Bush more popular than Obama.  Best line:

Therefore, it appears that what Obama meant by promising to be the anti-Bush is that, unlike George W. Bush, Obama would not get us out of a recession and into many years of economic prosperity. There would also be successful terror attacks on American soil during Obama's watch and a litany of scandals unseen in almost a half-century.

2. I just finished No Easy Day: The Firsthand Account of the Mission That Killed Osama Bin Laden. What a great book. The book really has two parts.  One part is the discussion of what it takes to be a Navy Seal and to make Seal Team 6, along with some missions they had.  The second part is the mission to eliminate Osama Bin Laden.  I stayed up way too late reading this book last night. This type of book makes we wonder if I could have any value as a analyst for the military - I would love it if I could help get rid of bad guys to make the world safer.

3.  Jayson Lusk does a great job explaining why the results in a study published in the journal "Organic Systems" on GM feed isn't credible.  

4.  It's World Series of Poker time!  I am not going this year, but have in the past.  (Here's my recap of my experience in 2010.)  My mom is playing in the Seniors' Event on Friday (I also have two other friends in the field).  My mom will be trying to top her 2012 performance, where she finished 12th in a field of over 3,300.

5.  Senator says border fence is dumb while also saying South Dakota borders Canada. 

Both Republicans and Democrats are hypocritical

Link here to story.  From 75% support to 52% for Republicans.  From 37% to 64% for Democrats.

This graphic says it all, however:

Edit - actual questions:

Wasteful farm bill passes US Senate

The Senate on Monday passed a five-year, half-trillion-dollar farm bill that expands government subsidies for crop insurance, rice and peanuts while making small cuts to food stamps.

This is terrible and is government cronyism at its (usual) worst.

Some notes:

1.  Just to put in perspective: $500 billion over 5 years is $100 billion a year.  Given our population, that works out to almost $300 for every man, woman, and child in the country.  If you only want to consider taxpayers, it is far more than $300.  With legislation like this, is it any wonder why we keep running massive deficits?

2. This has bipartisan support.  While the Republican Senator of PA, Pat Toomey, voted against this, both Republicans and Democrats have a terrible history of supporting wasteful farm spending.  

3. This line is ridiculous:

Senate Agriculture Chairwoman Debbie Stabenow, D-Mich., said the bill would support 16 million American jobs, save taxpayers billions and ...

This is similar rubbish to what is found in poorly conducted/biased economic impact studies.  This won't increase jobs and won't save taxpayers money relative to having no farm bill.

4.  Much of this goes with the bloated food stamps program.  People who get food stamps, in my opinion:

A. Should not be allowed to buy steak.  If you can buy steak, you don't need food stamps.
B. Should not be on cigarettes or drugs.  See justification for A.
C. Should not be spending any money on cable/satellite television, cell phones, etc.  See justification for A.

Before we steal money from one person to give another person food stamps, we should put in these common sense restrictions.

Assorted Links

1. Great discussion on the Freakonomics blog about whether to pay blood donors.  

2. CNN story on Clarence Thomas.  It's got a left-wing slant to it, but is otherwise interesting.  My favorite excerpt:

http://www.cnn.com/2013/06/09/us/clarence-thomas-three-questions/index.html?hpt=hp_c2

"As a child in the Deep South, I'd grown up fearing the lynch mobs of the Ku Klux Klan; as an adult, I was starting to wonder if I'd been afraid of the wrong white people all along. My worst fears had come to pass not in Georgia but in Washington, D.C., where I was being pursued not by bigots in white robes but by left-wing zealots draped in flowing sanctimony."

3. Harvard's top nutritionist is behaving in an unethical manner and is anti-science.  I know many people in public health, and the ones I work with are super people who do their best to let objective research drive their results.  This guy is terrible, however. Those who try to hide and discredit results, like this Harvard nutritionist (and some of the global warming folks) hurt the credibility of all serious researchers.

4. Marginal Revolution has a good (short) analysis on where the data spying is going.

National news for Selinsgrove, PA - government prohibits dad from building treehouse

Link here.  They're on Fox and Friends this morning.

News story is here.  The whole story is worth reading, as are the facebook comments.

The video should be online soon, and I'll post it here when I find it.  It's not often that our little town of 5,000 makes national news.

My latest Oped - how fracking got Obama reelected

Here is my latest oped.  It's currently running in the Lock Haven newspaper.  It was sent to several mid-sized newspapers in "fracking country" at the same time, so it might appear in other papers as well.

An excerpt:

While many things here are controversial, one is not. Fracking has had a positive impact on the economy and has decreased the unemployment rate in the United States. What hasn't been considered, however, is that fracking changed the result of the 2012 presidential election. 
  

Great photo ...

My thoughts on the IRS scandal

First, a couple links:

1. Ramesh Ponnuru has a great oped.  

2. Jay Leno's "joke".  I don't think the crowd thought he was joking. 

3.  George Will's column from a couple weeks ago.

I'm not sure I can add too much to this, but I'll try.  The problem is that government officials can get away with way too much.  This isn't strictly a problem with the left targeting the right, although we'd expect more of that since government workers will tend to be a bit more left-wing.  It's a lack of accountability and too much power.  

The punishment scheme for people who are abusing their political power should be such that if you have government power, and you abuse it, you are punished so severely you go out-of-your-way to make sure you're not abusing your power.  

My recommendation.  Those who abused their power should be tried for treason.  I think you could reasonably define the abuse of a government position to target political enemies as an "extreme act against the nation".  Those who are found guilty should be punished in whatever way we punish traitors.  If you are a government official, you absolutely cannot  abuse your power to affect the political process and/or elections.  If you do that, and are caught, no punishment is too severe.  Without this type of punishment, this will happen again.  

I don't even think this is a left-vs-right type issue.  While this time it's the Obama administration going after the right, we know that the Nixon administration was almost as bad in the past. 

Voter fraud, a huge basketball bet, and my business school's London Program is highlighted

1.  Voter fraud in Ohio and Florida.  More evidence we need voter ID laws.  You have to show your ID to get a gun, buy a beer, and drive a car.  But not to vote?  It stuns me that people oppose these laws.

2.  A $5.9 million dollar bet? I enjoy gambling on occasion - but this type of bet stuns me.

3.  My university's London program is highlighted in this YouTube video.  This video was shot this past academic year (2012-2013).  I taught this same semester abroad program (The London Program) in spring 2012.

Assorted Links

1.  Typical talking points for those who say cutting budgets to National Parks will hurt economy.  They're wrong on the national level, of course.  Cutting National Park budgets will hurt the local areas that contain the park, but those who pay for those parks are located across the country. Each area without a park is incrementally better off, meaning the cuts to the parks won't have an impact on the national economy.

2. The Freakonomics crew posted some funny ads that now would be thought of as repugnant.  My favorite:

3. This blog focuses focusing solely on ending the PLCB.  Quite a bit of good stuff here.

4. Sad but still a bit funny ...

A detailed response to a comment opposing PLCB privatization

I received a comment on my post discussing some of the tactics of those who oppose PLCB.

I will not hide I am a PLCB employee an a ssistant manager.I do have an interest in the privatization.I do believe that we are about to be privatize a mistake we will live with some regret as PA home owners and tax payers.1st the governors own people have now come down from the oringinal figure of 2 billion over three years to now 800 milion over 3 years. Now where will the 1 billion dollar promised to education from the sale and other groups come from? PSEA saw through this vail promise and do not back privatization. Like I said I believe the governor is going to strong arm this through the senate. People on both sides of this issue need to remember on election day the people who are pushing this issue and vote out this anti union governor who also wishes to privatize PENNDOT, the welfare system,and other government programs,and has not done anything to save jobs in PA, proof GE moving to Texas,and the fact that we are no longer one of the friendliest states to industry to the worst for new industry. Let us remember this next election day. I know I will have plenty on time to see that Tom and his cronies should be ready to answer on election day. So folks we may disagree on should the LCB,PENNDOT,State lottery,and the wealfare system should be privatize or not just look on election day are we the people better off pre Corbetization or now. Remember and do not forget the anti PA governor who will have lots of backing from Walmart,CostCo, Rite Aid, and others that will continue to create low paying jobs without benefits. 

Because I think this comment is somewhat representative of some of the arguments made by those who oppose privatization, I thought I would respond.

1. I appreciate that you are honest about your employment, and I do sympathize with the position you're in.  It's not your fault that our state has this system.  You could be the world's greatest assistant manager and be doing everything you can to run your store well.  While I am for privatization, and I know in the long run that it won't cost jobs (see my oped), there will be short term pain by those who work for the PLCB.  

2. Let's be completely honest about PSEA's stance.  They don't want to lose union jobs.  That's it. View every argument they make in this context.  No union really advocates for what's best for the state/country - they want what's best for the union (or unions in general).  That's not criticizing them - that is their job.  Now let's get to those arguments ...

3. There won't be enough tax revenue from this.  I don't know how the final transactions will come down, but remember that if there is tax revenue, it is coming from Pennsylvania citizens.  If there is less revenue coming in, it means that Pennsylvanians are paying less.  Further, as Washington state showed, a scheme could be set up where tax revenue increases from privatization.  I really hope we don't do that - I hope that taxes would be such where they stay the same or decrease slightly, but it could easily increase.  Either way - remember that this money coming into the state coffers from state control of liquor is coming from Pennsylvanians, who are being financially punished (tax) by the current system.

4.  Governor has done nothing to save jobs in PA.  This is a bit off the topic of PLCB issues, but ...  I'll still respond. First, I'm not Corbett's biggest fan, by any means.  However, the top sector for creating jobs in the past four years has been ... fracking.  Who's been more supportive - Corbett or Democrats? Many would argue he has been too supportive.  In the long term, the best a lawmaker can really do to "create" jobs is to have good government policies and not screw things up.  (To see screwups, for example, look to Obamacare, federal tax rate uncertainty, uncertainty over targeting business on a national level.)  Corbett has done nothing to make Pennsylvania's business climate worse.

5.  People on both sides of this issue need to remember on election day the people who are pushing this issue.  This one seems obvious.  However, if people are able to buy a six pack of beer in a more convenient location (like their gas station/grocery store), I promise that anyone who dislikes Corbett will not want them to remember Corbett was "pushing this issue".  If people credit Corbett for making their lives a bit easier each week/month/whenever they buy beer/wine, Corbett might actually get reelected.

The government is inefficient when it runs the economy.  It doesn't work.  The state control of liquor is different other state controlled economies (like the former Soviet Union) only because it's just for one sector (alcohol).  Economic theory and experience shows us that state control is inefficient and our society will be much better off if government control is ended.

NFL teams accused of colluding against veteran free agents

Link here

Also refers to article here.

An excerpt: 

"I basically think the owners got together and decided not to spend the cash on free agents," Freeney told CBSSports.com. "I definitely think that's part of it. I think the owners made a pact. There's only 32 of them and none of them broke ranks. I think they all decided not to spend money."

So Dwight Freeney claimed that owners made a pact to collude to lower the salaries of veterans.  This is a standard type of problem that we cover in principles of microeconomics courses.  

There are incentives for firms to collude and form a cartel (even though it is usually illegal).  The big problem for a cartel is that it only takes one firm to "cheat" on the agreement.  And there usually is an incentive for firms to cheat on the cartel.

In this case, there are 32 NFL teams.  It seems crazy to think that all 32 teams could be in on this collusion and a) no word about it leaks to the press and b) one of the firms doesn't decide to cheat on the agreement and sign a player anyway.