Wednesday, August 13, 2008

Tax Ads

The linked article on consumption has a fantastic suggestion:
Kasser has more ideas: Limit – and tax – advertising, he says. To promote consumption, ads foster insecurity, he says. That hinders self-acceptance, which is another predictor of lasting well-being.

This has valid economic justification. Human attention can be considered a natural resource, if for no other reason that the supply of it is finite: there is nothing we can do create more time to devote our attention to things. This would mean that, like the supply of land or oil in the ground, the supply curve would be represented by a straight vertical line. The market for human attention (the advertising market) only gets inflated as the population increases, and as demand for our attention increases, which makes advertising a fantastically profitable industry: enough to fund tv, print, and online media outlets.

Only in a sense does the right person get paid for their attention: the community gets to experience the media for (nearly) free. Otherwise, the payment for our attention is being delivered to media companies. This too is parallel to the other common resources mentioned above: e.g., The value of an urban area is created by the community, though the rent for land is collected by those who own it, just as the value of media advertising is created by the community viewing it, despite the rent of our attention being collected by those who own the media. And likewise, not collecting that rent for the community has allowed ownership of both urban land and mass media to be consolidated.

So, under this system, how will media be made, news be reported, etc? One possible solution: in recognition of every citizen's creative impulse, give everyone a tax rebate. Depending on your tax bracket, this could be enough to be a dividend check. Given that technology has driven overhead for media outlets to become almost negligible, citizen driven media and entertainment could become more likely as well.

A Few Notes

A Freakonomics Quorum on the future of suburbia was posted recently, featuring James Howard Kunstler at the top. An interesting note from his response is reagrding an upcoming urbanization prediction:
One popular current fantasy I hear often is that apartment towers are the “greenest” mode of human habitation. On the contrary, we will discover that the skyscraper is an obsolete building type, and that cities overburdened with them will suffer a huge liability — Manhattan and Chicago being the primary examples. Cities composed mostly of suburban-type fabric — Houston, Atlanta, Orlando, et al — will also depreciate sharply.

I'm not sure what, exactly, the concern is here, though I've also not read his books. I do recall, however, that before the days of elevators, most buildings reached a maximum height of about 7 floors. I'd be hard pressed to believe that running an elevator was the major concern, but perhaps I'm underestimating the energy used. Though, it would also make sense urban areas will need to be more dense than the recent half-century of suburban expansion, but not so dense that they cannot be supported by nearby agriculture.

Colin Beavan also wrote briefly about how "consuming fewer planetary resources may, instead of making us deprived, make us happier." Further:
Americans are now twice as rich as they were in 1950, but no happier... psychologists are advocating that policymakers use indicators other than the Gross National Product (GNP) to make decisions. What’s the purpose of an economy, they ask, if not to enhance the well-being of its citizenry

Freakonomics has recently had some excellent posts on the relationship of happiness to income. Much of the research indicates that, when viewed worldwide, there is a stronger relationship, perhaps because in many nations doubling your per capita income is the difference between poverty and subsistence.

Previous research has indicated that once you reach a level of income at which you are not concerned about meeting day-to-day needs, your happiness level is not as closely related to your income (though relative income is still important: i.e., "are you as wealthy as your friends?") Again, the data is, as Justin Wolfers says, "not so clear cut." In fact, in Belgium, it appears that more money makes you less satisfied with life.

Sunday, August 10, 2008

More Pressure

After a lot of this tire air pressure debate, I wondered who among us have actually, as a result, checked the pressure on their car's tires. I, embarrassingly, had not until today.

A tad more background regarding the numbers we're going for: Csaba Csere, Editor of Car and Driver Magazine, reluctantly entered the debate only to contribute his expertise on tire pressure. He said that, yes, it is agreed that if all four of your car's tires are 10 PSI underinflated, you would gain about 3-4% of your mileage by properly inflating them. This would mean that, for a nation to gain 3-4% reduction of oil use just by inflating your tires, every car in the nation would have to have every tire underinflated by 10 PSI. Csere was doubtful this was the case, though it might be feasible that all cars in America are underinflated by an average of 10 PSI. Unfortunately, no empirical data here.

My car's tires require a pressure of 44 PSI. When I checked today, They were each at about 30-35 PSI. I could just be unusually negligent, but in my defense I've been biking more than I drive lately. Coincidentally, my bicycle, which requires 125 PSI, also had each of its tires deflated by about 10 PSI (a level of deflation that's actually kind of normal for tires of that pressure over about a week's time, which was the last I checked my bike). If you're concerned, all mentioned tires are now up to par.

Whether we're talking about ANWR drilling (3% of consumption according to Csere, though I haven't found that number duplicated anywhere) Offshore drilling (1% of consumption) or properly inflated tires (up to 3% of consumption) it's clear we're not talking about actual energy-independence solutions (which was, at the time, Obama's point, quote: "...we could save all the oil they're talking about getting off drilling, if everybody was just inflating their tires, and getting regular tune-ups. You could actually save just as much.").

Also worth note: the reason why most of these projections use 2030 as a benchmark year is that models predict that production would peak around then (ANWR in 2028, for example), which means that once we hit that 3% mark, were we to begin drilling in ANWR, production would decline rather than maintain that level.

More worth note: Mankiw posts today regarding Obama's justification for oil-company-windfall-profits-tax, quote: "That would be a logically coherent story, but not an empirically plausible one." My personal opinion is that I've yet to hear even a "logically coherent story" from his opponent, though I'm of course disappointed that we as voters have to settle for logical coherence and not empirical plausibility.

Thursday, August 7, 2008

Why taxing the sale beats taxing the profit from sale.

Mankiw explains why a tax at the pump would work better than taxing windfall profits and subsidizing hybrids. The whole policy plan proposed by Obama seems to be a Rube-Goldberg-style invention to avoid saying we will tax your gas purchases, while attempting to accomplish the same larger goals such as discouraging petrol use (in the hybrid subsidy) through eating into oil company profits (via the windfall tax) when you'd easily accomplish both via a tax at the pump. At least, however, the larger goal is there, opposed to a larger goal of, say, more petrol use or ignoring the problem.

Also, when Obama was in Cleveland Tuesday, he was heckled for not starting with the pledge of allegiance at the beginning of the "town hall meeting." Obama, clearly bemused, tells him "You want to lead the pledge of allegiance? Go ahead."

At the end, the man is asked, "did someone say we're going to say the pledge of allegiance at some point?" and the man, John Quinn, clearly admits, "No!" and so no one is sure why he presumed it would happen.

Tuesday, August 5, 2008

The value of bare land.

Jay Newton-Small: "While millions of Americans drive to work and depend on their cars, there is a multi-billion dollar hunting, fishing and wildlife viewing industry that depends on pristine lands and waters -- areas that have suffered under Bush. And they vote, too."

I actually kinda want one. Sincerely, not Satirically.

In Barack Obama's energy speech yesterday, he said: "For the sake of our economy, our security, and the future of our planet, we must end the age of oil in our time."

Paul Krugman's comment was: "Now that’s more like it — a hard-hitting political speech with a solid policy proposal behind it." Krugman is of course more Keynesian than most, but the proposals at least demonstrate that Obama wants to move in a direction of less reliance on oil.

There are a few misleading policies among them, including Obama's call "to meet the goal of reducing our demand for electricity 15% by the end of the next decade. This is by far the fastest, easiest, and cheapest way to reduce our energy consumption..." Unfortunately, the fastest and easiest way to reduce demand for energy is to... make it cost more.

Some of the less-aesthetic policies might be rationalized by asserting that our culture is in quite a rough spot with our oil-based infrastructure, and that some extra effort is needed to dig our way out. If, for example, people payed the true cost of the gasoline they burn, they wouldn't need a $7000 tax credit to motivate them to buy a fuel-efficient vehicle (150mpg, according to his 6-year goal). But a "tax credit" for hybrids is far more politically palatable than "carbon tax," (true to the proverb that a Republican cannot say "tax" without adding "cut," and a Democrat cannot without adding "on the rich.")

Before the speech, Obama received some heat for conceding that he might consider the off-shore drilling currently supported by McCain if it were part of a compromise in a broader energy package. This sort of concession is apparently being encouraged in Congress by Nancy Pelosi. Quote, "Behind the scenes she’s encouraging vulnerable Democrats to express their independence if it helps them politically." Her assumption is that, in 2009, her party will have expanded their majority in both houses, and will be able to pass legislation more along the lines of the broader energy package that Obama is now proposing.

McCain, supporting proposals such as offshore drilling and nuclear power, is poking fun at the "low-hanging fruit" in Obama's proposals: that all drivers keep their cars tuned up and tires properly inflated. His jest is through sending out tire-pressure gauges as pictured above. However, this concern is wholly non-partisan. Republican governors Arnold Schwarzenegger of California and Charlie Crist of Florida have insisted upon it, was well as, well, NASCAR. And while off-shore drilling could meet roughly "1% of our demand two decades from now... keeping tires inflated can improve gas mileage 3%, and regular maintenance can add another 4%."

If only they made the tire gauge with a presta valve.