“We grew up founding our dreams on the infinite promise of American advertising. I still believe that one can learn to play the piano by mail and that mud will give you a perfect complexion.”

“Thanks again for saving me. Someday, I’ll save you too.”

– Zelda Fitzgerald

“I married the heroine of my stories.”

– F. Scott Fitzgerald

Expect further reforms in Agriculture Sector, rationalization of Direct Taxes and measures for Employment Creation: PHD Chamber | Business Standard News

via Expect further reforms in Agriculture Sector, rationalization of Direct Taxes and measures for Employment Creation: PHD Chamber | Business Standard News

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Stories for Dhananjay Parkhe · Member since Aug 2018

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Applause from Gustavo Razzetti and 2 others
The Most Transformative and Radical Ideas I’ve Heard From an American Leader in My Lifetime
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You know what they say.
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Why we got the glass-half-full metaphor all wrong
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Some of us like to keep a low profile in the bedroom
Member contentFor Members
A reading list for becoming a better citizen and person
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How to protect your web browsing from privacy invasions and the surveillance state
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When the image of your future self collides with the reality of now
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Based on your reading history
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Sitting on the couch sandwiched between my sister and I sat my nanny. From the earliest days that I was able…
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Ghosts tread close behind us all, each one as unique as a snowflake…
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Amelia Earhart on tenacity. (The Commonplace Book Project)
Hint: The Answer Isn’t Always Yes
Get out of your mental cocoon
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What it takes to be less lonely.
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2018 was an eventful year. I had surgery. I started going to therapy again. I wrote about love, and the…
Roxane Gay9 min read
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You Need Milestones to Chase Your Dreams
Best in Creativity
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Why linking your work to your interests can do more harm than good
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Best in TV
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The genre changed much more than entertainment
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Netflix’s plans for the TV series may finally give Japanese cartoons a shot at live-action success
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Monthly topical discussions between libertarian and non-libertarian scholars.

Economic Growth? Let’s Focus on the Tangibles

Posted on January 22, 2019 by Joshua M. Kim

I want to make sure that I understand what we are debating.

We are arguing with Tyler’s assertion that sustainable long-term economic growth should be elevated over all other priorities.


Some reasons to put sustainable economic growth at the center of our moral philosophy, and the policy decisions that align with this view, include the following:

  • Progress, as measured by improvements in health outcomes, living standards,  educational attainment, leisure, and other quality of life measures is tightly correlated with societal wealth growth. The wealthier a country is, all things equal, the better off the average citizen will be.

  • That progress is ultimately underpinned by economic growth, and not on the enactment of political policies that prioritize redistribution or some other goal related to social justice.

  • That the prioritization of long-term sustainable economic growth is the best way that we can invest in the well-being of future generations, as they will be the beneficiary (or the victim) of the choices that we make today.

  • That even small changes in the rate of economic growth can have enormous long-run impacts, and that the benefits to future generations of even small growth-positive choices should have a starring role in our moral philosophy.

If economic growth is to be prioritized, then we must accept trade offs. These trade offs include:

  • Greater levels of income inequality and wealth concentration.

  • Reduced public support for the elderly in favor of greater investments in kids.

What are the other tradeoffs if we follow Tyler’s heuristic of prioritizing long-term sustainable economic growth?

What I want is for Tyler’s big idea to convince me to change my mind.

I want to be persuaded that at least one of my traditional moderate-to-liberal views on most issues is wrong.

Wrong in the sense that my grandkids, and the grandkids of Tyler, Agnes, and Eli, will be worse off.

Maybe if I’m wrong about one thing, my whole ideological orientation toward economic and policy issues (moderate-liberal) will finally become unstuck. And if I can be convinced, maybe others will be as well.

Tyler writes that I should Google his opinions. But what I want to understand is how this big idea—prioritizing sustainable economic growth—plays out when applied to real choices.

Is it impolite, or somehow internet uncool, to ask that we get concrete?

It would be wonderful if spending time with Tyler and Agnes and Eli resulted in having my mind changed.

Is this what we are debating?

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We Have Lost Our Way in a Fundamental Manner

Posted on January 22, 2019 by Tyler Cowen

My main outstanding disagreement is with Agnes Callard, who has doubled down on her claim that Stubborn Attachments is status quo-oriented. But there is simply no reason to think the status quo already maximizes the rate of sustainable economic growth, and the book is full of statements to the contrary. Consider the opening sentence (p.15): “When it comes to the future of our world, we have lost our way in a fundamental manner, and not just on a few details.” Or the beginning of the book’s concluding section (p.123): “My utopian political vision is a society that follows these principles. That means a society that lets individuality, happiness, and autonomy flower to their maximum extent. I don’t expect something so good to actually come about, but it is nonetheless a vision to live by…”

I am happy to admit that most of my specific suggestions for policy I have presented elsewhere, still the book itself is clear on its radicalism while maintaining a deliberate focus on abstract principles.

When it comes to valuing lives, different lives are either commensurable or they are not, again as I discuss in the book. If they are not, nobody is going to produce meaningful rankings of different social states of affairs, not even by summoning up the mysterious ghost of “philosophy.” If human lives are commensurable in some way, we are back to sustainable compounding growth as giving us a decisive answer. When it comes to real world policy, we must indeed choose, and it is simply punting to claim there is no basis for comparison or trade-offs. Economics and the logic of social choice return, whether we like it or not.

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Recent articles:

Economic Growth… and What Comes After
When Economics Fails
A Question for Eli Dourado
The Radicalism of Stubborn Attachments
Economic Growth Isn’t Just Ethical. It’s Sublime.

via : Cato @Liberty Newsletter

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Winner and Loser States from Centralized Government

Posted on January 22, 2019 by Chris Edwards

Ninety years ago, two-thirds of government spending in America was state-local and one-third was federal. Today, it is the reverse with about two-thirds federal and one-third state-local. American government has become larger and much more centralized. That centralization has made winners and losers among the states as vast flows of taxpayer cash pour into Washington and are then dispersed through more than 2,200 federal spending programs.

In 2019, the federal government will vacuum $3.5 trillion from taxpayer pockets in the 50 states, borrow $1 trillion from global capital markets, and then turn on the leaf blower to scatter $4.5 trillion back out across the 50 states. Many billions of dollars will stay in and around Washington to pay for the leaf-blowing operations.

The Rockefeller Institute of Government has released a very useful report detailing these cash flows. The report calculates a “balance of payments” for each state in 2017, which is federal spending in each state less taxes paid to the federal government by individuals and businesses in each state. The winner states have a positive balance and the loser states a negative one. Federal spending includes four items: benefits (such as Social Security), state-local grants (such as Medicaid), procurement (such as fighter jets), and compensation paid to federal workers.

On a per capita basis, the biggest winner states are Virginia, Kentucky, and New Mexico. Virginia has a lot of federal employees, contractors, and the world’s largest naval base. Kentucky receives a lot in benefits, contracts, and grants, and has Senator Mitch McConnell. New Mexico has a lot of federal employees, contractors, and Los Alamos.

The biggest loser states are Connecticut, New Jersey, and Massachusetts. Those states have a large number of high-earning individuals who get hit hard under the “progressive” federal income tax.

Figure 1 below shows data from the Institute’s report. Taxes per capita are on the horizontal axis and spending per capita on the vertical axis. Each dot is a state. The totals allocated for 2017 were $3.1 trillion in taxes and $3.8 trillion in spending, leaving out five percent of taxing and spending that could not be allocated by state.

Generally, states on the bottom right are the losers and those on the top left are winners.

Connecticut is on the far right paying $15,462 in federal taxes per capita but receiving only $11,462 in federal spending. Connecticut would be better off in a decentralized United States with citizens paying most of their taxes to state and local governments rather than the federal government.

Every state is actually worse off than indicated in Figure 1 because federal borrowing in 2017 allowed spending to be 20 percent larger than taxes. But borrowing is not a free lunch. It creates a cost that will hit residents of every state down the road—borrowing is just deferred taxes.

For Figure 2 below, I scaled up federal taxes to include both current and deferred. That is, I scaled up taxes for each state the same percent so that total federal taxes for the nation equals total federal spending. With that adjustment, Connecticut residents paid $18,586 in current and deferred taxes per capita and received only $11,462 in spending. Connecticut residents are only getting back 62 cents for every dollar owed to Washington.

The patterns exhibited in the figures have persisted for decades. High-income states such as Connecticut have been penalized by the overly progressive federal income tax for a very long time. The interesting political question is why do they stand for it? Why do members of Congress from high-income states support a highly progressive federal income tax that particularly harms their own states?

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Senate GOP Bill Doesn’t Extend DACA. It Guts It

Posted on January 22, 2019 by David Bier

This weekend, President Trump promised to an “extension” of DACA for the “700,000 DACA recipients brought here unlawfully by their parents at a young age many years ago.” But the Senate bill that Senate Majority Leader Mitch McConnell introduced to implement his deal does not extend DACA but rather replaces it with a totally different program that will exclude untold thousands of Dreamers who would have been eligible under DACA. It is important to remember that all of these requirements are for less than 3 years of relief from deportation and work authorization, not a pathway to citizenship.

Here is a list of some of the changes:

  1. Requires Dreamers to reapply: P. 1235 requires Dreamers already in good standing in DACA to reapply for status, even though DACA would have allowed them simply to renew their status without refiling all of their paperwork and evidence. This requirement is a substantial burden, and most applicants will end up having to hire immigration attorneys to fulfill it.
  2. Much higher evidentiary burden: P. 1235 increases the evidentiary standard for Dreamers to prove their eligibility to receive DACA from a “preponderance of the evidence” to “clear and convincing.” The only higher standard of proof in the law is “beyond a reasonable doubt.” People win multi-million judgments based on thepreponderance of the evidence standardClear and convincing is often used for cases like withdrawing life support. In the immigration context, USCIS explains that preponderance of the evidence is usually the standard—meaning that “even if the director has some doubt as to the truth,” he should approve “if the petitioner submits relevant, probative, and credible evidence that leads the director to believe that the claim is ‘probably true’ or ‘more likely than not.’” Clear and convincing is used rarely for cases like “to rebut the presumption of a prior fraudulent marriage” (i.e. for applicants the government has reason to be suspicious of). Dreamers proving that they entered before June 2007 or that they resided continuously, for example, just became much more difficult under this legislation.
  3. Imposes a Monetary Fine/Doubles Application Cost: DACA, the Dream Act, and other proposals to legalize Dreamers have usually left off the monetary fine for being in the country illegally that proposals to legalize other immigrants have customarily had. This is because no one—including Trump—blames Dreamers for being in the country illegally. They were brought here as children. Yet this bill does contain a fine or penalty but rebrands it as a $500 “security fee” (p. 1243). This fine comes on top of the normal fees for processing the application, and it essentially doubles the costof the currently $495 application. According to the Migration Policy Institute’s analysis of why eligible Dreamers didn’t apply for DACA, not having $500 cash was the number 1 reason. Anecdotes from Dreamers themselves support this.
  4. “Public charge” rule: P. 1238 applies the public charge ground of inadmissibility inINA 212(a)(4) to Dreamers—something DACA did not require. While DACA recipients are currently ineligible, and would remain ineligible under this bill, for almost all federal benefits, the Trump administration’s pending public charge rule would ban anyone who is even 5 percent dependent on any level of government, even state or local aid, from receiving legal status. This could include numerous Dreamers in states such as California and New York, which offer state benefits to Dreamers. Dreamers in DACA have grown up in America since a very young age and have lived in the country for over a decade. They are Americans. Treating them as if they are new immigrants does not represent the view of most Americans.
  5. Minimum income requirement: P. 1239 would further require that Dreamers prove—again by clear and convincing evidence—that, unless they are a student, they can maintain an income of at least 125 percent of the poverty level during their time in the United States. DACA had no such requirement, and it would result in banning numerous Dreamers currently in DACA.
  6. Pay back legally-obtained tax credits: P. 1239 requires Dreamers to pay to the U.S. Treasury the value of any legally-obtained tax credits that they have received. Not only is this provision not in DACA, it is totally unprecedented in immigration law and would massively increase the cost for many applicants, particularly those with children.
  7. Excludes Dreamers who ever claimed to be U.S. citizens: Unlike DACA, P. 1238 also applies the ground of inadmissibility in INA 212(a)(6)(C) for those Dreamers who ever claimed to be a U.S. citizen. This is an exceptionally common phenomenon because many Dreamers don’t ever realize that they are here illegally until they claim otherwise.
  8. Excludes Dreamers with removal ordersUnlike DACA, P. 1238-9 would ban Dreamers who are in the country illegally due to a prior order of removal. Given that the whole point of DACA and similar programs are to give people here illegally legal status, this provision makes little sense and is solely designed to keep out Dreamers.
  9. Excludes Dreamers not in DACA: Nearly half of all Dreamers have dropped out of DACA or never applied in the first place, possibly due to fear of what Presidents Trump or Obama would do with their information or for costs or other reasons. Moreover, other Dreamers “age-in” to the program when they turn 15 (younger immigrants cannot apply). P. 1239 makes it clear that anyone not currently in DACA cannot apply—another huge change from the DACA program.
  10. Keeps Dreamers from getting permanent residence: Illegal immigrants who also entered illegally cannot adjust their status to legal permanent residence even if they are eligible due to (typically) a marriage to a U.S. citizen. They need to register a legal entry first. DACA allowed them to travel and reenter, which permitted tens of thousands to receive legal permanent residence. P. 1252 bars this practice by deeming such entries not a legal “admission” for purposes of adjusting status.
  11. Dreamers cannot renew status: P. 1240 grants a 3-year status that cannot ever be renewed. This is a huge departure from DACA, which—despite giving just a 2-year status—has allowed renewals for 7 years already.

These are just some of the many changes that the bill makes to the DACA program. Commentators should not describe this bill as “extending DACA” or even extending that status of DACA recipients. This is an entirely new program and an entirely new status.

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Warm Water, Hot Air

Posted on January 22, 2019 by Patrick J. Michaels

The oceans are heating up 40% faster than scientists realized screamed Business Insider last Saturday (January 12). Two days earlier The New York Times broke the storywith “the oceans are heating up 40 percent faster on average than a United Nations panel estimated five years ago.” It’s all from a January 10 article in Science by Lijing Cheng, of the Chinese  Academy of Sciences in Bejing, along with three American coauthors, titled “How Fast are the Oceans Warming?”

Scary. Not. “40 percent” is a straw man.

The subject of all this attention is the change in the heat content of the world’s oceans. This is obviously related to their temperature—something that has proven rather difficult to measure precisely on the centennial scale because of changes in measurement techniques and data sources. (Quants: heat (in joules) divided by the heat capacity (joules required to warm the ocean a degree) gives temperature change).

At the outset, it’s important to note that this is not an original research article. It’s a “Perspectives” piece, kind of like a sciency op-ed that cites a collection of refereed publications (in this case, with a large number of self-citations) that determine the “perspective” of the writers. Quoting from Dr. Roy Spencer’s blog on January 16:

For those who read the paper, let me warn you: The paper itself does not have enough information to figure out what the authors did…

Further, Spencer notes:

One of the conclusions of the paper is that Ocean Heat Content (OHC) has been rising more rapidly in the last couple decades than in previous decades, but this is not a new finding, and I will not discuss it further here.

Of more concern is the implication that this paper introduces some new OHC dataset that significantly increases our previous estimates of how much the oceans have been warming.

As far as I can tell, this is not the case.

The “United Nations panel” in the first paragraph is, of course, its Intergovernmental Panel on Climate Change (IPCC), and in their most recent (2013) science compendium they most certainly did not estimate that the heat content of the ocean is 40% less than what it is from Cheng et al’s “perspective.” In that report, they noted five different publications, but found problems with four of them and only conferred credibility upon the highest figure, published by Dominguez et al. in 2008. The Cheng et al. study is only 11% higher than that, not 40%. To repeat, the average of the five studies mentioned in the 2013 IPCC report is 40% below the new Cheng et al. figure, but the one that the IPCC found most credible in fact differs from Cheng et al. by only 11%.

The 40% figure is therefore a straw man.

It’s also noteworthy that the “40 percent” claim is nowhere in the Science Perspective. It’s from a guest post by Cheng et al. in “Carbon Brief,”  principally funded by the European Climate Foundation, which describes itself as “a major philanthropic initiative to help Europe foster the development of a low-carbon society and play an even stronger international leadership role to mitigate climate change.”

Another Perspective

It is obviously very important to understand historical changes in ocean heat content.  Another way to do this would be with the new “reanalysis” data sets, which combine heretofore separate atmospheric observations in the past via a dynamic model. Obviously as one goes further back in time, important data, such as vertical weather balloon soundings drop out, as they did in the 1930s. One important note:  the model is modulated with the changes in atmospheric radiation consistent with human emissions of greenhouse gases, ozone, and aerosols, as well as changes in solar radiation.

(The relevant paper is by Patrick Layloyaux of the European Center for Medium-Range Weather Forecasts, the same people who produce the daily “Euro” model that mid-Atlantic forecasters love so much in snow situations. He has 14 co-authors, with the majority being from the ECMWF.)

Here’s what the ECMWF simulates for the historical heat content (in Joules/square meter) of the upper 300 meters (984 feet) of the globe’s oceans:

Oceanic heat content (joules/square meter) or the upper 300 meters of the ocean.  From Layloyaux et al., 2018.

Somehow “ocean heat content as high as it was 75 years ago” isn’t quite so alarming.

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The Case for Economics When Considering Alcohol Tax Levels

Posted on January 22, 2019 by Ryan Bourne

“It’s time to raise the alcohol tax,” declared Vox author German Lopez back in December.

Now let me state upfront that I am not confident I know what the correct tax rate on alcohol should be. Lopez may well be right about their being a rational case on economic grounds for an increase based on high-quality, robust analysis. But his article does not make a reasoned case satisfactorily, nor does it link to such analysis.

In fact, it came to my attention as I was finalizing my new paper “How Market Failure Arguments Lead to Misguided Policy” (released today). And I’m convinced his piece is a classic of the genre. This article aims to highlight some of the key objections I have to his approach, which is increasingly common in public debate.

The traditional economic case for alcohol taxation

Libertarian theory aside, the classic case for taxing alcohol will be familiar to those with basic economic knowledge. Alcohol consumption is believed to impose, on net, external costs on people other than drinkers themselves.

When deciding whether to drink, individuals are thought to only consider the balance of private costs (the money it costs to drink, the hangover, the risk of disease or accidents for them etc) and the private benefits of consumption (the confidence, the enjoyment of the taste, the benefits to them of socializing etc).

But clearly, alcohol consumption can have external effects. The costs of alcohol-related crime and driving under the influence are borne by others. There may be net external costs relating to health care, too, given alcohol-related diseases and incidents could necessitate higher taxpayer subsidies or insurance premiums (though, applying such logic consistently, one would have to net off any “savings” that alcohol consumption might deliver in terms of lower Social Security and Medicare payments from reduced longevity).

The economic case for a tax then is this: if we observe net external costs associated with alcohol consumption, then allowing a free market would lead to higher levels of consumption than optimal. If a tax can be imposed that equates roughly to the marginal external costs of consumption, then drinkers are faced with a price reflective of the true costs of their actions.

Due to the “Law of Demand,” the amount of alcohol consumption will fall to the level at which marginal social costs equate to marginal benefits as this tax is imposed. Some of the negative external costs will occur less often, as will some of the private costs. Society as a whole will be better off because the tax means prices now reflect the true cost to society of the product’s consumption.

In order to make the case for a hike in alcohol taxes then, Lopez simply needed to present clear evidence that current tax rates on alcohol are too low to account fully for the external costs of consumption we see. His line of reasoning does not make this case.

1.   Ignoring the benefits and costs framework

Lopez presents good evidence that higher alcohol prices reduce demand for alcohol (as one would expect). It stands to reason then that reduced alcohol consumption will mean fewer alcohol-related deaths and the other negative consequences outlined above.

But he does not seem to acknowledge that alcohol consumption has benefits too. He highlights how excessive drinking causes anywhere between 88,000 and 100,000 deaths per year as a reason to increase taxation, for example. Yet he never acknowledges that alcohol consumption (at least for most drinkers) brings satisfaction, hence why we drink.

Looking purely at the number of alcohol related deaths tells us little about the desirability of taxation on alcohol per se, because it is not clear how many deaths are rational decisions by well-informed individuals to “live for today,” as opposed to deaths resulting from “external costs” of alcohol consumption.

A newer literature embedded in behavioral economics squares this circle by arguing that heavy drinkers are not truly fulfilling their true lifetime preferences when they consume (because of hyperbolic discounting or other irrationalities). But that is not the argument Lopez makes, and nor would we expect this to be the case for all heavy alcohol consumers.

The traditional market failure framework recognizes that allowing people to decide what to consume enhances their welfare, provided that any third-party costs are accounted for. Lopez, on the other hand, sets out reducing deaths from alcohol as an aim in itself – unlinked to any acknowledgement of benefits. He assures us that significantly reducing alcohol-related deaths “doesn’t require prohibition.” But the logic of focusing on just deaths and ignoring pleasure is that we should indeed aim for zero consumption.

By implicitly presuming we all really want to be life-expectancy maximizing, he goes far beyond the market failure framework of dealing with externalities.

2.   Conflating private costs with external costs

Indeed, the traditional case for taxing alcohol is about pricing in external costs – costs imposed on others. Lopez cites a Centers for Disease Control and Prevention study that estimates the economic costs of excessive drinking in the U.S. as totaling $249 billion in 2010, or $2.05 a drink. Implicitly reaching for “externality” arguments, Lopez notes how this figure includes the costs of “crime, drunk driving, health problems, and more,” pitching this tax as a way of accounting for the externalities imposed on casual drinkers and teetotalers by heavy drinkers.

But an examination of the CDC reports shows the major cost to the economy comes not from these external costs, but from “a reduction in workplace productivity,” which accounts for a massive $179 billion of the total.

This, overwhelmingly, is a private cost and not an external cost. If individuals’ alcohol consumption affects their work performance, or their human capital accumulation, or the length of their working life, the vast proportion of that cost would ultimately be borne by the individual themselves through worse employment prospects and lower wages.

Some people may simply prefer a work-life balance where they stay out later to socialize and drink regularly, rather than maximizing at-work productivity. Using the CDC estimates as a proxy for the external costs of alcohol consumption would therefore lead to a tax rate far too high to deal with genuine external effects.

It is certainly true that some part of “worse productivity” would hurt the individual’s employer or the ultimate consumers of goods and services produced by heavy-drinking workers. Lost productivity could also be considered at least partially an external cost in that lower wages or worse employment prospects may reduce an individual’s net tax contribution. If this necessitates higher tax contributions from other taxpayers to maintain government revenues, there is a clear fiscal third-party effect.

But applying such reasoning consistently would profoundly change the scope of economic policymaking. Many decisions throughout our lives affect our measured productivity, pecuniary rewards, and net tax contributions. Implicitly assuming a baseline in which all individuals maximize measured productivity and net fiscal contributions, and considering deviations from this to be a market failure, would be an absurd principle.

Taking time off to have children or to care for a sick relative, staying up late to watch TV regularly and being tired at work, or choosing not to invest in one’s own human capital, might all have similar effects. This is to say nothing of career choices. Opting to become a French teacher or a public-interest lawyer, even when the opportunity exists for one to be a Wall Street trader, means people clearly do not always make decisions to maximize their net tax contributions.

Singling out the productivity effects of alcohol consumption as a unique externality in need of correction, when every day individuals make decisions that affect their productive potential and, indirectly, their net tax contributions, would be unworkable, arbitrary, and wrong.

3.   Arbitrarily comparing alcohol taxes today with the past

One piece of evidence Lopez cites in support of raising the alcohol tax is that taxes on alcohol “were one-sixth to one-third of their inflation-adjusted value in the early 2010s compared to the 1950s.”

This may offer insight into affordability, but it is irrelevant for what alcohol tax rates should be as justified by economics. The economic rationale here is not to reduce consumption to some level or hit any other arbitrary target for outcomes. It is to price in the external costs associated with marginal alcohol consumption, and then allow consumers to decide how much to drink according to their own preferences when faced with the full social costs of their actions.

It’s perfectly plausible that these external costs change over time. And even if they do not, Lopez presents no evidence that the 1950s tax rates were levels which accurately reflected external costs.

4.   Ignoring the implications of heterogeneity between consumers

Lopez rightly acknowledges that key opposition to increasing alcohol taxes arises because individuals who regard themselves as “responsible drinkers” will resent paying more because of the costs primarily imposed by heavy drinkers. He responds by reassuring us that most of the tax (in terms of revenue collected) would be borne by the higher-risk drinkers, simply because they drink more.

But this is in part because, as the academic literature suggests, heavy drinkers are far less responsive to price changes than non-heavy drinkers. A review of the literature by Jon P. Nelson of Pennsylvania State University found that only two 2 of 19 studies on the consumption behavior of heavy drinkers found “a significant and substantial negative price response.”

If we are to make the assumption that heavy drinkers are responsible for most of the external costs of alcohol consumption, then raising the tax on alcohol will deter consumption for exactly the wrong group. Pricing according to some aggregate calculation to find the “marginal” external costs across the whole population could actually worseneconomic efficiency. The tax would be too low for heavy drinkers, but way too high for casual drinkers.


Standard economics, which considers the external costs of alcohol consumption, makes a strong a priori case for government action to “price in” these costs. But German Lopez’s article does not get us any closer to understanding what the correct way of accounting for these effects is. And if taxation, his analysis does not help us ascertain what the tax rate should be.

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Will Technological Progress Impoverish the Poor and Working Classes?

Posted on January 22, 2019 by Jeffrey Miron

This past weekend at LibertyCon, I debated Andrew Yang, a progressive candidate for the Democratic presidential nomination, about whether the U.S. should adopt a Universal Basic Income.

Yang believes there is need for a UBI because future technological progress will gradually destroy jobs for people with limited skills. This forecast has arisen for millenia, but it has consistently been wrong:

Emperor Vespasian: The Roman historian Suetonius writes, of the Emperor Vespasian (69-79 AD), that someone came to him with a new, cheaper technology for transporting heavy columns to Rome. The emperor rewarded the inventor but quashed the device on the grounds of displacing manual labor. Suetonius quotes Vespasian: “How will it be possible for me to feed the populace? You must allow my poor hauliers to earn their bread.”

The historian Arnold Toynbee writes of the Roman emperor to whom it had been reported, “as a piece of good news, that one of his subjects had invented a process for manufacturing unbreakable glass. The emperor gave orders that the inventor should be put to death and that the records of his invention should be destroyed. If the invention had been put on the market, the manufacturers of ordinary glass would have been put out of business; there would have been unemployment that would have caused political unrest, and perhaps revolution.”

William Lee/Queen Elizabeth I 1589: Invented the stocking frame knitting machine hoping that it would relieve workers of hand-knitting. Seeking patent protection for his invention, he travelled to London where he had rented a building for his machine to be viewed by Queen Elizabeth I. To his disappointment, the Queen was more concerned with the employment impact of his invention and refused to grant him a patent, claiming that: “Thou aimest high, Master Lee. Consider thou what the invention could do to my poor subjects. It would assuredly bring to them ruin by depriving them of employment, thus making them beggars”

Thomas Mortimer 1772: Wrote that he wished never to see machines such as saw mills and stamps as they would “exclude the labour of thousands of the human race, who are usefully employed …”

David Ricardo 1817: “I am convinced, that the substitution of machinery for human labour, is often very injurious to the interests of the class of labourers.”

David Ricardo 1817: “All I wish to prove, is, that the discovery and use of machinery may be attended with a diminution of gross produce; and whenever that is the case, it will be injurious to the labouring class, as some of their number will be thrown out of employment, and population will become redundant, compared with the funds which are to employ it.”

Thomas Carlyle 1839: “[T]he huge demon of Mechanism smokes and thunders, panting at his great task, in all sections of English land; changing his shape like a very Proteus; and infallibly, at every change of shape, oversetting whole multitudes of workmen, as if with the waving of his shadow from afar, hurling them asunder, this way and that, in their crowded march and course of work or traffic; so that the wisest no longer knows his whereabout[s].”

Evan Clark 1928: “the onward march of machines into every corner of our industrial life had driven men out of the factory and into the ranks of the unemployed”.

Keynes 1930: “We are suffering, not from the rheumatics of old age, but from the growing-pains of over-rapid changes, from the painfulness of readjustment between one economic period and another. The increase of technical efficiency has been taking place faster than we can deal with the problem of labour absorption; the improvement in the standard of life has been a little too quick”

Ewan Clague 1935: A labor economist, “the present outlook is for the rate of displacement of labor to exceed the rate of reabsorption so that technological employment will continue to be large.”

TIME Magazine 1961: The number of jobs lost to more efficient machines is only part of the problem. What worries many job experts more is that automation may prevent the economy from creating enough new jobs. Says Pennsylvania’s Democratic Congressman Elmer J. Holland, whose subcommittee is about to study the matter: “One of the greatest problems with automation is not the worker who is fired, but the worker who is not hired.”

John F. Kennedy 1962: “I regard it as the major domestic challenge, really, of the sixties, to maintain full employment at a time when automation, of course, is replacing men.”

Robert Heilbroner 1965: “As machines continue to invade society, duplicating greater and greater numbers of social tasks, it is human labor itself — at least, as we now think of ‘labor’ — that is gradually rendered redundant.”

Ian Turner 1978: Organized a symposium on the implications of the new technologies. The world, he predicted, was about to enter a period as significant as the Neolithic or Industrial revolutions. “By 1988, at least a quarter of the Australian workforce would be made redundant by technological change…”

International Metalworkers Federation 1989: Forecasted that within 30 years, as little as 2 percent of the world’s current labor force “will be needed to produce all the goods necessary for total demand.”

Jeremy Rifkin 1996: “In the years ahead more sophisticated software technologies are going to bring civilization ever closer to a near-workerless world.”

The failure of these predictions does not prove such concerns have no merit; perhaps the nature of technological progress will change.

But absent a reason why “this time is different,” history argues against these “Luddite” concerns.

Not to mention that past technological progress has meant incredible improvements in living standards, for poor and rich alike.

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School Choice Is about Accountability

Posted on January 22, 2019 by Corey A. DeAngelis

Private schools are held directly accountable to families. They must attract their customers and provide a high-quality educational product if they want to stay in business. School choice programs  allow families to access schools that are accountable to their children’s needs.

Government schools are not held accountable to children in the current system. A family that is not satisfied with their child’s residentially assigned government school typically only has three options: (1) buy an expensive house that’s near a better government school, (2) pay for a private school out of pocket while still paying for the government school through property taxes, or (3) complain to the government school leaders and hope things get better.

The high costs associated with each of those options leaves most families powerless – especially the least advantaged.

This clip from Andrew Coulson’s award-winning School Inc. highlights the fact that school choice is all about accountability. Low-income families in India are asked the following question: “Why are you spending money on the private schools when the government schools are free?”

Their response is telling:

“In the government schools our children are abandoned.”

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