17 Jun 2008
Carbon Taxes and Auctions:
What to do with $7 trillion, part 2
by Richard Belzer
in Regulatory Economics, Regulatory Policy, Legislation
In a story summarizing an in depth interview with Sen. Barack Obama, Wall Street Journal reporters Bob Davis and Amy Chozick provide news insights concerning how he or Sen. John McCain would propose to spend trillions of dollars in new government revenue that would be collected by auctioning carbon emission allowances. More...
14 Jun 2008
Cap and Trade:
Applying it to gasoline
by Richard Belzer
in Legislation, Regulatory Economics
Energy economist Jonathan Lesser publishes a commentary in the Wall Street Journal "recommending" a cap-and-trade program for gasoline. The piece is lightly satirical but nevertheless highlights an important point: All emission permit systems, including the proposed cap-and-trade regime for greenhouse gases, is a form of rationing. More...
4 Jun 2008
Carbon Taxes and Auctions:
What to do with $7 trillion
by Richard Belzer
in Regulatory Economics, Regulatory Policy
Robert Reich, secretary of the Department of Labor in the Clinton Administration, addresses the question of what the federal government should do with several trillion dollars worth of new revenue from carbon taxes or auctioned permits. More...
2 Jun 2008
Economists, Advocacy Groups, and Climate Change:
The Southern Alliance for Clean Energy's 'Economist Statement'
by Richard Belzer
in Regulatory Economics
The Senate is this week debating what would be the most far-reaching environmental legislation in US history, the Lieberman-Warner Climate Security Act (S. 3036). A regional US advocacy group, the Southern Alliance for Clean Energy (SACE), has distributed a "Cap and Trade Economist Statement" which would imply that economists favor the bill.
The Statement is interesting on several levels. First, it never mentions the bill being debated. Second, it focuses solely on one narrow (but politically important) aspect -- whether carbon emission permits would be given way or auctioned. Third, the principles that SACE wants economists to agree with are fundamentally incompatible with elementary economics. Finally, SACE says that a number of distinguished economists have signed the Statement anyway. More...
28 May 2008
Gas Tax Holidays, Part 4:
Pressure in favor mounts in Europe
by Richard Belzer
in Legislation, Regulatory Economics
Public discussion about a federal gas tax holiday has abated in the U.S., but according to the Washington Post it is heating up in Europe. More...
21 Mar 2008
The Revised Ozone Standard:
Simple math and simple constitutional law
by Richard Belzer
in Regulatory Policy, Regulatory Science
The Washington Post's environment reporter says EPA has weakened the national ambient air quality quality standard for ozone. Given that the standard is going down, what does she mean? More...
4 Sep 2007
Economic Incentives for Mitigating Global Climate Change:
Comparing emission permits and emission taxes
by Richard Belzer
in Regulatory Economics
In a Wall Street Journal op-ed (temporarily available to nonsubscribers), City Journal contributing editor Nicole Gelinas argues that a carbon tax would be a "cleaner" (apparently meaning "more efficient") solution for mitigating global climate change than the several emission permit proposals ("cap-and-trade") that have been proposed. Gelinas provides a useful introduction to the debate, but misses crucial aspects of how these economic incentive systems are the same, and how they differ. More...
13 Aug 2007
Benefit-cost Analysis and Real World Decision Making:
The case of homeland security equipment maintenance
by Richard Belzer
in Regulatory Economics
Critics say benefit-cost analysis is a bad tool for choosing whether to
regulate. Supporters say it's a good tool because it
mimics how people and institutions normally make rational
decisions. Today's example is homeland security equipment purchased by
the federal government but left unmaintained by local governments.
More...
7 Aug 2007
Taxing Cigarettes to Fund Health Care:
How government becomes a partner in promoting undesirable behavior
by Richard Belzer
in Regulatory Economics, Regulatory Policy
There is a long pedigree in economics for taxing undesirable behavior as a way to change it. The author of this theory is Arthur Cecil Pigou, an early 20th Century British economist. So-called Pigouvian taxes remain popular among economists; see, for example, Greg Mankiw's views on carbon taxes to combat climate change. Thay also have been popular with governments because, unlike taxes on labor or investment, they distort incentives in generally desirable ways. That means they have the added advantage that they are useful for generating revenue without causing economic harm.
Pigouvian taxes have a dark side, however. Government becomes dependent on the revenue these taxes generate, and the more effective they are in achieving the desired change in behavior the more government revenue from the tax declines.
Passage by the House of Representatives of legislation that would raise the tax on cigarettes to fund an expansion of the State Children's Health Insurance Program (SCHIP) provide a timely illustration of the problem. In recent years, the states have become senior partners in the business of selling cigarettes. They collect billions of dollars annually in excise taxes and receipts from the settlement of certain legal claims. These revenues depend on sustained future cigarette sales. If smoking ended tomorrow, the states would experience a huge financial crisis.
Funding the expansion of health insurance by raising federal excise taxes on tobacco puts the federal government in the same awkward position. More...
1 Jul 2007
Markets vs. Governments:
Contaminated Chinese imports
by Richard Belzer
in Regulatory Economics, Regulatory Policy
Over the past several months increasing evidence has arisen indicating that products manufactured by Chinese firms and exported to the U.S. often do not adhere to U.S. health and safety standards.
Does the federal government need to enact new regulations to deal with these threats? More...
26 Jun 2007
New Motor Vehicle Fuel Economy Standards, Part 4:
The 'energy security' advocates
by Richard Belzer
in Regulatory Economics, Regulatory Policy
Critical support for the Senate-passed CAFE bill comes from energy security advocates, a mix of retired generals and flag officers and executives from companies that are especially vulnerable to energy price shocks.
The Energy Security Leadership Council (ESLC) is an example. The positions ESLC takes -- and the positions it doesn't -- are instructive. More...
25 Jun 2007
New Motor Vehicle Fuel Economy Standards, Part 3:
How important is fuel economy to consumers?
by Richard Belzer
in Regulatory Economics
The Senate has voted to raise corporate average fuel economy standards. Today we follow up with a post on the relative importance of fuel economy to motor vehicle purchasers. More...
24 Jun 2007
New Motor Vehicle Fuel Economy Standards, Part 2:
CAFE as command-and-control regulation
by Richard Belzer
in Regulatory Economics
The Senate has passed legislation that would significantly increase motor vehicle fuel economy, although the jury is out as to whether it will reduce fuel consumption. For example, one of the predictable consequences of higher CAFE standards is that vehicle miles traveled will increase. We've posted on this and other predictable consequences.
Today we summarize some elementary principles in the economics of regulation. They suggest why Congress is enamored of CAFE standards rather than other tools that would more effectively and efficiently reduce gasoline consumption, their stated objective. More...
23 Jun 2007
New Motor Vehicle Fuel Economy Standards:
Some easily predictable consequences
by Richard Belzer
in Legislation
H.R. 6 (Rahall) passed the House 264-163 and now the Senate 65-27, but with amendment that requires a conference. This presents a good opportunity to describe the economic implications of some of its more notable provisions.
We start with corporate average fuel economy standards for motor vehicles. More...
21 May 2007
Comprehensive Immigration Reform:
Text of the Secure Borders, Economic Opportunity and Immigration Reform Act of 2007
by Richard Belzer
in Legislation, Regulatory Policy
Earlier today we posted a comment on the comprehensive immigration bill that was negotiated by the Bush administration and selected Members of Congress. A Google News search yields over 3,000 hits, but the bill itself has not been published for public review. That makes regulatory analysis impossible, yet advocates were seeking passage this week.
Through the courtesy of Wall Street Journal reporter John Fund, who published a commentary this morning on the bill and unearthed the text, we now have a copy of the discussion draft of the bill.
Readers should beware: the text is 326 pages. More...
