PeP Update

I have incorporated a comments section in the sidebar menu so now you can disregard the posts and jump right into the riveting debates we have here.

More Endorsements

Chris Dodd has finally gotten a little pub (maybe not it was reported in the hill). He has snagged the endorsement of the International Association of Fire Fighters (IAFF) union. Not bad. Though, I wonder if this a delaying tactic for the union so that they don't have to decide on one of the big three till later.

Hillary also nabbed an endorsement (not another pornstar) from a railroad workers union- The United Transportation Union.

Survival Guide

Popular Mechanics has a survivor guide for all you survivalists bracing for peak oil or a nuclear fall out. Check it out.

Picking a Bone

Michelle Cottle over at TNR's the plank alludes to the hypocrisy line often fashionable amongst liberals in dismissing family values:

"It's not so much that Craig has been championing traditional piety for others while wallowing in his own vice--the kind of tiresome hypocrisy so often practiced by Republican congressmen who fan the family values flames even as they cheat on their wives with hottie Hill staffers. (Yes, Newt, that includes you.) Rather, Craig has been championing traditional piety for others as part of a desperate attempt to cover up a dirty little secret that he so clearly hates himself for. "

In this instance she is fisking Larry Craig for being a closet homosexual and at the same time taking a hard-line stance against homosexuals. Fine with me, I agree. Where we part though is in her broader hypocrisy charge. I agree that Newt and so many conservatives that espouse family values or the virtues of the traditional nuclear family make for awful messengers. I disagree that this nullifies the validity of their message, namely that the nuclear family or family values writ large is a good thing or represents the optimal social institution. Newt Gingrich can afford his abysmal personal character. Most Americans, however, cannot. A divorce for folks of modest income can represent substantial hardship, financial and otherwise, whose effects are usually borne by their offspring. Being born out of wedlock correlates highly with anti-social pathologies. It is in the interest of society to have healthy families. It baffles me that people find such a statement objectionable.

Blogger...

Seems to be crapping out on me. I have tried to post on Ron Paul twice and it hasn't shown up on the blog. Is this a vast anti-libertarian conspiracy?

Update: All is well, disregard post.

Ron Paul Nabs Important Endorsement

Strippers are throwing their stilettos and thongs behind Republican Presidential Candidate Ron Paul.

Larry Craig Gets His Freaky Freak On

Apparently Sen. Craig (R-ID, as in "IDAHO, no You Da Ho!") was engaging in lewd and disorderly conduct in a bathroom stall at Minneapolis-St. Paul Airport. As far as I can tell he was masturbating loudly when an undercover cop attempted to play footsie with him under the stall? I am not quite sure. Anyhow, this is a great story. My hat is off to you Sen. Craig.

Dennis Kucinich's Wife Has A MySpace Page

Check it out as she is a Stone Cold Fox!

Update: hyperlink inserted.

Republicans and Health Care

The republican candidates seem to all believe that extending the health care tax deduction to all citizens will solve all Health Care woes. Currently, if you work for a firm covered by ERISA or the government your health care is exempt from taxes thus allowing you to consume health care with pre-tax dollars rather than after-tax dollars. Now this is a great deal for upper income folks as they save $.35 for every $1 they spend on their health care premiums (the top marginal tax rate is 35%). The only people that will really benefit from the extension of the health care tax deduction are upper middle income folks who are self employed or that work for small businesses. Now it doesn't seem fair that you should get a tax deduction if you work for IBM but not if you work for yourself. So needless to say there are some unnecessary distortions. That said, though, it does nothing to address those on the lower end of the income scale. Arguably it is destructive to them as it encourages higher income folks to spend more of their money on health care than they would if they were doing so with after-tax dollars thus driving up the price for health care. The cost of this deduction to the federal government runs $200 billion a year. In order to make up this lost revenue marginal tax rates need to be higher. Instead of expanding the tax deduction how about we scrap it. You could use half of the increased revenue from scrapping the deduction to create a catastrophic reinsurance program so that the chronically ill don't get dumped from their insurance plans and give the other half back to the tax payer by reducing marginal rates.

Another One Bites the Dust

Gonzales resigns. Chertoff appears to be in line to replace him. This surprises me and strikes me as politically tone deaf. Chertoff has not exactly set world on fire as Homeland Security chief so I would not think he would be a sure thing to be confirmed as Attorney General (even though given his background he is vastly more qualified for that position than his current post). But that means that Bush will have to expend twice as many of his non-existent political chits as he will have to get two people through the senate confirmation process.

Bush UN Ambassador Rips Bush a New One

Check out this link from the NY Times. Zalmay Khalizad, basically one of the few people in this administration who has acquitted himself in the foreign policy arena rips Bush a new one. The irony here is that he is Bush's current UN ambassador. He may as well have just taken out an ad and said my boss sucks a fat one.

Preventative Care as a Free Lunch?

Here is on David Leonhardt in the Economic Scene over at the NY Times on the folly of those that argue increasing preventative care (though surely a worthy objective) is a free lunch.

Romney's Health Care Plan

The New York Times has a good write up of Romney's health care plan.

Nose Candy Submarine

A submarine full of coke was intercepted off the coast of Mexico/Guatemala (I a m aware that these are distinct countries). I just think it's cool that people are doing this (not touching on the whole illegality/foolhardiness and destructiveness of the War on Drugs).

Lindsey Gets Off

In other news, Lindsey Lohan has escaped felony charges stemming from her DUI incident where she was found with a bag of nose candy.

Obama Girl and Jenna Jameson

The Obama Girl is about to do a playboy spread and appears set to endorse Hillary. One for two ain't bad. Apparently Porn Star Jenna Jameson has endorsed Hillary as well.

hat tip: Jim Geraghty of the Campaign Spot.

Sliding Towards Hanoi

Bush gave a speech yesterday at a VFW in St. Louis. In the speech he spoke of the withdrawal from Vietnam and the devastation that ensued to the Vietnamese and Cambodians and to America's image (both moral and its ability to project power). I think one can draw this Analogy between Vietnam and Iraq, but it is ironic that the President would do so because the reason that this aspect of the analogy is apt is that all other aspects of the analogy are apt as well.

Debate Format(Sort of)

Alex Tabarrok has an interesting proposal to shake up the presidential debates, or really to replace the debates: he wants the candidates to submit to a format along the lines of one of the reality tv talent shows where instead of singing and dancing skills the candidates demonstrate things like mediation and negotiation skills.

I don't know about such a proposal, aside from the fact that it would never happen, but I do think the debates suck and need to be changed. I think it would be cool if they got rid of the moderators and time limits and held a quaker meeting style debate. Totally free form, Biden would hang himself in the first two minutes.

Chairman Yi

Sportsguy Bill Simmons has a great nickname for Milwaukee Bucks(?) rookie Yi Jianlian: The Chairman. Though, I think Chairman Yi would be better. His signature move could be called the Great Leap Forward.

In other news, Yi still to this day refuses to sign with the Bucks, thumbing his nose at Milwaukee and all of Wisconsin. As I have stated previously, I think this is stupid for a number of reasons but I will focus on the marketing of Yi which his agents have offered as a primary objection to playing in Milwaukee.

I don't think that he will be disadvantaged from a marketing perspective because the fish out of water narrative will be so compelling that he will reach a broader audience. Picture if you will Yi and Penny Marshall taping a commercial a la Laverne and Shirley for Miller Lite. It would be an instant classic. Anyhow, I do think congress should address this ASAP.

Michael Vick and Race

Michael Vick is about to plead guilty to dogfighting charges and will actually do time, somewhere between 12 months to 18 months. I think that's only appropriate. One of the things that has been interesting to observe is the media's coverage of the Vick controversy.

The media has covered this story extensively and all of the gruesome details (the electrocutions, rape stands, etc.), however, there is one element that it has sorely missed- race. And I don't think that reporters are necessarily brushing this under the carpet but are simply unaware of this dynamic.

The Michael Vick dogfighting case is quite similar to the OJ Simpson trial in that how it is perceived divides significantly on race. Admittedly, I am drawing this conclusion from a small sample: colleagues' reactions at work, a couple of radio channels, statements from other players. But I do think there is a substantial difference in the White and African-American communities in terms of their perception of dogfighting in general and the Michael Vick case in particular. I didn't anticipate this. With the OJ Simpson case, even though there was a complete irrationality in the perception of OJ's innocence or some grand conspiracy, at the root of this irrationality as it applied to OJ was a deepseated mistrust in the law enforcement community and the justice system that was well founded. I am sure to some extent this is a contributing factor in the Vick case but not one that fully explains this phenomenon. I would speculate that the difference probably comes from differing norms on pet ownership more than anything but I don't really have a clue.

Megan McArdle AKA Jane Galt On The Move

Megan McArdle is one of my favorite bloggers and her blog is now going to be hosted over at the The Atlantic along with Ross Douthat, James Fallows, Matthew Yglesias, Marc Ambinder, and Andrew Sullivan. I would hyperlink it but I just bought a Mac and haven't gotten that far.

Office Happy Hour Rules

It's midnight and I am thinking about booze. Anyhow, a couple weeks ago your loyal correspondent attended an office happy hour that ended in disaster. This experience inspired me to come up with some basic guidelines on how to avoid being stuck with an absurdly high check (I wasn't, I ran).

1. If there are more than five people ask the waiter to provide separate checks.
2. Buy your drinks from the bar. This way, at the end of the night when thirty people are converging on the bill to try to sort out who owes what you can casually walk away.
3. Bring cash. When you have failed to follow rules #1 and #2 this rule is a vital safety valve. Here is what you do, when the waiter brings the bill to your table do not, I repeat, DO NOT take the bill into your posession. Gently guide the bill to your neighbor and look over their shoulder and calculate the amount you consumed plus tax and tip, round it up and throw the wad of cash at your neighbor and run.
4. In the event that your neighbor is faster on the draw then you are and guides the check over to you: Pick up the check, calculate your amount, put your cash on the tray or folder the waiter has provided and shove it into the hands of the first person that runs towards you to satisfy guideline #3. This is called hot potato. Chuck the check and then RUN!
5. If you have not adhered to rules #1-#4 then you will be stuck with the bill and will be amazed at how many people forgot to add a drink here or tip there or are too stupid to figure tax.

The West: "extreme-sport natives"

At lunch today (in a small Wyoming town) I read the Mountain Gazette. Several articles weighed in on moral dilemmas of mixing backcountry extreme sports such as whitewater kayaking, rock-climbing, skiing, etc with conservation and impending development.

While some of the articles made provocative, useful points, some instead held a "native" (native to the West, as opposed to somebody from San Diego or Boston) viewpoint I found frustrating, something I have encountered before in the West.

Take, for example, lamentations over latte-drinking yuppies on vacation, buying second homes and ruining mountain towns that are little slices of progressive, open-minded, green, sports-loving heaven.

First, it is not just your town to lament over. The fact that you or your parents moved there fifteen years before the tide of disposable income rose does not give you exclusive rights to living there. Think about how that town was likely founded in the first place - by miners who illegally prospected on Native American lands, found a valuable mineral, then petitioned the US Army to come kill off the indigenous population.

Second, as the cost of living goes up due to the influx of new money, yes, rent will go up and that will suck. However, if you are living a ski bum or climbing bum lifestyle that relies on part-time low-wage jobs so you have more free time to pursue your sports, my sympathy is limited. Choosing the asceticism of cheap apartments and unsteady work in Jackson Hole has its obvious risks and does not yield the same rarefied viewpoint as choosing asceticism for social benefit (volunteering for humanitarian work in a poverty-stricken area, for example).

Third, extreme sports does not a conservationist make. If you want to get up in arms over new condos being built on your favorite backcountry slope, go for it - but that doesn't make you a crusader for all that is natural and good in the world. Conservation is a complicated, sprawling issue that concerns the whole landscape, and it is not centered on your favorite gnarly lines and wicked chutes.

Upset extreme sport natives, those who live in mountain towns in the west mainly for the benefits of excellent skiing, climbing, and kayaking, make some damn good points: our growing and redistributing population needs some thought and recreation can be an excellent impetus for conservation. But in some aspects, the viewpoints just seem unrealistic.

The divided, turmoiled West

In my limited international travel experience, I’ve often found that people outside the US visualize our country as two coasts, with the West between. Think cowboys and Indians, snow-capped mountains, sagebrush, ski resorts, and Denver.

I do love the Midwest, but for four years I have lived out West. My life has been in an unstable zone somewhere between “tourist” and “local.” I live in a place long enough to know the back roads, to see the bars and the shops on a slow Tuesday afternoon, to absorb the landscape. But then I move. I do not stay not long enough to become part of the true social circles, to see how a town changes over time, or get anything more than a very in-depth portrait.

Tom Robbins wrote something like “geography determines climate, climate determines culture, culture determines morals.” Bernard DeVoto wrote of the West, “Its landscape is dramatic, its climate violent. Its history is dramatic and paradoxical…its inhabitants…are a volatile, expansive people, energetic extroverts at the base of whose conciousness are tensions and conflicts.”

Do we have any readers in the West? I’ve got a bee in my bonnet about this place, and I plan to post on it. I will tag “environment” and “culture,” because perhaps more so than anyplace else in the US, those two concepts intertwine out here.

Mulally on Carbon Tax

Alan Mulally, CEO of Ford, has some smart words on the carbon tax and CAFE:

"Ford Motor Co. CEO Alan Mulally called the federal government's mandatory fuel economy requirements a failed program and suggested a tax on gasoline might do more to achieve energy independence and help the environment....
"I have never seen a market-distorting policy like CAFE," Mulally said. "It's a policy that forces you to put out more small cars than there is consumer demand for to make the bigger cars that people really do want. "You're trying to force the market instead of being market-driven."

hat tip: Greg Mankiw

Obama Says Something Sensible

Here is a snippet from an Interview over at Grist (go over and read the whole thing, he acquits himself quite well):


"Q: Do you believe that we need a carbon tax in addition to a cap-and-trade program?"

"Obama: I believe that, depending on how it is designed, a carbon tax accomplishes much of the same thing that a cap-and-trade program accomplishes. The danger in a cap-and-trade system is that the permits to emit greenhouse gases are given away for free as opposed to priced at auction. One of the mistakes the Europeans made in setting up a cap-and-trade system was to give too many of those permits away. So as I roll out my proposals for a cap-and-trade system, I will price permits so that it has much of the same effect as a carbon tax."

He makes an important point that I have been repeating ad nauseaum, you don't really have a cap in a cap and trade unless you auction permits. A good follow-up question would have been what Obama would intend to do with the resulting windfall.

Freakonomics Moves to the NY Times

The Freakonomics blog is now being hosted by the New York Times. It was inevitable.

Anyhow Stephen Dubner has presented a question to this group of notables (for lack of a better word)-Arthur Brooks, Tyler Cowen, Mark Cuban, Barbara Ehrenreich, Nassim Nicholas Taleb:

"You are walking down the street in New York City with $10 of disposable income in your pocket. You come to a corner with a hot dog vendor on one side and a beggar on the other. The beggar looks like he’s been drinking; the hot dog vendor looks like an upstanding citizen. How, if at all, do you distribute the $10 in your pocket, and why?"

I actually give money to panhandlers only if they advertise that they are going to use it for booze. I appreciate their candor.

More Stupidity From Romney

"The good news is that we have a volunteer Army and that's the way we're going to keep it," Romney told some 200 people gathered in an abbey near the Mississippi River that had been converted into a hotel. "My sons are all adults and they've made decisions about their careers and they've chosen not to serve in the military and active duty and I respect their decision in that regard."
He added: "One of the ways my sons are showing support for our nation is helping me get elected because they think I'd be a great president."

I recognize the "why aren't you/your family in Iraq" is hard question for politicians that support the war, but this is a truly pisspoor answer.

hat tip: Professor Bainbridge

Glaeser on Brooks on Obama and Edwards

Ed Glaeser has a good op-ed over at the NY Sun. In the Op-Ed he discusses Obama and Edwards' respective approaches on anti-poverty measures and argues in favor of Edwards' approach as it is person based as opposed to place-based. Edwards has been advocating housing vouchers whereas Obama seems to be hitching his wagon to a new generation of urban renewal. I am not knowledgeable in these areas but that doesn't ever stop me so here goes:

Depending on the income restrictions (i.e. assuming Edwards' proposed housing vouchers are not a middle class subsidy) they would be eminently preferable to current affordable housing solutions for lower income folks. For awhile now our solution to the housing needs of the poor is to create public housing. The problem with public housing is a little concept called peer effects. You might remember as a child how there was always one friend who your mother cautioned you against associating with. She didn't want you to become a young hoodlum and one way to guard against that was to prevent you from hanging out with other hoodlums so that their ill considered ways never rubbed off on you. That in a nutshell is peer effects, our parents have always intuitively understood it even when our politicians don't. Bundling the indigent and throwing them in a building will provide adequate shelter, but it will also foster intergenerational poverty, children being born out of wedlock, and criminality. Poor people typically lack social capital and public housing perpetuates this state of affairs.

The Truth is Frightening

Here is a quote from Jonathan Gruber of MIT on the problem of controlling costs in Health Care:

“Fundamentally, if you’re going to control health care costs, it involves denying people care they want — or things they’ve been trained to think they want,” Mr. Gruber says. “There is no easy answer.”

WSJ on the Credit Crunch

WSJ has a really good article by Greg Ip on how the recent credit crunch has come about.

Me Blogging Borjas Blogging Bloggers (Sounds Like the Lyrics of a Neil Diamond Song)

Bloggers are contemplating the possibility of forming a union. Harvard Economist George Borjas has zinger:

"I hate to burst the happy ideological bubble these bloggers are living in, but: who exactly is the employer that you are going to be negotiating with? And who exactly is going to pay your higher salary and health benefits?"

Betting Markets

Slate has a feature covering political betting markets.

Google Phone?

According to the folks over at Engadget Google is seriously considering coming out with a cell phone: the G-Phone. Sounds great. One of the reported features is that Google will actually upload all of your phone calls to a database at the National Security Agency to save them the trouble of wirelessly tapping your phone.

NYC: Nanny State Edition

The New York City Council is contemplating banning the words bitch and ho.

LA Times on Google Maps

The LA Times has an interesting article on some of the privacy concerns stemming from Google Maps. That said, they are a little late to the party, see here and here.

Interesting HealthCare Proposal

This is from Brad DeLong, UC-Berkeley Economist and former Clinton Treasury Official:

"20% Deductible/Out of Pocket Cap: The IRS snarfs 20% of your family economic income. 5% of it is an increase in taxes (but that replaces your and your employer's current health insurance premiums). 15% of it goes straight into your Health Savings Account. That HSA is then used to pay all your family health bills. If your expenses in a year are less than what's in your HSA, the balance is rolled into your IRA (or, if you prefer, returned to you with your tax refund check).
Single-Payer for the Rest: If your HSA is emptied and you still have more health bills that year, the federal government pays them. The main point, after all, is insurance: if you fall seriously sick, you want right then and there to be treated whether or not your wallet biopsy is positive.

Sin Taxes: on Tobacco, Gorgonzola, Three-Liter Bottles of Liquid High-Fructose Corn Syrup, Tanning Clinics (Melanoma), et cetera: Sin taxes (and, perhaps, someday general revenues) pay for an army of barefoot doctors and nurses and mobile treatment vans roaming the country, knocking on doors, and providing preventive and other long-run lifestyle services for free: Let me examine your prostate. Mind if I check your refrigerator and tell you how to eat healthier? Have you exercised today? I'm a Pilates instructor, and we could do a session now? Are you up on your immunizations? Anybody here have a fever and need antibiotics? Come on out to the van and I'll clean your teeth." The idea is to make the preventive care cheaper-than-free, to insure that nothing with a high long-run benefit/cost ratio gets left undone because people would rather get a bigger check the next April to use to buy an HDTV.

A Lot of Serious Research on Best Public-Health, Chronic-Disease, and Hospital Practices: Made easier, of course, by linking the payment records from the health branch of the IRS to hospital records to the wirelessly-transfered logs from the barefoot doctor vans.
That's it. No deduction for employer-paid health expenses. No insurance companies.
The key is that we face not a health-care financing crisis but a health-care treatment opportunity. Technologies are going to do marvelous things: we are going to have livers grown from our own tissue on reserve in hospital basements in case we go picnicking and eat the wrong mushrooms. We need to figure out (1) how to spread the benefits of current and future medical treatment options as widely as possible while (2) also making sure that a lot of thought and energy goes into figuring out what effective treatments have the highest benefit/cost ratios--i.e., cost least--because those are the ones we can collectively afford to do the most of, and while (3) making sure that we collectively earmark as much of our total resources to health as we really want. Government programs are good at (1). Markets are good at (2). And insurance is good at (3) if we can deliver the right incentives to insurers. These three goals are in considerable tension. The package above strikes this relatively ignorant economist as likely to give us the best chance of getting as close as possible to utopia.

Why the 20%? Because I am very impressed by the use of technology to drive the cost reductions--which means the reductions in doctor and nurse time: the increases in the number of procedures that a given treatment unit can perform, and thus in the number of people whom we can, collectively, treat--in beneficial-but-optional areas like eye surgery and lenses. It does seem to matter that consumers are cost conscious and economize when they have financial skin in the game. This is the mother of all Health Savings Account proposals.

Why the barefoot nurses? Because there are an awful lot of games where we don't want economization. This is the mother of all public-health and subsidize-preventive-medicine proposals.

Why single-payer above 20%? Because I think there's no space left for insurance companies. Insurance executives' and actuaries' incentives are horribly wrong--they are either to figure out how to exclude the sick from their coverage or to skimp on preventive stuff because twenty years hence the patient will be covered by some other company. You want doctors to have incentives to deliver necessary and appropriate care better. You don't want insurers to have incentives to deliver shoddier and cheaper care in hard-to-monitor ways."

And Yes..

I put the words Hillary and Cleavage up there because traffic is starting to flag. Guilty as charged.

Puff Piece over at the NY Times

Here is a piece over in the Politics section at the NY Times concerning the growing tension between Obama and Clinton. This is slightly more substantive than the WaPo story on Hillary's drooping neckline and flash of cleavage but still, this seems to be a bit worthless. At no point does the article highlight any policy differences or anything remotely policy related that pertains to their newly frosty relationship.

More on Consumption Taxes

Here is a little policy brief on replacing the payroll tax (as opposed to the income tax) with the consumption tax from Maya McGuineas of the New America Foundation. Anyhow, she presents some interesting ideas as to how one can embed progressivity in such a tax through progressive rates and exemptions. That said, I still owe Archduke F.F. a better crafted response to his charges against the consumption tax than my glib exemption response.

Romney Said Something Worthwhile

Here is Romney in the debate on providing health care access through the tax code:

"ROMNEY: We have to have our citizens insured, and we’re not going to do that by tax exemptions, because the people that don’t have insurance aren’t paying taxes."

This isn't entirely true because a great deal of the uninsured are people in their 20s that would rather spend the $100 a month it takes to get catastrophic coverage on going out but for the near poor who aren't covered by medicaid this certainly rings true. In terms of extending coverage to the poor this is something that can't be done by manipulating the tax code but rather will have to be on the spending side.

BTW

I saw snippets of the Republican debate in Iowa and it essentially sucked. Mitt Romney is thoroughly impressive in a vaccuum until you consider all of the crazy shit he has said recently. One of my major complaints is the extent to which no candidate on either side has discussed tax reform. Right now marginal tax rates are higher then need to be as a result of very expensive deductions (mortgage interest deduction, not treating employer provided health care as income, state and local tax deduction). The problem with these deductions is they are largely enjoyed by top earners but as a result top earners need to pay a higher marginal tax rate. Wouldn't it just make more sense to gradually get rid of these deductions and slowly reduce marginal rates. You could make the claim that you are cutting tax rates (if not taxes) while not advocating something totally reckless fiscally.

A Partial Response to Green Cowboy

GC has asked two principle questions:

1: How close is the US economy (and, if you would like, the global economy) to "unrestrained capitalism?"

2: And can a socialist economy be successfully guarded against tyranny and centralization of power?

For the purpose of this exchange I will focus on the first question. Before I tackle the question of whether capitalism in the US is restrained or unrestrained we must first define capitalism. I think capitalism boils down to: A voluntary transaction between multiple parties. The transaction could be goods, services, time, labor, whatever you like, but it is voluntary. So to the question of is capitalism restrained in the US, clearly. There are any number of goods or services that our outright prohibited (marijuana, prostitution), for better or for ill. There are also any number of interventions that impede or otherwise dictate the parameters of a transaction. For example, say I would like to sell hot dogs in downtown Minneapolis. I go buy my cart, my hot dogs, some beers and whatnot and go downtown and proceed to sell hot dogs. Well, I could do so, but in all likelihood I would have to probably get some form of a business license or otherwise risk penalty. Or, when I seek employment, my employer, presuming it is a large employer, is by law required to offer certain benefits (health care for instance), when maybe I would prefer those monies in wages (I recognize that I am in the minority here). If you go to a bar in many cities the proprietor does not have the ability to allow you to smoke cigarrettes. The ability to do certain things on the land you own may be significantly curtailed by land use ordinances. If I decide to construct an office building to lease out, there are a myriad of health and safety regulations that I must comply with before I am able lease the building. When you go to the super market and buy sweets if you read the back you might notice that instead of using cane sugar, the manufacturer has used corn syrup or fructose, or to the extent sugar is used it is beet sugar. Well this is because a stiff tariff is placed on sugar imports (largely to shield beet sugar farmers from competition but also corn producers). I don't intend to argue here whether any of the above are good or bad, I am sure some of these interventions pay for themselves and then some where as others might range from the merely obnoxious to quite costly and destructive. All of that said, the U.S. version of capitalism, while much less restrained than others, boasts many restraints.

Einstein on capitalism

From the recent biography "Einstein, his life and his universe," by Walter Isaacson (page 504):

"In [an essay] Einstein argued that unrestrained capitalism produced great disparities of wealth, cycles of boom and depression, and festering levels of unemployment. The system encouraged selfishness instead of cooperation, and acquiring wealth rather than serving others. People were educated for careers rather than for a love of work and creativity. And political parties became corrupted by political contributions from owners of great capital.

These problems could be avoided, Einstein argued in his article, through a socialist economy, if it guarded against tyranny and centralization of power."

Two questions:

How close is the US economy (and, if you would like, the global economy) to "unrestrained capitalism?"

(I recently heard an NPR interview with an ambassador from an African country who was campaigning to reduce US subsidies to our own cotton farmers, as they create a disadvantage for cotton farmers elsewhere in the world; do subsidies interfere with "unrestrained capitalism?")

And can a socialist economy be successfully guarded against tyranny and centralization of power?

SuperBus

This thing is bad ass. It is a totally different take on public transportation and I have no idea if it is economically or logistically feasible. It's a bus but more like a massive limo. And it can ride on the highway or regular streets just like a normal bus but it could also function sort of like a train and go especially designed roads at speeds up to 150 mph. The thing I find puzzling/intriguing is the people in charge of the project intend to market it as an on demand system. What that means is instead of having a route structure with certain times you would request service on the internet or phone and it would pick you up. I guess you would have to have a variable rate structure for this to work. This scheduling approach is actually being employed by DayJet (which uses Very Light Jets or its Air Taxi service). I think in aviation such a scheduling technique has a chance of working because you are still limited in terms of where you can go (airports where DayJet has gates or some sort of arrangement). With a bus in a urban area it seems like that would be a more difficult task.

Anyhow, if this makes any sense and you are curious about the SuperBus here are some links for you. Here's Autoblog on the SuperBus. Here is the official website, though, it's in Dutch (The University of Delft is designing and building the SuperBus). Here's the economist on the SuperBus.

Cool Blog

I am something of a Transportation junky (which is convenient since I work peripherally on transportation issues). Anyhow, check out the Transportblog, it has some good stuff.

Tragedy in the Twin Cities

A bridge collapsed over the Mississippi River in the Twin Cities. To be honest I am shocked. I often joke about Minnesotans being socialists and commies and the sort because of their support for high levels of taxation. But having lived in Minnesota I understand their faith in government and their support for higher levels of taxation and their misplaced hope in the federal government. Minnesotans get considerable value for their tax dollars. Roads are well maintained, schools are good, higher ed is good. So more than anything I find this tragedy suprising.

Podcast with Tyler Cowen

Over at the American.com.

Why Cap and Trade is More Politically Viable

From Greg Mankiw:

"Cap-and-trade = Carbon tax + Corporate welfare."

Three Cheers for Xtra

Wow. I'm impressed with what you boys have done with the place. It's been a long time, PePpers, since the Pied has signed onto the Pie-Eyed. But Xtra is trying to bring us old rabblerousers out of retirement. Think he can succeed? We'll see...

Labels

I have been going back and labeling the posts for our readers convenience. You will notice cleavage is a label as it appears that 99 out of 100 hits seems to be geared towards observing Hillary's cleavage. Anyhow, I am doing this in a pretty half ass manner but I would kindly take suggestions for labels. So far I have: Minnesota, Technology, Language, Culture, Taxes, Health Care. I'll add environment shortly as well (looking out for you Green Cowboy, maybe you could post).

Sarko's Vacation Plans

Sarko is coming to the States for his vacation. I am really intrigued to see how the French press covers this. He is going to Lake Winnipesaukee. I have heard it's nice but I don't know if Lake Winnipesaukee boasts a bona fide "cabin culture".

Murdoch Wins

Rupert Murdoch is now the owner of the Wall Street Journal. I have heard rumors that he is going to appoint Bill O'Reilly to head the news section.

More News on Vista

The CEO of Acer talks smack about Vista here. Computerworld has advice on how to extend the life of XP on your computer here. More speculation about manufacturers and software providers longing for keeping XP here. In the meantime, this is a good reminder, I need to order my Mac.

Capital and Income Taxes

Alan Blinder wrote a good op-ed on the taxation of carried interest and on the tax treatment of capital income and labor income more broadly. He argues persuasively that the tax code should not treat income derived from Capital and Labor differently. This is one of my pet peeves when it comes to discussing taxes. People on both sides of the aisle focus almost exclusively on marginal tax rates. Democrats especially focus on raising marginal tax rates as a way of getting the rich to pay their "fair share". There is a basic problem with this though, the super rich typically derive a great deal of their income from capital gains. Thus raising marginal tax rates may or may not enhance progressivity much at all. It will raise the amount the upper middle class pays surely, but it won't get much of Warren Buffet's money.

Here's Greg Mankiw on the Taxation of Carried Interest. Here's Mark Thoma on Blinder. Here's Tyler Cowen offering his usual contrarian take.

Another Quote that Makes Me Smile

"In my view, the tax system will always be taxing the wrong activity as long as it taxes income. Instead, the tax should be on consumption.
When you earn income, you can either spend it on consumption, save it, or give it to charity. The latter two should not generate taxes."

Courtesy of Arnold Kling.

Hillary's Cleavage Redux and I Beat Drudge

Here is more on Hillary's cleavage (or boobage if you so prefer). Hillary is delivering a crushing blow to WaPo for peering down her neckline in print. Note to John Kerry: that's crisis management.

Anyhow, this also marks a supreme triumph for the Pie-Eyed Picayune, nay, mankind. I posted on Hillary's cleavage over a week before the Drudgereport said boo. There you go Matt Drudge, I own you!!!!

I Love Dancing Prisoners

Some of you might remember my post earlier this week about the Filipino inmates performing Thriller. Well apparently these videos are becoming a world wide YouTube phenomenon necessitating an article in The Guardian today.

And due to the response of the first video the prison has released 8 more videos, of the new ones that have been released my favorite (Sister Act’s “Holy Holy Queen”) is below.

Three Cheers for David Cameron

In a speech in Kigali, Mr Cameron called for an immediate end to trade barriers, saying: "Forget the endless tortuous negotiations about getting something in return.
"Just do it. We can afford it, Africa needs it, and we will all benefit from it."

hat tip: Alex Massie of Debatable Land

Quibbles with Anti's Proposal

Anti-Everything has offered a well thought out proposal to curb carbon emissions. That said I think it is flawed in so far as Anti opts for a cap and trade system over a carbon tax. As I attempted to explain in a previous post not all cap and trade systems are created equal. I am yet to hear a politician advocate a cap and trade system where tradeable permits would be auctioned off. To the extent that cap and trade systems are proposed they tend to allocate permits on the basis of current carbon consumption. This would hardly be an equitable system as you would be existing companies at the expense of potential entrants. I think the biggest problem with a cap and trade is that it will be difficult to actually enforce a hard cap as tradeable permits will likely become the new pork factory. I could easily envision a scenario where congress will constantly create new permits for its pet industries (campaign contributors or constituent firms) and thus dilute the scarcity of permits thereby diminishing the price of tradeable permits. To make a long story short, I don't think an effective Cap and Trade system can survive the political process. It will be yet another area where Congress can claim it is "doing" something about a pressing problem without accomplishing anything.

As to carbon capture and sequestration definitely seems like its worthy of dabbling with. Anti- also suggests (I might be putting words into his mouth so I apologize in advance) mandating hybrid technology or plug-ins. If you implement a carbon tax such a mandate is unnecessary. Consumers would no longer benefit from cheap energy and would prioritize things such as fuel mileage over horsepower and torque.

Plug-ins are more in the long line of technological "silver bullets" that Washington loves but may not accomplish anything. For instance, imagine that every car today was a plug-in, would carbon emissions diminish. The answer is probably no. Tailpipe exhaust would diminish, but there would need to be more coal and gas burnt to actually provide the energy to "plug-in"to.

The Next Wave in Health Care

Check out this article from Ron Bailey in Reason. He posits that the next wave in medicine is not a given treatment or cure but rather attacking the aging process itself.

Boo-urns To Ethanol

There was a good article on Bloomberg yesterday which basically explained how inefficient and pointless the idea of Ethanol production as an alternative to gasoline consumption really is. Couple this with research from Cornell University and the University of California-Berkeley which found that in terms of energy output biofuels require, at best, 27 percent more fossil energy than the actual fuel produced.

So basically producing ethanol does virtually no good in regards to transitioning the United States to renewable energies.

Here is what I think is the best bet for a solution.

1. Plug-in Hybrid Vehicles as opposed to E85 Flex-Fuel Vehicles or current Hybrid Vehicles.
2. Implementation of a national (and eventually international) Cap-and-Trade System.
3. The development and implementation of some type of Carbon Capture and Storage System.
4. National legislation that is similar to recently passed Minnesota Legislation which sets a renewable energy requirement of 25 percent or higher by 2025.

The You-Tube Debate

I actually thought the You-Tube aspect of the CNN debate would be utterly worthless. The idea of pre-screening the videos undermined the whole appeal of YouTube and the internet in general: immediacy and interactivity. That said, I thought the YouTube questions were better than Wolf Blitzer's moderation or anything Anderson Cooper would have been able to muster on his own.

I thought Hillary was the clear winner. Her answer on the question about Bush-Clinton families potentially being in power for 28 consecutive years was very well done. To paraphrase her response "It's not my fault that the current Bush got elected, in fact I thought somebody else was elected. Just vote for me on my merits." I am not sure that is a satisfactory answer but I don't know how I would do any better. I am surprised Obama or Edwards hasn't begun harping on this point.

Obama did ok. The man is obviously smart, charming, and he comes across well on TV. I was particularly impressed with how he finessed some of the faux populist questions: "Do your kids go to public school?; Would you be willing to work for the minimum wage while president?". He essentially called these questions for what they are, bs, but in far more eloquent terms.

Biden had another strong performance. I appreciate his candor.

I thought Richardson actually had a coherent response for once. He has up until now been a complete joke in these debates but given expectations for him he acquitted himself rather well.

Gravel is an absolute crank but I actually think he should be in both debates. I don't really think his views actually could be categorized as Republican or Democrat but he occasionally says pretty interesting things.

One of the things that I find absolutely depressing is when the moderators let the candidates completely duck questions. A classic example last night was what to do about the looming entitlement disaster. Most every rational observer will tell you that there are three basic tools that you have at your disposal: 1. Raise taxes 2. Cut Benefits 3. Borrow. A YouTube spot mentioned the first two options and asked the candidates which they favored. Did a single candidate actually answer this question. Of course not.

Members Project

American Express has a little campaign called Members Project where American Express Cardholders can vote for non-profits to receive a $5 million dollar award. There are 5 finalists and among them is DonorsChoose.org, a non-profit I blogged about in the past. If you are an AmEx card holder go to this site and vote, preferably for DonorsChoose.org.

Book Review

The New York Magazine reviews Tyler Cowen's "Discovering Your Inner Economist". Tyler Cowen runs the popular blog Marginal Revolution and is an economics professor at George Mason University.

On a related note, Tyler, in drumming up sales for his book is offering to do a personalized podcast for those that have pre-ordered his book. I have already pre-ordered his book and thus will be submitting a question because I am a dork. Does anybody have any suggestions?

Quote That Makes Me Smile

"Second of all, deductions are the way that the rich make sure that they pay a lot less taxes than the upper middle class. There is a reason that Barbra Streisand thinks that income taxes should be raised; she isn't going to pay much more tax. Most of her money is in assets, earning more money. It's the guy who owns the gas station down the street who's going to get it in the teeth. If we want to tax the rich, let's tax them, not give umpteen zillion deductions so they have the same marginal rate as your average bike messenger."

Courtesy of Megan McArdle.

Three Cheers for Roger Goodell

The new NFL Commissioner has been suspending players left and right for various legal infractions and other bad behavior. Notably he suspended Tenesse Titans star cornerback Pacman Jones for 8 games. The Vick situation (for those of you unaware, Michael Vick Atlanta's QB and bigtime NFL star, has been indicted for running a dogfighting ring) presented a somewhat trickier scenario. The other players that Goodell has recently suspended have a laundry list of criminal behaviour whereas this is Vick's first incident and he has been indicted as opposed to officially tried. Vick's lack of a prior criminal record and the absence of a verdict would conceivably give Goodell some wiggle room to treat Vick, an NFL star, differently from some of the lesser known players he has already penalized. However, Goodell showed that he actually has some stones and has suspended Vick temporarily. Here is Goodell on the Vick situation:

"While it is for the criminal justice system to determine your guilt or innocence, it is my responsibility as commissioner of the National Football League to determine whether your conduct, even if not criminal, nonetheless violated league policies, including the Personal Conduct Policy," Goodell said in a letter to the quarterback."

More Vista

Here is more from James Fallows on his experience with Vista. Initial Verdict: Vista Sucks.

Hillary and Breasts

Apparently the coupling of Hillary Clinton and Breasts yields tons of hits. Cleavage is a good one too. Advice for all you neophyte bloggers. However, Romney and Scrotum, not so much.

Thriller

So I am sure there are better things for me to blog about tonight while I procrastinate on writing my final finance paper. I hear there is a democratic presidential debate tonight sponsored by CNN and YouTube. But I found this to be much more entertaining.

Apparently Michael Jackson has a rather large fan following in the Filipino prison system.

Bonds in Milwaukee

Barry Bonds has two homers to go before breaking Hank Aaron's homerun title. His next game is in Milwaukee where Aaron originally broke the record. Do your part and telepathically boo Bonds.

Hillary's Cleavage

The Washington Post has an excellent article on Hillary Clinton's recent displays of some boobage on the campaign trail. Good job WaPo, that's some crack reporting right there. I bet you scooped Us and the Enquirer.

Do us a favor though, confirm which male candidate has the saggiest scrotum.

President Cheney

Pres. Bush is undergoing a Colonoscopy and Cheney will be acting President during the procedure. Here is my question: Have the betting markets established a bet for whether or not Cheney will use this brief window to impose Martial Law?

More Google

Google has hired Super Duper Economist Hal Varian as their Chief Economist (Also a contributor to the Economic Scene over at NY Times, though, no longer). WSJ has a blog interview of him. In it he posits that Marketing will be the next Finance.

Private Sector Big Brother Lurks Among Us

I happen to be rather conflicted on the issue of Google. I suppose I am not really conflicted, I recognize them as being pedarasts that routinely invade our privacy and support the subjugation of others (read: CHINA). Nonetheless, I love, I mean love their products. Gmail is tons better than yahoo or hotmail. Google search is of course dandy. Then there is blogger which I am blogging on right now, free of charge. Google Earth, very cool. Now they are pairing street level views with their maps. I think this is great. That said, yet again, Google is bumping up against privacy concerns. They have not taken precautionary measures such as blotting out faces and license plates.

Anyhow, Google apparently has a whole fleet of camera cars to do the StreetView. They are Chevy Cobalts. So if you see a Chevy Cobalt, there is a decent chance that it is a Google Car photographing you and your surroundings.

The Hogs

For any of you who are Redskins fans this a great story by Bill Simmons on "the Hogs". Anybody, that knows football knows that the Hogs were the best offensive line ever and that Joe Jacoby is the greatest football player ever (besides Montana, LT, Jerry Rice and a whole slew of other "skill players"). Also Simmons tells briefly, all too briefly, about the story of Riggins pissing on himself while passed out on the training table before a game. Great stuff indeed.

Is Tom Vilsack a Cheap Date?

The LA Times speculate about the motivations behind Vilsack's endorsement of Hillary Clinton. Money Quote:

"Clinton campaign spokesman Phil Singer said that Clinton had made it clear early "we were going to help retire the debt" but that Clinton did not receive Vilsack's endorsement because of any offer or deal."

Of course not, all above board here.

Costco as Anti-WalMart

The New York Times has a gushing review of Costco's business practices. Give her a look. I love both Wal Mart and Costco because they have low prices.

A little on Sarko and some Bernard Henri-Levy

Check out the NY Times, there is an op-ed by Bernard Henri-Levy on why he dislikes Sarko. I gather it is supposed to be a review of Sarko's pre-election book "Testimony" but Henri-Levy only obliquely refers to the book.

Here is a bit on Sarko by Jon Vincour of the International Herald Tribune (essential the NY Times abroad).

Also check out this book review by Garrison Keillor of Bernard Henri-Levy's "American Vertigo: Traveling America in the Footsteps of Tocqueville". Keillor writes a scathing review of the book. His chief complaint with the book that the "research methodology" if you will is wanting. The book is ostensibly about America, its culture, people, religion, politics. Much in the same vein as "Democracy in America" Henri-Levy has set to explore the country as a traveler and to relay his observations. Where Henri-Levy errors, in Keillor's mind, is that he sets out almost exclusively to explore the margins of society. Henri-Levy goes to gun shows, brothels, mega churches, and jails. He interviews celebrities and politicians of all stripes but does not really grasp what is ordinary America. In that sense Keillor's criticism is valid. That said, I do think Henri-Levy, in spite of narrow spirit of his travels, demonstrates an open-mindedness and curiosity that in my experience is not common amongst Europeans (or Americans for that matter). The result is a novel that explores a caricature of America, a distinctly European caricature at that, but whose purpose is not confirm that caricature.

10k

So I am running in a 10k on Thursday. If you happen to be in Alexandria (VA) I am the one that looks like he is on the verge of a cardiac arrest. Wish me luck. If blogging is light there after I will probably be in some ICU.

How to Destroy Your Country 101

More lessons in Economics from Robert Mugabe.

Mickey, Hamas Style

Check out this article, Hamas had a mascot (?). It was an anti-semitic Mickey mouse. Score. Next up, Pat Robertson's CBN airs the world premiere of "Duff- the Homophobic Dragon."

Random Health Care Notes

I was watching bits of the John Stewart interviewing Michael Moore on the Daily Show. At one point Moore made something of a sarcastic comment about the U.S. and health care that went something like this "where else in the world would people talk about trying to get profit when treating cancer." This is a foolish if completely pervasive sentiment. One of the basic things we forget is that things like cancer have become treatable is because it is profitable, ney, lucrative to develop treatments, whether they be diagnostic technology or pharmaceuticals. That's not a bad thing, it's a good thing.

When discussing health insurance people often will speak of how their employer "pays" for their health care among various and sundry benefits. Your employer does not pay for your health care. Your employer compensates you and a portion of your benefits is health care. Your employer does not provide health care out of the goodness of his heart. People think of health insurance as some employer provided freebie when in fact it comes at the expense of higher wages you would otherwise have been paid.

Pay for Performance Drugs

Check out this article over at the NY Times. The article describes various different trial programs where national health services or insurers and pharmaceutical companies are making the drug pricing contingent on results (i.e. if jane doe dies of breast cancer jane doe's insurer does not have to pay for brand X cancer pills).

While We're on the Topic of Sex...

Mickey Kaus has a good little run down on some shoddy and sensational reporting over at the L.A. Times about Posh Spice and a Diamond Encrusted Dildo. Bunch of perverts if you ask me.

Baby Boom in Germany

The Financial Times details how the Germans have been experiencing a very recent baby boom (15% increase in births over the same time last year). They are crediting recently legislated (3 years ago) pro-natalist policies and a paradigmatic shift in the way Germans view women's participation in the labor force after child bearing (namely that they should as opposed sitting at home) contributing to the baby boom. My guess is that neither of these factors are contributing to the baby boom. First, Germany has a relatively lush welfare society and arguably much family friendlier taxation. In spite of the generous welfare state, or in my view, because of it, Europeans and Germans in particular have decided that raising a family is tiresome and expensive and by and large have opted not to. I doubt any legislation will change that conclusion.

Second, I don't think attitudes change as quickly as the financial times seems to be assuming. My guess is that the women in Germany would have a similarly high rate of labor force participation as her American counterpart but with higher expectations of her when she comes home to her hubby. This is probably in part why 1) Europeans do not get married 2) to the extent they do they don't have many children. The financial times posits a massive shift in attitude in an unbelievably short time. Attitudes towards these types of things I think evolve more slowly.

I think the baby boom is the direct result of the World Cup. The country went on a drunken binge and were genuinely excited about the event itself but also how the world received the event and Germany in turn. Everybody had a lot of sex, more casual and unprotected than usual, and we are starting to see the short run effects.

This Made Me Laugh

I must say that this article has been the highlight of my very boring day thus far. Apparently a group supporting the idea of Creationism called Answers In Genesis have opened The Creation Museum in Petersburg, KY.

CEO and president of Answers In Genesis, Ken Ham, stated at the opening of the museum that it will undo the damage done 82 years ago when Clarence Darrow put William Jennings Bryan on the stand in the famous Scopes Trial in Dayton, Tenn. "It was the first time the Bible was ridiculed by the media in America, and that was a downward turning point for Christendom," Ham says. "We are going to undo all of that here at the Creation Museum. We are going to answer the questions Bryan wasn't prepared to, and show that belief in every word of the Bible can be defended by modern science."

Free The iPhone

I think we all agree that the iPhone is pretty neat, but is it a vehicle for political change? The people at www.freetheiphone.org are sure hoping so.

Oh and don't forget about the people at www.freetheiphone.com who are simply tech developers who want a chance to play around with it.

A Very Big Misunderstanding Indeed

A Republican member of the Florida House of Representatives has been arrested for soliciting an undercover male police officer.

Why I am Finally Buying a Mac

I am about to start law school and would like to get a lap top. Windows has unfortunately screwed up my world in this department. I could get a dell or hp laptop but unfortunately they all run on Vista at this point. The reason I don't want Vista (windows new operating system) is that windows initial product releases are notoriously crappy. It will be at least a year before Windows has developed Vista to the point that it is minimally satisfactory. Most people that I know that have purchased a computer with Vista have found themselves needing substantially more RAM than if their computer had XP as an Operating system. For more on why Vista sucks go here.

"Repugnant Markets"

The BBC Radio had a little program "Repugnant Markets" where Tim Harford (of the Undercover Economist and Slate Contributor) took up the issue of transactions that many view as fundamentally immoral, such as: kindney sales, terror betting markets, and dwarf tossing. The full transcript is here.

John Mackey and the Sock Puppet Fiasco

I posted yesterday about a sockpuppet. A sockpuppet is when a blogger creates a fake blogging identity to smear his critics or detractors or to boost his own image but in the appearance. This is cowardice but in some instances their potentially legal ramifications.

John Mackey, the CEO of Whole Foods and avid blogger, apparently created his own sock puppet and would blog on Yahoo Finance! and elsewhere to talk himself up and bash the management of Wild Oats a firm his company was seeking to acquire.

Interesting Op-Ed on the SAT

Charles Murray (he of the controversial Bell Curve) argues for the abolition of the SAT.

Interesting Podcast from the Hottest Economist EVER!!!!!

Economists are not a sexy group as whole, though, with one exception: Wunderkind Emily Oster. Emily Oster is a genuine hottie. Almost as important as general hotness is her research which is also brilliant. This podcast is a less interesting aspect of her research which ranges from answering Amartya Sen's missing women conundrum to explaining higher infection rates in Sub-Saharan Africa due to greater occurence of the herp. Check it out.

Note: She is like 26 or something and has PhD. Same with her husband, Jesse Shapiro who is in his own right a wunderkind. I hate them both.

Cyber Sockpuppets

Here is article at the NY Times about what a sockpuppet is and specifically about the use of one by Lee Siegel over at the New Republic (the story isn't terribly relevant at this point).

Great Name

There is a U.S. District Court judge named Barefoot Sanders. And no Ilya, his wife is not named Barefoot and Pregnant Sanders. You sexist pig!

BTW

I thought about putting Anti's name on the poll once but I was afraid of losing.

Cindy Sheehan..

Is intending to run against Nancy Pelosi if she fails to bring impeachment charges against the president in the next two weeks.

New Phrase courtesy of Julian Sanchez

"Outrage kabuki: The disingenuous practice of hunting for any utterance by a political enemy that might serve as an excuse to work yourself (and your fellow travelers) into high dudgeon. It's a pointless distraction that has an unhealthy chilling effect."

Carbon Tax part 1million

I understand why politicians favor cap and trade over carbon taxes, one word explains it all: tax. While I think ultimately a cap and trade system could be efficient it is unlikely. For a cap and trade system to be efficient, i.e. to accurately price carbon, carbon emissions permits would need to be auctioned off. This would as a result provide the federal government with an obscene one-time revenue(probably in the order of a $1 trillion), which, from a public choice perspective is also a boon. That means the government will only have a finite period of time to piss away money raised and dole out favors and subsidies. In all likelihood, a cap and trade system would be a mess, another rent seeking cess pool. I see this for a number of reasons:

1. Perverse incentives: to the extent legislation does not auction tradeable permits but rather allocates permits on the basis of current carbon consumption it provides companies with an incentive to pollute in the near term to elevate the number of permits it receives.

2. Federalism: This has been a problem for the EU where the price of carbon permits has fallen precipitously. Individual EU member states are allowed to dedicate additional permits and as such have been doing so at a frenetic pace to favor their given energy industries. The result of additional permits flooding the market is to diminish the price of carbon, thus defeating the whole purpose.

3. Barring Market Entry: Assuming again that permits are allocated by prior consumption (call it the grandfather method) as opposed to auctions, it would seem that this advantages existing firms at the expense of new entrants. New entrants would have to buy permits in order to pollute, thus incurring a cost that existing companies do not have to bear.

So back to why carbon taxes are troublesome but I think ultimately present a better opportunity from a policy perspective and how I think they could represent good politicking. One of the manners is in which a carbon tax is plain superior to cap and trade is the likelihood that it will survive the political process and have some effect on achieving the stated goal: reducing emissions. There are no similar pitfalls on the front end of the policy process for carbon taxes as allocating too many permits in a cap and trade scenario.

The conservative fear would that carbon taxes would provide additional revenue to the government which legislators could use for graft, pork, or just in general piss away. Not to mention that it would provide a not so subtle manner in which to increase the size of the government. Liberals are probably likely to dislike a carbon tax in the manner that it is regressive. I am not sure that it would be any more regressive than a succesful cap and trade regime, as energy prices would likely be passed on to the consumer. In any case a carbon taxes regressivity is more transparent then the effects of cap and trade. I think both concerns can be effectively addressed at the same time by substituing a carbon tax for the payroll tax on a dollar to dollar basis (Al Gore has proposing to whit).

Addressing the conservative concern regarding bigger government- First, payroll taxes are dedicated to financing social security and medicare. To the extent a carbon tax serves as a ersatz financing mechanism increasing the scope of the goverment would be an irrelevant concern. Second, Given that a carbon tax is a pigovian tax, to the extent it was succesful, it would thereby reduce long run revenues, ergo, potentially reduce the size of government over time as emissions go down.

Now to the issue of regressivity- For most Americans the only tax they pay is the payroll tax which is regressive as everybody is taxed at the same rate for their first $95 k in income. For lower income Americans that don't own a car for instance (car ownership and income are correlated) a carbon tax would be much more progressive as they would be paying virtually no federal taxes.

In terms of politicking I think this will be more difficult but not untenable. I think the important thing her is to emphasize (1), that a carbon tax structured as described above would not constitute a tax hike, in fact a tax cut for many folks, and (2) emphasize the national security angle. There is much talk about energy independence which is foolhardy but for some reason politically popular. A carbon tax would provide a strong incentive for consumers to consume less carbon and for energy producers to invest more in alternative energies. The latter effect would enhance the divesity of our energy portofolio and thus make our economy less susceptible to shocks induced by unstable governments.