Sunday, December 11, 2011

College Tuition Inflation

College tuition prices are, to be sure, just one example of how subsidies and taxes seldom turn out to benefit the people we hope the will benefit. Virginia Postrel sites a study about subsidizing the purchase of capital equipment, but the same can be shown in almost every area of the economy that has access to government enforced market manipulation. The effect is most exaggerated when one side of the supply and demand curve for a particular good or service is less elastic than the other side. Alex Tabarrok over at Marginal Revolution explains: ""Who pays a tax is determined not by the laws of Congress but by the law of supply and demand,” as Tyler and I say in Modern Principles. In particular, whether demanders or suppliers pay a tax is determined by the elasticities of demand and supply. The more elastic side of the market can better escape a tax, leaving more of it to be paid by the inelastic side. The same thing is true for a subsidy but in reverse, the inelastic side of the market gets the benefit of the subsidy." Take the minimum wage for instance, we want the poorest people among us to still be able to live on their wages so we set and arbitrary bottom to the cost of labor. The result is not, as we might hope, that the producer of the goods and services in question absorbs a narrower profit margin and everyone else benefits. Instead in areas of inelastic demand, like for instance food products, the price of the product is increased to cover the cost of the labor involved in it's production. We all need food so we buy it anyway and must forgo other purchases to do so. To a person of considerable wealth the loss of disposable income that comes with increased food products will be felt primarily in the loss of luxury items which are not necessary. But to the poor the choice will be much harder, losses are seen in the nutritional value of the food chosen, the loss of basic other necessities like utilities, transportation, educational needs and so on. Because the demand for food is relatively inelastic the costs are not born by the producer but rather the consumer. Poor people end up paying their own minimum wage at the grocery store and the gas pump. The list of these unfortunate unintended consequences goes on and on. Farm subsidies don't decrease the cost of food, they in fact increase the cost of both food and of farm land which in turn limits the ability of small farmers to enter into the market. Larger corporate farms succeed not by producing more and better food at a lower cost, but by gaming the system to absorb the most subsidies, often by producing less food. An intended result of many farm subsidies is an increase in market price by limiting the supply that ends up on the market. But this result is seldom seen where it's needed which is poor farmers, instead the result is seen on your dinner table. When we implemented farm subsidies to encourage the production of corn ethanol for our cars we eventually discovered that producing corn ethanol was more expensive and damaging to the environment than just using regular gasoline. This is widely accepted in the scientific community today but we still have the subsidies and we still have the required corn ethanol in our gas. Meanwhile so much corn is being used to produce fuel that the cost of using corn for feeding people and livestock has increased dramatically. We rich Americans have seen dramatic increases in the cost of food, but the result is most dramatic not here where we use the ethanol but in third world countries where people survive on abundant and cheap corn which is no longer available. For many around the world the subsidization of corn ethanol is not an issue of environmental impact but one of basic survival. We lose on all fronts with this subsidy. This is not to say that the urge to use our considerable political might for good is somehow a bad urge, but we must realize that the market is a more powerful force than government and when we attempt to push it around it pushes back. Today the complaint is that college costs too much, and to wit it does, but the problem may very well be that we're doing too much of the wrong things to fix it. We end up causing the exact problem we endeavored to eliminate.

Saturday, December 10, 2011

Drunk blogging the Republican debate

And we're done. I feel dirty

Bachman admires Cain because of his stupid tax plan because people are stupid. Ugh. My god she's a dumb cunt.

Paul admires the people who have come to agree with him... Awesome.

Mitt admires Ron Paul's qualities of leadership

The dogs are bugging me because I had dinner, even though it's not time for dinner.

7:43 Perry endorses Paul's stance on the FED.

Santorum thinks Gingrich is the guy and wants to be vp. Ha ha ha ha

Exactly ron Paul. The government fails when it tells I you how to take care of yourself.

"3rd party payer" is going to be a big point for a while.

Rick Santorum,: when did I live through hard times? Well I don't like faggots.

Ron Paul: when did I live though hard times? Well there was that great depression I lived through.

Look Ann Romney and the man that must be her mistress.

Rick Perry earned nothing the year I was born... Boo hoo. Pussy.

Rick perry is an asshole robot I swear it.

I have to say that the idea that the israelis or the Palestinians are new to the region is appalling. They have both been in the area for more than a thousand years... Shut up.t

I appologise for missions some big fails in the last ten minutes but my iPad keyboard suddenly turned retarded the problem is resolved.

Bachman wants me to know who was in rooms she was in before she was there?

When was mitt friends with benjamin netanyah? We know Newt has been for years and years.

Mitt is pissed that Newt actually knows some history?

Anybody notice that Ron Paul knows the history of the ottoman empire palestinians?

Newt is running against Jimmy Carter on the Israel issue.

Damn right stay out of the worlds issues

Ron Paul's podium is too high. It's weird.

There something really creepy about Perry's neck. He wears high collars and when it slips its like he's got weird shit under his skin, I'm not even guessing what it

We can stipulate that Evernote here thinks that securing the border is priority one? I'm not sure we can stipulate that Diane.

the founders wrote about marital infidelity.... Really Michelle?

Way to go Ron Paul the answer is the oath of office not your marriage vows

"Individuals who have been in fidelity with their spouse" I do not think this word means what perry thinks that it means

Wow "Newts a cheater" question right after the commercial? Let's see if newt can handle it.

6:42 commercial break. Fire on the Mountain makes GREAT wings.

Bachman is claiming responsibility for the Tea Party???

Santorum is running for a cabinet post

Sanatorum just called Bachman a loser

Romney is packaging himself as the states rights big government liberal...mhmmm creepy.

"I've got othe book and I wrote the book" mitt

"I frankly was floundering" newt

Rick Perry's job is to make Bachman sound sensible. Ick.

Perry and I agree on one thing, neither of us know what that sentence meant.

Ohnshit Rick perry is still here. I'm sorry Rick, I forgot you were there.

Watching Bachman speak is like watching a Disney animatronic zombie skank talk, I just can't even hear what she says.

Michelle Bachman says she's been in private business for 50 years. Hmmm

The right answer to newt is that he must not give that good advice if we had to bail his client out.

I love ron Paul but he can take a win and make it sound rambly

Does an entry level janitor in the ny school district make more than an entry level teacher? Anybody know the answer to that? Cite a source if you can

"the only reason you didn't become a career politician is that you lost to Teddy Kennedy" newt to mitt. SNAP BITCH

6:20. Romney chuckles at Gingrich electability... Keep chuckling hairpiece.

Ron Paul wants to keep tax cuts and pay for them by ending wars. Suck it everyone else.

Romney calls it the Obama economy but were sitting in a copy of Romney policy. Hmm

Diane sawyer is the least articulate person at the republican debate... That's a big accomplishment

Bachman wants to create "literally millions of dollars" of growth. This is the "win plan"

Perry is a sound bite.

Mitt Romney, prepositions are not something to end sentences with.

It's About Policing What You're Thinking

The Red Cross wants to make it illegal to violate the geneva convention, in made up places.

I'd say the urge to control the thoughts of other people was starting to get out of hand but that ship sailed a long time ago.