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Processed

Exactly what is “wrong” with processed foods? At the same time, what is “right” about something that is “hand-crafted?” Now, as a home brewer and a craft beer enthusiast, I am certainly “guilty” of favoring brewers that “hand-craft” their beer and whose ingredients, I am told, are lightly or not “processed” …

Note that “processed” does not mean, “we added nasty chemicals to it.” Indeed, when you prepare your meal at home, unless you are eating raw foods picked from your garden, you yourself are “processing” food. I am pretty sure there are as many dangerous and unhealthy “natural” and unprocessed foods just as there are surely plenty of healthful and safe processed foods. If that is in fact the case, then why is there such a fear of “processed” foods and what is the agenda of folks that use the term in a derogatory manner?

For example, I am starting a new sourdough starter today, from scratch, made with freshly ground organic rye flour. By the end, when I am ready to start baking it, the starter will have been heavily “processed” but I am sure that I would be able to get away with selling this as “made from scratch, organic, hand-made” sourdough bread.

My wife’s car took about 800 gallons of gasoline last year. My own car took about 400 gallons. Our family probably consumed another 30 gallons directly via snowblowers and lawnmowers and innumerable gallons indirectly due to the presence of gasoline in producing and shipping the many products and services we presently consume. At $4 per gallon, we are in the hole about $5,000 gasoline just to power our lives. You better bet your bacon that we are beholden to gasoline and oil companies. At $2.50 gasoline, we have about $2,000 more in our pocket every year. Think about that, in addition to being able to move ourselves around freely, we can, on top of that, afford a full gym membership, new winter boots, and a paint job in two rooms of our house every single year. Ignoring the real developmental benefits of cheap gas, from a purely selfish standpoint this is great, and I will support anything that continues to make the use of energy so incredibly affordable today,

The simple point, or 2 points, that I intend to make here should be obvious.

(1) How come any time I see the slanderous and ad hominem, “she is in the pay of XYZ!” used to dismiss the legitimacy of an argument or research effort by someone you disagree with, how come the immediate claim is that people are actually being paid by someone? In every real way, we are ALL in the pay of all of the things we consume if we like them. How come when I teach environmental economics and I argue for policies that promote a land ethic or conservation ethic, no one has ever accused me of teaching that simply because I love hiking and have an interest in expanding the largely “free” playground that my dearest hobby takes place in? Never. Or generally, if someone wants to accuse me of being in the pay of Big Oil, I much prefer the intellectually honest (and factually correct) point that I have a huge interest in seeing cheap coal and gas because I am a heavy user of both and cherish the convenience of both, and indeed the consumer surplus I enjoy from these products is hard to measure, over the intellectually cowardly point that the only reason I might ever post something about the benefits of fracking or coal or gas or the problems with biofuels or wind or solar or CCS is that some energy company paid me to do it? And how come if I happened to come out and change my mind about the efficacy of rolling out massive quantities of solar panels in the future, I would not be condemned for being in the pay of “Big Solar?”

(2) Why have I never been accused of being beholden to my employer the U of R? When I speak, I am accused of being in the pay of, say, Exxon, or Koch. Now anyone who knows me knows that I have not only not earned a penny directly from them, but that if one were to do a balance of my work, I am probably a creditor to them. Second, anyone who knows small time teaching and consulting knows that even if I am in the pay of Big Oil, they are not going to be paying me more than a few thousand dollars, certainly not the hundreds of thousands or even millions that scientists tend to secure from their federal and non-profit funding sources. But back to the basic point. Suppose my salary at the U of R is $80,000 plus consider the benefits of being able to be employed in such a nice setting to work (e.g. a HUGE library that I get to use, it seems, all by myself at times!). Further, my family depends on me keeping myself in the good graces of my employer. How come, should I argue that there are benefits to fracked gas, it is believed that I would say such a thing because some gas company managed to first pick me out of a pack of thousands of academics who might have some thoughts on the issue (how would they even know me, I am a nobody economist?), and second they managed to advance me a few thousand dollars to write a paper or make a public comment or something. That few thousand dollars, most likely a one-shot payment, is simply nothing as compared to what my employer means to me. If I am going to be the mouthpiece of anyone, it sure as heck is going to be the people and ideas that really butter my bread. You would think that not only would I be in support of the orthodoxy, but that should I happen to have even the tiniest thoughts that were outside of the orthodox views that either I had a VERY good reason to have them, or I was either provably wrong. Rarely are those possibilities embraced.

 

My university launches a new “Center for Renewable Energy.” Among my favorites:

The new center will also focus on the health impacts of changing energy resources. For example, researchers from the University’s sciences, engineering, and humanities departments will work closely with its Medical Center on inhalation, exposure, and toxicology studies to understand the health effects of both existing and new energy technologies.

Until the press release today I was not even remotely aware that such an institute was being created. Not that I am a serious scholar, but I do happen to teach the course on Environmental Economics here, so I may have a middling interest in something like this, and certainly our students might. Further, unless they are rolling economics under “sciences” departments, economists are almost uniquely capable of evaluating the impacts of existing of new and energy technologies. Why do I say that? Because by training we are ingrained to focus on ALL of the effects of various policy choices, not just the narrow impacts of particular aspects of such policies. And while I myself enjoy the humanities, I am having a hard time seeing how training in those areas is going to be particularly effective at analyzing the impacts of various energy sources on human health outcomes and economic outcomes.

And I am sure our new center is going to be a hotbed of research and seminars and lectures of this sort. And I am sure there will be myriad seminars on the potential health benefits of things like fracking.

By the way, the entire term “Renewable Energy” is close to being a chimera, perhaps we’ll dedicate a future post to it.

Health Dog Bites Man

Does paying for even some medical care out of pocket reduce costs over time? Here is the latest:

using data from 13 million individuals in 54 large US firms to estimate the effects of a firm offering CDHPs on health care spending up to three years post offer.

We find that spending is reduced for those in firms offering CDHPs in all three years post. The reductions are driven by spending decreases in outpatient care and pharmaceuticals, with no evidence of increases in emergency department or inpatient care.

By the way, and this is a HUGE by the way, an error committed by nearly everyone in discussions of living standards, costs, etc. is that spending and costs are the same thing. This paper shows that spending fell, it says nothing about costs. 

One more observation: it is a little surprising the authors find positive results nonetheless. What we have done in introducing CDHP into the current “system” is simply lay them on top of a system that is utterly incapable of handling consumer questions and desires to know pricing at the user end, and nonetheless we still see spending reductions. The next time you go to a doctor ask them what something costs and enjoy the baffled look they give you or the gymnastic routine they perform when they start to utter, “it depends.”

 

On Agendas

Is there any reason to believe that folks who have a “corporate agenda” are any more or less trustworthy, or shills, or misleading, or whatever pejorative you wish to use, than the myriad folks who have an “anti-corporate” agenda? It’s not as if there is not a huge bucketful of money and fame and celebrity that would accrue to someone who was an activist for the “cause” of either side.

On Labeling

80% of Americans, it is said, believe that food products containing DNA should be labeled.

The long-term economic and environmental consequences of climate change

or

The long-term economic and environmental consequences of climate activists

HT: someone other than me

Just finished doing my taxes. Yay, that’s both enjoyable and an incredibly valuable use of my time. I spent only about three hours so far this year getting my paperwork together, shopping for low-priced software, asking for advice, filling out my taxes, making a couple of phone calls and adjusting my withholdings for next year – I usually spend closer to 10 hours. If we say that each of the 100 million households in America, as individials, spend 3 hours per year on administering their taxes, that’s 300 million hours. If our time is worth $25 per hour (median HH income?) then we are talking about $6 billion down the tubes. If each of us spends $50 on tax software and preparation services, that’s another $15 billion down the tubes. I suspect these are vast understatements of the burden that doing (not paying) taxes places on households. I am sure the number is larger by a factor of 10 for corporations, businesses and charities.

Which brings me to my real point. Take two otherwise identical individuals, Donation Donald and Volunteer Vinny. Suppose that each has an (taxable) income of $100,000 that places them in the 25% marginal tax bracket. For simplicity’s sake, suppose that income from $0 to $50,000 are charged 10% and income over $50,000 is charged 25%. In a world with no special treatment of charitable work, each would pay $17,500 in taxes, or an average tax rate of 17.5%. Now, suppose the tax code recognizes the “value” of charitable work (I personally question whether the lion’s share of charity is value enhancing, especially to recipients, but that is for a future post). The way the current tax code works is that (up to a point) each dollar you donate to charity is allowed to be deducted from the income that you claim is taxable. Suppose that Donald donates $20,000 to a charity of his choosing (most, I argue, are not really charities as you think of them, again that’s for another post). Vinny, on the other hand, is tight-fisted with his money, but instead he decides to spend 400 hours (8 hours per week) volunteering his time for the local charity of his choice. What happens to the tax bill of each?

For Donald, his taxable income would drop to $80,000 and his tax bill would fall to $12,500,  a savings of $5,000 because he was willing to write a check for $20,000 to the “Save the Amoeba Foundation.” Vinny, on the other hand, spends all of his volunteer time caring for house-ridden elderly patients, (and a good deal of his own money commuting, communicating and so forth with the people he is helping). There is no formal charity set up, it’s just Vinny giving up his time and his own money. If his labor time is valued at $50 per hour, as his annual income indicates, he is donating the equivalent of $20,000 of his time to charity. What would his tax bill be for the year? $17,5000.

So here we have two people engaged in “charitable activities” and one faces a tax bill of only $12,5000 for donating money to a charity of questionable value (and spending no time at all aside from cutting the check) and we have another facing a tax bill of $17,500 for dedicating 8 hours per week to the care of senior citizens in his community, at great personal and time cost. Our tax code of course rewards the check writer and not the charity participator.

Yes the story is trite, and not all places you donate money to are useless and  not all things you spend time on are valuable – but the simply point is that you cannot claim the time you spend volunteering as a reduction in taxable income but almost ANYTHING You physically give away can be counted as a deduction to your taxable income. There may be very practical reasons why we cannot count volunteer hours (e.g. is what I am going right now something that could count? It certainly is being done for free, on my own time, for no profits, and for some presumed public purpose, and while I view this activity to be pretty useless, it is not much more useless than most of the things masquerading as non-profits with tax-exempt status these days) as worthy of our tax consideration, but I cannot see either a compelling moral or theoretical argument for why the giving of one’s time (perhaps the most valuable thing we have) is so disfavored by our tax system.

Are there tax systems around the world that treat volunteered time differently?

Lest you think that I favor changing the tax code to include deductions for the value of your volunteered time, my actual position is that there should not be anything called a “charity” recognized by the tax code in any way, shape or form. Again, that’s for another post.

You might think the answer is easy, “Tax the owners of capital!” Of course, capital is highly mobile today, it will only be moreso in the future as better ways to identify and locate off-shore (or off-planet) will surely be discovered. You might say, “Tax the robots when they come in?” Remember your basic tax theory, the inelastic factors are going to be nailed – which is to say, all of us impoverished former-laborers cum consumption zombies. In a world where the robots massively displace human labor, you can easily imagine that smart redistributive policies could capture a Pareto improvement, but again I’ve never seen an explanation that the redistribution wouldn’t only be difficult, but even possible at all in principle.

Now, for the record, I am a “robot optimist” – so I don’t think that smart machines are going to massively displace workers in my lifetime, on the other hand I read and think enough to understand that my optimism is not in any way scientific, so I like to prepare for the possibility.

In today’s research, I perhaps should alter my estimate of the likelihood of robot impoverishment:

Seth G. Benzell, Laurence J. Kotlikoff, Guillermo LaGarda, Jeffrey D. Sachs

NBER Working Paper No. 20941
Will smart machines replace humans like the internal combustion engine replaced horses? If so, can putting people out of work, or at least out of good work, also put the economy out of business? Our model says yes. Under the right conditions, more supply produces, over time, less demand as the smart machines undermine their customer base. Highly tailored skill- and generation-specific redistribution policies can keep smart machines from immiserating humanity. But blunt policies, such as mandating open-source technology, can make matters worse.

To quote C3PO, “We’re doomed.”  On the bright side, it’s nice to see economists that one might suggest have different world views collaborating on a paper – I rarely see such thing. So perhaps the end of productive human labor will have some other bright sides to it.

Zach’s Corner

Hello readers of The Unbroken Window.

I am but a humble college student here to fill in gaps between wintercow posts and provide other viewpoints and opinions on topics I find interesting and controversial.

And the best part is that I can’t be fired for what I talk about.

I’m look forward to getting to know the TUW community.

Zach

 

 

 

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