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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

 

 

 

I’ll have more to say later, here is the obit from my school:

St. Francis Prep
SFP Community Mourns Coach Vince O’Connor

Please pray for the repose of the soul of Coach Vince O’Connor who passed away this morning at the age of 85. His wake will be held in the Prep’s auditorium on Tuesday and Wednesday from 2-5 pm and7-9 pm each day. Funeral Mass at Prep on Thursday, February 19 at 10:30 am.

 

The son of Irish born parents, Vincent O’Connor was born in Brooklyn and attended Holy Name Elementary School and Manual Training High School (later renamed John Jay High School). While attending high school, Mr. O’Connor participated in varsity football, track, the school orchestra and served as school president. During this time he was active in the parish of St. Francis Xavier and was greatly influenced by the spiritual leadership of the Rev. John Kean.

 

After high school, Mr. O’Connor worked as a machinist for three years before entering the U.S. Army and serving eight­een months in Korea. Upon his discharge, he entered the Physical Education program at New York University and was appointed the J.V. Football Coach at St. Francis Prep by Bro. Timothy Walsh, O.S.F.

 

During his senior year at New York University Mr. O’Connor was appointed the varsity coach at St. Francis Prep by Brother Cypdan Zorskis, O.S.F. His coaching career was marked by early success as the Terriers won the Catholic High School Championship in 1955, his first year as varsity coach.

 

After graduation from New York University with a B.S. in Physical Education, Mr. O’Connor attained an M.S. in Health and Physical Education from Brooklyn College plus an M.A. and Professional Diploma in Guidance and Counseling from Teachers College, Columbia University.

 

In 1957, one year after teaching Biology at St. Francis Prep, Mr. O’Connor returned to Manual High School as a teacher of physical education. After nine years he was appointed guidance counselor at G. Westinghouse High School. One year later, Mr. O’Connor was selected as the guidance counselor for the “College Bound” program at S.J. Tilden High School.

 

During this same period, Mr. O’Connor served as coach of field events for the track team at St. Francis Prep for eight years (1953‑61). He also was head track coach at John Jay High School for four years (1962‑66).

 

In January 1971, Mr. O’Connor was appointed as Assistant Principal (supervision) for Health and Physical Education in School District 19, in the East New York area of Brooklyn. He served on many committees associated with the field of Health and Physical Education, and has also been a member of a variety of professional and social organiza­tions. In 1984, he was named an Honorary Alumnus of St. Francis Prep.

 

The Varsity Football Program at the Prep has achieved an outstanding record of success under Mr. O’Connor’s leadership, and he attributes much of this to the dedication and skill of the assistant coaches who have served with him.

 

Under Coach O’Connor, the St. Francis Prep Varsity Football Team has recorded 325 victories over the course of 60 seasons (the 2014 season was his 60th at the helm) and they have won 16 CHSFL Championships (with undefeated seasons in 1957, ’64, ’66, ’72, ’73, and ’83), including the 2005 CHSFL Championship victory over St. Peter’s ‑ the 300th win. Numerous St. Francis Prep Football Student Athletes have gone on to play at the college level and in the professional ranks.

 

Coach O’Connor was honored as National Coach of the Year in 1992, and he has been named New York’s Catholic High School Coach of the Year on twenty occasions. He has also served as President of the CHSFL.

 

In 2000 he was the recipient of The Frank McGuire Foundation Awardwhich recognizes high school coaches whose dedication and skill have a positive impact on young lives. In 2005 he was inducted into the CatholicEducation Foundation Hall of Fame, and in 2009 he was presented with the Round Tower Award by the Irish American Building Society’s Great Irish Fair Committee.

 

His loving and devoted wife, Mary; his son, Martin and his wife Anne; his daughter, Maryrose and her husband Patrick King; and his four grandchildren, Connor, Patrick, Dylan, and Siobhan have been his inspiration, and he has worn the label “Devoted Husband, Father, and Grandfather” as proudly as his title of “Coach.”

 

In celebration of more than 60 years of extraordi­nary service, and as apermanent tribute to Coach O’Connor’s selfless and tireless work with thousands of young student athletes from all walks of life, St. Francis Prep has established The Vincent and Mary O’Connor Scholarship Fundand has dedicated The Coach Vince O’Connor Physical Education and Athletic Training Center.

 

God bless this wonderful man. May he rest in peace. His legacy will endure!

 

Allow me to ask a sort of stupid (series of?) question:

(1) What does the peer-reviewed science conclude about the safety of vaccines?

(2) What does the peer-reviewed science conclude about the efficacy of vaccines in preventing disease?

OK.

(3) What does the peer-reviewed science conclude about the safety of GMO foods?

(4) What does the peer-reviewed science conclude about the efficacy of GMO foods (e.g. toward conserving water, land, etc.)?

 

It would be trite to point out the obvious inconsistency in that if you are going to invoke scientific consensus and the public well-being as reasons for supporting the use of vaccines, then you surely should be in favor of the use of GMO foods. Of course, we don’t see people line up this way. What I find most interesting is not the internal inconsistency, we have long showed that people hold all kinds of inconsistent beliefs. Why? Because they are not choosing their beliefs with “public health” or “reduced water consumption” or “best outcome” as the goal, rather they are choosing beliefs because that is what “people like us” are supposed to believe while they do not choose beliefs that “people like them” are supposed to believe.

Fine. But in this case, I find the contradictions even more compelling. The folks who are in favor of vaccines (again that’s a stupid question, what does it mean to be “in favor of” vaccines?) accede the point that we ought to give up our liberty to choose not to be vaccinated because of the overwhelming evidence that widespread vaccination is a wonderkind for public health. On the other hand, I see more vitriolic opposition to the use of  GMOs than perhaps even by the anti-vaccine crowd. And this is a bit weird. Why? At least in the case of vaccines, folks can be (somewhat) reasonably opposed to being forced to have something done to them and injected into their bodies. When it comes to GMOs, no one is forcing food down your throat in the name of public or environmental health. And the more free and prosperous our world is, the less likely that consumers would find themselves “forced” to have no choice BUT to eat GMO foods.

As I suggested above, the science on vaccines and GMOs seems quite clear. Vaccines are safe and effective (we can get into the nitty gritty, but not on this blog). GMOs are safe, cheap and effective. In one case folks support forcing people to ingest vaccines. On the other hand the same folks tend to be opposed to allow the voluntary expansion of growing GMO foods.

Now, should the government mandate vaccine use? Should it mandate that GMO crops be grown? Are these similar questions? Can appeals to self-ownership or individual liberty resolve these questions in any way? I won’t answer.

 

Just finished the thoroughly enjoyable A History of Pi by Petr Beckmann. It is over 40 years old but has aged well. It’s more than just a math book:

Then there is Roman engineering: the Roman roads, aqueducts, the Colosseum. Warfare, alas, has always been beneficial to engineering. Yet there are unmistakable trends in the engineering of the gangster states. In a healthy society, engineering design gets smarter and smarter; in gangster states it gets bigger and bigger. In World War II, the democracies produced radar and split the atom; German basic research was far behind in these fields and devoted its efforts to projects like lenses so big they could burn Britain, and bells so big that their sound could be lethal. (The lenses never got off the drawing board, and the bells, by the end of the war, would kill mice in a bath tub.)

The architectural style of the thugs also differs from that of normal societies,. It can often be recognized by the megalomaniac style of their public buildings and facilities. The Moscow subway is a faithful copy of the London Underground, except that its stations and corridors are filled with statues of homo sovieticus, a fictitious species that stands (or sits on a tractor), chin up, chest out, belly in, heroically gazing into the distance with a look of grim determination.

Or try this:

But let us return to the checkers program that can beat its own programmer. A long time ago, even when he constructed the first bow and arrow, man used his intelligence to design machines that surpassed him in speed, force, and many other qualities. Arthur Samuel’s program might be taken as an historic landmark: Somewhere near that point, man first used his intelligence to design a machine that surpassed him in intelligence. We are now only at the birth of such a machine, but eventually the intelligent computer might be to the moronic computer as the spacecraft is to the bow and arrow. There are already programs to write programs, and programs to balance assembly lines. It is therefore entirely within the realm of possibility that such a machine will eventually have the ability to reproduce itself.

“Destroy it!” is what the pious, respectable and community-minded ladies will scream when word gets out about the new computer.

Their screams have been heard before.

“Destroy it!” is what Julius Caesar screamed as his hordes put the torch to the Library of Alexandria.

“Destroy it!” is what the Grand Inquisitor screamed when he read Galileo’s Dialogues. 

“Destroy it!” is what the the Luddites screamed in 18th century England when they smashed the machinery that was supposedly responsible for their misery in the Industrial Revolution.

“Destroy it!” is what the Soviet censor screams when he sees a copy of Orwell’s 1984.

“Destroy it!” is what the Fascists of the Left screamed when they bombed or smashed computing centers in Minnesota and Montreal.

It has again become fashionable to blame science and technology for the ills of society. I have some sympathies for the Luddites who were uneducated, miserable, and desperate. I have none for the college-educated illiterates who drivel about “too much science and technology” because they want to conserve their life style by denying it to everybody else.

(1) Corporations like Walmart disproportionately benefit from the existence of antipoverty programs like Medicaid and Food Stamps. Why? Because when these are available to people, Walmart does not have to provide people with a wage that, alone, would be enough for these workers to sustain themselves since the government is already providing it.

(2) Corporations like Walmart disproportionately benefit from the existence of antipoverty programs like the Earned Income Tax Credit. Why? Because when the government provides a tax credit to people that are working, they are more likely to work, and therefore Walmart does not have to pay the workers as much as it “normally” would in order to attract them.

Only one of these can be right.

Via Scott Alexander:

Georg Wilhelm Friedrich Hegel goes up to the counter and gives a tremendously long custom order in German, specifying exactly how much of each sort of syrup he wants, various espresso shots, cream in exactly the right pattern, and a bunch of toppings, all added in a specific order at a specific temperature. The barista can’t follow him, so just gives up and hands him a small plain coffee. He walks away. The people behind him in line are very impressed with his apparent expertise, and they all order the same thing Hegel got. The barista gives each of them a small plain coffee, and they all remark on how delicious it tastes and what a remarkable coffee connoisseur that Hegel is. “The Hegel” becomes a new Starbucks special and is wildly popular for the next seventy years.

I especially liked this one:

Pierre Proudhon goes up to the counter and orders a Tazo Green Tea with toffee nut syrup, two espresso shots, and pumpkin spice mixed in. The barista warns him that this will taste terrible. “Pfah!” scoffs Proudhon. “Proper tea is theft!”

And elsewhere, this sort of disrupts popular narrative, so will be summarily ignored of course:

Lastly, we document a strong and positive relation between within-country variation in firm growth and rising wage inequality for a broad set of developed countries.  In fact, our results suggest that part of what may be perceived as a global trend toward more wage inequality may be driven by an increase in employment by the largest firms in the economy.

And this week’s edition of economic dog bites man:

The Impact of Unemployment Benefit Extensions on Employment: The 2014 Employment Miracle?
by Marcus Hagedorn, Iourii Manovskii, Kurt Mitman 

We measure the effect of unemployment benefit duration on employment. …  We find that a 1% drop in benefit duration leads to a statistically significant increase of employment by 0.0161 log points.  In levels, 1.8 million additional jobs were created in 2014 due to the benefit cut.  Almost 1 million of these jobs were filled by workers from out of the labor force who would not have participated in the labor market had benefit extensions been reauthorized.

Here is required reading for all of my Intro econ students, from my great colleague Stan Engerman:

 

The Spread of Pro- and Anti-Capitalist Beliefs

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