20
Jan
2017
Potpourri
==> The IER team (including me) respond to Obama’s article in Science.
==> A proposed Bill of Children’s Rights in California.
==> Steve Landsburg writes a touching reflection on McCloskey as a teacher at Chicago. I nitpick in the comments.
==> Bryan Caplan makes a great point about the California grocery bag rule: It’s not a tax, it’s a price floor. Textbook economics ensues.
==> Just put this Tucker Carlson interview on in the background. It gets hilarious as it unfolds. (It’s also important because I think some of you in the comments a few days ago were pointing to this group of “Demand Protesters” as evidence of some point you were making, but it turns out to be a hoax.)
I remember the first time I ran into the plastic bag charge. I had six or so books I was about to buy and they told me I had to pay for the bag. When I was told why, it annoyed me enough that I just bought the books from Amazon instead.
Regarding Bryan Caplan’s article:
“Taxes change behavior, too, but only by changing prices – leaving firms and consumers free to flexibly and creatively adapt. And instead of burning up resources on inconvenience and overly fancy bags, taxes change behavior and raise government revenue at the same time.
“Strangely, then, the only people with a halfway-decent reason to prefer California’s policy to a simple bag tax are libertarians who take the Starve the Beast strategy to its radical conclusion. Everyone else in California desperately needs to read an econ textbook before he votes again.”
Taxes don’t change behavior: individual preferences are the source of all valuations.
Rather, taxes impose opportunity costs on consumers’ preferences, thus incentivizing them to pursue a lower-ranked preference than they would absent the tax.
Taxes, therefore, reduce wealth, all other things equal.
Which means that libertarians are right to take the Starve the Beast Strategy to its radical conclusion.
Papa John and “Passing On”
https://mises.org/blog/papa-john-and-passing
“… the price of a given product is set by the demand schedules of the consumers. There is nothing in higher costs or higher taxes which, per se, increases these schedules; hence, any change in selling prices, whether higher or lower, will decrease the revenues of the business involved. For each business, on the market, tends to be, at all times, at its “maximum profit point” in relation to the consumers. Prices are already at their point of maximum return for the business; therefore, higher taxes or other costs imposed on the firm will reduce their net incomes …”
The real reason is so that voters will notice the legislators are “taking action.”
Exactly
I believe in some jurisdictions, the “bag fee” is required to be handed over to the state – the retailer does not keep it as revenue/profit.
In that case, would it properly be thought of as a tax, even though the retailer is not allowed to absorb it and give the bags away for free?
Wow! Could that bill of rights for kids in CA be a little more vague?
https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201720180SB18
CA truly stands for Crazy America.
This isn’t quite as clear as Bryan Caplan make it seem.
Is the ability to absorb the real differentiator between a tax and a price control?
Okay, so the grocer isn’t legally allowed to charge less than $0.10 per bag, but he is legally allowed to charge less on the groceries the consumer buys. So, why couldn’t a grocer absorb the bag charge?
Say that $50 worth of groceries requires five bags on average. Couldn’t the grocer segregate the bag charge (this is just an accounting adjustment) and compute a price reduction across his inventory to account for the bag charge? Now, groceries that cost the consumer $50 costs the consumer $49.50. What law would prevent a grocer from doing this?
Isn’t where the money collected from the bag fee goes the real differentiator? If the money collected then flows directly to the state, then it’s a tax. What I understand of the bag fee that’s not the case. The stores collect the fee, but they don’t turn it over to the state. On the other, they are limited in what they can do with the fee collected. The state mandates where and how the money is spent.
The problem is that the state wants to signal that you pay more for using a bag, regardless of how the merchant handles the cost. A similar dynamic is when the state hides the cost of gas taxes by insisting on the tax being hidden in a single price; when government raises the gas tax it looks like the merchant is getting more money.
Great response on the Deirdre blog post there Dr Murphy. You did it again, witty and precise. I still believe that albeit her theoretical description of population growth fomenting more wealth upholds, despite the terrible use of fallacious mainstream economic formulas. Misunderstanding inflation has been the bane of mainstream economics since it was first contrived.
I heed the Bible, it seems to hold all of the answers. I know your position on population growth and government tools used in failing to mitigate it, so it is unfortunate Deidre’s ambitions got the best of her. Certainly the Austrian perspective of understanding the business cycle allows us to see it is the very government monopolies that create all of the poverty in the world, most specifically the central bank. Most likely populations would grow at an appeased rate if there weren’t so much money pumping.
Thanks for still being that amazing Rothbard us Austrians need. You win!
I have a lot to say about plastic bag bans , having worked in DC when they implemented theirs , and then moving to CA. Incidentally, the liberal (and wealthy) coastal cities had local plastic bag bans for years, which was frustrating for me as an out-of-town visitor to Berkeley, Morro Bay, Santa Barbara, etc …
It also seems very anti-poor to me. I could picture a working mother getting off the DC Metro and having to lug home groceries in her arms to save money on bags. Is she really going to haul reusable bags to work everyday?
But I do have an economic question, now that the ban is in full effect. My usual grocery store, which gave a 5¢ credit for bringing your own bag for years, just announced that they are ending this practice. They specifically cite California’s new law as the reason. I intuited this might happen but would be interested in a professional economist’s explanation.