Environmental Economics

What ive learned in southern California

Forgive any typos in this post as I am posting from my phone on our short spring break trip to southern California. Here are a few things I have learned. 1. Southern Californians like donuts and hamburgers (at least those south of la). There's either a donit shop or hamburger shop on every corner. 2. There are a lot of prii here. 3. Disney land is recession proof. That place was packed yesterday. 4. Hollywood boulevard is just as seedy as the east coast boardwalks. 5. Apparently beautiful California weather is a myth. I've seen cold and rain and wind and only one day of sun. 6. Ill never go on vacation without my laptop again.

[Insert witty "GHGs as pollution" post title here]

Two paragraphs from Environmental Capital:

The Environmental Protection Agency finally ruled that greenhouse gases endanger public health and welfare, opening the door to obligatory regulation of GHG emissions in the U.S. economy. The EPA’s move is either the first step toward a massive new regulatory scheme, or it’s a way to prod Congress into taking action on climate legislation—in the WSJ, the NYT, and the WaPo.

For now, it’s nudged edit pages into action. The WaPo renews its call for a carbon tax. Fred Krupp of EDF calls again for cap-and-trade in the WSJ. And the L.A. Times calls for anything the U.S. Chamber of Commerce won’t like.

To do list:

1. Read the links
2. Apply sarcasm and attempt at humor
3. Type it up
4. Click "save"

Then round 2 in the afternoon (also from EC):

Environmentalists versus environmentalists: The NYT chronicles the fight brewing over renewable-energy development on pristine land like the Mojave Desert.

A green vs green post! We love those!

Trying to get ready for a presentation so this may need to wait (I've already cancelled my dental appointment) ...

Don't forget the budget deficit

Last Thursday I said this:

One comment as the issue of cap-and-trade and carbon/gas tax revenue rebates is heating up ... It wasn't so long ago that a big economic problem seemed to be the future bankruptcy of the social security trust fund and today the federal budget is way, way out of whack. Why is it that carbon policy revenues are promoted as a great way to lower taxes on labor (and capital, to a lesser extent) and not as a great way to reduce deficits.

I know the answer -- it is a policy bribe to millions of people who like tax cuts and lots and lots of government services at the same time -- but want to make the case that government is going to need some additional revenue someday.

And another example appears today in Grist (A fair bargain):

As a climate change policy, President Obama's carbon cap is a winner. It gets greenhouse reductions at the lowest possible cost and spurs the innovation and invention that will drive us to a clean-energy economy.

But if folks are eyeing the carbon cap as a way to raise money to pay for clean energy programs, they are barking up the wrong tree. Unless these funds are returned to the American public, the cap will have severely regressive effects on lower-income Americans. And in the end, it would come back around to bite us by sapping support for environmental spending in the future.

While I agree that it would be rotten if climate policy is way regressive (I'm inclined towards more income equality), this piece does not contain the word "deficit" and in the U.S. we're facing big deficits. At some point the accumulated deficits (i.e., debt) will get large enough that the debt to GDP ratio will be at the point where China doesn't want our bonds, interest rates could spike, inflation, inflation, inflation, and Mankiw has a gray-boxed example of monetizing the debt right here in the U.S. That inflation tax would be even more harmful to low-income households.

If we want to reduce income inequality let's do it directly through the tax code instead of tying it to climate auction revenue.*

*Hmmm. So, right now, I want to say that all government revenue should go into the general fund and spending should be decided based on benefits and costs and not dedicated revenue (hello, gas tax/road fund, cigarette tax/health care fund!). But, I haven't thought that all the way through so I'm not going to post it.

Last Thursday I said this:

One comment as the issue of cap-and-trade and carbon/gas tax revenue rebates is heating up ... It wasn't so long ago that a big economic problem seemed to be the future bankruptcy of the social security trust fund and today the federal budget is way, way out of whack. Why is it that carbon policy revenues are promoted as a great way to lower taxes on labor (and capital, to a lesser extent) and not as a great way to reduce deficits.

I know the answer -- it is a policy bribe to millions of people who like tax cuts and lots and lots of government services at the same time -- but want to make the case that government is going to need some additional revenue someday.

I would be P.O.ed if I was a Cardinals fan (and I am now)

Someone at CBS Sports deserves a good tongue lashing / dressing down (CBS cuts away):

The University of Louisville basketball team played a suspenseful game against Siena yesterday to reach the NCAA Tournament Sweet 16. But the local television-watching audience didn't get to see a key part of it.

An almost three-minute stretch in the final five minutes, in which the Cardinals rallied from a 63-61 deficit to a 68-63 lead, was not shown. The game, which was broadcast on CBS affiliate WLKY, was interrupted by cutaways to Marquette-Missouri and USC-Michigan State.

CBS was supposed to provide a "constant feed" of live U of L game action and not cut away from the hometown team, WLKY president and general manager Glenn Haygood said.

But Haygood said CBS interrupted the broadcast for reasons unknown to him. He said there were no alternate live feeds provided by CBS that WLKY could switch to.

One channel. Umpteen games. And the TV (and Music) industries wonder why people would rather stare at their computers? (hint: it rhymes with choice).

And, oddly, I am officially rooting for the University of Louisville (and Rick Pitino) after my other two sentimental favorites have gone elsewhere. I grew up 30 minutes from UofL and the 1980 national champions preseason scrimmaged at my high school. It's a lot more fun pulling for a Kentucky team in ACC land*.  Please don't tell any other UK fans ...

*Who do you root for after UMd loses?

I'm not teaching this semester but I still care about your students

Is cigarette demand elastic or inelastic? Find two clues then give your answer in the comments section (States look at tobacco to balance the budget):

In the South, where such taxes have been lower than in the rest of the country, Arkansas has nearly doubled its tax, to $1.15 a pack, and Kentucky’s will double, to 60 cents, on April 1.

Increases are also under consideration in other tobacco-growing states like North Carolina, South Carolina and Georgia. With estimated state budget shortfalls nearing $50 billion, opponents of smoking see an opportunity to make headway with the most reluctant lawmakers. ...

A 10 percent increase in the price of cigarettes reduces consumption by 3 percent to 5 percent, according to the Centers for Disease Control and Prevention, and deters young people from picking up the smoking habit. ...

Bill Phelps, a spokesman for the Altria Group, the parent company of Philip Morris, argued that states often overestimated revenues from cigarette tax increases. From 2003 to 2007, there were 57 state tax increases, Mr. Phelps said, and in 41 cases they fell short of projections.

But Frank J. Chaloupka, an economist and director of the Health Policy Center at the University of Illinois, Chicago, said cigarette taxes had not reached the threshold of diminishing returns. “We haven’t yet seen a case where if you raise taxes you don’t raise revenues,” Mr. Chaloupka said.

New Jersey did see a decline in revenue after its last tax increase, he said, but other factors, like a comprehensive smoke-free-air law that went into effect before the increase, drove down consumption.

That last paragraph ... don't forget your mantra when analyzing policy: holding all else constant. For example, electricity prices might fall after cap-and-trade or a carbon tax are implemented, but this is in spite of the cost-raising policy. Something else must be going on at the same time to drive prices downward.

A Friday Beer Post

From today's gmail inbox:

Hello from newburycomics.com,  We thought you'd like to know that we have shipped the items listed below.  Thanks for shopping with us, and we hope to see you again soon.

Order Information:

Shipment from: Newbury Comics
Will ship via: Standard U.S. Domestic Mail
UPC            Title                              Format    #     Price     Total
103-1223220N   Autographed CD Booklet                       1      0.00      0.00
01589140462    Sarah Borges & The Broken Single...          1     15.99     15.99

I suggest that you listen to Sarah Borges and the Broken Singles while drinking a beer.

The quickest way to get stimulus money in the hands of consumers

Green Jobs Stimulus

From the inbox:

State and local governments, nonprofit organizations and tribal agencies can now apply for up to an estimated $211 million in funding that will help create jobs for redevelopment nationwide and protect communities and the environment from diesel emissions. This is EPA funding available under the American Recovery and Reinvestment Act (ARRA) of 2009 that President Obama signed into law Feb. 17, 2009.

The first time I'm using the word "bleg" (ugh)

A request from a colleague:

Who are the contemporary marxist economics scholars that I should be reading?

Any help?

NIT Challenge Update

From the inbox:

I have learned something about the NIT.  It is really hard to keep track of.  First, you don't know when they are playing the games and secondly, it is almost impossible to find the scores.  I did stumble across the Notre Dame New Mexico game last night.  I was shocked they would be playing an NIT game on TV while the NCAA was in progress.  In any event, John and I each had one correct prediction yesterday.  John picked Penn State to advance to the quarterfinals and I had Notre Dame.  Current score, "Charlie" [name changed to protect the innocent. --ed] 32, John 28.

I read today that Creighton will have about 17,000 fans in their arena on Monday.  It is supposed to be one of the toughest places you can play a road game.  

Posted so as to give Tim a good laugh.