Re: Critiques of "Traditional" Economic Theory
Cyril Morong wrote: I could not think of a better phrase. Has anyone heard of the following books" "Debunking Economics" by Steve Keen "Death of Economics" by Paul Ormerod Anyone know if they are worth reading or if their critiques are useful? Cyril Morong I've read the first one. As far as I can tell, it's a rigourous and, to me, reasonably intuitive critique of the problems in Economics. I would appreciate anybody with more economic education to provide further insight. Xianhang Zhang
Re: paid parking a market failure?
Fred Foldvary wrote: 1. Is it the case that if the government offers street parking, given that the marginal cost of one more parked car is zero, the efficient charge is zero when uncongested and when congested, a charge just high enough to eliminate congestion? 2. If the answer to #1 is yes, then is it the case that if a private parking lot charges for parking at a time when the lot is never congested, this is socially inefficient, and a market failure? 3. Is cases #2 any different from a move theater charging admission when there are still seats available, the MC of one more viewer being zero? 4. Is it a correct proposition that government-owned parking should use marginal-cost pricing, but private parking may charge the average cost, without this being labeled socially inefficient? If so, why the difference? If not, is it socially efficient for government to own all parking lots and charge MC? Fred Foldvary This would be true if it were possible to charge different people different prices for parking based on congestion. I guess, theoretically, you could implement some sort of dynamic pricing system that changes the fee structure throughout the day but I am imagining it would be unpopular with the public who like some degree of predictability. If you must charge a single, universal price, then the cost of admitting an extra person is NOT zero because it requires you to drop prices which means you lose the revenue from all the other parkers/theatre goers. Xianhang Zhang
Poverty and Happiness
All this talk of the Laffer Curve seems to have skirted around one fundamental issue which I think economics has still failed to address to this very day. Namely, that time and time again, studies have shown that once you reach a certain standard of living, "happiness" depends not so much on absolute wealth as relative wealth. Furthermore, it seems that we value wealth on a relative scale while we value leisure on an absolute scale so a more competitive society can become less happy since we all do more work for no relative increase in wages and receive less leisure in return. I'm not arguing for a return to communism but I would like to see at least some economic modeling that reflects these findings. Xianhang Zhang
Re: Laffer Curve
James Wells wrote: I've been reading about Laffer's idea that there is a tendency for revenues to increase with increased taxation up to a point where revenue is maximized. As one of the class notes on Caplan's site indicates, you can derive revenue as a function of the tax rate and assuming that the slopes of the supply and demand curves are constants not equal to zero, you can show that the Laffer effect exists. For example, from Pd = price paid by buyer Ps = price received by seller t = tax per unit = Pd - Ps. R = revenue = tQ Supply curve: Qs = a + bPs Demand curve: Qd = c - dPd You can derive R = t(bc + da - bdt)/(b + d) Still, a lot of people have said that the Laffer curve is bunk. Are there any Laffer detractors here? If so, what must the supply and demand curves for labor look like for R(t) to be an always increasing (or at least never decreasing) function? James I'm not sure exactly what people should be objecting to. Logically, at a tax rate of 0, revenue is 0, at a tax rate of 100, revenue is zero. There exists a positive revenue for tax rates in between that range so logically, a maxima must exists within that range. Xianhang Zhang
Re: lotteries and elections
Wei Dai wrote: On Tue, Aug 31, 2004 at 08:25:16PM -0500, Jeffrey Rous wrote: When people ask me why I vote, my standard answer is "because I can." Voting simply reminds me that we have something special going here in the free world. I do a decent job of learning about the candidates and issues not because I think my single vote matters, but because, overall, voting does matter and I get a kick out of being part of the process. Maybe you know that your vote doesn't matter and still vote anyway, but I bet there is a high positive correlation among the general population between the belief that one's vote matters, and willingness to vote. Using ourselves for anecdotes in this case is a bad idea. We as a self-selected group of armchair economists already know that the probability that one's vote will make a difference in the outcome is tiny, so of course anybody who still votes will be voting for other reasons. It seems to be taken as a given that the cost/benifit analysis of voting seems to be placed firmly on the side of not-voting. Does anybody have any data to back that up? It seems to me that even though the chance that your vote would matter is rather small, the effect it can have if it does matter is very, very large. An interesting thing I've heard about from the Australian elections is that the entire fate of the country depends on as little as 20,000 people. Most electorates are "safe" and your vote doesn't matter either way, in swing states, most voters are already decided so those 20,000 people have a huge effect on the election outcomes. Xianhang Zhang
