Economics – Page 11 – Outrun Change

Background on comparing costs and prices across time

I often make comparisons of costs or prices across time on this blog. Doing so is difficult. I just found two resources to help understand how to do a better job.

The value of money in colonial America from the UNC School of Education explains the British currency system based on pounds. Because mercantilism was the predominant thought on how to gain wealth, manufacturing in the 1700s was done in the home country and raw materials were exported from colonies. (How much mercantilism held back the economy in the home country and every colony is a discussion for another day.)

This made manufactured goods extraordinarily expensive. Things we would think were high-priced were actually inexpensive.

For example most people could afford to buy land and build their own home but few people could afford imported sheets.

The article suggests looking at probate documents to see how things were valued. Continue reading “Background on comparing costs and prices across time”

A: 84% & minus 2%. Q: Percent of individual income taxes paid by top 20% and bottom 20% of Americans (actual for 2014)

Previously mentioned the percent of income taxes (excluding payroll taxes) projected to be paid in 2015: A: 48% & 0%. Q: Percent of individual income taxes paid by top 1% of taxpayers and bottom half (projected for 2015).

Here are actual numbers for 2014 for income taxes paid. Again, this is income tax only and excludes payroll taxes and excise taxes. The data is for quintiles of income. Each bracket of 20% of Americans includes about 65 million people. This is not based on tax returns.

Continue reading “A: 84% & minus 2%. Q: Percent of individual income taxes paid by top 20% and bottom 20% of Americans (actual for 2014)”

More on stealing raisins. Oops. I meant to say, more on implementing the New Deal.

The New Deal policy of confiscating a portion of raisins from farmers every year in order to drive up prices to consumers has been previously discussed here, here, and here.

The Wall Street Journal provides more background on this foolishness that is being considered in the Supreme Court today: The Incredible Raisin Heist / A property-rights challenge to federal marketing orders hits the Supreme Court.

I’ve been wondering what the Raisin Administrative Committee does with all those raisins after they are surrendered by the farmers. Editorial points out the government may sell the raisins on the open market, ship them overseas, or just give them away.

I have to find someone far brighter than me to explain how selling the raisins or giving them away stabilizes prices. Seems that would drop prices to what would otherwise be equilibrium or even lower.

The WSJ editorial outlines the progress of the case through the federal courts. I promise you this is a paraphrase of the editorial and not the outline of a dystopian political novel I’ve been mulling over.

Continue reading “More on stealing raisins. Oops. I meant to say, more on implementing the New Deal.”

Supreme Court to hear arguments whether feds can continue to take raisins without compensation

For reasons that defy logic, common sense, and basic morality, the federal government still has in place a New Deal era policy that raisin farmers must turn over some percentage of their crop to the federal government without compensation.

The purpose of the program is to increase prices to consumers.

No, this isn’t an April Fool’s Day post.

No, I’m not making this up.

George Will points out in his April 17 article, Shriveled grapes, shriveled liberty, the Supreme Court will finally hear oral arguments next Wednesday (4/22) on a case that has been in court for years.

Continue reading “Supreme Court to hear arguments whether feds can continue to take raisins without compensation”

Brief introduction to the Industrial Revolution

I am increasingly interested in economic history. We are now in a place of prosperity and health that would have been unimaginable 300 years ago and barely comprehensible two generations ago. How did we get to a place of such wealth?

If we can figure out an answer to that question it will be easy to figure out how to sustain what we now enjoy. More importantly, if we figure out how those of us who enjoy prosperity got here, we have a better chance of sharing it with other people living in countries more reminiscent of life 500 years ago.

I’ve been reading a lot of economics lately. You can tell from the blog posts. I want to write more on the topic.

Here is a great article on how we got here:

3/27 – A Fine Theorem – “Editor’s Introduction to The New Economic History and the Industrial Revolution,” J. Mokyr (1998) – The post describes a lengthy description of the Industrial Revolution. More on the underlying document in a moment.

The linked article gives a great summary. Here are the five major points in the article with a few aha! ideas that registered in my simple brain: Continue reading “Brief introduction to the Industrial Revolution”

The source of wealth, as explained by two musicians.

Frank Zappa and Bob Dylan explain where jobs, growth, prosperity, and wealth come from.

Hint: it isn’t from government.

“A Business Lesson by Frank Zappa”

[youtube=https://www.youtube.com/watch?v=TWXUatVuxQg&feature=player_detailpage]

[youtube=https://www.youtube.com/watch?v=TWXUatVuxQg]

(Title: A Business Lesson By Frank Zappa – youtube name in case link fails: TWXUatVuxQg )

(Link: https://www.youtube.com/watch?v=TWXUatVuxQg )

He puts out $250,000 of his own money to get a tour ready. He takes all that risk expecting it will pay off later. Here’s the deal: Continue reading “The source of wealth, as explained by two musicians.”

Update on marijuana regulation – #16

In case you were wondering, I’m watching the legalization of recreational marijuana to see what effect heavy-handed regulation has on a newly legal industry. My hypothesis? Overbearing regulation will restrict, if not strangle, an emerging industry.

Articles discussed in this post: taxes raised from recreational marijuana in Colorado may have to be returned to taxpayers and two radically different plans for legalization in Ohio.

4/1 – New York Times – In Colorado, Marijuana Taxes May Have to Be Passed Back – The taxpayer’s bill of rights in Colorado requires that when the state collects more money that it forecast on passing the state budget, the excess has to go back to taxpayers. Sounds like an okay plan, right?

Wrinkle in that plan is that all programs generating money get hit. Apparently the details in the voter approved plan will require that most or all of the money collected on sales of recreational marijuana may have to be returned to the taxpayers somehow.

To whom and how much remains to be determined. State legislators want to keep the money, of course. So they are trying to figure out how to not return it to the taxpayers.

Continue reading “Update on marijuana regulation – #16”

Brief introduction to the Industrial Revolution

If we can figure out an answer to that question we might be able to figure out how to sustain what we now enjoy. More importantly, if we figure out how those of us who enjoy the prosperity others created, we have a better chance of sharing it with other people living in countries more reminiscent of life 500 years ago.

I’ve been reading a lot of economics lately. You can tell from the blog posts. I want to write more on the topic.

Here is a great article on how we got here:

A: 48% & 0%. Q: Percent of individual income taxes paid by top 1% of taxpayers and bottom half (projected for 2015)

Table 4 of the Fairness and Tax Policy document from the Joint Committee on Taxation contains projections from the committee for 2015 tax returns. The table projects income and taxes paid by income level.

All of the following income numbers are based on a fairly broad definition of income, starting with AGI and adding items such as employer social security taxes, employer payments for health insurance, workers comp payments, and nontaxable social security benefits.

Key items that jump out at me:

Continue reading “A: 48% & 0%. Q: Percent of individual income taxes paid by top 1% of taxpayers and bottom half (projected for 2015)”

More indications of the battle between free enterprise and regulation in Washington’s recreational marijuana market

A reader pointed me toward this report from CNBC: Washington has more pot than it can smoke.

Feels like I hit a jackpot in watching the battle between free enterprise and crushing regulation. Follow along with me as I highlight the story with editorial comments on capitalism and regulation.

You may want to get a fresh cup of coffee. This will be along article.

Why so much discussion?

Why am I spending so much time writing about medical marijuana? As a general matter I don’t give a hoot about this marketplace because I have zero interest in this or any other market for intoxicants.

The medical marijuana markets are a natural experiment in a small, separately visible, newly created market and the impact regulation has on the development of that sort-of-legal industry.

Opportunities to see whether regulations strangle an industry are so limited everywhere else in the economy because other markets are large, well-developed, complex, intertwined, and have already adjusted to regulation.

With medical marijuana we can watch a brand-new industry adjust to brand-new regulations.

Back to the article.

There is apparently a huge excess supply of recreational marijuana over demand in Washington State.

Continue reading “More indications of the battle between free enterprise and regulation in Washington’s recreational marijuana market”

Some data points on pricing in newly legal recreational marijuana. We can already see distortions created by regulation.

Comments by a reader of my blog informed me that wholesale prices of state-legal-federally-illegal recreational marijuana have dropped dramatically. That got me to wondering what has happened to the pricing.

I’m am otherwise totally clueless of the pricing in this market. What I know I learn by reading the ‘net.

Just so everyone knows, I am following this story because it is a natural experiment to see the impact of crushing regulation imposed on a newly emerging industry.

The commenter shared a recent report on CNBC quoting a producer saying the wholesale prices had dropped from $1,700 to $2,200 per ounce down to $700 per ounce.

The range in price is due to different qualities. That would give wholesale prices in the range of $60 to $77 per gram in the recent past to around $25/gram currently.

That gives these data points:

Wholesale
$1,700 to $2,200 per ounce sometime prior to the CNBC article
$700 per ounce at the time of the CNBC article (date unknown)

So using the ‘net, which is the most incredible educational tool ever invented, I search for about 10 minutes and found a lot of great info. Spent another 10 minutes reading promising articles and found the following:

Continue reading “Some data points on pricing in newly legal recreational marijuana. We can already see distortions created by regulation.”

More good stuff on the open frontier of technology – 2/18

A few articles on the amazing things going on the in wide open tech frontier. Video of building an airplane. Potential for blockchain (which is the tech behind Bitcoin), we are all moving toward being entrepreneurs, and FAA’s draft rules on drone use.

1/7 – BBC – The world’s biggest ship – for 53 days – The Globe can carry 19,100 of the standard 20 foot containers. That’s equal to 4,550 of the usual container you see pulled on a big rig on the freeway. It is the largest cargo ship on the sea. It weighs in at 186,000 gross tons.

It only takes a crew of 23 to operate this ship, which shows how automated it is. The engine is so efficient that this ship uses 20% less fuel per container than a ship that can hold 10,000 TEU (I think that is the abbreviation).

Boeing – Time lapse video of airplane construction – hattip BehindTheBlack blog.

[youtube=https://www.youtube.com/watch?feature=player_embedded&x-yt-cl=84838260&v=SE71NJl-naY&x-yt-ts=1422327029]

1/22 – TechVibes – How Technology Behind Bitcoin Could Transform Accounting As We Know It – Great article providing background on blockchain, which is the core technology behind Bitcoin. Good brain stretcher on where blockchain could go.

Continue reading “More good stuff on the open frontier of technology – 2/18”

First results on marijuana tax collections in Colorado – #14

Legalization of marijuana is a natural experiment in how a newly-legal market responds to heavy regulation. First results are in on tax revenue harvested by Colorado. (lousy pun intended)

2/11 – AP at ABCNews – Colorado’s Pot Tax Tally Has Lessons for Other States – Report is in on how much tax revenue was realized from recreational marijuana.

Results? Continue reading “First results on marijuana tax collections in Colorado – #14”

Update on marijuana regulation – #13

Not a lot of news on how the recreational marijuana market is doing lately. There is some preliminary info suggesting the tax haul won’t be as big as expected. Will take more time before we can fully see how severely the regulatory burden is constricting the market.

Just as a marker for the future, I believe the heavy regulation of recreational marijuana will severely constrain the industry. We shall see. I will watch developments as they become visible.

Continue reading “Update on marijuana regulation – #13”

At $15.62 an hour you are in the top 1% of earners

Admit It: You’re Rich is a discussion from Megan McArdle.

If you are making more than about $16 an hour, you are in the top 1% of income earners in the world. If your time horizon is the last few thousand years of history, sitting in the lower end of middle class or perhaps working poor, you would be in the very tip-top of the 1% for all of history.

She is on the story of why people living on either coast are complaining they can barely get by on $350,000 a year.

I’m on it. So is David Sirota. And if your personal income is higher than $32,500, so are you. The global elite to which you and I belong enjoys fantastic wealth compared to the rest of the world: We have more food, clothes, comfortable housing, electronic gadgets, health care, travel and leisure than almost every other living person, not to mention virtually every human being who has ever lived. We are also mostly privileged to live in societies that offer quite a lot in the way of public amenities, from well-policed streets and clean water, to museums and libraries, to public officials who do their jobs without requiring a hefty bribe. And I haven’t even mentioned the social safety nets our governments provide.

So how is it that everyone who is making more than $33K a year doesn’t feel like they are incredibly, wonderfully, amazingly blessed to live a live of such luxury and comfort and ease?

Continue reading “At $15.62 an hour you are in the top 1% of earners”