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Tone, would it be possible to move posts from a thread that's getting respectfully derailed and glue them here?
That's possible. But while I'm here....
The importance of having respectful discussion and debate on this thread cannot be understated. The off-topic premise aside, minimizing any infraction of the Terms of Service, particularly personal attacks, will subsequently minimize above-average moderator responses to such actions.
If you are suddenly unable to track down certain posts on here, you will find them in the newly established off-topic NOVA thread.
Hmmm. Interesting, if at first a little disconcerting, concept. Worth the experiment, I suppose. There are certainly those threads in which the original premise is exhausted or otherwise eclipsed for a while by more interesting ones. It has seemed a shame at times to see those various thoughts washed down the drain simply over the rather trivial on some levels matter of their being not directly relatable to the original thread topic. The "start a new thread" advice never works, so perhaps this will be a decent compromise?
I'm not sure there is much that is more basic. The OP's statement implied a signficant elasticity where a significant INelasticity is widely thought to apply.
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Originally Posted by brooklynborndad
first off @ $100 a barrel - US oil consumption is about 18 million Barrels per day, or about 6 billion per year. Hence $600 billion in revenue per year.
This time. Oil has in the recent past also been at $100 per barrel with meaningfully different numbers for US consumption at the time.
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Originally Posted by brooklynborndad
...that less than 2/3 of total federal income tax revenue...
Receipts from federal income tax are currently in an atypical zone, having recently been depressed by the recession itself and by tax cuts enacted to combat the recession.
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Originally Posted by brooklynborndad
But demand likely WOULD drop - not only does VMT recently show some elasticity with respect to prices...
Inelasticity would typically mean "less than one", not "equal to zero", and with respect to oil, one price-elasticity may be found with respect to price increases and another found with respect to price decreases, this with each being affected by whether prices were classifiable as being either "high" or "low" at the outset.
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Originally Posted by brooklynborndad
...but such taxation would lead to fuel substitution in transportation, and impact the remaining non transportation usage of oil. So it would be less revenue. Maybe far less.
Well, we don't really have such vast storehouses of alternative fuels. That's why we are trying to develop some. The nearest substitute for doing things using petro-fuels today is often simply not doing those things at all.
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Originally Posted by brooklynborndad
But would it lower world oil prices? Total world oil production is almost 90 million barrels a day. US consumption is only 20% of that. If consumption in the US dropped by one half (which would kill his already shaky revenue dreams) that would be a drop in global quantity demanded of only 10%.
The lack of US economic activity implicit in a drop of 50% in US oil consumption would (with current technologies) have notable secondary effects (in both directions) on oil consumption in other economies.
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Originally Posted by brooklynborndad
To expect the world price of oil to drop by much more than say 10% in response is to expect global oil supply to be less elastic wrt to price than I imagine it is.
The quoted price of oil might drop 10% next week because of some related or barely related news headline or other. In the end, world oil prices have no choice but to respond to sustained changes in world demand, but these are infrequent and generally slow to materialize, leaving the role of demand overshadowed by other considerations over the relatively short-run.
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Originally Posted by brooklynborndad
anyone who has benefited from this free lesson in Micro...
With so much oil in the hands of state-owned monopolies in countries whose entire economies revolve around oil revenues, it's sometimes hard to tell whether it's micro or macro that comes into play more often.
No that would be classical economics, not neoclassical (I use neoclassical to refer to the postwar synthesis of keynesianism and with earlier neoclassical micro).
Well, some people use golf umbrellas and some use those little tiny ones that fold up and fit in your pocketbook. If nothing prior to 1945 can count as neoclassical, clearly the original work of both Marx and Keynes are right out.
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Originally Posted by brooklynborndad
Certainly Marx was well read in and influenced by Smith, Ricardo, Malthus. I suppose there are some policy recs of his that would be as close to those of the classical economists, as Coase's approach to the internalizing of pollution externalities is to the logic of Samuelson, Solow, et al, though I can't think of any.
Even Austrians presumably read the classical basics at some point. Marx meanwhile incorporates such neoclassical mainstays as rational behavior and expectations, the power of greed, and the notion of markets reaching equilibiria, unfortunate in their implications as some of those might be. In his time, economics and politics were not so well distinguished as disciplines as they are today, and some care must be taken to separate out Marx's economic thought from his poltical thought.
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Originally Posted by brooklynborndad
I am not aware the the UC grads who had a lead role in the chilean economy implemented any sort of emissions trading scheme.
Well, they held the reins for 15 years. What they produced was wild boom-and-bust swings in the economy and ever worsening pollution. Sort of like the US prior to the Progressive Era. This is not what their graphs or papers promised.
Of course where there are market failures, they need to be examined, and potentially addressed (with the caveat that sometimes fixing the market failure itself has a negative cost benefit, due to the admin cost of some fixes)
I sense the laissez-faire error of assuming that markets are such good things that we must entrust them with everything (or be called socialists on C-D), intervening in their provident operation only when evidence for it becomes so abundantly overwhelming as to be irresistible. This is what got Greenspan in trouble. It is the hammer-and-nail problem all over again. When all you have is markets, you are likely to waste a lot of time and energy trying to hammer down a tree instead of going over and picking up a saw to start out with. Markets are good at some things. When you need or want those things, give them a try. But don't expect to be able then to just walk away and wash your hands of the matter.
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Originally Posted by brooklynborndad
I dont see any particular reason to expect a market failure in emissions GHG trading any more than in any other market. If that is a concern, a carbon tax, which is also a market based approach, would be an alternative.
Failure definitely is a concern, but not because greenhouse gases are involved. It is because markets in general must be expected to produce failure in some significant degree since they do so often enough to exact a heavy toll if one is not prepared for them. Markets, like chainsaws, need to be handled with some care.
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Originally Posted by brooklynborndad
My point however, was that this... "Well, there was all that Nobel Prize hoopla over such notions when they first emerged from the usual gang at the Chicago School. As time passed, however, they all seemed to degrade into what they seem always to degrade into -- elegant graphs of ideas that rather consistently fail to produce the proposed effects in the real world. Not sure you'd be a right-winger for having advocated those ideas back in the day, but you probably would be if you did so today. "
...is incorrect. The Coase theorem has not degraded into graphs that fail to produce proposed effects in the real world. In terms of emissions trading schemes (not its only subject matter), they have been used for SO2, and indeed for CO2 in the EU (where tweaks have been required, but the consensus seems to be to keep it).
Well, we would clearly differ on the fate and residual value of Coase's work in this area then. Coase himself cautioned that the assumptions necessary to his theory would limit its practical application, and developments and analyses since have gone a long way toward demonstrating that there actually aren't any real-world circumstances under which it does apply. Thus the notion that in this case, as in Chile, all we are left with are the elegant graphs. The mere fact that market-machines continue to operate with some success and that they can or do as aspects of programs designed to address pollution problems does not validate a claim that externalities in general are market effects and are therefore market-tractable. It simply has not worked out that way, and won't.
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Originally Posted by brooklynborndad
I find it odd that you would find me a right winger for advocating an approach that is supported by Profs Krugman and DeLong, and is used by the EU.
The allegation was made by another, and upon the original defense of it (that I would have supported), I noted that one would not necessarily be taken as a right-winger for having supported Coase's work at the time, but that one might well be if still supporting it today.
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Originally Posted by brooklynborndad
One need not agree with everything that came out of UC on macro, or even on law and econ, to see useful things that came out of that time and place. To reject such a position or charecterize it as rightwing because of views on macro, or because of what happened in Chile, strikes me as being as rigid and ideological as, well, folks who think that a program to give density bonuses to developers who designate a few affordale units is a form of socialism.
What would be right-wing would be continuing to support laisez-faire, property-rights, or free-market ideas, claims, and arguments that have been quite substantially discredited and undermined. See the "zombie lies" notion that surfaced earlier in the predecessor thread or possibly some concurrent one.
Coase in particular and the monetarist and anti-government bents of the Chicago Schools in general do not suffer so much from having been right-wing as they do from having been wrong. This is a serious flaw. But not necessarily a universal one. It is still not a binary world, and being bunk in the main does not rule out the possibility of kernels and nuggets having popped up here and there.
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Originally Posted by brooklynborndad
Let me quote a great man
Who cares if the cat is black or white, as long as it catches mice?
Deng Xiaoping
Well, one might care if it suddenly stopped using the litter tray. I'm sure Deng would have agreed with that.
There is clearly a market for public goods and services. People very much do want things such as weather reports and inflation numbers and air traffic control. Not to mention defense against all enemies foreign and domestic. But these things can't be efficiently sliced up and sold two-for-a-dollar from behind a table at a flea market. They don't fit that model, so we divvy up the costs of all these public goods and services and pay for them through taxes. .
"Capitalism is part of a mixed economy. Capital is an essential ingredient for economic growth and stability, so producing some of it is a good idea. Where people -- though not Adam Smith -- tend to go wrong is in assuming that capitalism calls for the fruits of capital all to be distributed among some tiny clique or other, while the rest of society struggles along at the level of Malthusian subsistence. Smith himself deeply mistrusted capitalists and was pointed in his calls for the wealthy to support the lives of the workers. That, of course, would have been redistribution of wealth. The commie .
And as I think i have explained to Cava in this or the earlier thread, a "mixed economy" as its generally used by social scientists, does NOT refer to a society charecterized by the private ownership of the means of production, but with some redistribution of income, and/or the public provision of public goods, and/or regulation of market failures. It refers to a society in which a large portion of production is in private hands, and a large portion of the production of nonpublic goods is in public hands. The classic example would be say the United Kingdom circa 1955 - on the one hand the London Stock Exchange had many private companies, including banks, international oil companies like Royal Dutch/Shell, retailers, etc, etc -but where the electricity, coal, steel and railroad industries were entirely in state hands - and sectors like air, autos, etc were mixed.
To clarify - coal IS something that can be divvied up and sold to individual consumers - that is why public ownership of British Coal made the UK a "mixed economy" but public ownership of the Royal Navy not so much (historically coal was nationalized IIUC because peculiarities in the way labor was compensated in the british coal industry made it very difficult to establish minimum wages) There are clearly grey areas, where private business models are possible, but so laden with disadvantages that public provision is close to universal.
To the extent the USA is a mixed economy, its clearly at the "private oriented end of the spectrum" Public housing (an example of public provision of goods and services, which dont happen to be "classic public goods") would be an example fo a mixed economy. Zoning laws really aren't. In my opinion the (ON TOPIC, thank you very much moderator) program with which our discussion began, the use of zoning bonuses to encourage private developers to act in accord with certain public goals, is not evidence of a mixed economy, or "a cost of doing business in a mixed economy"
That is what this discussion was about, and its what I brought these concepts in to discuss. I am surprised that you disagree with me on this.
If you wish to continue quibbling about my use of standard terminology, and you wish to continue to use words like capitalism and mixed economy in ways that would get points taken off your grade in econ 101 or sociology 101, feel free.
Last edited by brooklynborndad; 07-01-2011 at 08:40 AM..
I'm not sure there is much that is more basic. The OP's statement implied a signficant elasticity where a significant INelasticity is widely thought to apply. .
I think the OPs (it was late than the OP, but whatever) not understanding basic arithemetic is MORE basic than the elasticity of demand. One can debate the possible elasticity of demand. One cannot debate his mistakes of magnitude.
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This time. Oil has in the recent past also been at $100 per barrel with meaningfully different numbers for US consumption at the time. .
When I said @$100, I was not referring to the current price of oil, but to OP's suggested tax.
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Receipts from federal income tax are currently in an atypical zone, having recently been depressed by the recession itself and by tax cuts enacted to combat the recession..
Which only makes OPs case weaker, and mine stronger.
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Inelasticity would typically mean "less than one", not "equal to zero", and with respect to oil, one price-elasticity may be found with respect to price increases and another found with respect to price decreases, this with each being affected by whether prices were classifiable as being either "high" or "low" at the outset. .
More importantly elasticity for any good should be higher over the long term than the short term. I think there are abundant good reasons for that in the case of the price of oil, from the time to turn over the vehicle fleets (obviously personal motor vehicles, but ALSO commercial trucks, aircraft, diesel locomotives, etc) Not to mention the stickiness in the built environment.
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"Well, we don't really have such vast storehouses of alternative fuels. That's why we are trying to develop some. The nearest substitute for doing things using petro-fuels today is often simply not doing those things at all. .
Double the price of oil and you change the economics of biofuels, dramatically. Double the price of oil and you change the economics of purchasing a hybrid vehicle, or a plug in electric. Double the price of oil and you change the economics of recycling lubricant, of getting backhauls in commercial trucking operations, of how you make plastics, of whether or not to use a power mower, of a zillion things. Some of those are not going to be responsive in the short term. Some will.
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The lack of US economic activity implicit in a drop of 50% in US oil consumption would (with current technologies) have notable secondary effects (in both directions) on oil consumption in other economies. .
I gave the OP the benefit of the doubt that ANY reduction would come from efficiencies. Even with that, his numbers didnt make sense.
Quote:
The quoted price of oil might drop 10% next week because of some related or barely related news headline or other. In the end, world oil prices have no choice but to respond to sustained changes in world demand, but these are infrequent and generally slow to materialize, leaving the role of demand overshadowed by other considerations over the
relatively short-run..
I am not sure what that has to do with my point that total US consumption is too small to to lead to a dramatic change in world price.
"Failure definitely is a concern, but not because greenhouse gases are involved. It is because markets in general must be expected to produce failure in some significant degree since they do so often enough to exact a heavy toll if one is not prepared for them. Markets, like chainsaws, need to be handled with some care. "
"Signicant" degree and "some" care are vague enough, I couldnt disagree with that. I would say that the same thing applies to regulatory mechanisms, and other public interventions, which are subject to problems from regulatory capture, to simple inflexibility.
My sense is that many of the failures of financial dereg were due to the extremes to which it was taken, which were pointed out by economists who accepted the widespread reliance on market mechanisms.
Taken literally, your paragraph above would suggest studying every new good or service to determine if the risks of using a market are worth it or not. I think that would be a grave error in public policy, and is not justified by the unique issues presented by the concentration of the financial system and associated system risks. Is it possible that Goldman will invest in social networking in such a way that it will endanger the financial system? Yes. The answer to that is to monitor and regulate system risk in the financial system, not to regulate social networking or to take stock in social networking firms off the market. Ditto, that Goldman might be brought down by leveraged investments in GHG emission credits is a reason to monitor and regulate the balance sheets of too big to fail players (or as some have suggested, to take actions to discourage or ban financial actors above a certain size or degree of interconnectdness) - its not a reason to substitute a command approach to GHG emissions for a market approach.
If you do like the latter, you should be happy. Today we are addressing GHG's by CAFE standards, subsidies to renewables, subsidies to nuclear power, and other command or subsidy approaches. We are NOT pricing carbon, with the result that a zillion possible responses, from using a handmower, to walking to the metro on a snowy day, to things we can't yet imagine, are not being given any public policy push. You can thank Freedomworks et al for this resistance to market solutions.
"If nothing prior to 1945 can count as neoclassical, clearly the original work of both Marx and Keynes are right out. "
Ive never heard of marx being referred to as neoclassical. Marshall and walras, maybe, but not Marx. Classical economics usually refers to Adam Smith, Ricardo, Malthus, etc. Neoclassical refers to the later systematization of classical thought. Keynes was certainly very well read in neoclassical economists like Marshall and Walras, as Marx was not, because, you know, Keynes came after them, and Marx before them. Since Keynes main contributions were areas where he broke substantially from neoclassical econ, he is not usually called a neoclassical economist. The "neoclassical synthesis" generally refers to the effort, strongly associated with Samuelson and others at MIT, to combine neoclassical micro with keynsian macro, and to establish a sound micro basis to keynsian macro. IIUC this effort has been pushed forward by more recent economists, including Krugman.
My strong sense is that this synthesis has not been falsified by either recent events or recent theoretical work.
"Actually, let me put it this way: the economy is a complex system of interacting individuals — and these individuals themselves are complex systems. Neoclassical economics radically oversimplifies both the individuals and the system — and gets a lot of mileage by doing that; I, for one, am not going to banish maximization-and-equilibrium from my toolbox. But the temptation is always to keep on applying these extreme simplifications, even where the evidence clearly shows that they’re wrong. What economists have to do is learn to resist that temptation. But doing so will, inevitably, lead to a much messier, less pretty view."
10 points if you can guess without googling who said that.
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