From the Positive Economist:
Government, whatever it is, isn’t a grumpy gatekeeper protecting a bottomless barrel of stuff and saying “no, no, no”. We can disagree about what government should do, of course, but let’s not pretend that there aren’t constraints.
How many stories does this apply to in a daily newspaper?
There is a point to keep in mind following the state of the union address in the USA.
We may believe that more redistribution is required to meet/maintain our social contract. That is fine. We may believe that more redistribution is “morally right”. That is fine.
But lifting taxes in of itself isn’t redistribution. The higher revenue from taxes must then be passed on to the poor – providing it directly as a transfer is the most obvious way.
Having the government lift taxes, and then arbitrarily use it for “industrial policy” or some other pet project is not redistribution – it is a large institution taking advantage of its position to waste other peoples resources for its own sense of pleasure.
If society wants redistribution it should get it, but this implies higher benefit payments (or policies that increase equality of opportunity directly) not just higher taxes. It involves actually redistributing income, not taking it and pissing it in the wind.
There is an excellent post over at Offsetting Behaviour discussing the reasons why people go vegetarian, and discussing the separation of moral and allocative issues that lead to this choice. The way I see it, there are three main reasons why a person may go vegetarian – these can be mixed and matched of course, they aren’t mutually independent.
Now I have recently gone vegetarian myself. My reasoning was the second one. This is strange given things I have previously said, I know – implicitly I do believe that if the animal only lives because it is going to be consumed, and that the life it lives is a good one, then it is morally right to eat the animal.
However, I am viciously time inconsistent. When it comes to the final stage of the animals life where it must die, I can’t handle the personal disutility I gain from the idea that the animal died to feed me. As a result of my selfish choice not to eat meat, the animals I would have consumed never get to live those beautiful free-range lives that they deserved. Not to worry though. See it here first.
Anyway, I haven’t come here to discuss myself, I’ve come here to discuss the sustainability issue.
Is meat consumption sustainable in our finite world?
Lets note something down here. Prices represent scarcity, as long as the “price is right” the consumption of meat is perfectly sustainable. As Eric says:
There’s no need for a moral imperative to reduce meat-eating. Get rid of subsidies in the agricultural sector, make sure effluent externalities are properly priced or regulated, then let relative price adjustments take care of the rest. The optimal amount of meat will be eaten, so long as we keep waving our hands about the moral questions.
However, people who do not eat meat on these grounds have exactly the same argument. They would say:
Given these sets of factors people turn around and say “what can I do”. With the price too low, there is a relative overconsumption of meat, an overutilization of land into the production of meat, an excessive degradation of the environment. In this context, it is completely consistent of people to say they will go vegetarian to deal with it – however, instead of complaining about the unsustainability of meat in of itself, it might be better that they say that the “price is wrong”. If you want to learn about how meat is stored for being sold and to be transported, get more information from this new blog post.
I would argue that governments should come together and ensure that the worst of these issues are fixed, namely that subsidises on agricultural production are removed. Then these people can get back to enjoying the consumption of meat, knowing that the higher price they are paying represents truly sustainable practices.
A very timely opinion piece in The Economist here on how energy policy should not be confused as with job creation.
Too often investment in the energy sector, especially around low-carbon energy, is held up as a way to ‘create’ jobs for the economy. This article dispels the myth:
At the risk of being obvious: energy policy is not a jobs programme. Here are three reasons why politicians shouldn’t try to create jobs through energy policy: it’s ambiguous, it’s inefficient, and, most importantly, it’s undesirable.
In summary the author’s critiques are as follows:
1. What counts as a ‘green’ job, for example? Would that job have occurred anyway? Did the ‘creation’ of that job crowd-out another job?
2. The energy sector is typically capital intensive rather than labour intensive and hence efforts to ‘create’ jobs may be better directed elsewhere.
3. More important issues exist in energy, such as accessing cheap, sustainable energy and the security of energy supply – adding a further goal of ‘job-creation’ muddles this.
Given job-creation via energy seems such a hot topic throughout much of the world right now due to weak economic activity, elections forthcoming in the US and NZ and ongoing concern with carbon emissions and a need to ‘green’ the energy sector, it’s worth keeping in mind these criticisms.
Below is an excellent guest post from Andrew Coleman on the PREFU – pointing out one of the weird assumptions that the government is relying on to “balance the books”.
“Have you read the PREFU yet?” bellowed one of my colleagues as he sauntered down the corridor at Otago University last week. “Of course not – why would anyone do that,” was my glib response.
The answer, of course, is that the PREFU is one of the great components of New Zealand’s modern democratic process. It requires that the Government provides an internally consistent set of projections about the likely state of the fiscal position over the next four or five years. Internal consistency is a marvelous thing. It means if the government announces a tax cut, the direct and indirect implications of this cut for growth, tax revenues, and the government deficit are properly calculated.
It means if the Government projects a surplus, the assumptions on the evolution of different classes of government spending are clearly portrayed. In short, it provides transparency.
Internal consistency is hard work, and we should be genuinely grateful to the Treasury analysts who do this work. All the assumptions are clearly laid out for anyone and everyone to see. If the Government is going to balance the books by imposing significant real cuts on health and education expenditure, then it will be reported and no-one has any excuse for not being provided with the information or for not having a model able to do the complex arithmetic.
Actually, it does appear that the Government is claiming the books will be balanced because of significant real cuts in the health and education sectors. This is not directly mentioned in the Executive Summary, where the focus is on the predicted growth rate (2.9 percent per annum from 2012 to 2016) and the return to surplus in the operating balance in the year to June 2015. (Mind you, the summary does mention that core Crown expenses will decline as a percentage of GDP.)
I think the statement “points to keep” in mind is currently my favourite thing around … however, I digress and I haven’t actually started the post yet.
Over at the Dim Post Danyl has an interesting point, derived from this post:
If some future entrepreneur invents a labour saving device that makes them a multi-trillionaire but puts dozens of millions of people out of work, should the government redistribute their private wealth?
To put my value judgments on the line, yes I do think that the more technological advancement we have, and the less “scarcity” exists, the more sense it makes to have more redistribution. However, that is my values – as an economist I want to put them to the side for a moment and think about the idea of allocation objectively. Here we go:
tl;dr labour saving devices are really just cost reductions – as society adjusts either people are no worse off, or everyone is better off.