A taxing idea for weight loss

Here’s an article claiming strong support for a proposal to tax junk food and use the proceeds to subsidize healthy foods  as a way to help people lose weight.

How does one define junk food?  A vegan would likely consider meat  in that class.

As agriculture is heavily subsidized  the first thing would be to remove all subsidies from all food and see what happens to prices and eating habits.  It could be that junk foods are more heavily subsidized than healthy foods.

A possible run on some banks and quantitative easing

As a general rule banks keep a small portion of their deposits as cash reserves with which to refund depositors.  Therefore if a lot of depositors demand their money back (a run on the bank) the the bank is in deep trouble.  That’s why one of the requirements to be a banker is the ability to lie with a straight face.

It’s also a reason to be concerned about this report of money being moved from European banks to American banks.

Another concern from this report is that some large American banks are charging for deposits in excess of $50 million because they don’t know what to do with it.  This doesn’t look good for another round of quantitative easing which would try to stimulate the economy by pumping more money into the banking system.

Is this money being moved from Europe to the United States as an act of faith in the U.S. economy or because its owners don’t know what else to do with it?

Who’s to blame and what do we do about the economy?

One thing of which there has been no shortage during this economic crisis is words with lots of scapegoats and ideas as to what to do.  Here’s my attempt to summarize.

Who is responsible for this mess?

The two favorites are greedy Wall Street bankers and incompetent politicians who aren’t following the policies which would most benefit the speaker.  The bankers may be greedy and the politicians may be incompetent but are they any more so than their predecessors who ruled during the golden age of prosperity?

The next groups to blame are those who won’t approve stimulus spending and those who object to spending cuts. Sometimes both groups are blamed for refusing to compromise.

Others who can be blamed are the ratings agencies who gave false assurances,  those making negative statements who are thus creating a negative feedback loop and those who spreading lies to create profit opportunities for themselves.

What can we do about the economy?

One approach is to cut government spending especially that which benefits poor people or those whose finances are precarious..  Of course we don’t want to cut government spending which finds its way into our own pockets.

The second approach is to stimulate the economy.  There are several ways of doing this including government spending, creating more money (quantitative easing and the National Infrastructure Bank) or encouraging exports and restricting imports to protect jobs. We could also use people with DBS degrees (the D stands for doctor) to convince us there is no real crisis and everything will be okay.

Now here are the answers to these two questions in the view of the author of this blog.

We are all to blame.  The basic problems is that humans have used up a lot of resources, especially those that are easily accessible,  and most of us have had a part in this.  Most of us have had nice homes, designer cars, interesting vacations, frequent restaurant meals and lots of other things.  Most of us have been demanding high returns on our pensions and savings.

So what should we do about the crisis?

If the problem really is with the resource base,  stimulating the economy will only make things worse and socking it to the poor is mean – and many more  people are likely to join them.

Therefore my vote is that everyone should be expected to accept a lower standard of living starting with those with higher than average incomes supported by taxpayers (most of whom get their high incomes from belonging to a union in a monopoly field) and those with high incomes resulting from legislation that restricts competition.  This includes people whose income comes from copyright and patent legislation and those whose income is protected by licensing requirements.

It is my fear that not enough of us care enough about our neighbors for this to actually happen.

So there you have it.  This post has added 489 words to the economic hot air.

On selling wheat and the Canadian Wheat Board

I have mixed feelings about agricultural marketing boards.  On the one hand I like competition to keep consumer prices down and on the other hand through the millennia food producers have often lived at a subsistence level and that is not fair.

The Canadian government is going to strip the Canadian Wheat Board of its exclusive powers to sell wheat and barley.

The problem for marketing boards is that any producer who can sell outside the marketing board will be able to sell at a cheaper price and therefore sell more and presumably get a better return for his work.  But if everybody sells on the open market then prices for all will go down and all will be worse off – except for us consumers.

When we drive across the Canadian prairies and see the nice farm houses, it appears most of them are doing quite well although one wonders if some that may reflect subsidies.

There is a basic problem in agriculture around the elasticity of the demand curve.  If you are making electronic gadgets and bring the price down by making more of them you can hope to sell more and your overall profits will increase.

That doesn’t always work in agriculture because when the price goes down rather than buying more food we will likely buy electronic gadgets.  If a farmer has a poor crop the price will go up and we will pay the higher prices in order to continue eating.  In theory when farmers have a poor crop they can do better than with a good crop.

I really don’t want to be a farmer although I still think that under current economic conditions a market garden would be a good investment and a good career.

The two worst things to happen to music

This guy is not a musician and only a small scale listener.  However having married into a family of musicians dynamics have required that I attend a number of musical events, some of which I have enjoyed more than others.

I have decided the two worse things to happen to music were the invention of the amplifier with 13 buttons for louder and copyright legislation.

We used to have as a neighbor a retired music professor who said, “If you can’t play it well, then play it loudly.”  Unfortunately he retired before the current crop of musicians took their training.

If we didn’t have copyright then all the money which currently goes to the superstars and the record companies would be available  to support all those professional quality musicians who currently work in other fields.  Young musicians would focus on learning to play or sing well rather than chase the almost impossible dream of becoming a superstar.   They may not earn great livings but they would probably survive and we as music consumers would enjoy the intimacy of live performances in small venues

Challenging patents

This week’s issue of The Economist has a couple of articles and an editorial on patents.

Patents are currently  a motherhood thing in economics.  To challenge them is to commit treason.  Well, here goes.

One of the features of a competitive market is that it be easy for participants to get in (and out)  To do that the technology must be known to all.  Patents work to protect the interests of those already in the market.  If we really wanted a competitive market economy we would retract all patent legislation.

Progress comes from building upon what others have done.  I have read that during the Industrial Revolution the inventors and designers frequently helped each other. Patent legislation was apparently loosely enforced, if at all.  Some of the major inventors never got rich and many died poor.

Not only does the current obsession with patents restrict competition, the large sums of money involved add to costs and eventually come out of the pockets of customers.  And in any case, do we really need all these gadgets?

Probably we would all be better off if there was no patent legislation.

Economic theory and anti-smoking graphics

So the tobacco companies are going to court to try and stop a government requirement that they show graphic anti-smoking images on cigarette packages.

I don’t smoke and I don’t like to see other people smoking.  Nor do I like to tell others not to smoke

I also like the perfect competition model which says that all participants in a market should have complete information about the products and the market conditions.  I believe it is good for governments to require firms to publish information about their business so that consumers can make informed decisions according to their own values.  This is probably the best and maybe the only way governments should interfere in the economy.

So are emotional pictures a part of the required knowledge about a product that is highly addictive?  What other information about the industry should its customers know?

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