Thursday, June 30, 2011

Why the Regressivity of Smoking Taxes shouldn't bother us

I’m surprised I’m writing about this, because smoking taxes seem uncontroversial. But I’ve had 2 people argue against cigarette taxes to me in the last month on the basis of their regressivity, so I figured I’d address them.


Smoking taxes are indeed regressive – they hit poor people at higher rates than rich people because more poor people smoke than rich people. Largely, we aim for progressive taxes, where rich people pay more because they can afford to.


I’m not convinced that this analysis matters when it comes to cigarette taxes. A high regressive tax rate only results in negative effects if:

1)      The activity being taxed is implicitly or explicitly a good and productive (or at the very least, necessary) activity (ie, work, consumption, savings, estate generation, etc). This is true for all taxes. The types of activities for whom regressive taxes are even worse than normal taxes are those where, holding the amount of an activity constant, we want everybody to do a little of it – like savings – and regressive taxes are more ok when, holding the amount of an activity constant, we’d prefer a few people to do a lot of it – like, arguably, smoking.

2)      The activity being taxed is potentially more productive than the marginal activity the government would spend it on (or, probably more theoretically accurately in the long term, the least productive activity the government would still spend on if instead of taxing, it rerouted spending away from its least productive activities). Again, how the behavior is distributed matters here.

3)      It cannot be avoided by switching to behavior that is equal or better in cost or desirability. This is rarely the case, but if it is, the impact of the tax doesn’t matter at all.


Disincentivizing smoking is a good thing, not a bad thing, so there is no incentive effect (from 1), and it’s something we’d strictly prefer fewer people to do in higher volume because of declining health returns to scale of smoking (which I admittedly assume). While our government is unbelievably bloated, it’s hard to see very much government spending as actually producing negative returns if you subtract out the tax effects (There are arguments for certain ethanol and energy subsidies, but even then, cheaper goods are usually good things).


Smoking is also voluntary, and switching to not smoking is desirable, not undesirable, so it fails on 3.



You could even make cigarette taxes unregressive by offsetting them with income tax cuts at low income levels, and that still makes them worth pursuing. This implicitly happens already – if there weren’t cigarette tax revenues, those tax revenues would eventually have to be made up somewhere.

Wednesday, June 29, 2011

Going to Mars - Couldn't agree more


America's human spaceflight program is now adrift. On July 8, the space shuttle is scheduled to make its final flight, and the Obama administration has no coherent plan for what to do next. Instead, as matters stand, the United States will waste the next decade spending $100 billion to support an aimless constituency-driven human spaceflight effort that goes nowhere and accomplishes nothing [TF Note: It accomplishes something if it makes human spaceflight significantly cheaper so that more people can do it more regularly – maybe even for commercial purposes. But that doesn’t detract from the rest of this article]. For NASA's human exploration effort to make any progress, it needs a concrete goal, and one that's really worth pursuing. That goal should be sending humans to Mars.


Uniquely among the extraterrestrial bodies of the inner solar system, Mars is endowed with all the resources needed to support not only life but the development of a technological civilization. For our generation and those that will follow, Mars is the New World. We should not shun its challenge.

And we are ready. As I show in detail in my just updated book, "The Case for Mars," we are much better prepared today to send humans to Mars, despite its greater distance, than we were to send men to the moon in 1961, when President John F. Kennedy started the Apollo program. We got to the moon eight years later.

There is nothing required by [his] plan that is beyond our technology.

The issue is not money. The issue is leadership. NASA's average Apollo-era (1961-73) budget, adjusted for inflation, was about $19 billion a year in today's dollars, only 5% more than the agency's current budget.


Yet, the NASA of the '60s accomplished 100 times more because it had a mission with a deadline and was forced to develop an efficient plan to achieve that mission and then had to build a coherent set of hardware elements to achieve that plan. If President Barack Obama were willing to provide that kind of direction, we could have humans on Mars within a decade…”


Monday, June 27, 2011

Not from the Onion

A dating site that only accepts beautiful people has had to remove 30,000 people who were admitted because of a computer virus...  This literally sounds like The Onion. I decline to give the site publicity, so I won't mention its name here. In other news, I may have to move to Sweden.


my favorite quotes:

"We have to stick to our founding principles of only accepting beautiful people – that's what our members have paid for," said Greg Hodge, managing director of [the site]. "We can't just sweep 30,000 ugly people under the carpet."


"We got suspicious when tens of thousands of new members were accepted over a six-week period, many of whom were no oil painting," Hodge told the Guardian.

The brutal axing of the 30,000 hopefuls is not the site's first brush with controversy. Last year, about 5,000 members were removed from the site after they had appeared to put on weight during the Christmas period.

This month, the website triggered anger in Ireland when it said that Irish men were among the ugliest in the world. This was based on the reasoning that only 9% of male Irish applicants to the site were accepted. Only 20% of Irish women are accepted, compared with nearly 70% of Swedish women who sign up.

Conceding that the latest set back was a "very embarrassing day", Hodge said he felt "very sorry" for the "unfortunate people who were wrongly admitted to the site and believed, albeit for a short time, that they were beautiful".



Wednesday, June 15, 2011

How is this even remotely anti-trust compliant?


In less than three weeks, Apple plans to begin enforcing new iTunes App Store rules prohibiting apps that include "external mechanisms for purchases ... such as a 'buy' button that goes to a web site to purchase a digital book… Its goal is to steer more of the revenue stream for content purchases through Apple's own in-app payment system, which typically nets Apple a 30% cut of the sales.”

Now read this:


Regardless of legal interpretation… by intent, this type of behavior should not be condoned under Antitrust…






Tuesday, June 14, 2011

Questions that confused me today

It is legal in the United States to pay for gametes - sperm and eggs - with the purpose of allowing infertile people to procreate. Adoption is also legal. But it's illegal to sell a baby. This makes no sense. I don't mean selling a child in terms of "ownership" of the child, I mean selling a baby to allow the baby to be raised as a child by the buyers. Why is this logical? Gametes have no purpose other than making babies, so materials solely for making babies can be sold, but babies can't? Is there any other example of this anywhere in the US? Certainly some drugs can't be sold, but materials for making drugs have other potential legitimate uses, and those that don't are generally illegal. Even the stuff sold in  drug paraphernalia shops can be used for smoking tobacco.

Refuting obvious argument number 1: you could quite easily ensure that the baby has to be sold before birth or within a short time after birth, so that the baby doesn't connect to the biological parents and is raised entirely by the new parents. This avoids the cruelty of selling a 10 year old with connections to his/her family.