Tuesday, September 27, 2011

Professor Mankiw's frustrating comment - with no chance to comment!

© 2011 Joshua Stark

Sorry for the non-environmental post, but the Harvard Econ. Professor Greg Mankiw has me a tad frustrated this morning.

I'm no economist, and so, if he cared to, I'm sure Mr. Mankiw could come in and take apart my comments here, (frankly, I'd love that, because I want an accurate representation of economics out in the public, and where I'm mistaken, I want to be corrected).  My real problem is that the Professor posts to a blog, but doesn't allow comments.

First, I would hope Mr. Mankiw would understand that the interactive nature of the internet makes it a world-changing phenomenon, and participate wholeheartedly in this interaction.  Second, I think by opening comments, Mr. Mankiw would watch his own posting a bit more carefully.  Case in point:

I'm poking through the cadre of economic minds on-line (starting at Env-Econ, of course) this morning, and I come across a little post by Prof. Mankiw.  He ends this three-sentence post with:

"If you can remember only one fact, make it this one: The middle class (middle quintile) pays 14.1 percent of its income in federal taxes, while the rich (top tenth of one percent of the population) pay 30.4 percent."

Of course, I'm frustrated by this comment, because it misses a basic economic concept, "diminishing marginal utility".  But, when I scroll to the bottom of the page to respond, I find no way to comment!

So, I'm taking time to point out a couple of mistakes that Mr. Mankiw makes in his implication (as I understand it, he is implying here that our federal tax system is sufficiently progressive).

First of all, as he points out, the richest 1/10 of 1% pay about double in "federal taxes" (we'll get to that definition in a minute) what the middle quintile pays.  My immediate question:  What is 14% to a person making the middle quintile vs. 30% to one of the richest 1/10th?  So, I follow the link he posted, and I find that the middle quintile is defined as people making between ~ $34k and $62k, while the richest 1/10th are defined as making over about $2,468,000.

Then I ask:  What is the marginal utility of this money - the relative impact of 14% on $34k ($4760) vs. 30% on $2,468,000 ($740,400)?  Am I the only one to see that the five grand is way more valuable to the person making $34k than the $750K is to the person making the nearly $2.5 million?  If you don't see that, then realize that I just swallowed the poorer persons yearly after-tax salary in the rounding error for the richer person.

Now, consider that these were just the examples of the poorest in the group.  For the richest of the 1/10th, we are talking billions upon billions of dollars earned per year. 

Upon closer examination, then, it becomes obvious that 14% is a far heavier tax burden on the middle quintile than 30% is on the richest 1/10th.

And there is one other problem.  The "effective federal tax rate" Mr. Mankiw uses doesn't even include federal excise taxes - like the 18.4 cents-per-gallon on gasoline.  For poorer people, these taxes are heavy burdens (one study showed that the folks in the middle quintile pay about a quarter of their income on transportation), but for rich folks, that regressive tax is almost nil.

Professor Mankiw, please consider teaching folks in the ether about real tax burdens and economic concepts (like diminishing marginal utility), and please oh please start participating in the earth-changing world of the interwebs.

I'd be tickled pink if you'd start here.

Tuesday, September 20, 2011

Sec. Salazar continues the time-honored tradition of promising California hydrological miracles

© 2011 Joshua Stark

Mike Tougher has a good article in the San Jose Mercury News about Interior Secretary Salazar's comments on pumping Delta water to Central and Southern California.

Last year, when I pointed out that Meg Whitman (remember when she ran for Governor?) promised more water, I gave her the benefit of the doubt and chalked it up to the pressures of a live debate (I'm sure I'd look like a complete moron in a live debate, so I'm always judging those events nicely).  Secretary Salazar, when taking questions before the Commonwealth Club, might also get the benefit of the doubt.  It was a live, well-respected audience.

But the comments Mr. Tougher reports show a man flirting with serious conflicts with physics.  And believe me, physics always wins.

From Mr. Tougher's report:  "Salazar said building a new aqueduct around the Delta might increase the flexibility of water operations in such a way that it could lead to more water deliveries."

The Delta needs x amount of fresh water each year.  We aren't sure what x is, yet, but we know that in a typical year it is more than it now gets.  If freshwater is diverted from the Delta, it will suffer an ecological decline.

Mr. Salazar later visited the new fish screens put up to protect fish from the South Delta pumps.  Unfortunately, what Mr. Tougher failed to note is that the sucking up of fish into the pumps is only one of the ways they impact endangered and threatened species.  Their overall impacts on the flow of water through the Delta also kills fish by confusing them and sucking them into predator pits. 

But never forget that removing actual habitat (i.e., through a peripheral canal) is not the cure for pump impacts on tides and flows.  The single greatest ecological and economic benefits for both the Delta and the rest of the Central Valley would come from farming the Westlands for solar power.  

Physics can be our friend.

Friday, September 9, 2011

What's rural? Wild? Urban? Nobody really knows

© 2011 Joshua Stark

Matt Weiser has an interesting article about Sacramento's recent, apparent uptick in violent human/wild animal encounters the past two weeks.  In particular, a couple of animals have been found with rabies (sad and scary, as anybody whose seen Old Yeller can tell you).

Coming from the country, I love how these stories are often told with surprise and awe about how these animals can live in such seemingly unnatural environs; namely, our cities.

First, I don't know how even humans live in these seemingly unnatural environs, but let's look past that, and consider the reality of our habitats and communities:  Nothing in nature respects political boundaries because they don't really exist.

There is no such thing as a "city" in nature.  Roads, rivers, bike trails, ditches, empty lots, power and sewer lines... the list of entryways into cities is long, and animals that have a high tolerance for humans and similar tastes find cities very inviting, indeed.  Cities offer wonderful shelters from weather and feasts for omnivores, and there is little we can do about it.  Conversely, traffic, agriculture, flood and fire control are a few examples of how the "urban" infiltrates and impacts those places we consider rural and wild, altering them completely.

Certain animals thrive under conditions that humans create.  As Bill Tweed, former Chief of Interpretation at Sequoia National Park, once pointed out, scavenging omnivores love food-storing omnivores; and, what are we, if not the consummate food-storing omnivore?  It would be very unnatural if other animals did not take advantage of our largesse.

For its part, Sacramento's wildlife may be wilder than most cities, which can, ironically, help bring down animal encounters.  We are blessed with a Wild & Scenic river corridor running right through the city, providing habitat for pipevine swallowtail butterflies to mule deer.  These wilder habitats offer more appropriate shelter and foods for those raccoons, skunks, opossums, and others who may be tempted to hit up houses and parking lots.

(If you are interested, you can read more of my posts on the illusions of rural, wild and urban here, here, and here).

Friday, September 2, 2011

President Obama concedes the wrong point in pollution regulation

© 2011 Joshua Stark

President Obama has pulled back from his earlier proposal to put stricter limits on ground-level ozone, a major pollutant and cause of asthma attacks and deaths, reports the Associated Press.

By this act, the President has conceded to opponents the very idea that pollution regulations are job killers, and opened the door to a flood of rollbacks, and the subsequent pollution increases that will come with them.

Hard choices have to be made, and the President has ducked a big one right here.  Sadly, he has done it by buying into the notion that pollution control is a net loss to our economy, thus legitimizing the idea, even though, under our current circumstances, it almost never has merit. 

In our dirtiest places, Americans live like 3rd World countries.  California's Central Valley has thousands of Americans who can't even drink their own tap water, and one-fifth of their children have asthma (for a thorough look at the impacts of asthma and ozone on the Valley, click here).

The regulation that the President has backed off would have direct impacts on asthma rates in places like the Central Valley, improving the quality of life for millions of Americans, particularly the poor.  But, what would be the economic impact?

Well, in 1997 the EPA estimated that asthma cost the U.S. between $9 and $11 billion (today, that would be $12.5 to %15 billion).  And these rates don't calculate lost productivity due to parents' worries over a hospitalized child, stress from losing a child, young people's inability to perform work throughout their life due to their impaired physiques and oxygen loss during growth.

Additionally, these calculations don't take into account the value of individual dollars - a gaping intellectual hole when calculating economic impacts.  Simply put, one dollar is worth more in a poor person's hands than it is in a rich person's hands, especially now.  A poor person, when getting a dollar, will spend that dollar, because it is more valuable turned into food than it is sitting in a bank.  A rich person may spend that dollar, or they may save it, because its value as a saved dollar may be bigger than its value as one more hamburger.

Right now, our economic problem is in large part due to our low total demand for goods and services because we can't afford them, because there isn't enough circulating money.  Money isn't circulating because we have too many people out of work, unable to afford things.

We are in the beginning stages of a vicious cycle, economically-speaking, and this cycle has nothing to do with our pollution.  But, regulating our pollution can go a long way toward ending this cycle and getting us out of our current slump.  Robust pollution regulation can lead to direct job growth in the testing and regulating industries (often public-private partnerships), and it will lead to increased productivity among those who would see improved health.  The additional demand from this growth of more valuable dollars would lead to increased supply to meet that demand, pushing up employment.

Make no mistake, companies who fight these regulations want to pollute.  If they didn't want to pollute, they would not care about the regulation.  They do not care about total demand, they do not care about social health improvements.  The individuals who work in these companies might care, but officially and professionally, they don't make their decisions based on what is good for the nation; they cannot, because the pressures of their fiduciary duties and their pressures to see quarterly profits are too great.

Economic reasons aren't the only reasons for robust pollution controls, and they shouldn't even be the first reasons.  But, there are real economic benefits to robust pollution control, and the President, by ignoring these, has lost sight of the good of the nation and has given over to ideas that will further stunt our growth, economically and otherwise.

Thursday, September 1, 2011

Grist wins me over - with sensible talk about population control

© 2011 Joshua Stark

In response to Vice President Biden's comments on China's one child policy, Grist's senior editor Lisa Hymas posted an article debunking some myths about the policy.  But what she really does is bust population control as a place for government intervention, and for that, Grist should be commended.