Is Apple paying its' fair share?

According to the numbers Apple is "the largest corporate income taxpayer".  How is this true when  Apple keeps much of its earnings off shore?  How is it  they are still #1 in corporate income tax?   I shutter to think what their tax liability would be if all their earnings were taxed at their current rate of 35%!  Yes, they pay a rate of 35%.  So do some individuals but that is not what this is about.  This is about Apple not paying taxes on roughly $74 billion dollars from 2009-2012.  This money was earned outside the US.   All this income was deposited in Ireland where there is virtually no tax.  Apple makes no apologies for keeping their funds on shore.  They feel they justify this behavior by providing nearly 600,000 American jobs.   It appears that we look the other way when it comes to Apple because of  the number of jobs it provides.  Instead lets look at the big picture.  35% is the top corporate tax rate.  The very top rate among advanced nations.  Shouldn't we be asking why are rates are so high and not why Apple keeps its funds elsewhere?  Wouldn't it be more logical to lower the tax rate for corporations like Apple and encourage them to bring their dollars and their jobs back to US soil?  Do we really want to continue to send "our taxable income" elsewhere? I don't!

New York City Considers Jail, Fine for Buyers of Fake Designer Goods

In the article, New York City Considers Jail, Fine for Buyers of Fake Designer Goods by Steven Nelson, it states that New York City Council, Margaret Chin is proposing harsher punishment for buyers who purchase counterfeit trademark items, such as handbags and electronics. Currently, the draft of the bill states it is illegal to "purchase a tangible item containing a counterfeit trademark when such person knows or should have known such trademark is counterfeit for reasons including, but not limited to, the quality and price of the purchased item, and/or the condition of the seller and the sale location."

In terms of protecting liberty, the government would be protecting the rights to a certain design of a product. However, in order for counterfeit sellers to make a profit selling these goods, they have to use lower quality products in making these goods, thus making a lower quality product overall. People who are willing to purchase a lower quality product for a lower price than the higher quality version will. Their item will probably also break down more quickly or have technical issues. For this reason, I don't believe that counterfeit sellers have much if any impact on the sales of the trademark products. I also don't believe that Margaret Chin has put this proposal into action in order to protect trademark items. 

I believe that Chin has proposed this bill for personal reasons. Counterfeit sellers are not hurting their possible trademark competitors nor any other third party. There is no market failure. If anything this bill would decrease competition and increase the price of trademark items, making it even more difficult for consumers to afford them. Counterfeiters are simply making a decent profit of the sale of a more cheaply made, similar item. Chin should not be using force to tell consumers what they can and cannot buy as this removes voluntary action and thus spontaneous order will not occur. 

The real reason Chin is proposing this bill is more likely that she feels that her  social status is somehow  threatened because while she owns an authentic bag others around her are buying the "same thing" but at a lower price because they cannot afford what she can. 

http://www.usnews.com/news/newsgram/articles/2013/06/14/new-york-city-considers-jail-fine-for-buyers-of-fake-designer-goods

Americans blame government for increases in poverty and dependence

"Want more poverty and dependence?  No problem.  Just pay for it!"   Economic principals don't come much simpler or less arguable than this.  If we want less, tax it.  If we want more, subsidize it.
We all know that the government, in order to control consumption of the things it considers bad, taxes them.
When the  tax goes up so does the actual cost paid by the consumer.  An increase of the tax on cigarettes pushes the price higher.  In turn we have fewer people willing or able to buy cigarettes.  Higher prices, fewer smokers.  Fewer smokers, less production.  Less production means fewer jobs. 

On the other hand we can increase the sales of select goods and services.  When we want more of something  we subsidize it.  If we want fewer people in the work force we simply subsidize them.
We pay people for agreeing to not produce.  Just as we once paid farmers to not plant, we pay Americans to avoid innovation and unpleasant work.  Hence, we are turning millions of people into consumers and
into non producing individuals.  This is economically devastating.  Don't get me wrong.  There are many people out there who, for valid reasons, cannot hold a job.  These are not the people we should resent paying for.  It is the nearly 10 million individuals living off the government (system) that I question.
Paying healthy people to stay home and collect benefits (that our tax dollars pay for) makes less sense
than subsidizing junk food and cigarettes does.

As Gun-Control Debate Rages, the Nation's Gun Industry Thrives

The article "As Gun-Control Debate Rages, the Nation's Gun Industry Thrives" written by David Francis, talks about the issues that will possibly arise for gun-dealers should gun control laws go into effect. Currently, the gun industry has made "$992 million dollars in profit last year" and is "[expected] to grow 3.7 percent annually until 2017" (David Francis). The reason behind this that due to the threat of stricter gun laws, people have been buying guns before these laws come into effect. 

The government states that the reason for these gun laws is to prevent tragedies like the Sandy Hook Elementary School Shooting. There are three different gun control laws that the article discusses that may go into effect; required background checks for buyers at gun shows, a ban on magazines that hold more than 10 rounds, and the ban of semi-automatic rifles.

From an economic stand-point, the government might be looking at this in terms of a market failure. If there is market failure, it would most likely be a negative externality in which a transaction is made between two parties and a third is made worse off. There are now three things we must look at to see if this is true. It must be an unintentional nonmarket interdependence. We would have to see if the transaction itself is what is harming the third party, which in this it's not. People are not dying because people choose to buy guns. Even if this were the case, it would be intentional on the buyers end. 

We could compare this to the ban on the buying, selling and use of heroine. Do people die from the buying and selling of heroine. The answer is no. Do people die from the use of heroine? Yes. But the ban on heroine does not stop people from buying, selling and using it. It may lower the number of exchanges, however a ban creates other problems. Heroine users must now steal and perform other illegal acts in order to obtain the money to purchase the drug. A similar thing would happen if there were a ban on guns. Would murder and other criminal activity with the use of guns still occur? Yes. A black market for assault rifles  and other banned weapons would appear, making it more difficult for authorities to keep track. 

If the government were to treat guns and ammunition like a negative externality and simply increased the tax to decrease the number of weapons and ammunition sold, there would be fewer weapons being made, sold, and bought in the market. From a liberty perspective, law abiding citizens may not be happy about the increase in prices for such goods, but at least the people have the freedom of purchasing weapons. This would also prevent otherwise law abiding citizens from obtaining guns through illegal means for reasons of protecting their 2nd Amendment rights or simply protecting their lives from non-law abiding citizens. 

In conclusion, government would not be protecting the peoples liberty and would cause potential other related criminal activity by putting a ban into effect.

http://money.usnews.com/money/personal-finance/articles/2013/01/14/as-gun-control-debate-rages-the-nations-gun-industry-thrives

Abstinence Programs Might Work

This article states that researchers have reported that sex education classes that focus on children remaining abstinent can persuade a significant proportion of teens to delay sexual activity.

The Obama administration eliminated more than 170 million in annual federal funding targeted at abstinence programs after a series of reports concluded that the approach was ineffective.  It has been found that states that prescribe abstinence only sex education programs in public schools have significantly higher birth rates than states with more comprehensive sex education programs. 

Teen pregnancy negatively impacts the economy.  Teen moms are less likely than their peers to receive a high school diploma.  They are very unlikely to attend college.  This leads to significant amounts of lost earnings.  Teenage pregnancy affects the job sector and education.  They are more likely to be reliant on government programs.  According to the Alliance for Excellent Education it's estimated that over the course of a teen moms lifetime she will cost the nation 260,000 dollars in lost earnings, taxes, and productivity.  

Should Colleges Enroll Illegal Immigrants?

This article talked about a girl named Ceylia.  She is a native of Poland.  She has lived as an illegal immigrant in the United States for almost 21 years.  She was valedictorian of her high school class and will be graduating from college with a degree in bioengineering with a 3.84 grade point average.  She will be unable to use her degree due to federal immigration laws.  In 1982 a Supreme Court  decision entitled illegal immigrants to a free education from kindergarten through high school.  After that it is undecided.  Congress has left it up to individual states to handle higher education policies.  Concerns about the slowing economy and illegal immigration has led some states to close the door on higher education for undocumented students.  Supporters say that money should be spent on making college more affordable for United States citizens. 

I don't believe that students like Ceylia should be denied use of her college degree.  Every individual has choices.  A person acts in an effort to achieve a purpose.  Purposeful action involves the choice of purpose and the choice means.  She studied hard to get where she is today.  She would ultimately be paying more taxes and make greater contributions as a professional.  We have people who are United States citizens who do nothing but take advantage of the welfare system.  That is their choice.  These immigrants who are succeeding in making their lives better shouldn't be penalized because their parents came into the country illegally.

http://www.usnews.com/education/articles/2008/08/07/should-colleges-enroll-illegal-immigrants

Colorado Sheriffs Wrestle with New Gun Laws in Differing Ways - The Denver Post - Sunday June 9th

Sheriffs have been deciding if they are going to enforce the new gun laws. Multiple sheriffs have announced they disagree with the new universal background checks and have refused to complete them. People are also stating that these new laws are against the second and fourteenth amendment and therefore should not be enforced. More than 400 sheriffs from around the country have signed a Constitutional Sheriffs pledge declaring they won't enforce executive orders regarding guns that Obama signed into law in January.

I believe that Obama is using the wrong type of force by signing the new gun laws because there is a negative externality in the purchase of guns. There are multiple third party people that are being harmed by guns each day and therefore he should tax the purchase of guns and equipment to an appropriate amount. Since the American government cannot always protect it's people and their property, they should not make it more difficult for people to obtain guns by enforcing new laws. Government's policies and actions result from the purposeful actions of individuals and therefore I believe people have gone to the government and requested them to make these new gun laws, when the government should have taxed the purchase of guns and equipment.

Subsidized Student Loan Rates to Increase?

I recently came across an article on CNN.com and it reminded me of the discussion we had in class about the fact that the rates may be increasing on subsidized student loans. So here are the facts according to the article. On or by July 1st Congress will vote to increase the current rate doubling it to 6.8%. This will affect roughly 7 million undergraduate students. Under the plan, the rates would remain low but increase as the economy improves. This rate increase will only affect subsidized student loans which the federal government currently absorbs some of the interest rate. This is about 1/3 of all student loans given out and these loans are awarded based on economic need. Most students actually take out unsubsidized loans, which the rate has been at 6.8% already since 2007. This rate will remain the same for most middle class students. The article concludes by stating that based on the way things are going we will most likely see the rate increase.

I found the article mostly to be informative and didn't cause much cause for debate... what interested me the most was actually all the comments that were posted below the article. Obviously if you are a student this is an important issue. First of all tuition is expensive. My husband just finished his college degree about two years ago and now I am a student and the loans are definitely piling up. I understand where people are coming from and the frustration they feel behind the increases. What startled me was that there were quite a few comments that stated they thought that college education should be free. College should be free? I find this thought completely absurd. Another comment made really struck home with me. The comment made was that we take things for granted if we don't have to earn it. I couldn't agree more. My first year at college I received a scholarship and the remaining portion of my tuition was paid for with a grant. I was attending college for "free". And let's just say my first year at college was less than productive. I mean I did ok, but I certainly did not try as hard as I could and I dropped some courses half way through. I just didn't care all that much. I finally finished my Associate's degree and then years later I am finally finishing my Bachelor's degree. I am an A student, I have been on the Dean's list and I have received a small scholarship recently. I work my butt off at school and here is why... I am paying for it. I am paying a lot for it. Not only am I paying tuition and fees, but I pay for it with time away from my husband and my three kids. My education means enough for me to take the time away from them and in my eyes, I am going to make it worth it. My perspective has changed so much since that first year right out of high school when I was getting a "free ride". 

So would it be nice if college was "free"? Well my bank account would sure be appreciative. But nothing in this life is free. And if students want a college education the truth is, it comes at a cost. This rate increase is no different than the unsubsidized loan rates right now, which a lot of students are already dealing with. We know what we are signing up for when we take out students loans. If we are unwilling to pay them back, we shouldn't take them out in the first place.

The article can be found here.

Guns and Public Policy

http://chippewa.com/dunnconnect/news/opinion/columnists/guns-and-public-policy/article_fa2f015a-ca3f-11e2-85c8-0019bb2963f4.html

Dr.  Alan Scott wrote this article, and it seems to me is writing it from a Liberty standpoint.  The constitution clearly states that we have the right to bear arms, BUT congress can regulate it at any time.  He says that the reason there is a lot of gun violence in the U.S. is basically because we have a hard time finding the balance between our rights, and our freedom to live in a society with gun regulation.  No one can ever agree on that balance in congress.  He also says that there is a higher percentage of people using guns other than self-defense in their homes because they never got background checks. He then goes on to say that an effective way of regulating guns would be to ban them all together, and from what I understand, to "rebuy" them from the government.  He contradicts himself shortly after that by saying that this would lead to overthrowing the government.

This seems like an exaggeration to me.  First of all, the constitution covers us from a liberty point of view from the government ever banning guns..."we have the right to bear arms".  While they do have the right to regulate gun control, they cannot simply ban our guns completely.  Second, coming back to "rebuy" our guns, thus leading to overthrowing of the government is ridiculous. 

He states that the U.K. has less than 200 deaths per year from guns.  This is because their government regulates their gun control a lot more than the U.S.  This is how we should lower our gun violence as well.  It is efficient, and not damaging our Liberty rights.

Discounted Dental Insurance?

There is a new dental program making itself heard in parts of California called Brighter.  Brighter's goal is to charge very little or nothing at all for dental insurance to make it more affordable to the hundreds of thousands of people who don't have dental insurance. To still produce income, their plan is to charge the employees to list their services online.  The discounts range from 20-30% discounts with no charge, to 60% plus with a small annual fee.

What it does not cover is how this effect the people who already have secure jobs and dental insurance.  It does not cover whether we will have to pay taxes on this new program.  It also is concerning that unless there is any other competition out there, it will soon be monopolized and will in turn become a market failure. 

I did not think to add the link until I already closed the browser, but it is called Brighter Dental Program. 

Affordable Care Act

According to a New York Times article, one of the greatest difficulties faced by entrepreneurs is obtaining individual health insurance.  The cost of individual insurance plans can be significantly higher than a group plan through an employer. Some individual may even be ineligible for health insurance.  Even as a small business it had become increasingly difficult to find affordable health care plans to offer your employees.  If you were a small business owner you would pay more for the exact same plan a larger company would pay.  When congress passed the Affordable Care Act (ACA) of 2010 it was designed to lower the cost of health care. One way the ACA sought to lower the cost of health care was to increase the size of the risk pools.  By increasing the amount of people on an insurance plan, the risk would be spread out enough that even high risk members and small business owners would be able to afford health insurance.  According to the New York Times article, the availability of affordable health insurance would allow entrepreneurs to begin new business ventures and shake free of the shackles of their employers health insurance.

There are many issues with the American health system but the most universal is the high cost of care.  But we need to consider why the cost is high.

1) Doctors spend nearly a decade in school accumulating hundreds of thousands of dollars of student loans.  By going to medical school doctors are making an investment in their own human capital in hopes that their future will be more productive and generate more income than they otherwise would.  There is also an opportunity cost in terms of lost income, lost productivity, and the allocation of future income to pay off student loans.

2) The American judicial system that does little to restrict frivolous lawsuits by plaintiffs anticipating an out of court settlement.  One of the main purposes of any government is to enforce personal property laws.  By allowing these lawsuits the government is granting the approval for plaintiffs to steal the productivity and property of doctors. A doctor could allow the case to go to court and fight to defend his honor, practice, and income.  But the opportunity cost may be great enough that an out of court settlement would be the least harmful route for the doctor.  Today many doctors carry malpractice insurance in order to mitigate the majority of the risk of these types of lawsuits.

3) The free market is restricted because insurance providers are not allowed to sell policies across state lines.  Lobbyists and rent seekers have created a virtual monopoly in the health insurance industry through state laws and legislation.  Without free and fair competition consumers will be restricted in finding an affordable policy for their individual needs.  The policies that consumers eventually purchase will be higher than they would be if we expanded our insurance networks nationally.

The ACA does nothing to address any of these problems.  Instead the ACA treats health care as a public good and compelling Americans to purchase insurance plans that the government approves.  But this notion of the health care system being a public good is false.  A public good is a good that is both non-excludable and non-rivalrous in that individuals cannot be effectively excluded from the use and where use by one individual does not reduce the availability to others.  Doctors and patients compete for patients to exchange their productivity and services for income.  Even patients are in competition with one another.  In some cases it may take months to see a specialist or a doctor may stop seeing new patients if their current patient population has exceeded their ability to provide service or fulfills their income requirements. Health care is not a public good because it is excludable and rivalrous.  Doctors accrue opportunity costs, dept, and risk in anticipation that they will be rewarded for the services that they will offer consumers.  Nurses, medical technicians, lab specialists, administrators, and many other careers also accrue opportunity costs, debt, and risk in order to over their services to consumers.

As well intentioned as the government is with the ACA, it will in fact make health insurance prices rise and health care increasingly scarce.  A free market will find a price that both parties benefit from the exchange.  The health care system is broken because of the very entity that is trying to fix it.  The government uses force to get in between the free exchange of insurance providers, health care professionals, and patients.  By enacting the ACA the government has harmed both the consumer and the economy in many ways.

1) In the ACA law, health insurance plans are required to meet criteria set forth by the government regardless of the insurance coverage needs of the consumer.  This interrupts free and voluntary trade between insurance providers and consumers.  Many consumers will end up paying for services they do not need or wish to have.

2) The ACA continues to enforce the restriction of selling health insurance across state lines.  Lobbyists and rent seekers have manipulated the system so that they can benefit financially.  The elimination of competition has caused insurance costs to be higher than free market levels.

3) The ACA forces insurance companies to insure individuals with preexisting conditions.  By introducing these high risk patients into the insurance pools everyone must share in the increased risk by raising the cost of health insurance.

4) The ACA compels Americans to purchase health insurance with an opportunity cost.

5) The ACA compels employers to offer health insurance to employees who work at least 30 hours per week.  Employers have already found ways around this portion of the ACA by reducing hours of low skilled labor to under 30 hours per week.  This forces these individuals to find a second job as a means to their standard of living.  With each employee now having a health care cost to employers in addition to wages it forces many employers to restrict or eliminate new employees, business expansion, and hiring of entry level workers.  The increase in operating costs will cause prices to rise as businesses struggle to maintain profitability.  Unemployment and underemployment among low skilled workers will rise which will have an opportunity cost of disposable income that will no longer be able to be spend at small businesses and start ups.  With less disposable income people will spend less.  The less people spend the more businesses will struggle.  The more businesses struggle the more unemployed we will see and prices rise.  This vicious cycle will destroy small businesses in America and we will only be left with large box stores with enough capital to wait out the coming economic disaster.

These are all reasons why the New York Times articles is wrong in assuming there will be an increase in entrepreneurs because of the ACA.  Capital will be allocated away from small businesses and start up companies.  It will be spend instead on higher insurance premiums and taxes to pay for the unemployed which will cause a decrease in aggregate spending.  But the solution is not to subsidize doctors education because there is not a positive externality.  The solution is not to restrict insurance market size because of rent seekers and lobbyists.  The solution is not to force people into the health insurance networks.  The solution is not to compel employers to offer expensive government approved health care plans.  The solution is to remove the force of government from the health care industry.  The free market will, by trial and error, find the most beneficial prices and services for all parties involved if it is left to its own devices. Only the free market will allow insurance companies to find a balance between risk and reward while consumers find balance between cost and value.  But as long as the government uses its force to manipulate the free market system we will always have unintended consequences and a failure in the health care market.

The New York Times article referred to in this post can be found here.

Food Prices Push Rate of Inflation Up in China

With all of the emerging economies in the world, China has received much of the media’s attention. According to a New York Times article, China is in high inflation for food, gas, and housing markets. What causes inflation is too much money is floating around in a nation mixed in with natural disasters and very high growth levels. This is China’s problem. Right now china is looking for ways to control the level of growth in the country, through policy. China has some help right now because of the economic instability of the European Union.

To control inflation, China will have to institute some sort of contractionary policy that will absorb some of the circulating money. (One method that the U.S. uses is to sell bonds and treasuries) To slow growth down, however China has to incorporated restraints on their exporting and importing of goods and is debating on how much to reduce the rate of funds supplied to lenders. A possible problem when it comes to adjusting to these new policies, as least when dealing with inflation, is getting a clear picture of the economy when looking at the indexes.

F.T.C. Approves Merger of 2 of the Biggest Pharmacy Benefit Managers

This article is from the New York Times and deals with oligopoly.

Medco and Express Scripts (two large P.B.M. companies) decided to merge in September of 2011 and were subsequently approved in April 2012 totaling a $29.1 billion merger. P.B.M. companies are “pharmacy benefit managers”, and manage prescription plans for employers and insurers. The reason this is a big deal is the consequences of letting two large firms, such as these, merge. The Federal trade commission usually prevents these types of merges from happening; however, (unlike with AT&T and T-Mobile) the FTC let this one slip through the cracks.

The effects of the FTC’s decision to allow the companies to merge are as follows: they now have more influence over prices than before, which could create entry barriers; rebates pharmacies contract for will become even smaller (profit loss). (The reason why Walgreens stopped accepting Express Scripts in the first place), and consumers will be forced to join a mail order service instead of being allowed the freedom to choose a pharmacy to receive services. The consequence for opting out of this mail-order service is the consumer will pay the entire cost of the drug, which can be very expensive.

With lower rebates and less consumers coming to pharmacies for their needs, there is not a very high chance that this will lower prices as the Express Scripts spokesperson claims. It will make it more difficult for pharmacies to earn any profit, decrease an already limited competition and force the drug industry wherever the merged company takes it, hence the reason why anti-trust laws are in place.

TIF: Don't Steal, Poloticians Hate Competition

Subsidizing Sprawl by Greg LeRoy has excellent points. LeRoy blames urban sprawl largely on inappropriate government subsidies. He comments, “Subsidies originally meant to rebuild older urban areas are being perverted into subsidies for suburban sprawl.” LeRoy mentions the TIF subsidy in particular as an ill devised government plan. The TIF subsidy was originally supposed to subsidize redevelopment of poor areas and neighborhoods. Not surprisingly he TIF subsidy was used to further politician’s agendas much more than it was used to subsidize poor areas. This is, of course, an excellent example of a Baptist and Bootlegger scenario. The Baptists clamor for financial aid for the poor; and the Bootlegging politicians and government ‘sells’ redevelopment to the highest bidder. This is the expected result from an economist’s perspective. The economics of politics encourages politicians to do whatever will benefit their pocket books/ get them reelected. The sprawl caused as a result of the bootlegging is, of course, caused by government failure and an expansion of bureaucracy. This government failure can also cause businesses that are benefiting from the subsidy to expand and build more recklessly. This reckless building is not efficient. Businesses will naturally allocate their goods to their highest valued use. However, with the subsidy the normal, natural system is skewed. The TIF subsidy takes away the caution found in a free market economy. The subsidy lowers the cost of business and the chance of failure and monetary loss normally associated with business growth and change. According to LeRoy, this subsidy can last up to forty years. The author also mentions a similar issue with enterprise zones. Enterprise zones originally “intended to help poor inner-city areas…are gerrymandered showing political favoritism.” Gerrymadining and political favoritism show yet again another example inefficiency and Baptists and Bootleggers, a corrupt government system effecting free market economics.

http://urbanhabitat.org/node/27

Chiquita Moves Headquarters to North Carolina

Chiquita Moves Headquarters to North Carolina
Nov 30, 2011
Banana giant bring 375 jobs to Charlotte


http://video.foxnews.com/v/1301915027001/chiquita-moves-headquarters-to-north-carolina/?playlist_id=86856

This is an interesting video as it points out how governments attempt to bring businesses and jobs to their states and cities with incentives and how that may not always pan out. With Chiquita moving its headquarters from Cincinnati Ohio to Charlotte North Carolina. Apparently the Cincinnati incentivized Chiquita to “create” 90 jobs and the Charlotte government anticipates that the move will lead to a “creation” of 375.

These are interesting estimates as they assume that these jobs will come from the people of these respective cities. I think that most if not all of these jobs come from Chiquita promoting people from their other branches around the nation. With something as technical as logistics and upper management I would think that a company like Chiquita would want to promote from within their own company so that they are certain that the individuals filling these positions have the experience necessary to fulfill the duties of the new position.

I also wonder what the chief differences in the business climate are that have led to this choice. It would be interesting to look into whether either city follows development that is highly structured by the government to reduce sprawl. 

http://www.suntimes.com/news/nation/9135736-418/chiquita-headquarters-moves-from-cincinnati-to-charlotte-in-22-million-deal.html

According to the Sun Times, Charlotte offered 22 million. It seems that each city has made a public stance on how valuable they deem each job in their city. With an offer of 22 million on the table in the hopes that it means 375 residents of Charlotte will get hired by Chiquita, doesn’t that mean Charlotte is willing to pay close to $60,000 per job that is created? In fact, the average job is supposed to be around $107,000. If companies sell out to the highest bidder then local governments are contributing to their own demise.

Absorbing Chiquita’s risk to relocate is not a role of government in my view. This practice just encourages companies to locate away from where they would be most profitable. It is also most likely not in the best interests of the city because they could be setting themselves up to have a lot of vacant buildings from companies that relocated there because of artificial funds infusion of subsidies.

Is sprawl a product of bureaucratic inertia?

Today I read an article on The Boston Globe by Paul McMorrow that attacks some zoning pitfalls (Click on the title to read it). On this opinion piece, he goes on to make some controversial statements that I thought were worth addressing (or not...). The subtitle of the paper reads: “Sprawl isn’t so much a deliberate choice as it is a product of bureaucratic inertia.” It seems to me that McMorrow is arguing for more bureaucracy in the system, which implies tighter government regulations on matters such as zoning. Now, wouldn’t a bigger government mean less control for the population? The fact that people are sprawling as a product of not having enough bureaucracy appears to be a very deliberate choice rather than what the author presents.

Secondly, he argues that “land is finite and exhaustible, so sprawl is a waste of land.” In economic terms, a distribution is efficient when it goes to the most highly possible valued use. Now, it seems to me that a waste of land as a marketable good would be to prohibit it from being used in a more valuable way. Studies have shown that a very low percentage of the land available in the United States has been developed, which leads me to conclude that there is still plenty of room for growth without seriously affecting any of the natural resources around us.

Lastly, he reasons that “smart growth creates the type of vibrant mixed-use neighborhoods that Jane Jacobs celebrated a half century ago, but there’s no policy imperative in urban romanticism.” This last statement shows, to say the least, a distorted view of Jane Jacobs’ ideas. To be clear, the “vibrant communities” acclaimed by Jacobs weren’t created by any development system arbitrarily set in place, but rather by people and their spontaneous interactions with one another. The best possible way to try to foster these communities into existence is to protect them from government intervention and let people live for themselves. Maybe then we will have communities that resemble such romantic times, but even if not, at least we will know that the power to make deliberate choices will have been honored in the Land of the Free.

Quick thoughts on UGBs

On the subject of urban growth boundaries (UGBs), there are many problems. Not simply with the subject of if they should be used at all, but with the fact that they apparently have limited effectiveness. As defined by the article Urban Growth Boundaries (http://www.greenbelt.org/downloads/about/ugb.pdf) they are “officially adopted and mapped line that separates an urban area from its surrounding greenbelt of open lands, including farms, watersheds and parks,” and their job is to preserve the open space surrounding an urban area.

Among the problems with UGBs is, apparently, whether or not they even work. Sprawl, the phenomenon that UGBs are meant to constrain, continues despite measures against it. An article from the Journal of Urban Economics (When are urban growth boundaries not second-best policies to congestion polls, by Alex Anas and Hyok-Joo Rhee, from volume 61) even states outright in its title that UGBs are considered inferior to tolls in most cases. There are other problems as well: the fact that policies like UGBs are born from government power rather than the interaction of the market means that there is little opportunity for experimentation. The options are to abide by the rule or be punished. This means that society loses some of its optimal good as well, because experimentation in the market shows whether or not people will use it.

In general terms, I think that there is a problem with the policy, in that it is and is not supportable. It is supportable because the environment that sustains everyone’s’ lives is worth protecting, but it is not supportable because the liberty that makes life worthwhile is impacted and reduced by these policies. But I really can’t be helpful; the best advice that I can give is to let time and innovation cure things in the future, and to find a way to charge those who use a resource at the cost of society to reimburse society.

Does sprawl travel overseas?

http://blogs.wsj.com/searealtime/2011/11/22/kuala-lumpur-a-southeast-asian-los-angeles/?KEYWORDS=sprawl

An article in the Wall Street Journal address the issue of urban sprawl in, believe or not, South East Asia. Kuala Lumpur has been nicknamed a mini Los Angles because of its sporadic and disheveled growth patterns throughout the last century or so.

The World Bank recently informed the Malaysian countries that they need to adopt more “smart cities” or “smart growth” policies in order to attract talent and they need to improve their livability guidelines. This is a tall order for the Asian countries due to the already out of control sprawl that they face. With a poor infrastructure and public transit system, the cities have become less dense and the land use has gone to those who are not using the land to its greater possible use.

The World Bank does not go into detail when the term “smart city” is thrown around, so I will do my best to clarify this term. What constitutes as a smart city is, as the Siemens group puts it, is a city in which improved transportation, green buildings, water conservation and reuse technologies, and smart grid infrastructure are implemented. This intern will create a new blissful happy, carefree Utopia were Kuala Lumpur used to be while eliminated sprawl as we know it.

In response to this statement the region of Kuala Lumpur is aiming at creating a more efficient rail system that will allow more than 60,000-70,000 people to commute between the cities of Singapore and Johor Bahru. I actually believe that this will help in the city’s economic growth and development. However, the next issue that needs to be addressed is all of the natural disasters that Malaysian cities are vulnerable to.