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Couldn't organized crime also act as a central planner for crime in a region? They could keep crime directed towards the more capital intensive crimes by providing the training or capital and establishing which crimes should be committed. Though with the overall level of crime in these areas not changing significantly I guess this idea isn't very useful (unless maybe organized crime also brings levels of crime to some sort of saturation point, bringing nearly all would be criminals into crime already). The idea that organized crime would provide protection from increased extortion makes sense. If someone is paying you protection money you should be providing the service they are paying for (even in that includes protection from your own thugs). Otherwise they might lose some credibility and receive less payments.
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Frank: A good point and probably does make the specifics of the change in value unimportant in moderate cases. This could also mean the question of "why do people hold money?" could still be asked even in cases of moderate deflation (eg 2% deflation instead of inflation). Nick: In a world of high certainty, then yes holding money in high quantities wouldn't make much sense. But even when you have high certainty you would want to hold some cash if you value having choices, since even holding highly liquid investments such as stocks wouldn't let you go out and buy dinner on a whim (though I suppose a credit card would allow for payments to be made on a regular basis as to on the spot).
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"Why is living in the 'burbs bad behaviour in your books? One can equally make the argument that people in the 'burbs shouldn't be subsidizing the enviro-fetishism of the latte sipping class when there are coal fired power plants to be replaced and hyper-efficient cars to be developed." It's not that living is the 'burbs is bad behaviour it's that, as shown in the map, people living in the 'burbs tend to output more green house gas. Since we are taking polluting as a negative externality, a cost should be paid for it. I don't think we should be taxing the 'burbs so much that living there would be impossible to afford, but taxing carbon so that there is a general downward trend in emissions is the end goal. Also a carbon tax wouldn't just affect the 'burbs It would also raise funds from coal power plants and other industrial polluters and the effect on industrial polluters would be much more significant.
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Jason is now following Stephen Gordon
Jul 5, 2013
From an economics standpoint I don't see why the fact that a carbon tax would adversely affect the exurbs is a bad thing. If the goal of a carbon tax is to reduce carbon output and the tax causes high carbon outputting exurbers to pay for their emissions or reduce them, isn't that an accomplishment of the tax? I'm not sure why the effect on the exurbs is seen as a bad thing when the effect on high carbon emitting companies isn't. Also as many have pointed out, a carbon tax would have a mostly minor effect on exurb living, so the issue seems kind of moot. "If economists want to sell carbon taxes, we have to face up to their distributional consequences." I'm not sure why this is, other than for political reasons. When we punish a bad behaviour we don't then try to compensate the people who are punished. If the punishment is seen as to harsh we need to reduce the punishment, not pay people to put up with it. Politically this is a charged issue, but from an economics standpoint I don't see why Frances is raising a red flag over the effect to the exurbs.
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An interesting post, and good as food for thought. The main issue you seem to be trying to address is money as a store of value as it interacts with money as the medium of exchange and medium of account. The fact that money loses value over time is possibly a direct consequence of money being used as the medium of exchange. Since a central bank would have a difficult time keeping the inflation rate at 0%, the promise of 2% keeps the bank from worrying about a possible slip into deflation through fluctuations. Deflation would make using money as a medium of exchange less useful since people would hoard it instead. Also the promise of a fixed level of inflation makes using money as a medium of account more useful as quoted values are more stable and more meaningful in real terms. So the use of money as a store of value is compromised to benefit the other two uses for money. Also the fact that you don't gain any service from money while you hold it doesn't mean that you shouldn't hold it. People pay for potential services fairly regularly. For example people pay taxes to keep fire fighting services despite not using them at all times, and some people may never require their service.
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Jason is now following The Typepad Team
Jun 24, 2013