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<title>EclectEcon</title>
<link>http://econoclectic.powerblogs.com/</link>
<description>Eclectic views on economics, policy, sports, etc.</description>
<dc:language>en-us</dc:language>
<dc:date>2008-07-25T23:07+00:00</dc:date>
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<item rdf:about="http://econoclectic.powerblogs.com/posts/1209086399.shtml">
<title>The Deterrence Effect of Fines:&lt;br>&lt;i>The Bridges of &lt;s>Madison County&lt;/s> New Brunswick&lt;/i></title>
<link>http://econoclectic.powerblogs.com/posts/1209086399.shtml</link>
<description>As I have often said, economics can be summarized in four words:...</description>
<dc:creator>EclectEcon</dc:creator>
<dc:date>2008-04-29T17:04+00:00</dc:date>
<content:encoded><![CDATA[As I have often said, economics can be summarized in four words:<BR />
<BR />
<b><center>People respond to incentives.</center></b><BR />
<BR />
And it makes sense that back before these bridges became historical sites, if people didn't want others to ride their horses on the bridge, they would levy a fine. <BR />
<BR />
<center><a href="/files/econoclectic-SawmillCreekCovered_Bridge.jpg"><img src="/files/econoclectic-SawmillCreekCovered_Bridge-small.jpg" width="220" height="159"  alt=""></a><BR />
The Sawmill Creek Bridge</center><BR />
<BR />
<center><a href="/files/econoclectic-MillPondBridgeSign.jpg"><img src="/files/econoclectic-MillPondBridgeSign-small.jpg" width="220" height="102"  alt=""></a></center><BR />
<BR />
The signs are clearly reproductions of the originals, but it is fun to see them. Why did it matter so much to the bridge proprietors (typically county gubmnts) whether someone drove or walked their team of horses across the bridge?]]></content:encoded>
</item>

<item rdf:about="http://econoclectic.powerblogs.com/posts/1191550127.shtml">
<title>What Do China, Florida, and Hawaii Have in Common?</title>
<link>http://econoclectic.powerblogs.com/posts/1191550127.shtml</link>
<description>and most other places, for that matter. Mis-pricing of water. From the NYTimes (reg req'd), courtesy of Brian Ferguson,...</description>
<dc:creator>EclectEcon</dc:creator>
<dc:date>2007-10-11T05:10+00:00</dc:date>
<content:encoded><![CDATA[and most other places, for that matter. Mis-pricing of water. From the <a href="http://www.nytimes.com/2007/09/28/world/asia/28water.html?_r=1&oref=slogin">NYTimes</a> (reg req'd), courtesy of Brian Ferguson,<BR />
<blockquote>For three decades, water has been indispensable in sustaining the rollicking economic expansion that has made China a world power. Now, China’s galloping, often wasteful style of economic growth is pushing the country toward a water crisis. Water pollution is rampant nationwide, while water scarcity has worsened severely in north China — even as demand keeps rising everywhere. </blockquote> Florida and Hawaii (and many other places) have similar problems: water is priced too low, so people overuse it. And unless prices are adjusted upward, people will continue to overuse it. And that will only lead to a <b>much</b> more difficult adjustment the longer the overuse persists.<BR />
<BR />
More from the article:<BR />
<blockquote>What happened? The list includes misguided policies, unintended consequences, a population explosion, climate change and, most of all, relentless economic growth. In 1963, a flood paralyzed the region, prompting Mao to construct a flood-control system of dams, reservoirs and concrete spillways. Flood control improved but the ecological balance was altered as the dams began choking off rivers that once flowed eastward into the North China Plain.<BR />
<BR />
The new reservoirs gradually became major water suppliers for growing cities like Shijiazhuang. Farmers, the region’s biggest water users, began depending almost exclusively on wells. Rainfall steadily declined in what some scientists now believe is a consequence of climate change.<BR />
</blockquote> Don't you wish that just once people would recognize that setting the price of water equal to zero (or way too low) causes these problems? ]]></content:encoded>
</item>

<item rdf:about="http://econoclectic.powerblogs.com/posts/1158442214.shtml">
<title>Aqua-nomics:&lt;br> Using the Price System to Alleviate Water Shortages</title>
<link>http://econoclectic.powerblogs.com/posts/1158442214.shtml</link>
<description>This past summer I spent three months in southeast England, where there were water "shortages" and concerns about the effects of two summers of drought conditions. I wrote about these conditions...</description>
<dc:creator>EclectEcon</dc:creator>
<dc:date>2006-09-20T16:09+00:00</dc:date>
<content:encoded><![CDATA[This past summer I spent three months in southeast England, where there were water "shortages" and concerns about the effects of two summers of drought conditions. I wrote about these conditions <a href="http://econoclectic.powerblogs.com/posts/1147555869.shtml">here</a> and <a href="http://www.eclectecon.com/posts/1150669673.shtml">here</a>. In the second of those two postings (which is longer and more detailed than usual for me), I wrote,<BR />
<blockquote>My neoclassical inner being tells me that the reason for the water shortages is that the price of water is too low.</blockquote> This is the same explanation for water shortages in the western United States, provided by <a href="http://www.perc.org/perc.php?subsection=5&id=823">Robert Glennon</a> in Perc Reports.<BR />
<BR />
In his article, Glennon systematically shows that attempts to increase the supply of water will meet with little success and will have very high costs. He then turns to schemes to limit the growth in demand for water. He concludes,<BR />
<blockquote>States should avoid conservation standards that require elaborate monitoring because they may be neither cost-effective nor successful. ...<BR />
<BR />
Even though water is a valuable resource, many Americans pay more each month for their cell phones and cable television than they do for water. Indeed, residents in some cities pay nothing for water. In Fresno, California, a controversy erupted in 2003 over whether meters should be installed in people’s homes so that actual water use could be measured and paid for. Until now, city residents have been able to use as much water as they wish without any charge for it. Meters enable a city to insist that residents be responsible in their water use or pay ﬁnancial consequences. The absence of meters has signiﬁcance for water use. Fresno residents use about 300 gallons per capita per day but in neighboring Clovis, which has meters, water use is about 200 gallons per day. Sensible water pricing would encourage all water users to carefully examine how they use water, for what purposes, and in what quantity.</blockquote> Exactly. <a href="http://www.eclectecon.com/posts/1150669673.shtml">As I wrote this summer</a>, installing meters and pricing water at a reasonably high price would work wonders toward avoiding water future crises.]]></content:encoded>
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<item rdf:about="http://econoclectic.powerblogs.com/posts/1157072208.shtml">
<title>Property, Contracts, and Duress</title>
<link>http://econoclectic.powerblogs.com/posts/1157072208.shtml</link>
<description>If you point a gun at me and say you will kill me unless I agree to paint some pictures for you, then under most interpretations of common law, when you...</description>
<dc:creator>EclectEcon</dc:creator>
<dc:date>2006-09-05T04:09+00:00</dc:date>
<content:encoded><![CDATA[If you point a gun at me and say you will kill me unless I agree to paint some pictures for you, then under most interpretations of common law, when you no longer have the gun pointed at me, I can renounce the agreement and sue (successfully) to have the paintings returned to me. Furthermore, if you sell or give those paintings to someone else, I can sue to regain my own property rights of the paintings because they were initially exchanged under duress.<BR />
<BR />
This logic is being used by <a href="http://www.nytimes.com/2006/08/30/arts/design/30surv.html?pagewanted=1&_r=2&adxnnl=0&adxnnlx=1157065552-pshvFiAyAiXBw40vrmPCDw">Dina Gottliebova Babbitt</a>, who was threatened with extermination in the Nazi war camps unless she painted pictures for Joseph Mengele. The fact that she used her talent to negotiate to save the life of her mother (along with her own) does not negate the fact that she exchanged the paintings under duress. Notably, [h/t to MA]<BR />
<blockquote>Mengele singled her out, Mrs. Babbitt recalled, in March 1944, on a day when thousands of other prisoners were being taken to be exterminated. She said that she demanded of Mengele that he also spare her mother or she would commit suicide by touching an electrified fence. She and her mother were among the 27 Czechoslovak Jews to survive from their group of more than 5,000.</blockquote> Now she wants them back, but the Auschwitz-Birkenau Memorial and Museum in Poland has them and claims they are too important a part of the historical documentation of the Holocaust to return them to the original artist.<BR />
<BR />
I don't know the proper jargon, but what is a reasonable time for the right of <a href="http://en.wikipedia.org/wiki/Adverse_possession"> adverse possession</a> (or <a href="http://en.wikipedia.org/wiki/Statute_of_limitation">statute of limitations</a> whatever it should be called in this case)?]]></content:encoded>
</item>

<item rdf:about="http://econoclectic.powerblogs.com/posts/1155837650.shtml">
<title>United Church to Boycott Bottled Water?&lt;br>&lt;i>Opposes Commodification of Water&lt;/i></title>
<link>http://econoclectic.powerblogs.com/posts/1155837650.shtml</link>
<description>This is a story from the CBC, not from Onion!...</description>
<dc:creator>EclectEcon</dc:creator>
<dc:date>2006-08-17T18:08+00:00</dc:date>
<content:encoded><![CDATA[<a href="http://www.cbc.ca/story/canada/national/2006/08/16/unitedchurch-bottledwater.html">This is a story from the CBC</a>, not from <a href="http://www.theonion.com/content/">Onion</a>!<br />
<blockquote>The United Church of Canada may ask its members to stop buying bottled water.<br />
<br />
The request is part of a resolution against the privatization of water supplies that has been put before delegates at the church's general council this week in Thunder Bay.<br />
<br />
Richard Chambers, the social policy co-ordinator with the national office of the church, said that water is a human right, and no one should profit from it.<br />
<br />
"We're against the commodification, the privatization is another way to say it, of water anyway, anywhere," he told CBC News.<br />
<br />
"And bottled water that we see being sold in Canada is just an example of that. The thin edge of the wedge of the privatization of water." ...<br />
<br />
Ironically, the church's delegates are drinking bottled water this week at its meeting at Lakehead University. The conference facility was not equipped to provide drinking water.<br />
<br />
Chambers said the church had asked for tap water at all functions, but a mix-up occurred.<br />
<br />
Delegates are scheduled to vote on the private water resolution on Thursday.</blockquote> I note that this is the <a href="http://en.wikipedia.org/wiki/United_Church_of_Canada">United Church of Canada</a>, which is quite distinct from the Congregational-type <a href="http://en.wikipedia.org/wiki/United_church_of_christ">United Church</a> in the U.S. (in which I studied when I attended theological seminary), but they are not terribly different. I have a close friend who was once very active in the United Church of Canada, but left it some years ago; he refers to them as "a bunch of lunatics." When I was in seminary, we all knew how everyone should lead their lives, and we were quite ready to tell them.<br />
<br />
<b>The Economics:</b> A major clash between theologues and economists comes from the failure to distinguish between normatives (shoulds, value judgements) and positives (what is). Theologues often talk in terms of what people <i>should</i> do; economists talk in terms of trying to explain what people actually do. The problem with the normative approach is that it often leads to the pollyanna fallacy: "People should behave as I say; let's pass laws that will make them behave that way." This attitude leads to very costly public policies because people don't change; it also seriously abrogates individual freedoms and can lead to theocracies. <br />
<br />
So how would these folks at The United Church of Canada suggest that scarce resources like water be allocated? I'm guessing over 80% of them would say something like, "From each, according to his ability, to each, according to his need." I.e., they're closet Marxists. The purportedly great theologian, <a href="http://en.wikipedia.org/wiki/Paul_Tillich">Paul Tillich</a> once said that you can't be a good Christian without being a socialist.<br />
<br />
The trouble with their view is that when there is scarcity, the resources have to be allocated according to some mechanism. Economists have done a pretty good job of showing that the market system, with well-defined property rights, allocates scarce resources pretty well. If, as a substitute for the market, religious leaders were the ones to decide who gets the goodies, then they will have immense power and make most of us worse off. <br />
<br />
I wonder who they think should pay for the purification and distribution of water. I'm guessing they just love rationing plans. If so, they should read more about the problems with queuing for bread, shoes, etc., in the former Soviet Union.<br />
<br />
<b>Update:</b> Alex Tabarrok reminded me of <a href="http://www.marginalrevolution.com/marginalrevolution/2005/11/water_of_life.html">this piece</a> about the benefits of privatizing water.<br />
<br />
Also, for more, see <a href="http://marketpower.typepad.com/market_power/2006/08/water_is_a_huma.html">Phil Miller's take</a> on the story.]]></content:encoded>
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<item rdf:about="http://econoclectic.powerblogs.com/posts/1147691194.shtml">
<title>Dealing with Resource Depletion;&lt;br> The Chinese Export Tax on Chopsticks</title>
<link>http://econoclectic.powerblogs.com/posts/1147691194.shtml</link>
<description>Who would think that the production of chopsticks would cause resource depletion? Apparently the Chinese gubmnt is sufficiently concerned about the possibility that they are slapping a 5% tax on the...</description>
<dc:creator>EclectEcon</dc:creator>
<dc:date>2006-05-16T05:05+00:00</dc:date>
<content:encoded><![CDATA[Who would think that the production of chopsticks would cause resource depletion? Apparently the Chinese gubmnt is sufficiently concerned about the possibility that they are slapping a 5% tax on the export of chopsticks. From the <a href="http://www.theglobeandmail.com/servlet/story/LAC.20060513.RTICKERMAIN13/TPStory/?query=chopsticks">Trono Globe and Mail</a> [thanks to Lori and Lisa for the pointer]:<BR />
<blockquote>Walk into any Japanese noodle shop or restaurant and chances are you'll be eating with a pair of disposable wooden chopsticks from China. But not for long.<BR />
<BR />
In a move that has cheered environmentalists but worried restaurant owners, China has slapped a 5-per-cent tax on the chopsticks over concerns of deforestation.<BR />
<BR />
The move is hitting hard at the Japanese, who go through a tremendous 25 billion sets of wooden chopsticks a year: about 200 pairs per person. Some 97 per cent of them come from China.<BR />
<BR />
Chinese chopstick exporters have responded to the tax increase and a rise in other costs by slapping a 30-per-cent hike on chopstick prices, with a planned additional 20-per-cent increase pending.<BR />
<BR />
The price hike has sent Japanese restaurants scrambling to find alternative sources for chopsticks, called waribashi in Japanese.<BR />
<BR />
"We're not in an emergency situation yet, but there has been some impact," said Ichiro Fukuoka, director of the Japan Chopsticks Import Association.<BR />
<BR />
A pair of waribashi that used to cost a little over ¥1, or about 1 cent, now goes for ¥1.5 to ¥1.7. The rising costs of raw wood and transportation because of higher oil prices have also contributed to the rise, industry officials said.<BR />
<BR />
But pretty soon, some fear Japan won't even be able to get expensive chopsticks from China: Japanese newspapers Mainichi and Nihon Keizai reported that China is expected to stop waribashi exports to Japan as early as 2008.<BR />
<BR />
To minimize the impact, Japanese importers now buy more bamboo chopsticks and are considering new suppliers, including Vietnam, Indonesia and Russia, said Mr. Fukuoka.<BR />
<BR />
Supporters of environmental causes see the new Chinese tax as a chance to get rid of disposable chopsticks, which have been linked to deforestation and a wasteful lifestyle. </blockquote> Let's get this straight. Is there a market failure that has led to the over-exploitation of forests to produce chopsticks in China? It is more likely that the only failure here is gubmtn failure, not market failure. <BR />
<BR />
If forests were privately owned, the owners, anticipating future shortages, would start raising prices and reforesting the lands. But if the forests in China are state-owned, exploitation decisions are more likely to be made by civil servants who have less of a stake in maintaining the forests than would dirty rotten running-dog capitalists. So to counter the bureaucratic incentive to produce more chopsticks for export, the gubmnt has now decided to intervene some more and tax the export of the chopsticks.<BR />
<BR />
And, in Japan, customers who have benefited for years from China's policy of subsidizing and "dumping" chopsticks on the world market must now face up to the reality of having to pay world prices for their chopsticks.<BR />
<BR />
<span class="small"><b>True story (related digression):</b> back in the 1950s, I was in a Chinese restaurant in Los Angeles and thought it ironic that the chopsticks there had were stamped "Made in Japan". How times have changed since the opening of trade with China and with the changes in economic conditions in the two countries.</span>]]></content:encoded>
</item>

<item rdf:about="http://econoclectic.powerblogs.com/posts/1143261340.shtml">
<title>New Zealand Moves Toward Tradeable Water Permits</title>
<link>http://econoclectic.powerblogs.com/posts/1143261340.shtml</link>
<description>Speaking of water, as I did yesterday, from Stuff in New Zealand comes news that at least some people are beginning to consider allowing markets to help allocate water:...</description>
<dc:creator>EclectEcon</dc:creator>
<dc:date>2006-03-30T06:03+00:00</dc:date>
<content:encoded><![CDATA[Speaking of water, as I did yesterday, from <a href="http://stuff.co.nz/stuff/0,2106,3613843a10,00.html">Stuff </a>in New Zealand comes news that at least some people are beginning to consider allowing markets to help allocate water:<BR />
<blockquote>Environment Minister David Benson-Pope and Agriculture and Forestry Minister Jim Anderton have prepared a Cabinet paper, which is expected to rule out privatisation but allow limited trading of water rights and establish an economic "price" for water.<BR />
<BR />
... the Government did not want a regime which would prompt users to exploit their full water right, because that might encourage them to use more, not less, water.<BR />
<BR />
One option could be a "cap and trade" system which could allow consent holders to trade a proportion of their water right, but not the full amount. <BR />
<BR />
... The South Island river faces competing demand for hydro-generation, irrigation, industry and recreation, while the available flow is arguably "over-allocated" in dry years.<BR />
<BR />
Existing users effectively have priority, on a first-come-first-served basis, which may not allow for new or more economic uses.</blockquote> Let's see, now:<ul><li>Well-defined property rights.<li>Dramatically lowered transaction costs</ul>It all sounds pretty <a href="http://en.wikipedia.org/wiki/Ronald_Coase">Coasean/Coasian</a> to me.<BR />
<BR />
[h/t to <a href="http://www.rodneyhide.com/index.php/weblog/theres_hope1/">Rodney Hide</a>]]]></content:encoded>
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<item rdf:about="http://econoclectic.powerblogs.com/posts/1136613692.shtml">
<title>The Importance of Property Rights (revisited)</title>
<link>http://econoclectic.powerblogs.com/posts/1136613692.shtml</link>
<description>Nearly a year ago, I wrote,...</description>
<dc:creator>EclectEcon</dc:creator>
<dc:date>2006-01-07T06:01+00:00</dc:date>
<content:encoded><![CDATA[Nearly a year ago, I wrote, <blockquote>An important extension of the <a href="http://en.wikipedia.org/wiki/Coase_theorem">Coase Theorem</a> for economic policy makers is that the creation of well-defined and easily enforced legal entitlements is crucial for economic growth.</blockquote> <a href="http://news.bbc.co.uk/1/hi/world/middle_east/4581334.stm">Here</a> is further evidence, from Gaza [h/t to <a href="http://www.melaniephillips.com/diary/archives/001540.html">Melanie Phillips</a>]: <blockquote>Hafiz Barghouti, the editor of the newspaper Al-Hayat Al-Jadeed, has written: ‘It appears we are neither prepared to change, nor admit that we have failed in running our own affairs. Everyone is busy calculating how to make the biggest possible gains at the homeland's expense. While most Palestinians find it easy to blame the occupation for all our ills, it is a fact that the occupation was not as bad as the lawlessness and corruption that we are now facing.’</blockquote>]]></content:encoded>
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