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In an essay in Critical Review a few years back, Jeffrey Friedman had a go at explaining what’s wrong with libertarianism. His sixty-page argument can be summed up in a single sentence: “Philosophical libertarianism,” he wrote, “founders on internal contradictions that render it unfit to make libertarians out of anyone who does not have strong consequentialist reasons for libertarian belief.”

The conflict between the philosophical and consequentialist sides of libertarianism is nowhere more sharply on display than when applied to environmental issues. …


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As President-elect Joe Biden begins the transition process, he faces serious fiscal policy challenges. A hoped-for V-shaped recovery from the Covid-19 pandemic has turned into a something that looks more like a long-tailed Nike swoosh. Business closings, mostly classed as temporary back in March and April, are, increasingly, proving to be permanent. Short-term unemployment is falling, but long-term unemployment and involuntary part-time work are increasing. Evictions and foreclosures loom over cash-poor working-class families, who are estimated to have accumulated as much as $70 billion in back rent owed. Meanwhile, state and local governments, whose spending is constrained by balanced-budget rules, are laying off teachers and fire fighters. …


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On October 1, the Congressional Budget Office released a detailed report, Policies to Achieve Near-Universal Health Insurance Coverage. The report outlines four broad approaches to the long-sought goal of universal, affordable access to healthcare for all Americans. The CBO cautiously aims only for near-universal coverage, which it defines as coverage for at least 99 percent of the population. …


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To put it mildly, federal regulatory agencies have not, during this administration, been in the forefront of those calling for bold action on climate change. That makes last week’s report on Managing Climate Risk in the U.S. Financial System especially welcome. The report comes from a subcommittee of the Commodity Futures Trading Commission (CFTC) an independent U.S. regulatory agency responsible for regulating commodity futures, options, and swaps.

The report is not an official policy statement from the executive branch, but the five CFTC commissioners, three Republicans and two Democrats, all appointed by President Trump, voted unanimously to create the subcommittee and subcommittee members voted unanimously to issue the report. …


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A few days ago, Rep. Sean Casten (D-IL) posted a 31-part mega-thread on Twitter about carbon pricing. Casten thinks carbon pricing is a potentially powerful tool for coping with climate change, as I do, even though we don’t agree on every detail of how it should best be implemented. But one point that Casten raised in his Tweets stood out for me: Who owns the air?

Casten does not pose that question directly, but it comes up indirectly when he raises the issue of how a carbon tax, which is commonly said to be a “price on pollution,” differs from an ordinary market price, like the $120 he paid recently for a pair of running shoes. …


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In a recent three-part essay, the Niskanen Center’s Brink Lindsey acknowledges all that the modern market system has done to incentivize innovation and coordinate the production and distribution of goods and services. He is concerned, though, that the economists who have assumed leadership of the free-market intellectual movement sometimes take the existence of markets themselves for granted. He adds a vital qualification:

A well-functioning market system is neither self-executing nor self-sustaining. To achieve what they are capable of, markets need to be embedded in and supplemented by supportive legal, political, and social institutions.

The idea that institutions are important to the proper functioning of a market economy is hardly new. Harold Demsetz’s work on property rights and Douglass North’s writings on institutions and transaction costs are well-known landmarks in the literature. The question of quality of government (QoG) is a somewhat narrower, but still broad question within the study of economic institutions. Bo Rothstein’s 2011 book on QoG provides an excellent overview of the literature and many original contributions. …


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Does the American welfare system adequately encourage the poor to achieve self-sufficiency, or is it a “poverty trap” that locks welfare beneficiaries into a lifetime of dependency? The question has been debated endlessly with no clear win for either side.

In large part, the dispute turns on a concept known as the effective marginal tax rate (EMTR) faced by poor and near-poor households. The EMTR is the percentage of any additional earned income that a household pays in taxes or loses in government benefits. Critics argue that high EMTRs leave little incentive to work, and even for those who do work, they mean that their efforts do little to help them to lift their disposable incomes above the poverty level. What is the point of getting a job if taxes and benefit reductions are going to eat up 75 percent or more of your earnings, even without figuring in expenses like child care, commuting, or work clothes? Supporters of the existing welfare system argue that punitively high EMTRs are rare. …


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The United States entered the COVID-19 crisis with an unusually large budget deficit for an economy at or close to full employment. Even if employment, output, and growth were to recover quickly to where they were at the end of 2019 (something that is far from certain), the deficit, under current law, will remain large.

The good news is that interest rates are likely to remain well below the rate of GDP growth for the foreseeable future, as they have since the beginning of the century. As long as that remains the case, there is no danger of an “exploding debt” scenario in which a large but constant federal deficit causes debt to grow without limit as a share of GDP. At this point, the greatest danger to the recovery is premature austerity. …


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Picture courtesy of Pixabay.com

Those of us who have spent the last couple of months working from home, or even just sitting at home, have had a lot of time to think about the little things that surround us in our houses or apartments. Since climate change and conservation are two of the things I blog about regularly, my topic today is going to be the petty annoyances and occasional satisfactions associated with saving energy at home.

Let’s start with light bulbs. Those good old Edison-inspired incandescent bulbs. How we loved them — except when they burned out, which they did regularly. …


Even after businesses reopen, a large portion of consumers may not be able to afford to shop

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Photo: Thomas Trutschel/Getty Images

The Covid-19 pandemic is having a disproportionate impact on the health of low-income Americans, but even low-wage workers who avoid the disease itself are likely to suffer grave economic distress. In part, that is because workers with lower incomes have been more likely to lose their jobs than those who are better paid. The Pew Research Center reports that 32% of upper-income adults say that someone in their family has lost a job or taken a pay cut due to the outbreak. …

About

Ed Dolan

Economist, Senior Fellow at Niskanen Center, Yale Ph.D. Interests include environment, health care policy, social safety net, economic freedom.

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