Plain Sense Economics

As a followup to my earlier note on Oregon’s Measures 66 & 67, we need to take a quick look at some of the theories and rationale behind government taxes. This isn’t and can’t be an exhaustive discussion, but hopefully it is a start for our considerations. For SOU students I commend to you my [...]

This article in The Wall Street Journal describes the British economist, A. C. Pigou.
Here’s an excerpt:
In the years leading up to his death, in 1959, he was a reclusive figure, rarely venturing from his rooms at King’s College. His novel ideas on taxing polluters and making health insurance compulsory were met with indifference: Keynesianism was [...]

This report on NBC News tonight highlighted the impact of a recent increase in Federal taxes on cigarettes and chewing tobacco.

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The report mentions an estimate that a 10% rise in cigarette prices results in a 7% drop in smoking among youth and a 4% [...]

The cap and trade process for regulating the negative externality of pollution has been tested for a couple of decades, and recently has had more attention from Kyoto to Pres. Bush’s Clear Skies Initiative. Society (through the government) chooses a limit or cap on pollution of a compound. Then polluting facilities buy and sell [...]

A Pigovian tax (named after economist Arthur Pigou) aims to correct negative externalities. In plain-sense English this means that when a private market has a negative effect on others, a tax can sometimes offset that negative effect. The additional feature of a Pigovian tax is that it lets the private parties work out the best [...]

In my earlier post on Externalities I mentioned that one form of government intervention to correct a negative externality is a Pigovian tax. Named after the English economist A.C. Pigou (pee-GOO), this tax attempts to bring outside, social costs into the decision that a seller makes in a market.
“…come again?…” Here’s what I mean…. [...]

Somewhat to my chagrin I discovered that I hadn’t posted on externalities – which is an economic concept important to understanding public policy options. So on with it…
In a nice, idealized market place the buyers and sellers come together at a price point where the private benefits of the purchase to the buyer equal the [...]