A Case Study in Plutocracy for the 'Occupy Wall Street' crowd

"What, me pay taxes?! Surely you jest! Heads, I win, tails, taxpayers lose!"

The Center for Public Integrity's iWatch News has a nice report today entitled "How an Obama fundraiser turned Oklahoma into a personal tax haven". The bagman in question is Tulsa billionaire George Kaiser (pictured above). It seems Kaiser has used every trick in the book to avoid taxes (the iWatch report links to a chapter in a 2001 book, The Cheating of America with details) while making piles of money. Yet when his investment in Solyndra, a firm making solar panels, went belly up, it was taxpayers who were on the hook -- for $535 million in loan guarantees. 

That's how plutocracies should be run, of course, and plutocracy's numerous hirelings heap scorn on the idea that things could be any different. But some people, like those in the "Occupy Wall Street" protests and their supporters, have other ideas of what a good society looks like...

RH

Corporate welfare: the case of the Spanish fishing fleet

In The Economics Anti-Textbook (pp.165-166), we briefly point to the on-going destruction of the world's fisheries, carried out at public expense. Here are some good new reports on the subject, looking at enormous EU subsidies to the Spanish fishing fleet (and misbehaviour by the industry). The source, the International Consortium of Investigative Journalists, is well worth keeping an eye on, given the dearth of investigative reporting in the corporate media.

RH

Accounting for Pollution

An entry about the costs of pollution in Paul Krugman's blog yesterday had the title "Markets can be very, very wrong". Indeed. A point we wanted to make in The Economics Anti-Textbook was that, for all the talk about Pigouvian taxes and tradeable permits in the microeconomics texts, the textbooks spend little or no time pointing out that governments often don't actually impose the taxes the textbook says they should to improve efficiency.

Perhaps pointing out the obvious would raise 'controversial' questions (Why don't they use such taxes? Whose interests are served by allowing excessive pollution?). Controversy is something to be avoided in Textbookland, where the goal seems to be to maximize the share of the market and not annoy potential adopters of the textbook.

The paper Krugman was writing about was "Environmental Accounting for Pollution in the United States Economy", the lead paper in the August 2011 issue of The American Economic Review, the flagship publication of the American economics profession. The authors, Nicholas Muller, Robert Mendelsohn and William Nordhaus, attempt to compare the gross external damages caused by production in various sectors with the value-added in the sector that is traditionally measured in the national accounts. The idea is that the national accounts should measure the net output of a sector, so that external damages are netted out from the estimate of its value added to get "each industry's net contribution to national output" (p.1672). They conclude that "Solid waste combustion, sewage treatment, stone quarrying, marinas, and oil and coal-fired power plants have air pollution damages larger than their value added." (p.1649)

A coal-fired power plant whose pollution damage exceeds the value of its output at market prices according to Muller, Mendelsohn and Nordhaus's paper

They remark (p.1672) that "this does not necessarily imply that these industries should be shut down." [After all, where would ordinary folk take their yachts if there were no marinas?!] "On a formal level, it signifies that a one-unit increase in output of that industry has additional social costs that are higher than incremental revenues. At an intuitive level, it indicates that the regulated levels of emissions from the industry are too high."

Krugman suggests that those opposing greater regulation of pollution are "operating from some combination of knee-jerk defense of the haves against the rest and mystical faith that self-interest always leads to the common good." The promoters of that "mystical faith" have huge resources and are engaging in a long-term campaign of ideological warfare in which the university campus is a key battleground. If you can stomach it, check out the website of "Students for Liberty", funded, it seems, by the usual suspects...

RH

Juliet Schor's Plenitude

Readers of The Economics Anti-Textbook will surely want to check out Juliet Schor's latest book, Plenitude: the new economics of true wealth. We made a number of references to Schor's work in The Anti-Textbook but this one (published also in 2010) was too recent to make it into our book.

I have added her book blog to the links on this page. Who can resist a blog that begins with this forthright statement?

I’m here to plant a stake in the heart of the Business-As-Usual economy and its bankrupt politics.

Not me!

For a neat graphic introduction, see this, or you can watch her lecture here...

RH

Economic education for kids, Tea Party style

By some marketing accident, a complementary copy of Bloomberg Businessweek arrived this week in the mail. With a shudder, my wife read me the following (from the 'Fun' section of the 'Companies & Industries section that was describing a variety of summer camps for kids):

Tampa Liberty School, hosted by Tea Party affiliate group The 912 Project, teaches [sic] 8-to-12-year-olds "the principles of liberty, free markets and limited government." Jeff Lukens, 53, whose day job is at an auto auction firm, will run this year's session. The first lesson will teach the campers the difference between European tyranny and freedom in America: After walking into a room that's "kind of dark and gray and austere ... [and being made] to sit down, be quiet and do what they're told ... we tell them, there's this other place you can go to called the New World," says Lukens. Once they've crossed an obstacle course representing the Atlantic, the campers arrive in America. "It's colorful, it's bright, it's cheery -- they get over there and we pop confetti in the air and it's a party," says Lukens. The kids later clean up the mess, so that they know "with freedom comes responsibility." Other lessons teach campers about the gold standard and that "our rights come from God, not from government," he says.

As Noam Chomsky likes to say, comment is superfluous.

RH