Currently Listening Heaven Sent By Esthero see related

Brief Thoughts on Parental Choice:

I would like to see parents choices returned them under a system of a more competitive education system. As a home schooled student for 12 years, I experienced first hand the intellectual freedom in an environment where my parents were free to choose and adapt my education to the ever-changing flow of my interests. I have never been in a learning environment where I have not been free to shape in some way, the direction of my passions. Now that I have left grade school I look back on my home education as being one of the most precious experiences of my childhood.

My desire is that more young people would have the opportunity to experience this freedom. To find joy in learning is like finding gold in quicksand. At first glance as a young child one sees classroom work as slave labor but when learning and curiosity can coexist hand in hand, people change the world. I believe greater school choice implemented through a comprehensive voucher and tax credit system for the benefit of all parents is the first step towards bringing about a positive change in the quality of American education.

to:                 Mr. Meese

from:           John Lavoie

subject:     Has U.S. Income Inequality Increased?

date:            11 January 2005

Has U.S. income inequality increased? The Cato Policy Forum entitled, “Has U.S. Income Inequality Increased?” attempted to answer this question by featuring three contrasting lecturers. Alan Reynolds, Cato Policy Analyst and a supporter of the position that income inequality exists, but is not widening as many scholars argue. Gary Burtless, a John C. and Nancy D. Whitehead Chair in Economic Studies at the Brookings Institution, provided a strong counter-point to Reynolds arguing that the income gap between the rich and poor has been widening and is continuing to increase at an exponential pace. Diana Furchtgott-Roth, currently a fellow at The Hudson Institute, took a position of indifference to Reynolds and Burtlett and argued that economic data is not reliable because it does not account for variables such as population growth and movement between income quintiles. Furthermore, she stated that low income entry level workers should be aided in their efforts to enter and advance in the workforce.

The first speaker, Alan Reynolds, argued that income inequality is not what the media makes it out to be. Reynolds’ basically summarized his book entitled “Income and Wealth,” a critique of an article published in The Economist magazine written by two Economists, Thomas Piketty (Ecole Normale Superieure in Paris) and Emmanuel Saez. (UC Berkeley) Their article stated that “The only truly continuous trend over the past 25 years has been toward greater concentration of income at the very top.”  Reynolds countered this statement by providing evidence that income inequality in the early 1980’s was caused by the economic recovery that took place during the Reagan years. High income individuals in 1980 were faced with high inflation, high unemployment, and a bond crisis. Many of those individuals were compensated more in the form of capital gains than a simple salary. As the country pulled out of the economic crisis of the early 80’s, income inequality stabilized. Reynolds’ concluded by providing evidence of the 90’s income inequality being a decade that nearly flat lined in terms of the ratios between rich and poor. All individuals enjoyed income growth in the 10-20% range over the course of the decade.

Gary Burtless, the next speaker at the forum, argued against Mr. Reynolds stating that income inequality is every bit what the media makes it out to be. Burtless described Reynolds’ book as a “Lawyer’s Brief” claiming that it was a nitpicky attempt at disproving CBO’s (Congressional Budget Office) studies. Burtless did agree with Mr. Reynolds’ assessment of the 1980’s, but disagreed with the growth trend of the 90’s and argued that the Gini coefficients between 1989 and 2004  show that the income inequality trend has been broadening. (even though, as Reynolds argues, incomes across the board have risen at unprecedented rates) In summary, Burtless concluded that the top 1% of income earners in the 1990’s outpaced the growth of all other quintiles.

The final speaker, Diana Furchtgott-Roth, argued that Reynolds and Burtless were both incorrect. Income inequality may be the case, but who cares? People move between income brackets throughout their lives and the change in top wage earners can be explained partly by more people earning more money. The quantity of individuals in the upper brackets has increased. Hence, due to this and other population factors such as marriages and divorces, household incomes can fluctuate in a way that cannot be measured by economists.

She argued that people are perceiving inequality and not looking to the true underlying problem; the fact that millions of American’s are still at the poverty level. While Reynold’s and Burtless bicker over statistics, Furchtgott-Roth argued that no data is perfect and even if there is inequality, we must work towards bringing about economic gains for all income earners.

In summary, Furchtgott-Roth concluded by saying that it is important that we preserve and promote entry level jobs in order to allow people to enter the workforce and so empower them with the opportunity to advance themselves up the career ladder. To accomplish this, she believes America needs to reform its schools towards a more free-market performance based method of education. It is paramount that the U.S. government not enact policies that price low wage entry level workers out of our markets.

A step towards a solution perhaps, but the issue will surely continue to be debated as long as there are rich and poor.

Currently Listening The Great Summit: The Master Takes By Louis Armstrong & Duke Ellington see related

Cleaning up New Orleans: The Coase Theorem Applied to Distributing Negative Pollution Externalities in a Post-Katrina Economy

    The Washington Post Article entitled, “Extraordinary Problems, Difficult Solutions: Massive Floods, Pollution Make for “Worst Case”” had a main goal of vividly informing the reader of the extent of the environmental damage that took place in New Orleans. (a link is posted at the end of the blog) This article was published on September 1^st, 2005, just four days after Hurricane Katrina and I believe is more of a news summary written with the intent to inform people the extent of the environmental devastation. It does not present a definite economic argument, but is more a news report that raises many environmental economic issues. To this day, the area continues to suffer from economic, social, and environmental damages caused by the storm. This spring I visited New Orleans to gut houses and I witnessed first hand what a level 3 hurricane can do to a poorly governed and unprepared city. The environmental and economic problems of New Orleans go hand in hand and the economic theory applications in this issue are extensive. In this article review, I wish to point out some of the economic problems mentioned by the article and how they can best be addressed. The article does not present specific public policy solutions to addressing the problem so my goal will be to delve deeper into presenting some reasoning behind the economic problems created by the environmental damage.

Public goods provision: A Bayou Coasian Application

            What is the extent of the damage? Hurricane Katrina wiped out the power grid, sewer system, water systems, and all forms of education, roads, police, fire, and government administration offices. The city at the publication date of this article was quite literally a flooded out ghost town. The article stated that Louisiana was known for its lack of enforcement of safety regulations on hazardous materials and thus, after the storm, the city is faced with “landfills and storage areas containing “thousands of tons” of hazardous material to be leaked and spread.” (p. 3) Hence, we have a problem of negative pollution externalities.

How can we deal with the damage? The problem here is a situation of disproportionate costs born by 3^rd party individuals, IE, any people negatively affected in any way by the spilling of those materials. This problem’s root lies with the Coase theorem, the idea that if there are no transaction costs, and all property rights are assigned, then the optimal amount of consumption occurs.[1] Property rights must be assigned to all aspects of a market transaction, in order to eliminate unforeseen transaction costs borne by a third party. Effective regulation of those hazardous waste areas would have prevented the additional costs imposed on the gulf region by the leakage of chemical waste into the flood waters. To take this a step further, I think that it is additionally a problem of public goods provision. I lay the blame on the New Orleans government for not enforcing properly those regulations that would have prevented the negative environmental externalities from harming any third parties. Pollution externalities are a problem to be addressed by society as a whole and should be dealt with by the government to minimize 3^rd party transaction costs.

Returning to the Ghost Town: A Prisoner’s Dilemma Approach

From page one of the article I quote former head of FEMA Michael D. Brown, “I surmise that there are people in New Orleans who will not be able to get back to their homes for months, if not forever…it will be a Herculean undertaking.” The questions remain, who is paying the cost of moving back to New Orleans, how are these costs going to be distributed, and what is causing people to refrain from moving back? Who wants to move back to an abandoned, hazardous waste filled, black mold infested neighborhood? The problem is again negative pollution externalities and the answer in theory is collective action. If the motivation to return home to New Orleans is strong enough, people must band together and collectively decide to move home to neighborhoods. This is the only way a neighborhood can be beneficial to all homeowners because it demands that people share the cleanup cost of restoring the environment in their neighborhood.

However, there is a fundamental problem with this theory because people do not live together in groups of 10 or 20 homes. When 100,000 people are displaced from a Parish, it takes a massive operation of social trust simply to convince them that moving back to a disaster area will prove to be a valuable investment. Below is a payoff matrix outlining the incentives of two people who have evacuated New Orleans and are now living perhaps temporarily in Texas. (Payoffs A , B )

 The incentives are set up in such a way that evacuees are unlikely to take the risky investment of returning to New Orleans without assured certainty that their neighbors will return. Living in a neighborhood or portion of the city by oneself with no neighbors paying the cost to clean up “black mold” externalities is not an option. For example in the lower ninth ward, one reason why many homeowners have perhaps chosen not to return is because they have seen the amount of negative media attention that area has received and they find that it is less of a risk to leave New Orleans permanently.

http://www.washingtonpost.com/wp-dyn/content/article/2005/08/31/AR2005083102758.html

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"American Freedom:" Are we truly as free as we say we are?

I believe freedom is relative.  Freedom is freedom-from versus freedom-to. America is defined by the differences and similarities of the people who live in it. We all say we stand for one unchanging absolute vagary called “freedom.” We all stand for “rights” and “justice” but the fact of the matter is that in some way, we all disagree about what is and what should be. Is the garden of Eden freedom? Adam and Eve had complete freedom within the world they knew except for one critical concept, a knowledge of good and evil. Were they really free or was God telling them what to do? They were not 100% free, but neither were they 100% enslaved. It’s not a bad life to live in a garden with the creator of the universe, the woman of your dreams, and all the food you can stand to eat. They were naked and they felt no shame.

Freedom is however you want to define it. Some people don’t want freedom and they instead prefer protection. Each one of us Americans signed some of our natural freedoms away when we decided to become the United States. We made a choice to be protected by a sovereign government in exchange for some of our natural rights. (kill, pillage, etc.)

Freedom is at its deepest essence, a choice. A choice for example that Edna Pontellier in The Awakening faced. She had everything everyone told her she was supposed to be happy with, yet she was anxious and ready to throw off the chains and do something, anything, to break free from the predestined mold of her home-maker career. The thing about America is that we all want our own way, some of us agree, some don’t, and we believe our own definition of freedom is what freedom should be. I believe I have the freedom to allow my moral beliefs to influence the politics regarding a pro-life abortion policy. Supporters of abortion believe they should have the freedom from a government telling them what is and is not moral.

The bottom line is this, we American’s don’t know what we mean when we say “freedom.” Huck Finn knew what freedom was, it was his own authority to rebel against societal mandates, strip naked on the river, and head off to “Zion,” whatever that is supposed to mean. Do American’s know what freedom is? Is the greater metropolitan area of Washington D.C. a shining example of “freedom? Are we a saddening example of a Jane-Smiley-esque stuck up culture blinded by our own sense of perfectionism that paints a culturally gray picture of an alternative form of slavery masquerading under the title, “American Dream.”  What is the “American Dream” anyway? Is that freedom or is it plain old “comfort.” The American Dream is this: “We don’t know what life is, but we know all who live on earth eat, sleep, mate, work, shit, and die.”[1] The American Dream makes me sick.

“Freedom” is only limited by what government you’ve signed your allegiance to and the culture you’re trying to become a part of. If you are truly living your life because you are filled by joy or at least complacent acceptance of the cards the world has dealt you, you are free. I chose to chain myself to a desk in your classroom all year Dr. Williams because I want to learn more and live out a life that will one day be something more than whatever the world tells me to be. Why? Because it is not culture that tells me what happy is and is not, it is my heart. To play the ignorant conformist fool and live out my days as an American Dreamer will never be my idea of lifelong fulfillment.