regulation2point0

Tom Lenard (Technology Policy Institute) and Larry White (NYU Stern School) raised in interesting issue in Politico this week. Will broadcast television survive its technological, economic and cultural obsolescence much longer? Equally to the point, would we be better off without it?  TV broadcasters are spectrum hogs, and the prospect of them abandoning the airwaves (and their remaining legitimacy as stewards of spectrum) gladdens these hearts.

The Financial Times recently published commentary by Jacob Weisberg deploring Amazon.com’s use of political and financial  muscle to avoid collecting sales taxes on out-of-state purchases. Amazon, he  notes, only recently relented because the company sees greater advantage in  positioning warehouses closer to customers.

Wall Street Journal writer Gordon Crovitz  responded with a  column entitled, “9,646 Tax Burdens on the Internet,”  in  which he argued that the crazy quilt of state and local tax rules  would be  unmanageable for Internet retailers – especially smaller ones.  Crovitz offers  the example of a 1,400-word Wisconsin regulation  differentiating taxable ice  cream cakes from ones that are exempt by  virtue of contents.

Who’s  right? Neither and both.

For the rest of this posting, please visit U.S. News and World Report

Young adults have done a better job than older Americans of reducing debt since the Great Recession, but they’re deferring some traditional parts of the American Dream to do so.  That may be good personal budgeting, but the spending pullback is likely one reason for anemic economic growth.

The Pew Research Center says the median debt of households headed by those under age 35 fell 29 percent between 2007 and 2010.  That compares to an 8 percent drop for households headed by those over the age of 35.  The debt dip reflects the decision to put off buying homes and cars, two long-time economic drivers.  Home ownership among the younger set fell from 40 percent in 2007 to 34 percent in 2010.  Car ownership fell from 73 percent to 66 percent.

This shift from traditional consumption patterns is probably slowing growth now, but the economy could ultimately get a big boost from pent up demand – assuming the younger folks are merely deferring home and car-buying into the future and not skipping them altogether.

Political rhetoric in U.S. political campaigns suggests that factory jobs are all fleeing overseas, but a recent report from the Congressional Research Service (CRS) suggests the facts aren’t quite that simple.  There’s no doubt that factory work accounts for a shrinking share of total employment, but CRS says the U.S. is still the world’s largest manufacturer and has outperformed most other wealthy countries over the past decade.   CRS estimates that the value added of U.S. manufacturing rose 11 percent after inflation between 2000 and 2010.  Manufacturing value-added rose less in Germany and Japan and actually fell in Britain, Canada, and France among other countries.  China, Korea, and Taiwan did better than the United States.

Jobs are going away, but that’s partly because U.S. factories and workers are more productive than ever before – producing more goods with less work.  That’s good for the overall economy because it reduces costs and improves global competitiveness.  U.S. manufacturing also appears to be increasingly concentrated in higher-skill, higher value sectors.   That’s bad news for those individuals – especially for those with lower skills – whose jobs are no longer necessary.  The pain is real, but the explanation isn’t what people think.

It turns out that a court ruling rejecting New York Mayor Bloomberg’s bid to crack down on supersized soft drinks may have saved the Mayor from regulatory backfire.  At least that’s the suggestion from a new study that suggests that food sellers would have responded with menu options that would have boosted soda sales to patrons who simply chugged down a larger number of drinks in smaller cups.

A study on the “Unintended Consequences of Limiting Sugary Drink Sizes” suggests that the Bloomberg proposal, which would have banned soda servings of more than 16 ounces, didn’t take account of how the market place might respond.   The study suggests that food retailers who offered two smaller sodas for a fixed price rather than single supersize servings would have had a hit with thirsty customers, especially groups who could have shared the drinks all around.

As we’ve often noted, regulation distorts the market place, but not always in the way the regulators intend.

Mark Twain once called the reports of his death greatly exaggerated, which is how we feel about competition in the telecom sector.   Despite the protestations of those who keep urging new government regulation to assure continued choices in cable TV and wireless, the market keeps telling us that competition is alive and kicking.  As new evidence we offer up the competition between Dish and Softbank to control wireless carrier Sprint as a springboard into the U.S. market for mobile services.   Indeed, Dish’s bid suggests additional competition in the television marketplace as well.   We’ve seen it again and again in the information sector, seeming dominance is increasingly fleeting (think AOL and Blackberry).   There’s almost always a new challenge over the next hill.

The Federal Communication  Commission, which oversees the gigantic U.S. market for telecommunications, recently  released its sixteenth report on the state of competition in the wireless  industry. It’s chock-full of data, grist for business strategists and policy  nerds seeking to understand the dynamics of a fast-paced wireless industry and  its uneasy relationship with wireless regulators.

The report provides  plenty of reasons to believe that innovation and  competition are alive and well  in the wireless industry – no surprise  if you’ve gone shopping for a wireless provider  anytime recently. But  it ignores all the evidence gathered about gains in consumer  choice and  output coupled with lower prices in order to reach an odd conclusion (or rather, non-conclusion).

For the rest of this posting, please visit U.S. News and World Report

The 2007-2008 recession put a major dent in Americans retirement plans and probably means that an awful lot of senior citizens will be hard at work when they might rather be relaxing on the beach or in their backyard hammock.

According to the Center for Retirement Research, 53 percent of workers 30 and older aren’t going to have enough money for retirement if they continue on their current financial path.  That’s a big bump up from 44 percent in 2007 (based on data collected before the financial meltdown).  It’s also much, much higher than 30-31 percent levels that prevailed in the 1980s, which indicates that the decline in retirement readiness is a long-term trend that was made worse, but not created, by the global economic collapse.

Would a tiny tax on securities turnover corral the frightening volatility of global financial markets and raise a ton of revenue painlessly in the process? Or would it undermine innovation and drive trading to friendlier climes? There will soon be no need to speculate (pun intended). Eleven EU countries are about to embark on a large-scale experiment in what some commentators label the “Robin Hood tax,” and others see as a self-defeating exercise in revenge against the wonderful folks who gave us the financial meltdown of 2008.

For the rest of this posting, please visit Yahoo! Finance.

We’ve said it before and we’ll say it again – government support for ethanol is both bad climate policy and bad economics.   Now, the government data offer more evidence that, as a business, ethanol for fuel doesn’t add up.

Despite some recent improvement, data from the Department of Energy and the Department of Agriculture show that production costs at ethanol-only plants often exceed revenue.   As a result, about 20 ethanol plants had halted operations at least temporarily as of January 2013.

Some facilities are making a go of it by recovering corn oil as part of the ethanol distilling process.  Expanding the product line reflects smart business acumen at the individual plants, but hardly advances the case for taxpayer subsidies.