California Water Restrictions - Emily Lundberg

This week, California Governor Jerry Brown announced mandatory water restriction policy. For the past three years, the state of California has been in a draught, raising questions about the availability of fresh drinking water down the road. The lack of snow this winter due to the absence of the La Nina weather phenomenon left little hope of nature running its course and solving the problem on its own. Over the next nine months, California cities are trying to reduce water consumption by 25 percent. To enforce this new policy, the Governor Brown has instructed local water agencies to adjust their billing rates and discourage water waste. Whether this policy will actually be enforced or not is a large concern. The water agencies must provide enough incentive to decrease consumption by 25 percent, a large cut in current usage patterns.

Although the California mandate does not specifically spell out exact restrictions on water usage for agriculture, there will surely be spillover economic effects into California’s agriculture industry. Despite labor issues and negative effects from regulations, the dairy industry has been able to lower costs and compete by growing feed locally. Growing feed, however, requires more water than typical vegetables or trees. Under the new water restrictions, dairy producers will have to choose to either cut supply and reduce their herd or increase input prices by buying feed from other states. Reducing herd size surely will impact wholesale and retail dairy prices as other producers will not be able to increase supply fast enough to meet consumer demand. Loss of market share for the CA dairy industry can have negative spillover effects on labor (farmers, farm workers) transportation, and other industries involved in getting dairy products to the consumer. These same implications can be discussed for the meat industry and wine industry in California.

Although a limited irrigation scenario causes producers to incur losses and requires strict enforcement to be successful, I do believe this policy to be least costly in the short run. This policy, however, will not reduce groundwater consumption over time. Water saved today will be used down the road, exhausting the resource. An alternative policy should be considered that could have more effective long-run implications.

The Pyramid of Raqqa and the Free Market

"If Isis’s “caliphate” were a state, it would be a country of the poor. Most Syrians in the territory are struggling to get by on about $115 a month"

What must a terrorist organization do to be considered too violent for Al-Quaeda? Abu Al-Baghdadi, the BA, MA and PHD (all in Islamic Studies) holding, self-proclaimed Caliph of the ISIL in Raqqa found a way.

In doing so, he made his capital Al-Raqqa. Raqqa presents a unique case to show just how effective economic policy is. 

Once resting in a profitable spot between Iraq and Syria, it is now sustained by the people whom the ISIL fight. In retrospect, Al-Assad's guiding hand was cold, but competent. Since sustaining the switch from Assad to Baghdadi, the residents must hold three currencies. General utilities running for a few hours is more of a desire than a daily expectation, because the ISIL guard state-built facilities while government workers sustain the city. Government workers are paid by the Syrian (Damascus) and Iraqi government. In fact, the most integral workers in Raqqa, as well as the basal utilities integral to running a tiny city (much less a state), are all paid for, built and/or hired by the Syrian or Iraqi governing bodies. Come pay day, they gather three types of currency and make the trek to Damascus or Baghdad. While life has become more difficult, it has remained similar enough that the ISIL public policy can be analyzed. 

Thus, there are fairly stringent economic policies, and some have interesting implications. Take, for example, the above figure of $115 a month for the average Syrian (Raqqans are ostensibly poorer) and now deduct that by 50%. That $57.50 goes to the ISIL for protection money, though the organization in Syria reaps $1m/day via extortion and gas money. The ISIL takes all petroleum and oil in exchange for promises not to kill employees nor destroy utility buildings. The first medical university of Raqqa opened because the ISIL killed every doctor that helped Shia soldiers. This is basically a Labor supply ceiling that combines a floor of free aid sent by humanitarian groups. 

The tax line can almost be seen as economic re-distribution if one looks at the soldiers - standing uselessly at gates, checking passports, taking money and whatnot - as the furthest left tail of the distribution. It leads to traders and entrepreneurs, even with a 2.5% revenue tax and a 10% tax on exporting cargo (might as well sell it in Raqqa), being tentative to engage in business with the ISIL. Most interesting is that when there are no militants around to watch, the prices of fuel to bread - set by the state - reach exorbitant levels due to severe supply limits. With labor and commodity supply limits, it is interesting to note how the people constrained by the quasi-limited economy still engage in free market principles, even when faced with deadly repercussions. In fact, farmers bereft of real farming equipment, when offered subsidized farming necessities for food purchasing rights by the soon-to-be starving ISIL, refused to engage in private transactions with the ISIL on the grounds of selling the food in strongholds like Raqqa at free market prices (which are also substituted for barter-economies). 

Baghdadi is taking the "social welfare" and dividing it/moving it to the "dead weight loss (to welfare)" triangle in that what should be social welfare has been driven as far down (aka price point near the top) as possible to leverage the entire triangle to be given to the ISIL in some form or another. In macromarket terms, the civilians are resisting by choosing, in the face of a Caliphate once again, to eschew monarchism for democratic foundations.

http://www.ft.com/intl/cms/s/0/b2c6b5ca-9427-11e4-82c7-00144feabdc0.html#axzz3WCy6po3E 

http://english.alarabiya.net/en/webtv/reports/2014/03/04/Food-prices-skyrocket-in-Syria-s-Raqqah.html

Should Sports Gambling be Legal? - David Berk

      In 1992, the Professional and Amateur Sports Protection Act (PASPA) banned betting on all sports events, except for in four states where betting was legal at the time. These states were Nevada (Las Vegas is a huge sports betting hub), Oregon, Delaware and Montana. It is reasonable to see why this act would be passed. Many people believe that the outcome of sporting events are changed when gambling is brought into the picture. There are different incentives created for athletes to win games by a certain spread or to make a game closer than it otherwise would have been. However, recent comments by NBA Commissioner Adam Silver suggest that betting laws on sports may soon be repealed. Silver has made comments regarding policies in London, where sports bets can be placed on a smartphone or at a kiosk in the stadium. He believes that U.S. sports can benefit from this expanded gambling and that the PASPA is outdated.
      I tend to agree with Adam Silver on the topic of sports betting. The fact of the matter is that there is somewhat of a black market, much like for illegal drugs, for gambling on sports. If someone wants to place a bet, there are illegal online bookies readily available. The NBA, as well as all other professional sports leagues, have an opportunity to expand revenues by legalizing and regulating sports gambling themselves. Additionally, gambling provides an opportunity for increased popularity of second tier sports such as hockey and soccer. Additional viewers of these sports due to gambling incentives can only be good for the popularity these sports. Overall I support expanding sports betting and believe it would be a great move for all major sports. 

New Beer Laws - Jon Song

In recent years, craft beer has experienced a huge boom in popularity and microbreweries are producing more beer than every before.  Unfortunately, by producing so much beer, these microbreweries are breaching the American three-tier system, consisting of large breweries, distributors and microbreweries, that governs the beer industry; this system was created to prevent the largest breweries from controlling the entire industry since those in the microbrewery category are allowed to produce and distribute their own beer.  In many states, a microbrewery can no longer serve their beer at bars and restaurants if they exceed the production limit.  In response to the popularity behind this brews, many states, such as Arizona, Wyoming and North Dakota, have rewritten their beer laws in order to allow these microbreweries to continue producing.

I believe that the laws passed by Arizona, Wyoming and North Dakota are great steps in the right direction.  Allowing microbreweries to produce more beer creates more jobs and more spending in the economy.  Furthermore, since beer is a form of alcohol, states will reap profits from excise taxes as more craft beer, which usually also priced higher per beverage.  More states should be taking actions to rewrite their beer laws; the old limit is 1.2 million gallons of beer, whereas Arizona's new limit is 6.2 million and even with this limit, producers and distributors agree that this allows microbreweries to continue to expand without taking power away from distributors.  Seeing as there is no potential monopoly-esque conflict, there is no economic reasons that the beer production cap for microbreweries should not be increased.  

Meister Blog #3

The Fish and Wildlife Service (FWS) seeks to conserve, protect and enhance fish, wildlife and plants and their habitats. Through programs like, the Partners for Fish and Wildlife, Partners in Flight, Sport Fishing and Boating Partnership Council, and other partnership activities, the FWS fosters aquatic conservation and assists voluntary habitat conservation and restoration. Its primary economic objective is to fund state agencies so they have the funding to regulate overfishing. Overfishing is a problem due to future consumption issues and environmental impacts. The act of international fishing is known as a common good, because it is rivalrous and non-excludable. Fishing acts, restrictions, and quotas are put into place to address these commons goods. The program is set to address the issues of overfishing and destruction of ecosystems.

In general, I think the Fish and Wildlife Service is a necessary agency and the Fish Wildlife & Sport Fish Restoration Program is vital to maintaining not only the economy of producers and consumers for eating fish  (the fishermen and bulk buyer consumers), but also to maintain the natural habitat and ecosystem. Nobody knows the full effects of the market when the supply of fish is unregulated.  If the fish market suffers, other plant and animal life will surely be affected, which may affect unknown markets indirectly. The programs are not only used for funding, but they also are used for education, restoration, and awareness. The money funded to the state government is used to find better practices, and also limit the amount of fish that are taken from the ocean/sea. In addition to fish, this agency also looks to support other marine life. I definitely support intervention because nobody really owns the water. The property rights to the water should be as public as possible.

Overfishing isn’t a public good, but the water itself is. Therefore since nobody has the rights, the government should do whatever it can to be socially optimal.

Distracted Driving Laws - Leslye Barth

Distracted driving laws exist in 14 states in the US, DC, Puerto Rico, Guam and the US Virgin Islands. These laws prohibit all drivers from using handheld cell phones while driving. All are primary enforcement laws, meaning that an officer can cite a driver for using a hand-held cell phone without any other traffic violation taking place. The implementation of distracted driving laws have generally been well received, but the recent veto of a statewide ban on texting while driving in Texas was the first time the policy has been turned down by a governor (Rick Perry). Perry commented that although texting while driving is "reckless and irresponsible," the bill is "a government effort to micromanage the behavior of adults." 

Texas does prohibit texting while driving for drivers younger than 18, school bus operators and those who have had learners permits for 6 months or less, and prohibits the use of handhelds in school zones. However, anyone over 18 is allowed to text while driving. Texting while driving causes over 1.6 million accidents per year, and the Texas governor is choosing to "protect" the rights of drivers to do whatever they want in their cars with respect to phone usage. This calls into question the role the government plays in protecting its citizens. In my opinion, it is far more important to protect the lives of those on the road who are going about their business from those who recklessly choose to be distracted while driving. The cost of life far exceeds the "benefit" of having the privilege to text while driving, and Texas should definitely reconsider legislation to ban the use of handheld cell phones while driving. The lack of this law is permitting dangerous activity on the road and is endangering citizens who either choose to text while driving or those that surround the particular individual who puts others in danger (a serious negative externality). This law is a no-brainer, but the governor of Texas is too focused on his agenda of reducing government involvement to protect the own lives of his citizens. 

Grant Shao - Los Angeles Minimum Wage

The push to increase the minimum wage has occurred on the national stage with promises from President Obama as well as on the local stage as cities such as Seattle, Portland, and San Francisco have all made pushes to increase the citywide minimum wage. On Tuesday, March 31, the county Board of Supervisors unanimously voted to study the raising of the minimum wage. The campaign specifically would like to implement a wage raise to $13.25 as soon as 2017 specifically in Los Angeles County, which would affect approximately 4 million residents. However, there are plans to increase the wage to $15.25 by 2019 as well as expanding the coverage area to include another 1 million residents surrounding Los Angeles County.

Theoretically, this increase in the minimum wage could drive up unemployment as firms fire employees in order to keep costs constant while still abiding by this minimum wage. Another option would be a decrease in profits as firms struggle to pay their current staff the increased minimum wage. Many lobbyists are worried that the proposed increase in minimum wage could see many firms relocated outside of the affected area in order for their wages to remain low, which would then negatively impact the city with reduced tax revenues from those firms. The county board, however, would like to focus on the examples of Seattle, Portland, and San Francisco which have all seen increased productivity from their populations after the implementation of a significant wage increase. These cities have also seen significant gentrification movements as well as decreased income inequality as well as decreased crime rates after the new policies.

I would argue that there are some key differences among the economies of Seattle, Portland, San Francisco, and Los Angeles. First and foremost, Los Angeles has a significant illegal immigrant workforce that would not hesitate to work for below to minimum wage if the minimum wage were to increase. Raising the minimum wage would only incentivize firms to utilize this illegal immigrant workforce within their firms and would drive citizen workers out of the market. Second, Los Angeles is a significant manufacturing center on the west coast and in the United States in general. Many manufacturing plants have unions with collectively bargained wages that are held constant in the long term. The proposed increase would raise the minimum wage above these collectively bargained wages, with no incentive for firms to raise the collectively bargained wages until the agreement runs out. This increase would then drive workers out of those firms, leaving a significant revenue stream lacking labor, which feeds back into the first difference that I have stated. On the flip side of the coin, the raise in minimum wage could have a positive impact despite rising unemployment. Los Angeles, especially compared to San Francisco has a significant problem with underemployment, where people are employed, but do not earn a sufficient wage to support themselves. This problem exists due to the large supply of part-time jobs within the economy as manufacturing plants hire part-time laborers and the entertainment industry does not provide steady labor. The increase in the minimum wage would definitely increase the unemployment rate temporarily, but could bring some people who are underemployed into full employment. As the labor market adjusts, the increase unemployed people could move out of the city or to another city entirely in order to find work. While the increase in full employment is a benefit with this policy, I believe that overall there are multiple differences between the economies of Los Angeles and Seattle, Portland, and San Francisco which prevent those cities from being templates for Los Angeles and make this policy untenable.


http://www.latimes.com/local/lanow/la-me-ln-county-minimum-wage-20150330-story.html#page=1