Grant Shao - Raising the Legal Smoking Age

Last Thursday, California state Senator Ed Hernandez (D - West Covina) introduced legislation that would raise the legal minimum smoking age for cigarettes from 18 to 21. Despite receiving support from multiple health groups, tobacco lobbyists in Sacramento are looking to strike the bill down before it reaches the state Senate. Senator Hernandez cites the health risks associated with smoking as the main driving factor behind this bill, while tobacco lobbyists cite the impingement of personal freedom as the main reason why the bill should not come to pass. Naturally, tobacco companies also know that getting young adults addicted to cigarettes at an earlier age will make them more likely to consume cigarettes in the future. According to the American Lung Association, smoking contributes to the deaths of more than 40,000 Californians each year, and 21,300 California kids start smoking each year.

I would argue that the benefits of keeping the legal smoking age at its present level and regulating the sale of cigarettes drastically outweigh the costs of the increased levels of smoking, particularly since most of these costs are caused by consumers themselves. According to the Tax Policy Center (TPC), state and local tax revenue from tobacco generated 905 million dollars in California in 2012. Assuming an equal distribution from ages 18 to 80, the age 18-21 demographic lost by this legislation would constitute lost revenue of approximately 44 million dollars. To put this in perspective, the lost revenue represents almost half of the state budget for environmental protection.

Aside from the economic reasoning behind voting against the bill, there are also philosophical reasons for voting against it. The founding documents of this country seem to emphasize the importance of freedoms, specifically the individual's freedom to make his or her own decisions. By setting the age of adulthood at 18, the government should bestow all constitutional freedoms on individuals above that age. This bill would serve as an impingement on this freedom and would violate the social ideals of this country.

The supporters of this bill provide an equally valid argument for the support of this bill. Smoking cigarettes has been proven to cause certain health diseases that drive up the amount of healthcare expenditure in California. The extent of these diseases extend beyond the consumer of cigarettes. Secondhand smoke has become an increasing cause of disease nationally and affects people who do not choose to consume cigarettes. While I do believe that the problem of secondhand smoke should be addressed, lowering the smoking age does not serve this purpose, and all other health costs are incurred by the actual consumer of the cigarette.

The government should allow individuals to exercise their freedom and choose to consume cigarettes as an adult if they so choose. Tobacco tax revenue between the ages of 18-21 generates approximately 44 million dollars, a significant amount of money that could be used towards education or welfare programs. In my opinion, this bill should not pass.

Grant Shao

Unemployment Insurance-Richie Weker

The federal government mandates that each state government offer unemployment insurance.  Unemployment insurance utilizes payroll taxes to pay benefits to workers who have been laid off by their companies.  These employable persons must be unemployed through no fault of their own and are available to work and are actively seeking employment to qualify for the monthly sums of benefit. The unemployment insurance system is meant to be forward funding, meaning that the base is supposed to be grown during periods of healthy economic growth in order to be used more heavily during periods of poor economic growth such as during a recession or other moments that would bring about high unemployment.

During periods of recession the program stimulates economic activity and job creation.  Individuals who have their income disrupted and have not adequately self-insured are the ones that are most likely to spend any additional income they receive very quickly.  The unemployment insurance program gives this demographic the benefits to replace their income that they in turn spend in stores and businesses help decrease the output gap and create jobs in periods of slow growth.  The unemployment insurance program helps not only the individuals receiving the benefits but their community and local economy as well. 

There is a moral hazard that comes with the unemployment insurance program.  It concerns the duration of the unemployment benefits given.  The main argument against unemployment insurance programs is that it a disincentive for the unemployed to find work.   In order to avoid the moral hazard of having employed workers simply pay for the benefits for unemployed workers, while the unemployed workers do nothing but collect the benefits can be avoided by the states not providing too high unemployment insurance benefits.  It is necessary to give people the temporary aid while they are in the process of looking for new employment, but giving too much allows them to simply wait the twenty-six weeks before finding a new job.

I believe that the federal mandate that state governments should provide unemployment insurance to unemployed workers who qualify for the program is an economically productive mandate.  I believe that many of the states should adopt the forward funding policy as well, so they can build up their reserves during good economic times to be used when the economy takes a hit.  I believe that this policy is one that is very beneficial during harsh times and provides a good service.  Although I do believe that individuals should self-insure and save to help them during hard times, this paternalistic government intervention is necessary for the general welfare of the citizens and this program is an example of a program that is largely beneficial to individuals and their local economies and communities.

-Richie Weker

Leslye Barth: Legalization of Marijuana - Economic Implications

After several years of debate and Supreme Court rulings, cannabis has been legalized in four states and the District of Columbia. More states are moving towards this shift, and it is predicted that 23 states will legalize marijuana by 2020. As this is an unprecedented movement in the US, economists are watching the economic arguments in favor of legalization unravel as the drug enters the real-world market. One main rationalization for the legalization of marijuana was that the regulated sale of the drug would drive down production costs and retail prices, while generating tax revenue and refocusing drug enforcement efforts on more socially harmful narcotics (i.e. cocaine, heroin, crystal meth). Economists are now observing that this isn’t exactly what is happening, due to variables including state tax policies, the shifting behavior of buyers and sellers, and contradictory drug laws nationwide.

In Colorado, for example, the increased taxes have caused the price of marijuana to double, while the black market still exists and is offering at less than half the post-tax price. This could be due to the limited inventory and consumer demand, but pot retailers are incentivized to go high-end and specialize. Policymakers are therefore being challenged to get the taxes correct to avoid an even stronger black market. The legalization is predicted to save billions of dollars annually from reduced drug enforcement costs and tax revenues, but if the expanded market starts to displace alcohol sales (or worse, consumers start combining the two), these gains could be lost (more traffic accidents, health costs, etc.). I think the biggest factor is going to be law enforcement – how seriously authorities monitor unlicensed sellers will shape market supply and pricing trends. Border states of Colorado are already attempting to sue the state of Colorado for the negative economic externalities: Nebraska and Oklahoma have seen significant increases in crime related to marijuana since the legalization in Colorado. In my opinion, only time will tell us if the legalization makes economic sense for the US, as economists have already observed that the market for marijuana has not behaved as predicted.

Oliver Stephenson Right to Work Blog 1

A study was released earlier this week that stated that states utilizing Right-to-Work laws were falling behind those that supported unions in a variety of benchmark categories, including wages and poverty levels, among others. Right-to-Work laws allow citizens to be hired into the private sector without belonging to a specific union. While this may seem like it supports the American notion of freedom, it can actually prove to be detrimental to wages as a whole, and in some cases allow for individuals to free ride on the heels of a union. Because unions are just that, a union, allowing for extraneous workers in the job pool eliminates their ability to negotiate, and can result in citizens losing out on benefits or wage increases that would otherwise result from collective bargaining.

Yet, the picture is not so black and white, support (albeit waning) does remain for Right-to-Work laws. In argument for the laws, politicians cite the injustice involved in forcing any citizen to become a part of a union or group. It is their belief that as Americans, protected by the constitution, we should be able to work where we want, and associate with who we want, free of fees. 

Thus, there is a dilemma involved in the creation and enforcement of this public policy. Is it just to impose unions if those unions protect US citizens and allow them to benefit from collective bargaining? Or, would be better off allowing a “free” market to reign, where everyone would be allowed to fend for themselves. There is evidence that would support either notion (or in the case of the article below, the notion for unions), but the answer is not yet clear.

Article: http://badgerherald.com/news/2015/01/27/new-study-suggests-right-to-work-law-is-doing-more-harm-than-good/#.VMwGJY1dVLT

JR Jackson - Net Neutrality

               Net Neutrality is the idea the Internet Service Providers (like as AT&T, Comcast, etc.) treat all traffic that goes through their networks the same. Proponents for net neutrality believe that preferential treatment to certain websites (like Netlifx or Apple) would result in arbitrary fees to companies in need of internet services. In addition, no net neutrality would put smaller companies at a disadvantage because companies with more capital would be able to pay the ‘unreasonable access fees’ while the smaller companies would be left in the dust. Obama was initially a strong supporter of net neutrality when he initially ran for president, but his administration has had a change of heart and have made proposals to let the FCC authorize ISPs to make deals with companies.

               In my opinion, I think the proponents of net neutrality are right in their assumption that a world without net neutrality could be devastating to the internet. Companies in their first few years face many challenges, and a world without net neutrality would at an additional cost that could cause many of them to go belly up. The arbitrary fees the ISPs could charge would discourage people from starting business and overallre innovation. The worldwide internet economy accounts for 4.1% of the GDP in the G20 countries. The internet sector gives so many opportunities for people around the world, and maintaining net neutrality will help ensure more opportunities to help the internet economy grow.

Aging Prison Population Nationwide --Adam Soshnick

There is a concerning trend that is occurring through America's prisons: that the population of prisoners is aging. The population of U.S. prisoners over the age of 44 grew more than 8% annually from 1991 to 2011. Conventional wisdom says that this is the result of the war on drugs and the harsher sentencing policies that have come along with that. But new research has shown that there has been a large spike in middle aged adults being arrested and sentenced (instead of just young people growing old in prison because of long sentences).

The problem with having such a large population of prisoners over the age of 40 is that they generally cost a lot more per year to take care of than younger prisoners because of the associated medical conditions that must be treated. This puts a huge strain on the budget of the states and prevents tax dollars being spent on more meaningful causes and programs.

I believe that states are going to have to take a look at this growing trend and attempt to curb the flow of older adults entering the prison system at such high rates. That means that when younger prisoners get out of jail they need to have more support and better programs to help them find jobs so they don't end up back in jail at an older age. Also local counties need to focus on ways to have community programs and support for the homeless and the poor to help them get the training they need to find jobs. Instead of solely focusing on chaining the harsh sentencing penalties for drug offenders (which is something that needs to looked at too) more needs to be looked at in terms of how we as a society can prevent this alarming trend of people in their 40s, 50s, and 60s entering the prison system at unprecedented rates.

http://blogs.wsj.com/law/2015/01/29/new-research-challenges-assumptions-about-aging-prison-population/?mod=wsj_streaming_stream

Adam Soshnick

Goodman - Education Vouchers

In the arena of education reform, the idea of using a ‘voucher-system’ has gained increasing support and controversy. While there are many different proposed methods of implementation, the general idea is to drive improvement in the school system through private market competition. Instead of receiving “free” public schooling, the parents of children would receive a voucher worth some dollar amount that they could redeem to fully, or partially, pay for tuition at the school of their choice. Under our current system, children in the public school system are assigned a school based on geography. This makes sense in terms of transportation, but many argue that it increases inequality of opportunity, as property prices are often restrictively elevated in outperforming school districts, leaving low-income students at the worst schools. Studies have found that areas with greater choice in school selection have higher test scores and lower per-pupil costs (Hoxby, 1998). Another study shows that areas where public schools are subject to competition, either from voucher systems or magnet schools, also outperform in terms of test-scores and per-pupil costs.

The idea has its share of opponents. Many argue that the program would simply result in a shift of funds from public schools to private schools, which would ultimately have a negative effect on low-income students. The best private schools would still have a restrictively high tuition, in excess of the voucher face value, and the worst schools would simply lose the extra tax dollars currently paid by students attending private schools. Another issue is the religious nature of many private schools, that many feel should restrict them from any form of tax funding. Others argue that geographical boundaries would still exist, as low-income parents often do not have the time or means to transport their students to better schools that are farther away, even if they have the option to attend. One issue I rarely see mentioned is the effect of such a system on property values. Personally, I could see many opposing the idea due to an imminent collapse in the value of their house, which often has school quality baked in. There is a lot of literature on the voucher school system and it has been implemented with varying degrees of success in other countries. I’d be interested to hear anyone else’s thoughts on the topic, arguments, or corrections to my summary.

Kim Financial Literacy

With the 2008 financial crisis, blaming fingers pointed every which way. With time, a substantial number of the fingers aligned to critique the lack of financial literacy abound in the US. The reasoning seems so simple, because if everyone was taught how to manage personal finances, then the economy never would have contracted so much. But the studies that have been conducted, in what I looked for, in analyzing how people deemed financially literate compared to those who were not found no relation to the outcome. Yet, the evidence and theory do not match, because the financial literacy advocates propagate that financial literacy must be incorporated into public education on a national level such that we can see the results years from now. However, as far as public policy goes, this long-term theory will have immediate short-term opposition.

I am interested in the US financial Literacy and Education Commission. The council is extremely well connected and represented. The commission uses MyMoney.gov to educate participants on, well, money. Immediately apparent is the sliding mosaic that says, "YOU CAN GO TO COLLEGE/WE CAN HELP YOU PAY FOR IT" across a diverse group of faces. One issue, on a public scale, is why this website is not incorporated into public education, and how does the conceivable demographic that does not have access to the internet learn about fiscal security? Furthermore, how should financial literacy impact further policy making if it should at all?

http://www.nefe.org/what-we-provide/programs-initiatives/public-policy.aspx

mymoney.gov

http://en.wikipedia.org/wiki/Financial_Literacy_and_Education_Commission

Brandon Kim

Jacob Nussbaum Blog 1

One policy I am interested in is the College Assistance Migrant Policy (CAMP). CAMP enables migrant workers and members of their families in the United States to attend postsecondary school. The program fully funds the first year of postsecondary education, and in some cases will cover up to five years of postsecondary schooling. Approximately 2,000 members annually receive a CAMP grant. I like this program because it helps people receive an education that otherwise probably would not. The typical person receiving a CAMP grant would work a low-skill job for low wages. CAMP gives them the opportunity to receive an education, gain higher-level skills, work a high-skill job, and receive higher wages. This betters the participant and their family because it increases their income potential and quality of life potential, giving them opportunities they never would have.

            The policy also is beneficial because of the positive consumption externality that society receives. The 2,000 annual members are increasing their education level, enabling them to become more productive, which all of society benefits from. Ideally, they would no longer need any sort of welfare benefits now, which they may have needed without the program. This takes some of the burden off of taxpayers who fund welfare programs.

            Some possible detractors from the policy are the cost and the length. College education can be quite costly. Putting 2,000 people through this program annually is sure to add up. Additionally, the question of how much is one really improved from one year of college is worthwhile. Many participants only receive a one year grant. Does this really qualify them for better jobs? Overall I like the policy because of its externalities and immediate benefits, but I can see why the policy would be too costly and not that beneficial.