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February 23, 2009
Cap and Trade Fails

The Cap and Trade market for Carbon Offsets has failed in the EU. A ton of CO2 is down to &euro 8 from an expected &euro 35- &euro 45.

Politicians like Cap and Trade over a straight Pigovian carbon tax because it allows them to indirectly tax (insulating them from their voters) and then allows them to dole out favors to industry. It is therefor amazingly less efficient compared to say taxing carbon outputs directly and cutting other taxes directly to offset the increase.

You of course will not hear much about the market failure because it doesn't fit any "popular" agenda. Also, all this leaves aside whether we even should be taxing C02 (do we tax people for having wee little C02 polluting machines? Can the EPA regulate breathing?) What I find most amusing in the article though is that the answer to this completely predictable "market failure" is - wait for it - more regulation and more power to the politicians.

Can I cap and trade my politician with the prison system?

Posted by hoffmang at 12:52 PM

February 19, 2009
I Don't Think I Can Comment Further

Heh. This goes well with the other one my wife framed for me.

Posted by hoffmang at 09:10 PM

February 12, 2009
Accountants Count What Is Easy To Count

We have a problem. There exists a major player in the economy that gets to rig the rules for their benefit and their benefit alone. It comes at major cost to every single person in the economically advanced world...

And you thought the answer was bankers.

The FASB (Financial Accounting Standards Board) is a group of accountants who get to set the rules for GAAP (Generally Accepted Accounting Principles.) Imagine if bankers elected a panel of bankers to be the Senate.

They've stuck us with mark to market accounting. The idea of this issue seems so obvious on the surface. If there is a market price for an asset, and your business holds such an asset, then you have to value that asset at the market price. Of course that doesn't consider the actual cash flow of the asset or a lack of liquidity in the market for that asset. Why not you might ask?

Well, accountants regulating accounting would like to make sure its easy for them to take no responsibility for figuring out what something is worth. Why not rig the rules so the audit is easy and the securities plaintiff's bar can't sue you?

Brian Wesbury writes a decent essay explaining the mark to market issue. What surprises me is that academic economists I otherwise respect (paging Russ Roberts) seem wedded to mark to market. These are the sorts of folks who normally ask what incentives the rulemakers face and they don't seem to be thinking through FASB's incentives on the issue...

Posted by hoffmang at 09:44 PM

February 07, 2009
Killing Children

It has just come to light that the first major study to supposedly show a link between the MMR vaccine and Autism was an intentional fraud caused by manipulating patient data by doctor Andrew Wakefield.

This man murdered children around the civilized world. His crimes are worse than Patrick Purdy.

Updated: And there is this gem from the NYT: "At the time, the journal editors said, Dr. Wakefield was also gathering information for lawyers representing parents who suspected their children had developed autism because of the vaccine."

Posted by hoffmang at 05:02 PM

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