Short Nerd Chief

Posts Tagged ‘economics’

Smoking still legal in Virginia restaurants (at least until next year)

Posted by Fred on February 11, 2008

The Virginia House of Delegates appears to have killed this year’s crop of anti-smoking bills.  As one would expect, this makes the Ban the Butts crowd irate.  Here’s Michael Paul Williams, almost, but not quite, getting his analogies right: 

Don’t offer me another specious argument against government interference, as if it’s an inalienable right for people to blow smoke up my nose.

How about my rights to clear lungs, or clothing that doesn’t require dry cleaning after a visit to a restaurant or bar?

“Freedom” has become another word for “selfish” in our society. But should diners have to expose themselves to risk because of someone’s imaginary “right” to spark up a cigarette?

In most workplaces and public buildings, we’ve come to our senses.

Imagine a cross-country or transcontinental flight in which travelers fill the already noxious air of the cabin with cigarette or cigar smoke. You don’t have to, because smoking is banned on domestic commercial flights. The airline industry survived. So would the restaurant industry.

Closer to home, it is now considered presumptuous, if not impolite, to light up a cigarette without permission in someone else’s parlor. That societal evolution is one of the few facets of American life, in this age of deteriorating discourse, that has actually become more genteel and refined.

It’s tempting to do what Williams has done here, and imagine this as a battle of smokers’ rights vs. nonsmokers’ rights.  It’s also completely wrong.  There is no right to smoke, at least not under the current expansive view of state power under the US and state constitutions.  The General Assembly could pass a bill tomorrow banning all tobacco products, and it would be constitutional (whether it should be constitutional is another matter).  There’s also no right to smoke-free air, at least not yet.  The analysis of these laws should start and end with the business owner, who would be deprived of the ability to decide whether to allow a legal activity on private property.

That’s where the flawed analogy comes in. Williams starts off right with his parlor analogy, but he doesn’t go far enough. Yes, it is rude to light up in somebody’s home without permission.  It’s likewise rude to light up in a restaurant that has voluntarily banned smoking. But if I invite you and three friends over to my house and choose to allow one of them to smoke, it would be just as rude for you to demand that they put out the cigarette because you don’t like the smell.  You can ask politely, but if I say no, your choices are to deal with the smoke or leave.  A restaurant is no different – if the owner of the business allows smoking, you can ask that they change their policy, but if they say no, you can either deal with the smoke or leave.  It’s their property, and you don’t have any more right to demand that they kick the smokers out than you do to demand that they replace the live music with Yanni CDs or to replace the sushi with Filet-O-Fish.

Harsh? Maybe, but that’s the price of freedom.  Please don’t bring out the specious public health argument, either.  Yes, it now seems clear that extended exposure to second-hand smoke is dangerous, probably even more dangerous than extended exposure to Yanni.  But the government shouldn’t be in the business of eliminating all risk, else they start with cigarettes and end with protecting us from paper cuts and hurt feelings.  The atmosphere down at the local pub is the product of a series of voluntary contractual relationships between the business owner, his employees and his customers.  If any of them doesn’t like it, they are free to make different economic choices.

It’s also most certainly not like government requirements that employees wear hair nets or wash their hands, or that restaurant owners avoid tainted meat or comply with fire codes.  legitimate health regulations are designed to protect patrons from latent dangers that they are otherwise ill-suited to avoid.  If I order a burger, I have no way of observing whether the patty is infested with e. coli or laced with detritus shed by the fry cook.  If I go to a bar that allows smoking, I either know about the obvious risk and choose to accept it, or I am an idiot.  Smoking bans aren’t about protecting public health; they’re about banning an activity that politicians and interest groups don’t have the guts to ban outright.

I’m not a smoker and I hate the smell of smoke as much as the next guy, but the government shouldn’t be in the business of enforcing my personal economic choices (and if they’re going to do it, I’d prefer they start by banning domestic lagers, tofu and imitation crab).

Posted in Politics, Richmond | Tagged: , , | 1 Comment »

House, Senate, Prez agree on economic stimulus package

Posted by Fred on February 8, 2008

DollarBills After Senate Democrats dropped plans to expand unemployment benefits, Congress and the White House agreed on the terms of a final economic stimulus package, meaning that checks are likely to go out in May.  The bill passed by Congress (PDF) calls for a gradual phase-out of tax credits for higher-income taxpayers, but now includes a whole bunch of people who otherwise wouldn’t have qualified because they have no qualifying income.  Here’s some scenarios, assuming I read the text correctly:


AGI Children
0 1 2 3 4
3000 300 600 900 1200 1500
6000-75000 600 900 1200 1500 1800
80000 350 650 950 1250 1550
90000 0 150 450 750 1050
100000 0 0 0 250 550
110000 0 0 0 0 50
111000+ 0 0 0 0 0


Married Filing Jointly

AGI Children
0 1 2 3 4
3000 600 900 1200 1500 1800
12000-150000 1200 1500 1800 2100 2400
160000 700 1000 1300 1600 1900
170000 200 500 800 1100 1400
180000 0 0 300 600 900
190000 0 0 0 100 400
198000 0 0 0 0 0


Nothing changes my overall view that (a) a reduction in the tax rate is still better than a one-shot credit; (b) there’s no justification for providing tax relief to people who don’t pay taxes; and (c) there’s no justification for denying tax relief to “the rich” (defined in this case as a family of four with AGI above $180,000, which is certainly not rich).  But there it is anyway – I’ll enjoy my $1800. How will you spend yours?

If anyone’s interested, I created a little spreadsheet – leave a comment and I’ll post it.

Posted in economics, Politics | Tagged: , , | 1 Comment »

Who Pays for the Government? Not You.

Posted by Fred on December 18, 2007

Alex Tabarrok points to Congressional Budget Office data (summary report – PDF; raw data – XLS) that states the obvious – by any measure, our tax system is progressive, in which the “rich” pay their fair share of taxes.  The data suggests that the top 20% in fact pay more than their share of taxes.  The top quintile of taxpayers are the only group that pays a higher share of federal taxes than their share of total income.  These taxpayers earn 48.6% of total income, yet pay 68.7% of federal taxes:

  Share of Total Federal Tax Liabilities Share of Total Income
Year 0-20% 21-40% 41-60% 61-80% Top 20% 0-20% 21-40% 41-60% 61-80% Top 20%
2000 1.1 4.8 9.8 17.5 66.6 5.2 10.9 15.1 21.0 48.3
2001 1.0 4.9 10.1 18.4 65.3 5.4 11.9 16.3 21.1 45.8
2002 1.0 4.9 10.4 18.8 64.8 5.5 11.8 16.3 21.7 45.5
2003 1.0 4.5 10.0 18.4 65.8 5.4 11.7 16.1 21.6 46.1
2004 0.9 4.4 9.7 17.6 67.2 5.1 11.1 16.1 20.8 47.5
2005 0.8 4.1 9.3 16.9 68.7 5.0 10.9 15.7 20.3 48.6

Note that this data is for total federal tax liability, including the payroll taxes that arguably affect lower-income taxpayers more than does federal income tax (the total share of federal income tax liability for the bottom two quartiles in 2005 was -3.9% and -0.9%). And the share of total taxes paid by the top 20% hasn’t declined over the last quarter-century.  While other taxpayers’ share was flat to declining, the top quartile’s share has increased:


One can argue that the federal tax system doesn’t penalize the rich enough, or doesn’t redistribute wealth enough (one would be wrong, but one could argue it).  What one cannot claim, however, is that the current tax system unfairly favors the “rich”.  This should have been obvious, but given the rhetoric in Iowa, apparently it isn’t.

Posted in economics, Government | Tagged: , , | Leave a Comment »

NYT explains why à la carte cable is more expensive

Posted by Fred on November 27, 2007

The New York Times’ Joe Nocera explains cable economics:

The reason is that unmoored from the cable bundle, individual networks would have to charge vastly more money per subscriber. Under the current system, in which cable companies like Comcast pay the networks for carriage — and then pass on the cost to their customers — networks get to charge on the basis of everyone who subscribes to cable television, whether they watch the network or not. The system has the effect of generating more money than a network “deserves” based purely on viewership. Networks also get to charge more for advertising than they would if they were not part of the bundle.Take, for instance, ESPN, which charges the highest amount of any cable network: $3 per subscriber per month. (I’m borrowing this example from a recent research note by Craig Moffett, the Sanford C. Bernstein cable analyst.) Suppose in an à la carte world, 25 percent of the nation’s cable subscribers take ESPN. If that were the case, the network would have to charge each subscriber not $3, but $12 a month to keep its revenue the same. (And don’t forget: with its $1.1 billion annual bill to the National Football League alone, ESPN is hardly in a position to tolerate declining revenues.)

Of course, the real math is even worse for the consumer.  According to the recent Warren Communications study, there are about 67 million households that subscribe to cable service with at least 36 channels.  For the week of November 12-18, the top-rated prime-time cable channel was the Disney Channel, with an average of about 2.9 million viewers. For that week, less than 5% of cable households tuned into the #1 cable channel (ESPN’s at number 3, or 4.1%).  If you go down to number 20 (the History Channel), it’s only 1.5%.  Would any of these nets really get 25% of the total cable households to buy them a la carte?  It’s really pretty simple math: the revenue required to run the channel stays the same, but the customer base over which such costs are spread goes down dramatically, so the price goes up (also dramatically).  That’s not to mention the sharp cut in advertising revenue with far fewer potential eyeballs, and any increased overhead costs for the cable companies, who would have to implement a far more complicated billing system (and they can’t even get the simple one right much of the time).

A la carte programming sounds great in theory, but it would be bad in practice, and wouldn’t save anybody any money.  that’s not because the cable companies are evil, greedy bastards (at least not this time), but simple economics.

Update: As pointed out in the comments, the numbers above are average viewers (which I noted when I quoted them). Unique viewer data isn’t available. I stand by my original point, however. You’re not going to get from 2M average viewers to 12M or 15M subscribers for most channels. Even the #1 cable show (almost always Monday Night Football on ESPN) gets only about 10M viewers. Is the total ESPN subscriber base significantly broader than the pool of people who watch MNF? You’re certainly not going to get to the numbers needed to make the fee per subscriber cheap.

Posted in TV | Tagged: , , , | 2 Comments »