Overfishing

This week we discussed a concept known as the Tragedy of the Commons in the marginal benefits do not equal the marginal costs. The example used in class was of fisheries and overfishing. We have seen a large increase in the number of fishermen in the United States and therefore there is a decrease in the quantity of "fish in the sea". There are theories regarding how to combat this issue and the current solution is to put a quota on the amount of fish a fisherman is allowed to haul in. While overfishing is a problem caused by the fishermen themselves I would argue that the lack of government intervention within the industry is causing the industry to struggle. Instead of having smaller quotas and a larger quantity of fishermen there should be larger quotas and a smaller pool of fishermen allowed to catch those fish. With the high cost of fuel and other costs associated with commercial fishing a smaller quota makes it much more difficult for a commercial fisherman to operate successfully and profitably. If fewer permits were allowed then the quotas could be raised therefore controlling not only the costs of the commercial fishermen but also the prices of the fish within the consumer market.

Public Choice Theory

The topic of Public Choice Theory was discussed this week in class and I found it to be a fairly irrational theory that only applies to a select few. The first problem that I have with this is the idea that politicians and government agencies are "self-interested actors" and "are always trying to increase their own utility". We can look at any area of life and see opportunistic people who are simply concerned with improving their place in life. This includes politics, real-estate transactions, ticketing brokers, and any other level of business. We can also look at these areas and see folks who are working hard to improve their place in life, but doing it in an ethical and honorable manner.
This theory sounds like the bullett from the gun of an activist who thinks that all government is bad. There are thousands of politicians in the United States from the Senators and Representatives in Washington DC to the city politicians in small towns all over the country. Many politicians, and I would even go so far as to say most politicians, follow a calling to public service not to get rich but because they believe they can make things better. There is corruption in all levels of politics but that can be said for any industry in the world today, including the churches, but these organizations are filled with good, hard working people that offset the few bad apples. We elect public officials not because we agree with everything that they say, but rather because we believe them to be ethical and representative of our communities. A large part of what they do in office is to listen to different views and determine which decisions are going to benefit the people the most, or hurt the people the least. To argue that all politicians are only interested in increasing their own utility instead of pushing towards what they believe is the best course of action for all involved is an extremely pessimistic way to look at things.
Another part of this argument that I disagree with is the "Paradox of Voting" which argues that for a rational, self-interested voter, the costs of voting will exceed the benefits. I believe that we underestimate the power of one's influence on others. Can one vote decide an election, 99.9% of the time the answer is no but one person can certainly have a domino effect on many people. If I decide to vote and then wear my "I Voted" sticker in public that day then I am advertising for voting. Further, any conversations that I have with friends, or even a younger sibling or relative about the importance of voting can have a future effect on whether that person will cherish the right to vote in the future. Now if I am negative about voting and voice my opinion that no single vote counts and it is a waste of time to participate then my negative opinion can have an influence on whether or not someone will be a voter. I would argue that while the benefits of voting in a current election may not match up with the costs, the long-term benefits of voting will be substantially greater than the investment.

External Cost or External Benefit...

This week we were discussing, among other things, the topic of externalities within the realm of Microeconomics. After thinking about the idea of externalities I would argue that external costs and benefits are determined on an individualized basis.
One of the examples that was used in class this week was that of a residential development and the external costs and benefits that are associated with that development. A resident of a home in that area will see an increase of traffic within their community as a result of the development, they will also see more traffic in their everyday lives in the shopping centers, restaurants, and stores that they are accustomed to using. Initially, this can be a external cost for many people due to the inconveniences that are placed upon them, but it can be an external benefit for the owners of the area stores as well as the employees who work in those stores.
Look at the same community two years after the development has been built and the situation can be completely reversed. The neighboring residents who felt an external cost immediately may now have seen the value of their property rise due to increased demand in the area. Instead of having a very limited number of restaurants to eat in, grocery stores to shop in, and shops to visit there are now a variety of national retailers, national eateries, and national grocers. This variety provides not only choices that were not previously there but also most likely provides a financial savings due to the additional competition. Consequently, the area stores that previously serviced the area have seen an increase in competition that most would not survive due to a national retailer's ability to provide lower prices by bulk ordering. Initially their business was booming but the growth of the area eventually wound up costing them their business.
All of the above is hypothetical but I believe it points out that the idea of externalities is one that can be relevent to the individual and can change for those individuals as time goes on.

This week we discussed taxes and more specifically the split of the tax burden between the buyer and the seller, which is known as the tax incidence. I would like to propose the theory that the tax burden upon the buyer does not truly exist and it is instead only a tax burden on the seller.

We discussed the necessity of taxes to run a city, and therefore if we were to remove those taxes the city would require another form of funding to survive. Say for example that without the revenue from collecting taxes the city raised its fees for other services such as impact fees, utility fees, and other fees that affect not only businesses but residents as well. At this point both buyers and sellers would be directly affected by the fees and the sellers of a good would be able to incorporate those costs into their business plan to effectively set their prices. The buyers of goods and services would have less money to spend on these goods and services due to the fact that their everyday bills went up significantly.

With the tax system set up in its current form sellers set their prices to be at an efficient level and the buyers buy the amount that they need and/or can afford at that level. This sounds like a similar argument that we heard in class until you look at the price that a seller charge for their good or service. If a seller is able to charge more for their product or service then they are going to charge more for it. For example, a vendor could charge $5 for a t-shirt with a $2 tax included and make enough sales to do run a successful business. If we eliminate the tax then that same vendor would not be wise to only charge $3 for their t-shirt when they could charge the same $5 but not have to pay out the $2 in tax.

While I admit it is a bit out there in terms of analyzing the tax burden, I believe there is a potential theory in this line of thinking.