Tom's Blog on Life and Livingness
New rules that affect all Australian residents selling property are now in place and effective, the Australian Tax Office (ATO) has announced.
Changes to the Foreign Resident Capital Gains Withholding (FRCGW) legislation mean that Australian residents need a clearance certificate from the ATO for all property contracts signed on and after 1 January 2025, regardless of the sale price.
These are some typical daily running costs for four different types of cooling, assuming an operating time of 12 hours over the day:
Cooling Device Power Use Cost per Day
Ducted Air Con 4.5kW $16.20
Split System AC 1.2kW $4.32
Ceiling Fan with DC Motor 20W 7 cents
Portable Fan with DC Motor 15W 5 cents
Ceiling Fan in Night Mode 5W 2 cents
Use our free electricity cost calculator to run your own numbers.
https://reductionrevolution.com.au/blogs/calculator/electricity-cost
AEMO’s shock admission about the limited scope of its renewables modelling reveals a significant gap between Chris Bowen’s green rhetoric and reality
Australians are still in the dark about whether renewables are really the most cost-effective choice for our needs after our market operator made a frank admission about its future pricing models, writes Nick Cater.
Authored by Peter Jacobsen via the Foundation for Economic Education,
In the 2020 election, an interesting candidate made his way onto the scene for the Democratic Party’s presidential nomination: Andrew Yang. Yang made a splash in particular for his promise to give everyone $1,000.
Andrew Yang’s campaign strategy took a similar approach to Trump’s 2016 campaign in hyper-focusing on a single issue. For Trump, the single issue was immigration. For Yang, that issue was universal basic income (UBI).
Yang’s version of UBI was alluring in its simplicity. Every person in the country would receive a nice, round $1,000 per month. It didn’t matter if you were rich or poor, old or young. A vote for Yang was a vote for cash.
Many from his own party denounced the idea of giving rich people $1,000 per month. But Yang held strong to the payment being universal. By making sure every person gets $1,000, you avoid some incentive issues and the bureaucracy that accompanies typical welfare programs.
Why UBI?
Why have a UBI at all? Yang gave several reasons. One primary concern Yang had was that technology would soon begin to displace many low-skilled jobs. UBI would help the country get ready to take care of displaced workers.
But Yang claimed a myriad of benefits for UBI beyond just a safety net. UBI would free people up to be creative and entrepreneurial. A guaranteed income would provide people with the security they need to pursue their passions, start businesses, or go back to school. Contrary to the claims of detractors, a UBI wouldn’t increase laziness—it would improve people’s productivity!
Sometimes, UBI supporters even highlighted how it would make government smaller if it replaced our current complicated welfare system. Though, to my knowledge, no advocate of this policy has ever explained a realistic path toward abolishing current welfare programs.
So, is Yang right? Would UBI free the inner entrepreneur in all Americans, or would it just mean some people would engage in more leisure? Let’s look at the evidence.
The Disappointing Basic Income Study
Researchers Eva Vivalt, Elizabeth Rhodes, Alexander W. Bartik, David E. Broockman, and Sarah Miller’s working paper, titled “The Employment Effects of a Guaranteed Income: Experimental Evidence from Two U.S. States,” was recently put out by the National Bureau of Economic Research (NBER).
The study “leverag[ed] an experiment in which 1,000 low-income individuals were randomized into receiving $1,000 per month unconditionally for three years.” What were the results?
First, it made the recipients poorer:
“Overall, the transfers led to a reduction in annual total individual income of about $1,500 in our main survey measure, compared to the control group.”
Why? Well, people worked less (1.3 hours per week less) and stayed unemployed for longer!
Not only do the recipients work less; this happened to other adult members of the household as well.
Unemployment duration “increased by 1.1 months” for recipients.
But did people use this time to find a better job? It doesn’t seem like it.
Recipients appear to be more selective in their applications, but the authors say, based on their survey measurements, “We do not see much in the way of differences in the types of jobs participants applied for,” and “the results do not support any changes in quality of employment.”
Were people doing other productive things in unemployment, though? The results are unimpressive.
The authors examine whether the receipt of basic income increases entrepreneurship. While they find people claiming to have more entrepreneurial intention, this does not translate into actual entrepreneurial activity.
What about education? Do people go back to school? Mostly no.
The authors say, “By and large, we do not observe significantly improved education outcomes in our sample, though there are some indicators of minor improvements.”
So what did people do with the extra time they got from working less?
In short, the answer is, they relaxed.
In concluding the results of the paper, the authors say, “[P]articipants in our study reduced their labor supply because they placed a high value, at the margin, on additional leisure.”
The authors provide an even more in-depth breakdown of time usage from their study. They estimate the number of minutes per day allocated doing different activities. The above graphic gives a breakdown.
The results? Well, apart from the “other activities” category, the biggest increases in time were non-commuting transportation, social leisure, and solitary leisure. Some time was also spent in home production (doing work around the house) and “self-care.”
On the flip side, people spent less time working, sleeping, caring for children, generating income, and engaging with their communities. Furthermore, less time was spent on self-improvement, searching for jobs, and exercise.
The numbers here may seem small, but if you apply this to millions of people daily, it becomes very weighty.
Not all of the results were statistically significant, but the major point is, overall, people used the time they gained from working less to engage in leisure, and there is no evidence of an increased use of time in other categories UBI proponents purport to care about, such as creative output, entrepreneurship, community engagement, self-improvement, or even spending time with children.
Where does this leave UBI advocates? Well, at best the evidence shows a UBI would cause people to work less and relax more. Insofar as the case for UBI is built on unleashing the stifled engine of human creativity, it seems like UBI isn’t up for the job.
https://www.zerohedge.com/political/largest-study-ever-ubi-was-just-conducted-and
Garry Tan, chief executive of prominent tech-oriented venture capital firm Ycombinator, wrote on X late last week that there is a “pretty elaborate” phishing scam that uses an AI-generated voice.
The scammers “[claim] to be Google Support (caller ID matches, but is not verified),” he wrote in an Oct. 10 post that he termed a “public service announcement.”
“DO NOT CLICK YES ON THIS DIALOG—You will be phished.
“They claim to be checking that you are alive and that they should disregard a death certificate filed that claims a family member is recovering your account. It’s a pretty elaborate ploy to get you to allow password recovery.”
IT consultant Sam Mitrovic, in a blog post last month, wrote of a similar scam attempt targeting Gmail accounts and also using an AI-generated voice.
“The scams are getting increasingly sophisticated, more convincing and are deployed at ever larger scale,” Mitrovic wrote in the post. “People are busy and this scam sounded and looked legitimate enough that I would give them an A for their effort. Many people are likely to fall for it.”
The burst of inflation that followed the COVID-19 crisis and the expansionary policy of international central banks, including the Federal Reserve, has returned the topic of price controls to the news. For example, recent articles have advocated forms of price controls to reduce U.S. inflation and achieve other goals.1
This article reexamines price controls, discussing their history, operation and disadvantages, and economists’ views on the policy. It explains why most economists believe broad price controls to be costly and ineffective in most situations.
U.S. PCE Inflation Is at Its Highest since 1982
SOURCE: FRED (Federal Reserve Economic Data).
Price controls are government regulations on wages or prices or their rates of change. Governments can impose such regulations on a broad range of goods and services or, more commonly, on a market for a single good. Governments can either control the rise of prices with price ceilings, such as rent controls, or put a floor under prices with policies such as the minimum wage. The following table shows some examples of common price controls.
| Ceilings | Rent control |
|---|---|
| Price controls on necessities: food/gasoline | |
| Price controls on food, water or building materials after a disaster | |
| Drug price controls | |
| Floors | Minimum wage |
Price controls have a long history: The Code of Hammurabi prescribed prices for goods 4,000 years ago, and the Massachusetts and Virginia colonies did likewise 400 years ago.2 Governments have commonly restricted prices during wartime, with all major belligerents instituting broad limits on prices during World War II. Western countries commonly employed broad price controls into the 1970s. The U.S. government last used broad controls in a series of schemes from 1971-74 following the withdrawal of the dollar from the gold standard. Many developing countries control the prices of staples, sometimes combining price controls with subsidies.
Let’s consider the impact of price ceilings. High prices have two economic functions:
That is, prices allocate scarce resources on both the consumption and production sides. Price controls distort those signals.
The next figure shows a stylized supply-demand graph for a competitive market in which the equilibrium price-quantity pair would be defined by the point at which the supply and demand curves cross, at {PE, QE}. In the presence of the price ceiling, however, consumers want QD units, while the suppliers are willing to offer only QS units. QD is much greater than QS and the difference is a shortage of the product (Q) at the price ceiling.
The next figure similarly shows how a price floor, such as a minimum wage, changes the equilibrium {price, quantity} combination in a competitive market. In this figure, the price floor produces a glut of supply—for example, unemployment in the case of a minimum wage.
Supply and Demand with a Price Floor
SOURCE: The author.
Price controls have costs whose severity depends on the broadness of the control and the degree to which it changes the price from the free-market price. The costs include the following:
Most of these costs are straightforward, but allocative inefficiency requires some explanation: Because QD is greater than QS in the second figure, there is a shortage of the product, and sellers must figure out how to allocate a limited supply. Perhaps they sell only to longtime customers or customers who also buy other products, or they just limit the quantity that each customer can buy.3 Rent control forces landlords to keep renting to existing tenants at artificially low prices. Such “non-price rationing” is inefficient because some buyers who don’t get the good would be willing to pay more for them. Producers would be willing to increase production and sell to consumers who want to buy at a higher price, but price controls make that illegal.
When a price ceiling prohibits a desired transaction, the buyer and seller will often evade the price ceiling by transacting in a closely related but unregulated product or by trading illegally in black markets. Similarly, sellers might change a good slightly to prevent it from being subject to the same price limit. The economist Hugh Rockoff notes that the price of clothing has been particularly difficult to control because an article of clothing can be upgraded easily to a higher-priced category by adding inexpensive decoration or reduced in quality by substituting cheaper materials.
The historian Jennifer Klein has documented that the current dependence of the U.S. health care system on employer-provided insurance is a relic of the evasion of wage controls during World War II. During that conflict, defense industries wanted to hire more workers but could not legally raise wages. To make their jobs more attractive, some employers began offering health insurance as a legal fringe benefit.
Price controls prompt greater behavioral changes in the long run. Consider how firms might respond to a higher minimum wage that increases the cost of entry-level labor. In the short run, employers might raise prices and economize on labor. Firms will tend to raise prices, even in a competitive market, because producers must pay higher wages to their employees. People will consume less of the higher-priced products that use entry-level labor intensively. In the longer run, employers will install more capable machines, such as dishwashers or automated cooking machines, to reduce the quantity of entry-level labor they use.
Economists generally oppose most price controls, believing that they produce costly shortages and gluts. The Chicago Booth School regularly surveys prominent economists on questions of interest, including price controls. Most economists do not believe that 1970s-style price controls could successfully limit U.S. inflation over a 12-month horizon, and many of those economists cite high costs of controls.
Economists do know, however, that price controls can be theoretically beneficial when imposed appropriately on a monopolist or monopsonist, and they do tend to work better in imperfectly competitive markets.4 The economist Hugh Rockoff cautiously suggests a limited role for price controls during some inflation episodes in his book Drastic Measures: A History of Wage and Price Controls in the United States. Rockhoff reported that even the late Milton Friedman, a noted free-market advocate, accepted a limited role for temporary price controls in breaking inflation expectations during a disinflation.
Price controls have had a very long but not very successful history. Although economists accept that there are certain limited circumstances in which price controls can improve outcomes, economic theory and analysis of history show that broad price controls would be costly and of limited effectiveness. Appropriate fiscal and monetary policies can reduce inflation without the costs imposed by price controls.
References
Endnotes
If you are a tea or coffee drinker, make yourself a cuppa and set aside a few minutes for this one.
“I am constantly amazed at how recent headlines validate the core ideas and observations about psychological warfare that Jill and I have chronicled over the last two years.” – Dr Robert Malone
Read article: https://www.malone.news/p/investors-beware-mpox-disaster-cronyism
