Sunday, April 29, 2007
Free Trade and Prices
Free Trade and Prices
Just in time for our chapter on international trade, a couple of economists are looking at the effect of trade on consumer prices. Have a look (be sure to follow the links) and draw your own conclusions.
I would point out that while entrepreneurship is incredibly mobil, physical capital is very mobil and labor is increasingly mobil, that the remaining factor of production, Land and Natural Resources is not. This changes things slightly when we're dealing with stuff like oil and copper.
All in all, I'm inclined to agree with Tyler Cowen that the real gain from trade is the increased output.
Can do, Don't tell
Another captured board has done it again. A couple of years back the Structural Pest Commission went after a high school boy that started rat proofing homes. They sent him a cease and desist order and they got slapped down for it. Then they went after landscapers spraying roundup and the legislature slapped them down again. Now they're going after a retired cop.
As retirees go, Rich Hanley seems like a decent enough guy. He's a former cop who came to town a few years ago. He obeys the law. He pays his taxes. In 2004, he started up a little business, repelling roof rats.
Specifically, he covers vents with steel mesh so the little fellas can't come calling.
Once, we would have applauded such enterprise. Now, we issue cease-and-desist orders.
Yep, it's true. My favorite state bureaucrats over at the Structural Pest Control Commission have decided that Hanley has violated the law...
"The problem is his advertising," says Lisa Gervase, executive director of the agency...
The pest-control cops launched a seven-week probe, concluding that Hanley can do the work. He just can't tell people why he's doing the work. Thus, his sales pitch - "Keep birds and rodents from invading your home" - has to go.
Gervase said the state would have no problem if Hanley says he's covering vents to keep leaves out. "But if he's advertising that he can keep pests from invading your home, that's pest control, and you need a license for pest control."
Apparently he can do the work, he just can't say he's doing the work.
Saturday, April 14, 2007
A Captured Board
There are a couple of theories on regulation. One is called capture theory. Under capture theory the regulatory body becomes "captured" by the industry and regulates the market so as to raise (or protect) suppliers' profits. This is usually done by limiting access to the industry through licensing. If someone starts providing a service that competes with the suppliers, then the regulatory body generally claims jurisdiction and tries to force them to quit.
This last happened here in Phoenix with the high school kid that started rat proofing homes in Arcadia and ran afoul of the exterminators. Given enough public outcry, the regulators backed off.
An Arizona regulatory board has ordered Zillow.com to stop offering its online estimates of home values.
The Arizona Board of Appraisal has issued two cease-and-desist letters to the popular real estate Web site, claiming Zillow needs an appraiser license to offer its "zestimates" in Arizona.
"It is the board's feeling that (Zillow) is providing an appraisal," said Deborah Pearson, Board of Appraisal executive director.
This is exactly the regulatory behavior that capture theory would predict.
Tuesday, April 03, 2007
Odds and Ends for class
These don't have anything to do with Arizona and the local economy, but they do highlight some recent stuff related to what we've been covering in class.
Also from the Economist, a different take on price discrimination in the air.