tag:blogger.com,1999:blog-113996442024-03-13T11:16:11.700-07:00Arizona EconomicsSome thoughts on economic news in Arizona.Scott Gustafsonhttp://www.blogger.com/profile/02279857994761900397noreply@blogger.comBlogger276125tag:blogger.com,1999:blog-11399644.post-44909523349516135292012-10-04T19:38:00.003-07:002012-10-04T19:38:41.286-07:00Debate Feedback<p>We covered tax incidence in micro the other day. One of the examples I use is the luxury tax that congress imposed on yachts during Bush I. In that case, congress thought that they could tax the rich by taxing things rich people bought. The actual result was taxing the boat building companies out of business. I also pointed out that the luxury tax experience was the reason that President Obama's proposed tax on private jets never went anywhere.</p><p>During the debate, President Obama mentioned almost as an aside that he still thought taxing private jets was a good idea because "they can afford it." Several of my students picked up on that and wondered why the President didn't understand tax incidence.</p>Scott Gustafsonhttp://www.blogger.com/profile/02279857994761900397noreply@blogger.com6tag:blogger.com,1999:blog-11399644.post-91531433663961990412012-07-06T18:21:00.000-07:002012-07-06T18:21:07.805-07:00Taxes and Recessions<p>A tweet from <a href="http://mjperry.blogspot.com/" target="_blank">Mark J. Perry</a> got me interested in looking at the IRS data on tax returns. We are just getting the 2009 data so we can see how things changed from the business cycle peak in 2007 to the trough in 2009. Looking at the <a href="http://www.irs.gov/pub/irs-soi/09intop400.pdf" target="_blank">400 tax returns</a> with the largest AGI some interesting things show up.</p><p>To make it into the top 400 in 2007 you had to have an AGI of $138.8 million. In 2009, only $77.4 million. That is a decrease of 44.2%.</p><p>Total AGI for the top 400 was $137.9 billion in 2007 and $81.0 billion in 2009. A decrease of 41.3%</p><p>Total AGI for all returns fell 12.2% from $8.688 trillion in 2007 to $7.626 trillion in 2009.</p><p>Total taxable income for the top 400 fell 42.5% from $118.5 to $68.1 billion. For all returns total taxable income fell 16.1% from $6.063 to $5.088 trillion.</p><p>Total income tax payments from the top 400 fell 29.7% from $22.9 billion in 2007 to $16.1 billion in 2009. For all returns total income tax payments fell 22.3% from $1.115 trillion in 2007 to $866 billion in 2009.</p><p>From a tax policy standpoint what this tells us is that high incomes are very pro-cyclical. They go up faster than the economy grows and fall faster than the economy contracts. If you skew your tax payments with a very progressive income tax then your tax revenues do the same thing. </p>Scott Gustafsonhttp://www.blogger.com/profile/02279857994761900397noreply@blogger.com6tag:blogger.com,1999:blog-11399644.post-10648354086504667052012-07-04T19:49:00.000-07:002012-07-06T18:10:29.862-07:00A Geography DigressionThe EPA has come out with some new proposals on what Arizona needs to do with three different power stations. In selling their proposal, they use the following:<br />
<blockquote class="tr_bq">
EPA is also proposing additional pollution controls for nitrogen
oxide at those plants. These actions will improve visibility and human
health at 18 national parks and wilderness areas, including the Grand
Canyon, Saguaro National Park and the Petrified Forest.<br />
<br />
More than 11 million people visit national parks in Arizona
every year. Yet for many visitors the spectacular vistas are veiled in
haze, dulling the natural beauty. Ninety percent of the time, the Grand
Canyon’s air is impaired by pollution. On average, pollution reduces
the Grand Canyon's pristine natural visual range by more than 30
percent.</blockquote>
Since we clearly don't want to impair the view of the Grand Canyon we must submit to their wishes.<br />
<br />
However, let's have a look at their map.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-oHjgcXthdlU/T_T9tXLbb6I/AAAAAAAAAFM/aGMK2fMjvtU/s1600/AZ+power+station+impact+area.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="320" src="http://4.bp.blogspot.com/-oHjgcXthdlU/T_T9tXLbb6I/AAAAAAAAAFM/aGMK2fMjvtU/s320/AZ+power+station+impact+area.gif" width="247" /></a></div>
<br />
Note that the Grand Canyon is at the far western edge of the "impact area" of two of the plants. Since the wind blows from west to east here in Arizona, the chance that any of the airborne pollution from the plants would make it to the Grand Canyon is essentially zero - but the EPA has to hype the potential impact on the Grand Canyon. <br />
<br />
I've been in marketing and understand what you are temped to do sometimes to try to sell something. What I don't understand is why the EPA thinks anyone looking at their own map would believe them.Scott Gustafsonhttp://www.blogger.com/profile/02279857994761900397noreply@blogger.com0tag:blogger.com,1999:blog-11399644.post-16942206359556709922012-06-30T18:16:00.000-07:002012-06-30T18:18:30.155-07:00Priceline for Medical Tests<p>A family Doctor here in Arizona has set up a company that mimics Priceline,but for <a href="http://www.azcentral.com/arizonarepublic/business/articles/2012/06/14/20120614medical-care-auction.html" target="_blank">medical tests.</a></p><blockquote><p>So Hastings took a routine part of his job -- negotiating rates with labs and medical imaging offices -- and launched a startup business. His Internet-based company, <a href="http://www.bidonhealth.com/">BidOnHealth.com</a>, is modeled after the consumer-travel website Priceline.</p><p>It allows consumers to shop for discounted rates for routine blood tests or medical-imaging services such as MRIs and CT scans.</p></blockquote><p>I always knew that you could negotiate prices for medical care. (Especially if you are paying real live cash money now as opposed to an insurance payment at an uncertain date in the future.) But this service would seem to simplify the process as well as provide you with some baseline prices.</p>Scott Gustafsonhttp://www.blogger.com/profile/02279857994761900397noreply@blogger.com5tag:blogger.com,1999:blog-11399644.post-48838278211189438892012-06-30T17:47:00.001-07:002012-06-30T17:47:31.781-07:00Counter Cyclical Companies<p>Twenty years ago, when I worked for DEC in Dallas, one of my customers was Mary Kay. As you work with a company you have to get to know how, when and why they make money - otherwise you can't sell them anything. What was interesting about Mary Kay was that their sales went up during a recession. The IT folks I worked with attributed this to an increase in independent sales reps during hard times and a subsequent decrease when times were better.</p><p>I found this argument persuasive, but perhaps we were wrong.</p><blockquote> <p>Although consumer spending typically declines in economic recessions, some observers have noted that recessions appear to increase women’s spending on beauty products—the so-called lipstick effect. Using both historical spending data and rigorous experiments, the authors examine how and why economic recessions influence women’s consumer behavior. Findings revealed that recessionary cues—whether naturally occurring or experimentally primed—decreased desire for most products (e.g., electronics, household items). However, these cues consistently increased women’s desire for products that increase attractiveness to mates—the first experimental demonstration of the lipstick effect.</p></blockquote><p>As they say, read the <a href="http://personal.tcu.edu/sehill/LipstickEffectMS20March2012.pdf" target="_blank">whole thing.</a></p><p>Summary article <a href="http://blogs.scientificamerican.com/guest-blog/2012/06/27/lipstick-the-recession-and-evolutionary-psychology/" target="_blank">here.</a></p><p>HT: <a href="http://marginalrevolution.com/marginalrevolution/2012/06/the-countercyclical-asset-a-continuing-series-2.html" target="_blank">Marginal Revolution</a></p>Scott Gustafsonhttp://www.blogger.com/profile/02279857994761900397noreply@blogger.com0tag:blogger.com,1999:blog-11399644.post-16641706525813036742012-03-18T17:20:00.000-07:002012-03-18T17:20:05.888-07:00Coase Theorem in Practice<a href="http://mjperry.blogspot.com/2012/03/invoking-coase-theorem-for-fracking.html">Mark J. Perry</a> explains.<p>Scott Gustafsonhttp://www.blogger.com/profile/02279857994761900397noreply@blogger.com1tag:blogger.com,1999:blog-11399644.post-16598864833520956682012-03-03T10:06:00.000-07:002012-03-03T10:06:04.598-07:00Taxing College Tuition<p>Looks like the minimum tuition bill is <a href="http://www.eastvalleytribune.com/money/article_8004dad4-64b1-11e1-bd5e-0019bb2963f4.html" target="_blank">dead.</a> However,
I found this interesting. </p>
<blockquote>
<p>Kavanagh said, though, that ignores the other problem he wants to address:
some students subsidizing others.</p>
<p>Written policy of the Board of Regents requires that at least 14 percent of
what students pay in tuition be set aside for need-based financial aid. But
the regents have currently set that figure at 17 percent.</p>
<p>“It’s the middle and upper-income students who pay full or almost
full tuition, part of which is being diverted for the more needy students,” Kavanagh
said.</p>
</blockquote>
<p>I knew this was happening, but I didn't know it was a specific Board of Regents
policy.</p>
<p>From an economic perspective, this is a tax. It is a tax on students used
to subsidize other students. </p>
<p>What surprises me is that from a political perspective we allow an appointed
board to levy a tax and engage in income redistribution.</p>Scott Gustafsonhttp://www.blogger.com/profile/02279857994761900397noreply@blogger.com0tag:blogger.com,1999:blog-11399644.post-23086740824123189812012-02-20T20:44:00.002-07:002012-02-20T20:44:29.752-07:00Limits<p>Apparently there are <a href="http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/02/20/bloomberg_articlesLZNZ0D07SXKX01-LZO0R.DTL" target="_blank">limits
to Moore's Law</a>.</p>Scott Gustafsonhttp://www.blogger.com/profile/02279857994761900397noreply@blogger.com0tag:blogger.com,1999:blog-11399644.post-69365503812909299782012-02-20T10:11:00.000-07:002012-02-20T10:11:28.890-07:00Types of Entrepreneurs<p>We hear a lot about small business and entrepreneurs whenever we talk about
employment growth. However, there are a lot of different types of entrepreneurs.
<a href="http://www.theatlantic.com/business/archive/2011/09/what-every-government-except-one-doesnt-get-about-startups/244467/" target="_blank">Steve Blank explains the differences.</a></p>
<blockquote>
<p>There are six distinct organizational paths for entrepreneurs: lifestyle
business, small business, scalable startup, buyable startup, large company,
and social
entrepreneur. All of the individuals who start these organizations are "entrepreneurs" yet
not understanding their differences screws up public policy because the ecosystem
in supporting each type is radically different.</p>
</blockquote>
<p>The scalable startup represents what most local governments want - rapid and
large employment gains. Yet it's small business "feed the family" startups
that employ most of the private sector workforce.</p>
<p>HT: <a href="http://pointsandfigures.com/2012/02/20/breakfast-links-78/" target="_blank">Points and Figures</a></p>Scott Gustafsonhttp://www.blogger.com/profile/02279857994761900397noreply@blogger.com0tag:blogger.com,1999:blog-11399644.post-72601748727213307372012-02-20T09:11:00.002-07:002012-02-20T09:11:25.753-07:00Test Tube Beef<p>Whenever we cover complements in production in class, I like to point out
that we get an increase in leather whenever the price of beef increases. This
is because we don't yet know how to produce beef without getting a hide. Well,
<a href="http://www.abc.net.au/environment/articles/2012/02/13/3428033.htm" target="_blank">they're
working on it.</a></p>Scott Gustafsonhttp://www.blogger.com/profile/02279857994761900397noreply@blogger.com0tag:blogger.com,1999:blog-11399644.post-65503004562033391212012-02-11T11:41:00.002-07:002012-02-11T11:41:41.614-07:00Economists and Central Bankers Having Fun<p>If you would like to see what passes for fun among Central Bankers and Economists,
head over to <a href="http://twitter.com/" target="_blank">Twitter</a> and look at the hash tag #FedValentine.</p>
<p>Alternately, you can see some examples<a href="http://www.freakonomics.com/2012/02/10/what-does-your-fed-valentine-say/" target="_blank"> here.</a></p>Scott Gustafsonhttp://www.blogger.com/profile/02279857994761900397noreply@blogger.com0tag:blogger.com,1999:blog-11399644.post-39003935545217926462012-02-11T11:39:00.000-07:002012-02-11T11:39:49.828-07:00What Happened to Gasoline Sales?<p>A 25% reduction in one month is an outlier. <a href="http://www.zerohedge.com/news/guest-post-why-gasoline-consumption-tanking" target="_blank">Two
months in a row</a>, not so much.
Not sure what has happened.</p>
<p>Lots of interesting data at the links.</p>Scott Gustafsonhttp://www.blogger.com/profile/02279857994761900397noreply@blogger.com0tag:blogger.com,1999:blog-11399644.post-51710766184039762702012-02-11T11:37:00.002-07:002012-02-11T11:37:38.997-07:00Heading to Jail<p>When we cover the chapter on anti-trust laws, I like to point out to students
that price fixing is a crime with not just civil penalties, but also criminal
penalties. We don't see many executives going to jail for it, but <a href="http://content.usatoday.com/communities/driveon/post/2012/01/two-auto-parts-suppliers-fined-500m-for-price-fixing/1" target="_blank">it
does happen</a>.</p>
<blockquote>
<p>Two Japanese auto suppliers are paying fines totaling $548 million in a criminal
price-fixing conspiracy case involving parts sales to U.S. automakers, the
Justice Department said today.</p>
<p>One supplier, Yazaki will pay a $470 million fine and the other, Denso, will
pay $78 million. The Yazaki fine was the second-largest criminal fine obtained
for a Sherman Act antitrust violation. In addition, four Yazaki executives,
all Japanese citizens, will serve up to two years in U.S. prison as part of
the deal to plead guilty to one felony count, the Associated Press reports.</p>
</blockquote>
<p>Remember that in the US, price fixing is always illegal.</p>Scott Gustafsonhttp://www.blogger.com/profile/02279857994761900397noreply@blogger.com1tag:blogger.com,1999:blog-11399644.post-6970942911494009392011-12-07T21:24:00.002-07:002011-12-07T21:24:41.279-07:00Cartels, OPEC and the Euro<p>A cartel is a difficult thing to hold together. When initially set up, the
power of the cartel is at its height and all of the members are doing well.
But what makes a cartel work is the agreement to limit production and hence
raise prices. The problem is that the members have an incredible incentive
to cheat on the agreement.</p>
<p>OPEC went through this when cheating on quotas was rampant, and the Saudi's
kept reducing output to keep things working. Eventually they got tired of everyone
else cheating and doing better than they were. Their solution was to open
the taps until all of the other members screamed in pain. The cartel agreement
resumed and while there was still cheating, it was at a lower more tolerable
level.</p>
<p>I sense that the Euro Zone is going through the same process. The southern
European countries have been cheating on their agreement, (budget deficits
less than 3% of GDP) and it has become unsustainable. Now the swing producer,
Germany, is holding them
accountable
and refusing to take up the slack. (No we won't use our excellent credit rating
to bail out your debt.)</p>
<p>I predict much screaming and tales of woe. Eventually there will be a renewed
agreement. There will still be cheating, but at a lower and more tolerable
level.</p>
<p>HT: <a href="http://www.coyoteblog.com/coyote_blog/2011/12/also-from-the-this-time-we-really-really-mean-it-files.html" target="_blank">Coyote Blog</a></p>Scott Gustafsonhttp://www.blogger.com/profile/02279857994761900397noreply@blogger.com0tag:blogger.com,1999:blog-11399644.post-46872094989366826682011-11-20T18:39:00.000-07:002011-11-20T18:39:15.827-07:00Estimating Manufacturing Costs<p>Now that the Kindle Fire is out, someone has taken it apart and <a href="http://finance.yahoo.com/news/research-firm-amazon-sells-199-220859587.html" target="_blank">figured out
what it costs to make.</a></p>
<blockquote>
<p>Amazon.com Inc.'s Kindle Fire tablet, which started shipping this week,
costs $201.70 to make, a research firm said Friday. That's $2.70 more than
Amazon
charges for it. </p>
</blockquote>
<p>I keep pointing this technique out to my microeconomics classes. If you have
experience in an industry, it isn't that difficult to figure out the competition's
costs. From the data in the article, it looks like Amazon intends to make most
of it's profit off of selling content rather than hardware.</p>Scott Gustafsonhttp://www.blogger.com/profile/02279857994761900397noreply@blogger.com0tag:blogger.com,1999:blog-11399644.post-76886622246831851462011-11-20T18:30:00.002-07:002011-11-20T18:30:26.077-07:00Monetary Policy Summary<p>We've just finished up monetary policy in class. One of the last things we
covered was how stimulative monetary policy could become less effective when
banks want to lend less and consumers want to borrow less. Basically you can't
push on a string.</p>
<p>While I was describing this in class of Friday, the President of the Federal
Reserve Bank of San Francisco was explaining it to other bankers at the <a href="http://www.frbsf.org/news/speeches/2011/john-williams-1118.html" target="_blank">Fourth
Summit Meeting of Central Banks on Inflation Targeting</a> in
Santiago, Chile.</p>
<blockquote>
<p>Why hasn't aggressive monetary accommodation fueled a rapid recovery
in economic activity? I will focus on three powerful currents that have
slowed the pace of recovery. The first is the massive destruction of wealth
from the
crisis brought about by the declines in house and stock prices. The second
is the severe tightening of credit resulting from the financial accelerator
mechanism, triggered by the decline in real estate prices and the upsurge
in residential foreclosures. The third is heightened uncertainty regarding
European
sovereigns and the overall health of the financial system. These renewed
concerns about the financial system have diminished the appetite for risk
and sent investors
fleeing to safe assets, such as U.S. Treasuries.</p>
</blockquote>
<p>As they say, read the whole thing.</p>Scott Gustafsonhttp://www.blogger.com/profile/02279857994761900397noreply@blogger.com0tag:blogger.com,1999:blog-11399644.post-52409798318856997382011-10-31T08:42:00.000-07:002011-10-31T08:42:36.682-07:00Economics of a Zombie Attack<p>My Ignite Phoenix talk on the Economic Effects of a Zombie Attack is <a href="http://www.youtube.com/user/IgnitePhoenix#p/c/FDAFD8ED09F5DBA1/8/PlfGYuCMjpQ" target="_blank">here</a>.
The video doesn't capture the energy from the audience. It was fantastic.</p>
<p>The basis for the talk was the <a href="http://video.mesacc.edu/media/test" target="_blank">longer
lecture</a> and Q&A from last spring.</p>Scott Gustafsonhttp://www.blogger.com/profile/02279857994761900397noreply@blogger.com0tag:blogger.com,1999:blog-11399644.post-62295285628787912932011-10-02T07:18:00.002-07:002011-10-02T07:18:38.772-07:00Complements - Devices and Content<p>One thing that is missing in the debate over the Kindle Fire versus the iPad
is acknowledgement of what it is we really consume. There's no reason to have
a tablet computer without electronic content, and there is no reason to have
electronic content without something to display it on. Tablet computers and
electronic content are complements. Both Apple and Amazon understand this,
but are coming at the market from different directions.</p>
<blockquote>
<p>The iPad and Kindle Fire are emblematic of their makers. Apple’s primary
business is selling devices for a healthy profit, and they back that up with
a side business of selling digital content for those devices. Amazon’s
primary business is as a retailer, including as a retailer of digital content.
They back that up with a side business of low-cost digital devices that are
optimized for on-the-fly purchasing of anything and everything Amazon sells.
The Kindles are to Amazon what the printed catalog was to Sears a century ago.</p>
</blockquote>
<p>I'm not sure who will win the market in the end - the better device with adequate
content or better content with an adequate device.</p>
<p>For now, I'm happy with my Color Nook.</p>
<p>HT: John Gruber at <a href="http://daringfireball.net/2011/09/amazons_new_kindles" target="_blank">Daring Fireball</a></p>Scott Gustafsonhttp://www.blogger.com/profile/02279857994761900397noreply@blogger.com0tag:blogger.com,1999:blog-11399644.post-59369852318464676132011-10-01T11:27:00.001-07:002011-10-01T11:31:39.439-07:00Maybe They Will, Maybe They Won't, Apparently They Did<p>Although Arizona voters passed a medical marijuana initiative, state officials
have been trying to get a definitive ruling from the Feds on whether or not
the Feds will prosecute those that engage in the medical marijuana business.
I wrote about the controversy <a href="http://azecon.blogspot.com/2011/07/marijuana-lottery.html" target="_blank">here.</a></p>
<p>Since actions speak louder than words, I think <a href="http://www.azcentral.com/community/tempe/articles/2011/09/30/20110930Tempe-medical-marijuana-clinic-dea-raid-abrk.html" target="_blank">we have an answer.</a></p>
<blockquote>
<p>A medical-marijuana clinic owner and his girlfriend were arrested after the
Drug Enforcement Administration raided the Tempe facility Thursday morning.</p>
</blockquote>
<p>and</p>
<blockquote>
<p>"Essentially what we discovered is that they were illegally distributing
marijuana for a fee," Sanchez said. "Which of course is a federal
violation."</p>
</blockquote>
<p>Engaging in an illegal activity certainly raises the opportunity cost of a
business, even one sanctioned by state law.</p>
<p>HT: <a href="http://www.espressopundit.com/2011/09/they-should-use-their-phone-call-to-reach-ej-montini.html" target="_blank">Espresso Pundit</a></p>Scott Gustafsonhttp://www.blogger.com/profile/02279857994761900397noreply@blogger.com0tag:blogger.com,1999:blog-11399644.post-83792220450673047582011-09-24T15:31:00.000-07:002011-09-24T15:31:02.463-07:00Local Economic News<p><a href="http://www.azcentral.com/arizonarepublic/business/articles/2011/09/23/20110923event-showcases-cloud-computing-apps-businesses.html" target="_blank">Hostapaloooza</a> was in Scottsdale on Thursday. </p>
<blockquote>
<p>It's a one-day information-technology festival that allows Microsoft and its
business partners to show off the latest cloud-computing applications that
Web-hosting companies and other IT-services companies can offer customers.</p>
</blockquote>
<p>It was in the Valley because we have a comparative advantage in providing
data center services.</p>
<p>Toys "R" Us has started <a href="http://www.azcentral.com/arizonarepublic/business/articles/2011/09/23/20110923toys-r-us-hire-400-arizona.html" target="_blank">hiring
their seasonal staff.</a> According to
the article they will hire almost as many temporary staff as they have full
time staff during the rest of the year.</p>
<p>Goodyear has provided enough <a href="http://www.azcentral.com/business/articles/2011/09/23/20110923goodyear-incentives-sub-zero-open-plant.html" target="_blank">tax
incentives</a> to entice Sub-Zero out of their
manufacturing plant in Phoenix and into expanded space in Goodyear's foreign-trade-zone.
This reduces their property taxes by 75%. The remainder of what Goodyear will
collect in taxes over 7 years will just cover the incentives that they will
pay Sub-Zero as
they staff up.</p>
<p>Finally, First Solar probably won't get their <a href="http://www.azcentral.com/business/articles/2011/09/22/20110922tempe-based-first-solar-wont-get-nearly-2-billion-loan-guarantee.html" target="_blank">$1.9B
loan guarantee</a> from the
feds for their Topaz project but it looks like they will get guarantees for
two others.</p>
<blockquote>
<p>The Energy Department has given preliminary approval for a $680 million loan
for the Antelope Valley project and a $1.88 billion loan guarantee for the
Desert Sunlight project.</p>
</blockquote>
<p>The loan guarantees reduce the risk to lenders and hence reduce the interest
rate First Solar pays on financing for the projects.</p>Scott Gustafsonhttp://www.blogger.com/profile/02279857994761900397noreply@blogger.com1tag:blogger.com,1999:blog-11399644.post-86337921229562792102011-09-21T21:16:00.000-07:002011-09-21T21:16:45.621-07:00Compare and Contrast<p>A couple of new business deals were announced yesterday. <a href="http://www.azcentral.com/arizonarepublic/business/articles/2011/09/21/20110921chandler-data-center-developer-expands-site.html" target="_blank">In
the first</a>,</p>
<blockquote>
<p>San Francisco-based Digital Realty Trust Inc. hosted a grand-opening ceremony
Wednesday to tout the completion of a 226,000-square-foot expansion to its
existing 293,000-square-foot data center at 2121 S. Price Road in Chandler.</p>
</blockquote>
<p>They also provided a reason for locating here.</p>
<blockquote>
<p>Warner said West Coast businesses that offer Web-based technology for consumer
and commercial use have been choosing metro Phoenix to place their equipment
because it is much cheaper than in the major California markets.</p>
<p>The cost of power alone for a 10,000-square-foot user inside the Chandler
data center would go up by about $600,000 a year if it were to relocate to
a similar facility in Los Angeles, he said.</p>
</blockquote>
<p>So basically it was a decision driven by cost. We have a cost advantage here
in Phoenix compared to the next best alternative so we get the business.</p>
<p>The <a href="http://www.azcentral.com/business/articles/2011/09/20/20110920goodyear-get-solar-supplier-saint-gobain.html" target="_blank">second
business</a> was,</p>
<blockquote>
<p>A Pennsylvania-based building-materials and glass company said Tuesday that
it will open its first North American solar-manufacturing facility in Goodyear
by the end of 2011, supplying the area with 50 new jobs.</p>
</blockquote>
<p>It was also interested in cost savings.</p>
<blockquote>
<p>The company is applying for the Arizona Renewable Energy Tax Incentives Program,
which was passed in 2009 by the state Legislature to promote renewable energy
in the state.</p>
<p>Companies in solar, wind, geothermal and other renewable-energy industries
that expand or relocate to the state are given up to 10 percent refundable
income-tax credits and up to a 75 percent reduction on real- and personal-property
taxes for up to 15 years.</p>
</blockquote>
<p>Also</p>
<blockquote>
<p>Saint-Gobain, which has glass and abrasives facilities in Scottsdale,
also will receive a federal tax credit from the U.S. Treasury Department
for expanding
in Arizona. The credit is for 30 percent of the company's investment in the
state.</p>
</blockquote>
<p>Actually the second business wasn't interested in cost savings. It was after
government subsidies. From a public policy standpoint, I would much rather
have more of the first type of company rather than the second.</p>Scott Gustafsonhttp://www.blogger.com/profile/02279857994761900397noreply@blogger.com0tag:blogger.com,1999:blog-11399644.post-9656395347622692532011-09-18T20:47:00.000-07:002011-09-18T20:47:02.856-07:00Solar is NOT a Substitute for Oil<p>Actually there is one more thing to be said on the <a href="http://azecon.blogspot.com/2011/09/against-it-before-she-was-for-it.html" target="_blank">prior topic.</a></p>
<p>During the Solar Summit apparently some people still think solar is a <a href="http://www.roselawgroup.com/blog/wordpress/?p=34304" target="_blank">replacement
for oil.</a></p>
<blockquote>
<p>“She [Giffords] often says, ‘If oil literally rained from the
sky, you can bet we would all keep our buckets handy. With solar energy, we
have an oil substitute that does fall from the sky. We need to get smart about
capturing it.,’ ” Carusone said.</p>
</blockquote>
<p>Solar generates electricity which is used almost exclusively for fixed energy
consumption. Oil is turned into transportation fuels and chemical feed stocks.
Although electricity and oil are both "energy," there is almost no substitution
between the two.</p>Scott Gustafsonhttp://www.blogger.com/profile/02279857994761900397noreply@blogger.com0tag:blogger.com,1999:blog-11399644.post-76011263649084202292011-09-18T20:32:00.000-07:002011-09-18T20:32:03.912-07:00Against It Before She was For It.<p>Apparently former Arizona Corporation Commission Chairman Kris Mayes has changed
her position on the proposed power line from Arizona to Southern California.
She was against it before she was for it. <a href="http://knowledgeproblem.com/2011/09/16/interstate-commerce-in-electric-power-arizona-policymakers-two-faced-view/" target="_blank">Michael
Giberson</a> over at <a href="http://knowledgeproblem.com/" target="_blank">KnowledgeProblem</a> has the details. </p>
<p>I wrote about the issue <a href="http://azecon.blogspot.com/2007/06/arizona-energy-exports.html" target="_blank">here</a>, <a href="http://azecon.blogspot.com/2007/10/arizona-energy-exports-round-2.html" target="_blank">here</a>, <a href="http://azecon.blogspot.com/2008/03/exporting-power-or-not.html" target="_blank">here</a>,
and <a href="http://azecon.blogspot.com/2009/05/arizona-corporation-commission-goal.html" target="_blank">here</a>.
Related stuff <a href="http://azecon.blogspot.com/2009/09/jobs-and-costs-then-and-now.html" target="_blank">here,</a> and
<a href="http://azecon.blogspot.com/2009/09/aps-as-jobs-program.html" target="_blank">here.</a></p>
<p>Not a lot more to be said except that this is an excellent example of this
year's Honors topic: <a href="http://www.ptk.org/honors/hp_hstg.htm" target="_blank">The
Democratization of Information.</a> The internet has a memory.</p>Scott Gustafsonhttp://www.blogger.com/profile/02279857994761900397noreply@blogger.com0tag:blogger.com,1999:blog-11399644.post-24005754344112918722011-09-12T17:33:00.002-07:002011-09-12T17:33:48.706-07:00Jobs Plan - Monday Evening Summary<p>The <a href="http://www.whitehouse.gov/blog/2011/09/12/president-obama-sends-american-jobs-act-congress" target="_blank">plan</a> calls
for permanent tax increases to pay for temporary tax reductions and spending
increases. This makes no economic sense.</p>
<p>For a more thorough review of what this means see <a href="http://www.theatlantic.com/business/archive/2011/09/obamas-job-plan-a-never-never-bill/244966/" target="_blank">Megan McArdle.</a></p>Scott Gustafsonhttp://www.blogger.com/profile/02279857994761900397noreply@blogger.com0tag:blogger.com,1999:blog-11399644.post-53647615679015223182011-09-11T16:56:00.001-07:002011-09-12T16:46:14.373-07:00Jobs Plan - Paid for by Someone Else<p>The final point in the President's <a href="http://www.whitehouse.gov/sites/default/files/jobs_act.pdf" target="_blank">jobs
plan</a> is that it is fully paid for.
By this he means that the cost will be offset by future taxes or spending reductions.
To do this, he gives the Joint Committee the task of finding an additional
$447 billion in cost savings. In short, he outsourced the tough part of the
task to another branch of government.</p>
<p>Update: This is no longer true. He proposed paying for them with permanently
higher taxes.</p>Scott Gustafsonhttp://www.blogger.com/profile/02279857994761900397noreply@blogger.com0