A Regulated System of Incentives for Kidney Donation—Time for a Trial!

Arthur Matis says the time to test using incentives to encourage people to donate their kidneys has arrived. (JAMA Network, June 2021. FYI, JAMA = Journal of the American Medical Association.) Many states and employers created incentives for people to receive vaccinations against COVID-19, apparently with some success. Why not try the same type of approach for another activity that saves lives?

The minimum wage paradox

A Social Benefits Calculator reveals that an increase in the minimum wage has a small impact on income for many poor people. (Winston Salem Journal, June 2021) Reductions in "social benefits such as food stamps (SNAP benefits) or child care or housing assistance" and increases in taxes reduce the impact of the increase in wages. Here is a money quote.

"Let’s use the calculator and create a hypothetical example: a full-time working parent earning the minimum wage, who is unmarried with two children in subsidized day care. ... after his or her wages more than double from $7.25 an hour to $15 an hour, earnings rise from $1,160 to $2,400, or a $1,240 change.

"... But after subtracting the decrease in benefits and higher taxes, that $1,240 increase erodes to just a $199 net improvement, or just a 16% change.

"... Through multiple scenarios using the CSEM calculator, I have found long ranges of income where work barely pays — what I call “disincentive deserts” in my published research. In some cases, individuals are actually worse off by accepting wage increases because of larger drop-offs in benefits, in what are called 'benefits cliffs.'”

The examples highlight the disincentives to earning more income that many poor people face and may explain why some poor people do not try to "pull themselves up by their bootstraps". Why work more when the tax man takes away much of the gain?

Does prodding people with fines to buy something they don't want improve their standard of living?

Without penalties that people pay under Obamacare, fewer would buy insurance (http://www.cnn.com/2017/03/13/politics/by-the-numbers-cbo-obamacare-repeal-gop/index.html). 

Many people claim that the reduction in number of people buying insurance if the Republicans remove the fines imposed by Obamacare is a reason to oppose the Republican plan. I question the logic.

I doubt the ability of someone else to decide what is best for me. As a classical liberal, I want the government to treat me as though I can decide what is best for me and to treat other people as I want to be treated. When people decide not to buy a product - insurance, caviar, Kirkland jeans, or Air Jordan Sneakers - they reveal that they think purchasing the product is not in their self interests. I don't see how prodding them to act contrary to their self interest by making them pay a tax if they act in their self interest makes them better off; they are buying something that they don't want to buy.  

Strange things can happen when the government restricts individual freedoms

http://www.weeklystandard.com/berkeley-goes-offline/article/2007153 shows that government regulations often have unintended consequences. Classical liberals say that the government has no valid role regulating voluntary contracts between Berkeley and its clients and students.

Do consumers need laws to make automobile companies increase MPG?

This article in CNN claims that one reason for the government to require automobile manufacturers to produce cars that average 50 MPG is that this "standard[s] would save consumers $4,000 at the pump over the life of their cars. That's $1 trillion nationwide -- and more if gas prices rise."

My question is, "Would automobile manufacturers produce cars that average 50 MPG if the legal requirement does not exist? Let's assume that the $4,000 is the present value of the money consumers would save over the lift of the car when it meets the efficiency standard. What would happen if the government removes the standard? I see two possibilities.

1. If the cost to the manufacturers of meeting the standard is less than $4,000, then the manufactures would meet the standard and would increase the price of the car more than the cost and less than $4,000. Suppose that the additional cost is $3,500. By producing the car and charging $3,750 more for the car, both the consumer and producers gain. The consumers gain because the increase in price, $3,750, is less than $4,000, the present value of the money they save on gasoline. Producers gain because the increase in price, $3,750, is greater than $3,500, the additional cost they incur.
2. If the cost to the manufacturers of meeting the standard is more than $4,000, then the manufactures would not meet the standard. Suppose that the additional cost is $4,500. Consumers would not want to buy cars meeting the standard if the price increases by more than $4,500 because the increase in price is greater than the present value of the money they save on gasoline. Producers would not want to sell cars meeting the standard if the price increases by less than $4,500 because the increase in price is less than the extra cost they incur. 

The analysis indicates that the market would meet the fuel efficiency standards if the extra cost of meeting the standard is less than the present value of the money consumers save on gasoline and would not meet the standards if the extra cost of meeting the standard is greater than the present value of the money consumers save on gasoline. We can draw two conclusions.

1. When the cost of meeting the standard is less than the benefit consumers receive, then the market will produce cars that meet the standard without any need for government interference.
2. When the cost of meeting the standard is greater than the benefit consumers receive, then government interference increases the price of cars by more than the benefit consumers receive.

Is peace the best argument for free trade?

https://qz.com/919166/killing-free-trade-will-rob-the-world-of-a-highly-effective-deterrent-to-war/

Solutions to Global Warming

https://www.youtube.com/watch?v=6RsrRpjAGi8

The video begins by pointing out problems of trying to reduce the emission of CO2 to address the problem.

FYI: Levitt identifies 2 solutions, not 3.

Another Prominent Economists Argues Against Trade Restrictions

http://www.vanityfair.com/news/2017/02/donald-trump-china-economics-trade

What do you predict will happen to the price of gasoline?

https://twitter.com/WSJ/status/832596498336595969 states that the gasoline market has the largest glut in 27 years.

1. What is the impact of a glut in gasoline on the price of gasoline going forward?
2. What is the impact on the price of oil going forward? Remember that gasoline refiners buy substantial quantities of crude oil because crude oil is an input used to produce gasoline.