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Showing posts from June, 2019

Is it only California?

The Economist ran a special report last week comparing Texas and California strengths and weaknesses.  What's unavoidably obvious is that many of California's weaknesses stem from housing affordability.
The finances of their schools are severely hampered by 50% higher salaries for teachers.  That's not largesse, it's driven by the higher cost of housing.  Teachers in California need that money to afford to live there.Net migration is negative (though population is still growing), and the overriding factor here appears to be housing costs.California spends a lot to help it's low-income population, almost 120% more money than Texas per person, yet still ends up with only a marginally lower rate of poverty after transfers despite a much higher average wage.  Housing explains about 80% of the higher cost of living that negates California's more substantial efforts to have less poverty. So, if you care about any of these issues, you should ask, are high property valu…

Incentives and Balance

A number of times recently, while having a discussion about a policy with friends or acquaintances, the regressivity of a policy has been raised as a concern.  In one case it was gas tax, in another a carbon tax, in another a bag fee.

Does being regressive make a policy bad?  While I agree, it is a point against, it's not the final decision point.  A policy should be looked at in terms of its larger context. 

While it's hard to justify putting additional burdens on those with less, a policy can be enacted within a context of policies that overall lighten the burden.  It's beneficial to do so when the policy has net benefits.  For example, a basic carbon tax is regressive; the poor as a percentage of their income are more dependent on gasoline and energy.  But if a carbon tax is enacted within the context of a equal direct cash payment, the overall effect is progressive.

It's also important to recognize that distribution can be the smaller question, even if it's alw…