Keeping up with the FITs, 6/25
Pseudonymous substackers on life; Allison Shrager on financial virtue-signaling; Scott Sumner on the gas tax holiday; Glenn Reynolds on gas taxes and The Great Forgetting; Timothy Taylor on crypto
Note: FITs stands for Fantasy Intellectual Teams, one of my great creative ideas that was just too difficult to continue to execute.
Rejecting traditional lifestyles like getting married and having kids is probably contributing to overall unhappiness. Media is so entertaining that people choose to be less social, often to their own detriment. Financial and career opportunities entice people enough to move away from friends and family, something unusual until recently. We would probably be happier if we spent less time online and more time together with friends and loved ones.
As my wife says, Bring Back the Shtetl!
Just buy what you want, work for who pays you the most, and buy sin-filled stocks. Then, give all that extra money to charity.
On the last point, I would say it is ok to invest the extra money in profit-seeking business. Charity is ok, as long as it is simple charity, not part of the virtue-signaling complex.
But I understand the desire to virtue-signal while engaged in commerce. I myself refuse to join AARP, even though in theory I could use their economic benefits and perhaps take the money to lobby against their preferred policies.
Suppose that you wish to achieve the following 4 objectives:
1. Helping Vladimir Putin win the war in Ukraine.
2. Worsening global warming.
3. Worsening the budget deficit.
4. Enriching oil refiners at a time when supply is constrained and they are already earning extraordinary profits.
What is the most effective way of doing all four? On option would be to temporarily end the federal gas tax.
I don’t actually believe that these are the reasons why President Biden recently floated this idea. I think we underrate the extent that public policies reflect ignorance of basic economic theory. Whether the ignorance lies with the voters, the policymakers, or both is another question.
Glenn Reynolds dug up an open letter written by economists in 2008 concerning a gas tax holiday idea floated in the George W. Bush era. Many of the signatories were on the left, including some who had held positions in the Clinton Administration.
First, research shows that waiving the gas tax would generate major profits for oil companies rather than significantly lowering prices for consumers.
Second, it would encourage people to keep buying costly imported oil and do nothing to encourage conservation.
Third, a tax holiday would provide very little relief to families feeling squeezed.
Fourth, the gas tax suspension would threaten to increase the already record deficit in the coming year and reduce the amount of money going into the highway trust fund that maintains our infrastructure.
Of course, the situation is different in 2022. The President is a Democrat. And we have what Tyler Cowen calls The Great Forgetting.
Cryptocurrencies like Bitcoin and Ethereum are decentralized and secure. But there are about 2 billion digital payments made around the world every day. The process of updating the blockchains used to keep track of these kinds of cryptocurrency exchanges is notably costly in terms resources and is, by comparison with methods like modern credit card transactions, impossibly slow for addressing this volume of transactions. In other words, these secure and decentralized cryptocurrencies have not so far proven scaleable. Thus, the expansion of scale cryptocurrencies is in part driven by the arrival of new ones, which are decentralized but then often turn out to be less secure.