Big Kahunas

Gig Giacona wrote:

How about an example..

That's easy; straight out of any intro economics class.

For example, consider a factory. It has a choice of producing in an
environmentally friendly way at price X, or in an environmentally
unfriendly way at some fraction of X.

Even if we assume everyone operating with complete knowledge and
"enlightened self interest", if the market for the factory is sufficiently
larger than the population impacted by the pollution generated by the
factory, it is more "market friendly" (ie. more profitable) to operate in
an environmentally unfriendly way.

These are called "market failures". The term "failure" is based upon a
judgement against some ideal, which tells you that even economists have
aspirations that aren't market-driven grin.

It's been a while, but I think the definition of "market failure" is where
the market doesn't allocate resources to maximize consumer satisfaction.
In the above example, even if we assume people would be willing to pay a
higher cost for their products to maintain a clean environment for
themselves, this doesn't happen because most dollars spent would provide a
clean environment for someone other than the buyer.

That is, the consumers of a given factory's output aren't those that suffer
from the pollution from that factory.

It seems to me that whenever there is a cost paid by someone other than the
consumer, this type of situation can arise. I *think* this is what is
meant by an "externality", but I'm not sure (like I said: it's been a
while).

- Andrew

On Mon, 15 Dec 2003 12:01:22 -0600 "Gig Giacona" wrote:


"R. Hubbell" wrote in message
news:MBICb.2788$pY.2535@fed1read04...
On Fri, 12 Dec 2003 14:20:22 -0600 "Gig Giacona"
wrote:

Your argument proves my point. If it becomes important enough the market
will deal with the problem. In this case the Toyota Prius. But I'd be
willing to bet they are not out selling SUVs.


Now I've got you! Mooohahaha. SUVs have been selling like hot cakes
because of at least two loopholes in the laws. One is how they are
classified
and the other is a huge tax-break for businesses that buy them (a weight
thing)

Keep in mind that the world and for that matter the USA is a very big place.
Not every state gives huge tax breaks for SUVs. And in most states the tax

Neither lophole is a state loophole.


goes up with the weight. BUT... for the sake of agument let's not even talk
about cars bought for business use... Just personal. I'd be will ing to bet
the Prius is still way behind the even Toyota's own SUV in sales.


You're missing one of the main points, the fact that SUVs are misclassified
allows people to buy them at a fraction of what they would cost if they
were classified properly. (don't have the details, I believe it hinges on
weight and safety ratings)



The "market" you lovingly cling to is once again artificially buoyed up
because it's rivets are popping and it's long in the tooth and creaking
and
it's past TBO and it's ready to rest in Davey Jones' locker and it's ready
to go Tango Uniform and ....

And state controlled economies have just proven SOOOO successful.

And there lies the crux of the whole thing.
Define successful.





Now the Prius has huge tariffs imposed by the US govt. and their are no
loopholes. (although I think in some states the state subsidizes a portion
of the cost, sort of like undoing the federally imposed tariffs)


I have no idea what the tariff is on the Prius but from Toyota's own web
site there seems to be some sort of Federal Tax DEDUCTION for buying one.


But that is still a fraction of the price reduction that SUVs enjoy.


R. Hubbell





Retail purchasers of a new Prius may be eligible for a federal tax deduction
of up to $2,000 for purchases completed during calendar year 2003. Details
are as follows:
How to Claim up to $2,000 Federal Tax Deduction

The Internal Revenue Service (IRS) requires that purchasers retain normal
proof of purchase documentation as well as the Toyota Certification letter
and Internal Revenue Service Acknowledgement letter as substantiation for
the deduction.
For printable copies of both letters, click the icons below.
For further information from the IRS, see the IRS News Releases of October
6, 2003; August 12, 2003; and Revenue Procedure 2002-42.
Toyota Certification Letter - Model Years 2001, 2002 and 2003
Toyota Certification Letter - Model Year 2004
IRS Acknowledgement Letter - Model Years 2001, 2002 and 2003
IRS Acknowledgement Letter - Model Year 2004

Up to $2,000 Federal Tax Deduction Guidelines

The purchase of a new Prius (model years 2001, 2002, 2003 or 2004 only) must
be completed on or before December 31, 2003 for the $2000 deduction.
Vehicles purchased during calendar year 2004 may be eligible for a $1,500
tax deduction.
Before using this important federal tax deduction on your tax return, please
check with your tax advisor for possible additional state tax benefits and
for any changes in the federal tax laws that might occur after October 1,
2003.
The federal tax deduction is not available for Prius lessees or purchasers
of used Prius vehicles. To the extent applicable, this deduction is
available to Prius purchasers regardless of whether you itemize deductions
on your federal income tax return.
Your overall federal tax benefit will depend on your individual tax
situation, particularly if you claim depreciation deductions on your Prius.
See your tax advisor for more details.

In article SYpDb.12267$pY.8244@fed1read04, "R. Hubbell"
wrote:

You're missing one of the main points, the fact that SUVs are
misclassified
allows people to buy them at a fraction of what they would cost if they
were classified properly. (don't have the details, I believe it hinges on
weight and safety ratings)

"a fraction"? how much? 1/10th? 1/2? 95%?

--
Bob Noel

"Gig Giacona" wrote in message
...

"Carl Ellis" wrote in message
...
Gig Giacona wrote:

And with the advances in science I wouldn't bet the farm that there
will
never be another marketable Cuban mahogany tree IF there is
sufficient
demand.



Yes, this is an argument that is often made, the market will save us all
with advances in technology and science and efficiency. The market
serves
itself, what is good for the market is not necessarily good for the
public.
Their interests may intersect but don't bet the farm on it.

- Carl -




How about an example..




ENRON




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Here's a thought.

A pure free market and communism have something in common. They can never
work. Why? Human greed, hunger for power, and fallibility.

It seems that there is some tension necessary for success. In the case of
our government it's the executive, judicial, and legislative branches, plus
the multi-party system. In the business world it's entrepreneurs,
corporations, government, and consumers.


- Carl -


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But how about an example from real life.

"Andrew Gideon" wrote in message
online.com...
Gig Giacona wrote:

How about an example..

That's easy; straight out of any intro economics class.

For example, consider a factory. It has a choice of producing in an
environmentally friendly way at price X, or in an environmentally
unfriendly way at some fraction of X.

Even if we assume everyone operating with complete knowledge and
"enlightened self interest", if the market for the factory is sufficiently
larger than the population impacted by the pollution generated by the
factory, it is more "market friendly" (ie. more profitable) to operate in
an environmentally unfriendly way.

These are called "market failures". The term "failure" is based upon a
judgement against some ideal, which tells you that even economists have
aspirations that aren't market-driven grin.

It's been a while, but I think the definition of "market failure" is where
the market doesn't allocate resources to maximize consumer satisfaction.
In the above example, even if we assume people would be willing to pay a
higher cost for their products to maintain a clean environment for
themselves, this doesn't happen because most dollars spent would provide a
clean environment for someone other than the buyer.

That is, the consumers of a given factory's output aren't those that
suffer
from the pollution from that factory.

It seems to me that whenever there is a cost paid by someone other than
the
consumer, this type of situation can arise. I *think* this is what is
meant by an "externality", but I'm not sure (like I said: it's been a
while).

- Andrew

"R. Hubbell" wrote in message
news:SYpDb.12267$pY.8244@fed1read04...
Gig WROTE:
And state controlled economies have just proven SOOOO successful.

And there lies the crux of the whole thing.
Define successful.



They didn't all implode over the last 15 years.

"Carl Ellis" wrote in message
...

"Gig Giacona" wrote in message
...

"Carl Ellis" wrote in message
...
Gig Giacona wrote:

And with the advances in science I wouldn't bet the farm that
there
will
never be another marketable Cuban mahogany tree IF there is
sufficient
demand.



Yes, this is an argument that is often made, the market will save us
all
with advances in technology and science and efficiency. The market
serves
itself, what is good for the market is not necessarily good for the
public.
Their interests may intersect but don't bet the farm on it.

- Carl -




How about an example..




ENRON


ENRON could have not have happened in a truly free market. It is an example
of what happens as a market is freed after a long period of artificial
control. Another example is the Russian Mafia.

"Gig Giacona" wrote in message ...
"Carl Ellis" wrote in message
...

"Gig Giacona" wrote in message
...

"Carl Ellis" wrote in message
...
Gig Giacona wrote:

And with the advances in science I wouldn't bet the farm that
there
will
never be another marketable Cuban mahogany tree IF there is
sufficient
demand.



Yes, this is an argument that is often made, the market will save us
all
with advances in technology and science and efficiency. The market
serves
itself, what is good for the market is not necessarily good for the
public.
Their interests may intersect but don't bet the farm on it.

- Carl -




How about an example..




ENRON


ENRON could have not have happened in a truly free market. It is an example
of what happens as a market is freed after a long period of artificial
control. Another example is the Russian Mafia.

Deregulation simply gave ENRON the opportunity to game the system. It
all boils down to whether people want to play fair or not. Yes, in
the end the market punished them by dropping their stock price to zero
but only after the government opened investigations. People will
cheat if they believe they can get away with it. The "free market"
does not prevent this.

I believe a truly free market is unattainable - it's a utopian ideal.
Human nature will not allow it.


- Carl -

"Carl Ellis" wrote in message
om...
"Gig Giacona" wrote in message ENRON


ENRON could have not have happened in a truly free market. It is an
example
of what happens as a market is freed after a long period of artificial
control. Another example is the Russian Mafia.

Deregulation simply gave ENRON the opportunity to game the system. It
all boils down to whether people want to play fair or not. Yes, in
the end the market punished them by dropping their stock price to zero
but only after the government opened investigations. People will
cheat if they believe they can get away with it. The "free market"
does not prevent this.

I believe a truly free market is unattainable - it's a utopian ideal.
Human nature will not allow it.



You are giving too much credit to the government. ENRON's house of cards
would have failed and was in the process of doing so before the
investigation.

I'm not saying there should be know laws. Fraud, theft should be controlled
and punished by the government.

Let's just call it quits and talk about airplanes.

What kind do you have, Carl?