A company town

I’m in St. Louis for the Concordia Publishing House board meeting, and the whole city is in a tizzy over an attempt by a Brazilian-Belgian company named InBev to buy Anheuser-Busch. See Critics of the Bud Buyout Are Frothing. When the South African corporation SAB bought Miller, Milwaukee didn’t get all in an outrage, and many people welcomed it. But St. Louis is worried that their local beer giant under foreign management might cut out all of their civic involvement, shut down the free Grant’s Park, cut jobs, and who knows what all.

Ready for a hybrid yet?

Now that gasoline costs upwards of $4, buying a hybrid automobile–which typically costs around $3000 more than the all-gasoline model–makes economic sense. But you would need to keep your Prius for three and a half years to recoup that extra money. There are now many hybrid models from a wide range of manufacturers. The Wall Street Journal has a useful article comparing them, including the chart below. I am astonished, though, to see how little improvement there is in gas mileage from a normal car, except for the Prius and the Civic. Do any of your drive hybrids? Are they worth it?

hybrid chart

Big Brown and the Economy

Where superstition, gambling, and the stock market intersect: According to this article, Big Brown victory may spook markets, whenever a horse wins the Triple Crown, the stock market plunges for the rest of the year. However, when a horse that wins the Kentucky Derby and Preakness (as Big Brown has done so far) but LOSES the Belmont Stakes (to be run on Saturday), the market goes up.

So cheer for anyone but Big Brown. But if he wins, sell everything you have in the market, which, if everyone does it, would create a self-fulfilling prophecy.

Tax it to death!

Porn Tax Considered As Solution To Budget Shortfall

California state lawmakers are considering an unusual idea to solve the state’s huge budget shortfall: Tax pornography.

The idea was proposed by a state assemblyman, and would impose a 25 percent tax on the production and sales of pornographic videos — the vast majority of which are made in southern California.

It is unknown, however, how seriously lawmakers will take the idea or how the porn business would deal with the new tax. It is likely, though, that porm-makers would simply pass the cost along to consumers by making pornographic materials more expensive.

However, many economists believe that pornography is an industry with inelastic demand — meaning market conditions typically don’t affect consumers’ desire for the product. In other words, it is believed that most porn consumers would continue to buy regardless of how much it cost.

Would conservatives support THIS tax? Is there a problem with so-called “vice taxes”–such as taxes on alcohol, tobacco, gambling, and maybe now this–in which the government, in effect, profits from citizens’ moral weakness? Or is taxing something like porn a good way to limit it?

The airlines’ baggage

So American Airlines next month is going to start charging $15 to check your bag! Other airlines are considering it. See Checked Bag Fees: Money for Nothing.

Have the airlines considered the unintended consequences? Customers who will now choose airlines that provide normal reasonable service? More unchecked luggage clogging up the security lines, crammed into scarce cabin space, and slowing down boarding? Even more rage at LOST luggage?

I understand that fuel prices and cutthroat competition are squeezing airlines, so that the only way they can make ends meet is by cutting out the free peanuts and the like. But airlines have always had trouble making a profit. Isn’t there a business model that would allow airlines to stay in business while providing good service?

Higher prices would surely be a part of that, but the pricing system seems out of joint also, with some passengers paying many times what others pay for the same flight. Is there a solution to this?

Recession with economic growth?

The economy grew .6%, contrary to the perception that we are in a recession. See Economy Improves, Old Media Ignores. Some are saying that this represents the first time that we have had a recession while experiencing economic growth! Even though a recession MEANS subsequent quarters of no growth.

So is the economy stronger than the doomsayers have been saying it is? I suspect what we have is a paradox in a vast economy, with some sectors in bad shape–unfortunately, those that impact average Americans the most, with high prices for food and fuel and a loss of equity in home values–and other sectors doing quite well (such as oil companies and the farmers who are enjoying record prices).