Tuesday, September 23, 2008

Balanced Budget = Mistake?

I have been confused about government finances for a while (thinking especially about stadium financing). Most state and local governments have a balanced budget obligation which, I assume, means that inflows (tax revenues and fees) must balance outflows (expenditures and transfer payments). Which sounds fine and reasonable.

Stadium financing proponents often argue in favor of government subsidy by noting increases in local business revenues (which I suspect are simply made up numbers). But I have also wondered whether there should be public support even if the numbers are valid. And thought: "No. Even if the numbers are right, the tax revenues related to that increase in business will be much smaller than the expenditure, even assuming some sort of multiplier effect based on local velocity of money." But I think my reasoning was incorrect. If one thinks of government not as a separate person but rather as a collective spending pool, then an increase in revenues less than the expenditures is an appropriate use of government funds (a collective action/public good theory; ignoring Mills type issues).

Which brings me to balanced budgets. I don't think there is much alternative to balanced budgets as local governments cannot print money. But I do wonder if this limitation results in suboptimal government spending (because the wrong measures are being compared and balanced). And then the kicker - perhaps federal subsidy mitigates this problem AND federalism (at least on the budget side) is a mistake. Yikes.

Wednesday, September 10, 2008


In light of the current Fannie mess, this is intriguing: "Chief Financial Officer [of Capital One] Gary L. Perlin, a former Fannie Mae treasurer, and Chairman and Chief Executive Richard Fairbank have long looked with suspicion on the mortgage business." WSJ page B5D September 10, 2008.

Not that it requires repeating, but Fannie has been rotten to the core for years.

Tuesday, September 9, 2008

yankees and retail investors

The Yankees' ownership strikes me as similar to a retail stock investor (speculator) - always chasing (and lagging) trends, buying at the top, selling at the bottom, and abandoning shares when they hit bottom. Hope they keep Girardi and lose some of the short-term thinking.

Thursday, September 4, 2008


From this week's Economist: "Plutonium-powered thermogenerators have also been used to power lighthouses and radio beacons in isolated areas." Are these things guarded? I would think remote locations make them easier to hijack?

Monday, September 1, 2008

Apple product announcement

Perhaps "iPhone on MacBook" is more than simply an LCD touchscreen. I think it has been conspicuous that adding a WLAN to a MacBook has not been a simple "check-the-box" option. Perhaps there will REALLY be something like an iPod Touch on the new MacBooks. This would definitely affect profit margins as indicated on the recent earnings call. The touchscreen would allow an "instant-on" type of connection for medium-duty tasks. And would build in tethering (also conspicuously absent from AT&T's offerings). Pricing is tricky (if built in to all, those who don't want/need, will feel like pricing of the computer is too high - but if an option, doesn't seem as groundbreaking). But simply having the LCD touchscreen may be differentiating enough. And if they can sell an iPod Touch at $200, not that expensive to build-in to every laptop in the line.