Monday, December 29, 2008

The gas tax (a.k.a. the carbon tax)

This blog has long supported a carbon tax (see this or an older post). There are many reasons, but among them,

  • Regardless of where you stand on global warming, pollution is bad. Clean air is good. Without external restraint, our shared environment becomes a tragedy of the commons. A carbon tax is an effective, market-neutral means of increasing the cost of pollution production.
  • A carbon tax, unlike cap-and-trade, permits the market to choose where and when efficiencies can be achieved/improved upon.
  • Unlike cap-and-trade, a carbon tax is simple, direct, and less subject to stealth manipulation by politicians.

Support crosses ideological lines: Many liberals support a carbon tax (example), economists like it (example), and many conservatives do as well. George Will wrote about it a while ago.

Today, the Weekly Standard website made available an article by Charles Krauthammer, discussing his support for the Net-Zero Gas Tax.

Are the political winds shifting? It is hard to see the public agreeing to a gasoline tax increase or price floor when the economy is souring, but maybe there is a chance.

Friday, December 26, 2008

The brick and mortar crumbles

Buried inside this Financial Times piece about dismal holiday retail sales is the following notable nugget:

Amazon shares rose 0.4 per cent to $51.78 after the online retailer said the holiday period had been its best ever.

This trend will continue into the future. Online purchasing is, by far, the least costly method of shopping for both customer and seller. The online seller does not need to pay sales staff to man a huge box store (with huge leasing and "physical plant" costs of its own), and that cost savings is passed on to you. The customer saves money and time shopping online, and gets lower costs due to seller efficiencies and also because of increased competition. After all, the entire online world is at your fingertips, when shopping online.

The downside of shopping online is generally shipping costs and lack of immediacy. Sometimes brick-and-mortar operations also excel in customer service and item exchanges, but increasingly this is less true. Brick-and-mortar retail outfits rarely repair items online, and try to keep their inventory as thin as possible. For that reason, when problems arise, the customer must deal directly with the manufacturer (with associated phone calls, shipping and RMA delays) rather than the brick-and-mortar store. That experience will be the same for the customer, whether or not the item was purchased online.

Given the cost savings and greater amount of available information online (product details, customer reviews and ratings, etc.), shopping will trend more and more towards online. Brick-and-mortar stores, for many product categories, will be no more than product showrooms where customers browse and interact with brands, rather than purchasing.

Gift shopping such as at Christmas time, in particular, is typically an exercise known well in advance, and can therefore be accomplished online in advance of the event. Customers that have time to research online, purchase online, and wait for package shipment will be drawn towards online retails for much of their gift shopping.

Saturday, December 20, 2008

The State of Germany

An excellent blog post on the UK Telegraph's website, analyzing Germany's recession. This was a particularly well-written observation of the current situation:

It is becoming ever clearer that the surplus countries (angels) will suffer just as much - if not more - than the deficit countries (sinners), even if this offends moral justice. This was ultimately the story in the 1930s, though it did not look like that at the outset.

Germany and China have become addicted to exports. This is not as healthy as it looks. They will bear the brunt of belt-tightening by the Anglosphere Club, and East Europe.