http://edition.cnn.com/2008/HEALTH/11/13/alcohol.tax.deaths/?imw=Y&iref=mpstoryemail
Summary
This recent CNN article reported on the reduction of deaths and diseases due to alchohol after excise taxes were implemented. Statistics show that when Alaska raised its alcohol tax in 1983,deaths caused by or related to alcohol dropped by 29 percent, quite a significant amount. In 2002 an 11 percent reduction was the result of another tax increase. It was clear that raising the tax saved lives because it results in some lower consumption of alcohol. The statistics used in the study were gathered by information from death certificates; Dr. Alexander Wagenaar, a professor at the University of Florida's Department of Epidemiology and Health Policy Research along with the co-authors compiled the number of deaths connected to alcohol such as alcohol poisoning and alcoholic liver disease, and diseases linked to alcohol, such as cirrhosis and chronic pancreatitis. Deaths caused by alcohol-related car accidents or violence were excluded in the study. It is also worth noting that researchers in Finland have found similiar results. When the government of Finland lowered the tax on alcohol in 2004 to protect domestic sales, the number of arrests on intoxicated individuals increased by 11 percent. Of course, the American alcohol industry opposes the excise taxes because they claim that they would only prevent the responsible consumers rather than the abusers of alcohol from purchasing products. Another argument that was made was that taxing alcohol would have negative imapct on the economy because of diminshing returns for the government.
Connections to Chapter 3
The component in this chapter was the role of the government in a market economy. In the situation above the government levied an excise tax on the alcohol industry in Alaska in order to curb alcohol use. The excise tax increases the price of alcohol which shifts the supply curve upwards. This also lowers the demand for the product by increasing the incidence tax depending on its elasticity. The question of whether alcohol is an inelastic or elastic good is dependant on whether the consumer is heavy drinker( making it inelastic) or one who enjoys wine or spirits and only drinks occasionally (which would make it elastic). The article seems to contradict the idea in the chapter that the imposition of an excise tax on alcohol (which according to the text is an inelastic product) will generate revenue for the government because of its inelasticity.This however is not the case since the number deaths/diseases due to alcohol has declined and one can infer that this is the result of a decline in demand. Another connection to the chapterthat can be made would be positive third party effects. The less people consuming heavy amounts of alcohol, the less potential there is of an alcohol related death or accident among the population.
Personal Reflection
An excise tax can reduce alcohol consumption as shown in the study, but I believe that prevention programs and education are the best solutions to this constant problem in society. Taxes on alcohol cannot truly diminish the problems since it is considered an inelastic good along with tobacco. A higher tax on alcohol might also be needed to offset the inflation the economy is experiencing. I agree that a excise tax would affect the demand of those who drink responsibly but will not affect the heavy drinkers whom the government should focus on helping. Overall it is good to see that taxes on alcohol have had significant benefits in Alaska. A similiar policy should be replicated for other products that can to be harmful to the population and environment e.g: tobacco,automoblie air conditioners and carbon dioxide producing items.
Thursday, November 20, 2008
Sunday, October 26, 2008
Chapter 2 Blog
Link: http://www.canada.com/vancouversun/news/story.html?id=fbbda0f0-d7a4-46f5-9725-26c667b5edff
Summary
The representatives of OPEC and the Minsiter of Venezuela's economy will be discussing the oil crisis at an emergency meeting Oct 24. It is expected that the supply and demand of oil will be balanced inorder to put a stop to its decreasing value. OPEC's president said that a cut is likely and Qatar's oil minister believes it will be around 1million barrels a day. Oil prices which were at a high of $150 a barrel in July has dropped considerably (less than half that this week) largely in part to a feared global recession. Hugo Chavez, leftist president of Venezuala relies on oil revenue in order to fund the costs spent on the poor of his nation.
Connections to Operation of a Market
A global recession can lower the demand of any commodity because it affects important factors of demand (the income of the consumer and the expectations of future incomes). If a recession is expected, then consumers can also expect incomes to go down therefore there will be less of a demand for oil. Another key component in the chapter that should be mentioned would be the theory of increase in supply if price increases. The inverse of this statement holds true in this situation, as prices decrease then the supplier will respond by lowering the supply in order to offset the demand.
Reflection
The recession is beginning to take its toll on the other markets in the world. This decrease on the demand for oil will have its effects in Venezuala because its revenue is needed to fund the aid to its majority poor. This is also why countries or any state, or province should have more than one commodity to be the backbone of its economy. Take the maritimes of Canada for example. In the maritimes, fishery is the main economic stimulant, but if the demand for these products start to decrease than the economy will become unstable. With regards to the oil situation, I think the decision to reduce the supply of oil will not solve the problem because this is more of a demand oriented problem.
Link: http://www.canada.com/vancouversun/news/story.html?id=fbbda0f0-d7a4-46f5-9725-26c667b5edff
Summary
The representatives of OPEC and the Minsiter of Venezuela's economy will be discussing the oil crisis at an emergency meeting Oct 24. It is expected that the supply and demand of oil will be balanced inorder to put a stop to its decreasing value. OPEC's president said that a cut is likely and Qatar's oil minister believes it will be around 1million barrels a day. Oil prices which were at a high of $150 a barrel in July has dropped considerably (less than half that this week) largely in part to a feared global recession. Hugo Chavez, leftist president of Venezuala relies on oil revenue in order to fund the costs spent on the poor of his nation.
Connections to Operation of a Market
A global recession can lower the demand of any commodity because it affects important factors of demand (the income of the consumer and the expectations of future incomes). If a recession is expected, then consumers can also expect incomes to go down therefore there will be less of a demand for oil. Another key component in the chapter that should be mentioned would be the theory of increase in supply if price increases. The inverse of this statement holds true in this situation, as prices decrease then the supplier will respond by lowering the supply in order to offset the demand.
Reflection
The recession is beginning to take its toll on the other markets in the world. This decrease on the demand for oil will have its effects in Venezuala because its revenue is needed to fund the aid to its majority poor. This is also why countries or any state, or province should have more than one commodity to be the backbone of its economy. Take the maritimes of Canada for example. In the maritimes, fishery is the main economic stimulant, but if the demand for these products start to decrease than the economy will become unstable. With regards to the oil situation, I think the decision to reduce the supply of oil will not solve the problem because this is more of a demand oriented problem.
Saturday, September 20, 2008
Opportunity Costs of the Afghan War
Link:http://www.canada.com/vancouversun/news/story.html?id=18ae45b4-2bbb-4f1f-8f2f-063cb66b3721
This article is about the costs of fighting the war in Afghanistan. The projected ending cost of the Afghan war is $22 billion spent on the mission, payments to replace old equipment and treatment for veterans. This cost, which was calculated by David Perry of Dalhousie University's Centre for Foreign Policy Studies can be broken down: $7billion for the cost of war (e.g: ammunition and fuel), $11billion for long term health care of veterans, $2billion for equipment used for specific missions and the final $2billion for the replacement for the replacement of the military's LAV-3 armoured vehicles. The liberal government provided funding to the Defence Department by covering 85 percent of the war cost and the Conservative government providing 29 percent, the rest paid for with the Department's own money.
Connections to Introductory Concepts
The connection I make with the current situation in Afghanistan and the chapter in our text has to do with opportunity costs. There is obviously a large opportunity cost to this war from the large government funding to the utilization of resources. In any war that is fought, the concept of opportunity costs must be applied to utilize resources effectively. The sum of $22billion does entirely cover everything in the war, so the opportunity costs would only be bigger once every cost involved in the war is covered. The money spent on this mission could of been used for other investments (e.g: more funding for health care, education, and other government services). It is not only the money that has an opportunity cost attached to it. Materials and factories needed to produce war equipment could of been used to manufactor other things. Soldiers serving in this war are also giving a large opportunity cost and that should also be considered when calculating the cost of war. Many things have to be sacrificed when a nation goes to war, and quite often the direct cost is just not worth as much as the opportunity costs.
Reflection
War is never a good thing. I am in favour of ending this war as quick as possible, as more and more Canadian soldiers have been reported wounded or dead. I commend the men and women overseas for proving aid to people in war ravaged countries such as Afghanistan, but taking into account the wounded and the opportunity cost of war, one can question whether or not this war is still worth fighting for. There are other matters back home that the government should focus on, such as the environment and economy.
This article is about the costs of fighting the war in Afghanistan. The projected ending cost of the Afghan war is $22 billion spent on the mission, payments to replace old equipment and treatment for veterans. This cost, which was calculated by David Perry of Dalhousie University's Centre for Foreign Policy Studies can be broken down: $7billion for the cost of war (e.g: ammunition and fuel), $11billion for long term health care of veterans, $2billion for equipment used for specific missions and the final $2billion for the replacement for the replacement of the military's LAV-3 armoured vehicles. The liberal government provided funding to the Defence Department by covering 85 percent of the war cost and the Conservative government providing 29 percent, the rest paid for with the Department's own money.
Connections to Introductory Concepts
The connection I make with the current situation in Afghanistan and the chapter in our text has to do with opportunity costs. There is obviously a large opportunity cost to this war from the large government funding to the utilization of resources. In any war that is fought, the concept of opportunity costs must be applied to utilize resources effectively. The sum of $22billion does entirely cover everything in the war, so the opportunity costs would only be bigger once every cost involved in the war is covered. The money spent on this mission could of been used for other investments (e.g: more funding for health care, education, and other government services). It is not only the money that has an opportunity cost attached to it. Materials and factories needed to produce war equipment could of been used to manufactor other things. Soldiers serving in this war are also giving a large opportunity cost and that should also be considered when calculating the cost of war. Many things have to be sacrificed when a nation goes to war, and quite often the direct cost is just not worth as much as the opportunity costs.
Reflection
War is never a good thing. I am in favour of ending this war as quick as possible, as more and more Canadian soldiers have been reported wounded or dead. I commend the men and women overseas for proving aid to people in war ravaged countries such as Afghanistan, but taking into account the wounded and the opportunity cost of war, one can question whether or not this war is still worth fighting for. There are other matters back home that the government should focus on, such as the environment and economy.
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