The Effect of Online Sales Bans on E‑Cigarette Use

From Jeffrey Miron.

"Despite reports that they are less harmful than regular cigarettes, legislators have targeted e-cigarettes and vapes via crackdowns and online sales bans, citing a desire to protect young people.

A new study examines the effect of online sales bans on use of electronic nicotine delivery systems (ENDS). The study

used data from five national surveys conducted between 2013 and 2023 and leveraged the staggered adoption of the bans across states … [to] reveal no evidence that prohibiting online sales reduced youth e‑cigarette use. … Furthermore, these bans had a minimal effect on the frequency of use among continuing users.

The legislation was ineffective because

young people rarely used the internet to obtain ENDS products before the bans. … Although the bans significantly reduced online purchases of ENDS products, the overall reduction in youth use was less than 1 percentage point.

Indeed,

online purchases fell by 40–50 percent on average, suggesting that young people continued to obtain ENDS products online through illegal shipments … [and] shifted from online to in-person purchases and obtained more ENDS products from family and friends.

The bans also did not stop adults from using ENDS; the study shows

no evidence that online sales bans reduced e‑cigarette or cigarette use among adults, even though adults use these products at higher rates than young people."

Colorado’s Funeral (licensing) Mistake

By Alex Tabarrok.

"Today about a quarter of the US workforce are required to have a license to work in their chosen profession, up from just 5 percent in 1950. Almost always the trend has been to add occupational licensing over time, but in 1983 Colorado did something unusual: it delicensed funeral service workers such as funeral directors. Brandon Pizzola and I analyzed what happened in our 2017 paper, Occupational licensing causes a wage premium: Evidence from a natural experiment in Colorado’s funeral services industry.

What we found was that delicensing reduced wages, reduced prices, and caused a shift towards cremation rather than the more expensive mortuary services preferred by funeral directors. Here’s a key figure.

 

But that is not the end of the story. In 2023 a series of gruesome abuses came to light involving the sale of body parts, rotting bodies, and worse. Newspapers repeatedly noted that Colorado was the only state not to license funeral service workers. As a result, Colorado is relicensing funeral service workers as of 2027.

The problem is that there is no evidence that abuses were worse in Colorado. It’s easy to find similar abuses—including sexual abuse of corpses—in states with heavy licensing. Pizzola and I didn’t examine the rate of necrophilia among funeral workers in our paper (silly us), but we did cite the following:

A recent US government review of occupational licensing concluded that “the empirical research does not find large improvements in quality or health and safety from more stringent licensing” (CEA, 2015). Similarly, Colorado revisited their decision in a 1990 sunrise review that considered reinstating occupational licensing. The Colorado Department of Regulatory Agencies found that since the 1983 occupational delicensing: (1) “there had been incidents of malpractice within the profession but no widespread pattern of abuse,” (2) “[a]llegations of significant threats to the public health, safety and welfare perpetrated by the death care industry in Colorado regarding the improper disposal of human or infectious wastes had not been supported by verifiable evidence,” and (3) “claims that the public in Colorado had suffered or might suffer significant detriment due to a lack of trained mortuary science practitioners caused by the abolition of the Board were unsupported” (Colorado Department of Regulatory Agencies, 2007).

Moreover, the licensing requirements—mandating various hours of training and so forth—have very little to do with the types of abuses that generated public support for relicensing. How many hours of “don’t have sex with corpses” training is required? And the funeral director in the worst Colorado case was in fact sentenced to 40 years in jail. Isn’t that incentive enough?

People want what cannot be guaranteed: good behavior in all circumstances. And they will reach for a licensing regime if it promises that, even when such promises are empty."

Should we worry about the influence that wealthy individuals have on politics?

See Matt Zwolinski Makes Emmanuel Saez’s Error by David Henderson.

Mr. Henderson pointed out that many of Zwolinksi's examples were of corporate influence, not individual influence. And there is plenty of influence from unions like the NEA.

Excerpt:

"There were so many things to pursue here. I’ll take two. First, I live in a highly NIMBY area and I don’t notice that particularly wealthy people dominate the discussion in favor of hampering housing construction. If anything, the wealthiest people in the debate tend to be developers who want to build.

Second, Matt is quite comfortable taking away wealthy people’s money with the estate tax, which really is a death tax. What would he feel comfortable taking away from teachers and their unions so that they would be less effective in pushing in an anti-liberty direction? Their freedom of speech? I doubt it, but I don’t know his answer.

But making those points takes us away from my main point, which is that most of the lobbying is done by corporations, not wealthy individuals. There is little doubt that Disney, to take his example, would have lobbied heavily for the extreme extension of copyright even if no Disney shareholder had been particularly wealthy.

While researching my next article for Hoover, I came across something I wrote in which I had linked to a discussion in which Larry Summers asked the same question of Emmanuel Saez. Saez had failed to make the simple distinction between high-market-value corporations and wealthy people. Go to this link and follow Larry’s reasoning from the 1:06:00 point on. It’s masterful. Larry calls on Saez to give one example of a wealthy person having much less political power because the government has reduced his wealth from a very high number to a lower, but still very high, number. When Saez answers, he gives an example of a corporation, just as Zwolinski responded to me.

There is one way in which Zwolinski probably has more understanding of the relevant economics than Saez does. At the 1:10:10 point, Saez mentions robber barons as if it’s a slam dunk, showing that he doesn’t understand that the major characters listed as robbers and barons were neither. (Other than that, it’s a great expression.) My guess is that Zwolinski understands the true facts about robber barons better than Saez does."

Wealth tax equilibrium accounting

By John H. Cochrane.

"The recent Piketty-Saez-Stiglitz revival of wealth taxes, ostensibly to improve the lot of the poor, makes many mistakes. I’ll focus on one: the difference between wealth and consumption. The poor wish consumption. Turning capital into consumption must destroy the capital that produces consumption. Taxing wealth in the name of inequality will make the world, including the poor, much poorer.

Why should billionaires live high on the hog while so many still live such wretched lives? “Tax the rich, feed the poor / Til there are no rich, no more” sang the rock band 10 Years After in 1971. It’s a centuries-old answer looking for new questions. (They made a lot of money on that song! The song is more like Lennon’s “Revolution,” expressing some skepticism. I remembered the lyrics as “till there are no poor no more,” but the actual lyrics are more accurate descriptions, both of the intention and the likely effect.)

However, the vision of high lifestyle amid destitution imagines great inequality of consumption. The current outrage, and demand for confiscatory taxation, is over inequality of wealth. (And that, largely mark-to-market wealth driven by high prices.) There is a big difference.

The hard fact: Our billionaires, and now trillionaire, own wealth that is almost exclusively stock in companies they created. That wealth is almost entirely left reinvested in those companies. And the companies produce great products, innovate, and employ thousands. Just what is the problem, you might ask, but that’s not our point today.

For example, suppose Elon Musk consumes $10 million a year. It’s hard for any human to consume that much. Still, that’s 1/1000 of 1% of a trillion. At 10% per year, Musk earns that much in less than an hour.

The wealthy do not swim in Scrooge McDuck pools of money that can be handed out. And even if they did, that money, redistributed, would swiftly drive up prices rather than feed everyone. Musk’s trillion is not the ready inventory of a huge grocery store that can be handed out to feed people. And if it were, once the store was empty, the poor would be hungrier again, and there would be no store to buy from.

What would the government do if it took over Musk’s SpaceX stock? At best, the government would use SpaceX earnings to buy and hand out, say, food, rather than invest in the company. Others must then produce food and not rocket ship parts. That means reorienting the productive capacity of the economy away from investment and to consumption. It means less capital going forward. Certainly no rocket ships or AI, and all the benefits those stand to bring.

But most of SpaceX value is not a stream of profits like a railroad’s. Most of its market value is investor’s hope that in the future SpaceX will dream up new and profitable ventures. That value would go poof the minute the government took it and stopped investing. It may go poof anyway.

Perhaps you think the government, by taxing Musk and demanding cash, can force Musk to sell his stock to others who won’t implode SpaceX’s value. But where do others get money to buy SpaceX stock? In the end, it must come from other company’s earnings that won’t be invested in other companies. Again, the economy reorients from investment to consumption. Tax the rich feed the poor, till there are no businesses no more.

Perhaps you think the government can manage SpaceX “for people, not for profits.” It used to. And NASA, though one of the best government agencies, was never able to do what SpaceX can do. Socialism never did turn much of a profit for consumers.

The world’s rich consume very little of their wealth. The worlds’ poor consume a lot of whatever they have. Being poor is not fun. If we split up Musk’s $1 trillion and gave about $100 in Tesla stock to each of the world’s nearly 10 billion people, it’s a good bet they would not be content to consume only 1/10 of a cent extra per year.

There are plenty of other reasons that wealth taxation will not help. Even the billionaires’ wealth, even if it could be transferred and consumed without destroying the seed corn of our economy, is trivial. 

 

This is simply false, and innumerate. 15% of a Trillion is $150 billion. The US alone spends $1.8 Trillion on anti-poverty programs each year, to little effect. (Wolfgang Richter is probably a parody account but alot of people have been saying things like this-CM)

The biggest reason it will not work is the simple one: incentives. If you tax wealth, you tax the activities that create wealth.

Taxing billionaires is not enough. Piketty, Saez, and Stiglitz now want the rest of us to “degrowth” in order to transfer resources to the poor. That doesn’t add up either. Degrowth means producing less too. What are the poor to eat? Penury and depopulation used to be embarrassments of the socialist left. I guess they now features.

I too would love to raise the prosperity of the world’s poor. The goal is not the issue. The issue is whether the wealth tax will help or hurt.

What helps? This graph from Max Roser at Ourworldindata makes the point beautifully: 

 

The x axis is GDP per capita, not time. The y axis is the share living in extreme poverty. In fact, our lifetime has seen the greatest decline in global inequality and global poverty ever seen. What helps the poor? Growth. Capitalism and growth. Degrowth and wealth taxation will push us right back up that slope."

There was a huge collapse in wealth inequality in the UK between 1900 and 1980 (another refutation of Piketty)

By Sylvain Catherine.

"The UK graph is one of the most interesting because the historical graph with the correct denominator — % of total wealth rather than % of GDP — from the World Inequality Database, Piketty’s lab, looks so different.

There is a clear upward trend since the 1980s, but:
1⃣ The levels are far less impressive, since the top 0.001% owns roughly 2% of the nation’s wealth.
2⃣ In retrospect, levels remain much lower than the average for the 20th century.

This, of course, does not take into account that the UK has since developed a large welfare state. In particular, these graphs leave out the value of accrued pension claims from the UK state pension, something that most workers in the early 20th century could not count on.

If, instead of looking specifically at the top 0.001%, we look at the top 1%, which is more relevant for 99% of people, there was a huge collapse in wealth inequality in the UK between 1900 and 1980, and basically no change since then. And that is before taking state pensions into account. The same thing is true when you look at the top 10%.

Again, these are not my numbers, but those reported by Piketty and Zucman’s lab. The only difference is that I compute the shares correctly: the wealth of the top 1% as a share of total wealth of the UK rather than its GDP.

Every group’s wealth has increased as a percentage of GDP since 1980 because asset prices have increased: house prices notably. Using GDP as the denominator does all the heavy lifting here and is a fallacy."

 

 

The Myth of Dynastic Wealth: The Rich Get Poorer

By Robert Arnott, William Bernstein,and Lillian Wu. 

"Thomas Piketty’s Capital in the Twenty-First Century rocketed to the top of the best-seller lists the moment it was published in 2013, and remained there for months. While this feat is quite remarkable for a weighty tome on economics, it’s no mystery why Piketty’s magnum opus created such a sensation; it is clearly articulated, is accessible to the non-economist, and contains a trove of historical insights. 

We believe Piketty’s core message is provably flawed on several levels, as a result of fundamental and avoidable errors in his basic assumptions. He begins with the sensible presumption that the return on invested capital, r, exceeds macroeconomic growth, g, as must be true in any healthy economy. But from this near-tautology, he moves on to presume that wealthy families will grow ever richer over future gener- ations, leading to a society dominated by unearned, hereditary wealth. Alas, this logic holds true only if the wealthy never dissipate their wealth through spending, charitable giving, taxation, ill-advised invest- ments, and splitting bequests among multiple heirs. As individuals, l as families, the rich generally do not get richer: after a fortune is first built, the rich often get relentlessly and inexorably poorer."

Even Californians Are Saying No to New Taxes

Across the state, county and city ballot measures raising levies are trailing or have been defeated

By Allysia Finley.  Excerpts:

"the city (LA) routinely deploys firefighting crews to respond to 911 medical calls that could be handled by emergency medical technicians at much lower cost."

"In Contra Costa County . . . employee salaries and benefits have risen 47% since 2020."

"Even San Francisco liberals rejected a union-backed gross-receipts tax hike on large companies with more than $1 billion in sales in the city."

"Unions dressed up their measure as an “Overpaid CEO tax” because it would hit companies whose highest-paid executive makes more than 100 times its median employee’s pay. This political sales job worked in 2020, when two-thirds of San Francisco voters approved a similar tax. But voters weren’t about to get swindled again."

"Following the 2020 tax hike, businesses reduced their workforces in the city to minimize their tax liability. Business groups championed a 2024 ballot measure to slash the tax, which passed."