The global positioning system (GPS) was originally developed for military purposes but has been made available to private companies since 2000. Allowing private companies to build new products and services using this technology has resulted in a massive increase in technological advancement in the US that provides significantly more economic benefit than the cost of operating the GPS system. Estimates place the value of GPS at $1.4 trillion from 1980 to 2019, but the federal government spends relatively little to operate the system.
The G Word with Adam Conover – Run for Your Money
In the early 1900s, the banking system wasn’t as stable as we might have hoped. Banks loan out money to borrowers, but are susceptible to a panic when a lot of customers want their money held in savings. A bank run occurs when a large number of a bank’s depositors attempt to withdraw their money simultaneously because they believe the bank will become insolvent. This happened frequently enough during the Great Depression that it put pressure on the President to create an insurance program.
The G Word with Adam Conover – Externalities & Regulation
Whenever an action creates a negative externality, the private individual allocates too many resources toward the production of that item. This happens because the producer is focused on their own profit maximization problem and is not accounting for any external costs associated with production. When it comes to meat packing or factory farming, producers don’t take into account the external costs of pollution or the potential risk of bacterial infection. Regulating such industries can mandate that firms take into account the social costs of production rather than the private cost of production.
The G Word with Adam Conover – The Value of A Label
In the late 1800s and early 1900s, there was no real oversight on meat packing and procession. When Upton Sinclair wrote The Jungle, it brought national attention to the unsanitary conditions at meat packing facilities. Today, the labels are intended to serve as a signal that meat has been processed correctly. It’s an attempt to correct for information asymmetry in which the food processor knows how the food was handled, but the final consumer is unaware.
Learn more: https://www.ers.usda.gov/webdocs/publications/41203/18885_aer793.pdf?v=0
Mumbai Police — A Solution for Noise Pollution
Mumbai drivers are apparently notorious for honking, even when the light is red and people can’t move. The Mumbai police decided to incentivize drivers in order to reduce some of the noise pollution in the city. The police installed noise meters and if the decibel level reaches a certain threshold, the timer on the lights resets. A message flashes to let drivers know that the more they honk, the longer they wait!
Another fun policy intervention occurred in Europe to help drivers slow down.
Big Bang Theory — An (Un)Permitted Deck
Howard and Bernadette are bothered by their neighbor’s (Andy) new flood lights, which appears to look out over their backyard and right into the hot tub they have built. Andy doesn’t see the problem because his flood lights are in his backyard and provide him some sense of security, but they are a nuisance to Howard and Bernadette.
Instead of talking to their neighbors directly, like the Coase Theory would suggest, they head to the city zoning office to try and report the issue in the hopes that he has violated some city zoning ordinance. When they realize that will take too much time, they try to get Sheldon’s help, but Sheldon is cautious because Bernadette and Howard didn’t get permission to build their backyard deck, nor renovate their shower.
In Howard and Bernadette’s mind, government regulation should only be used for externalities. Their deck and bathroom aren’t affecting third parties so they don’t see the need to have them approved.
John Stossel — Blue Laws
Blue Laws in the United States date back to Puritanical times when local governments wanted to ensure that people were in church on Sunday and observing the sabbath. Today, Blue Laws are a form of prohibition that limits the amount of time that businesses can sell profits. While most states have removed their blue laws, some still remain, like the inability to sell cars on Sundays or more extreme limitations like those in Bergen, NJ. This Stossel clips argues that the prohibition is a restriction of freedom for businesses that want to sell products.
John Stossel — The Fight Against Food Trucks
John Stossel, through ReasonTV, looks at the regulations behind the food truck industry. From a competitive market standpoint, food trucks have the ability to respond to high demand areas by relocating at any given moment. For brick-and-mortar businesses, however, food trucks enter the market as a low-cost competitor and steal customers from permanent restaurants. Many cities in the United States have setup regulation limiting the location of food trucks or the hours they may operate. This rent seeking behavior, however, limits the amount of options available to consumers in the name of “fairness.”
The Simpsons — Prohibition
Springfield residents are clamoring to re-enact prohibition in town, but the City Council feels like the positive externalities outweigh the costs associated with alcohol. The County Clerk finds an old law for Springfield ordinance that actually outlaws alcohol. The new Duff Zero (alcohol-free beer) isn’t as popular as the original and the Duff factory has to shut down.
Ron White — The Death Penalty
Ron White describes how his state is different than California and one of those ways is through the use of the death penalty. In other states, they may be trying to cut back on the use of the death penalty for heinous crimes, but Texas appears to be trying to put in an express lane. The death penalty, while controversial, is often used by states as a credible threat and a deterrence mechanism in order to reduce future crime.