Bardonomics

Image: Phil Broad On May 19, EgyptAir Flight 804 crashed into the Mediterranean Sea, killing all 66 on board. The past couple of years have seen a spate of fatal aviation incidents, and questions have been raised about the safety of air travel.   There is no doubting that any great fear about air travel is thoroughly unwarranted. Statistically, aviation is safer today than at any previous time in its history. It is also often noted that flying by plane is the safest form of transportation. The chances of dying in a plane crash are calculated to be around 1 in 11 million; you are orders of magnitude more likely to be involved in a fatal car or traffic accident.  At the same time, calls for greater aviation security and safety measures abound. Governments and corporations around the world have invested large sums of money into tightening security at airports and protecting planes against all manner of threats, from terrorism to mechanical failure to pilot error. ...

Image: kennysarmy Around this time every year, one begins to notice a marked shift in the demeanor of students everywhere. Following a grueling period of studying and exams, we emerge from our rooms, battle-scarred yet relieved. Summer, once hopelessly distant, is now nearly within our grasp.   Some of what we have learnt and, by now, no doubt forgotten, may seem just a bit impractical. It is true that outside very specific career paths, it is supremely unlikely many of us will have to identify the production quantity at which a natural monopoly achieves allocative efficiency. (It’s where price is equal to marginal cost, for anyone wondering!)  Why, then, do we work so hard to learn material we may never use again? There is, of course, a deep satisfaction that comes with learning. Yet apart from that, there is also a fundamental economic concept at play.   Whether consciously or not, all of us taking APs, IBs, DSEs, or another one of the alphabet soup of...

Image: deargdoom57 A version of this article also appeared in the South China Morning Post's Young Post on Thursday, May 12.  http://yp.scmp.com/news/features/article/103436/pros-and-cons-price-controls How much should an ice cream cost? Is there a justified level of profit, and when does profit turn into consumers being cheated? Should governments try to protect people from high prices? Questions on fair pricing have been at the centre of economic policy discussions for a long time. There is evidence to show that government price controls generally lead to economic dysfunction and the breakdown of effective markets. One of the most striking examples today is the crippling shortage of basic necessities in Venezuela. This is a result of the government’s attempt to manage retail prices and protect consumers from inflation. Although most economists have long agreed that government price controls are not effective, there is still the question of how to ensure buyers are...

Image: Tizi A version of this article also appeared in the South China Morning Post's Young Post on Thursday, May 5.  http://yp.scmp.com/news/features/article/103398/india%E2%80%99s-economy-taking-right-steps-goods-and-service-tax India’s current prime minister, Narendra Modi, was elected in 2014 on his economic credentials and the promise that he would bring to the nation the same prosperity he brought, as chief minister, to his home state of Gujarat.  The keystone of Modi’s economic policy is a nationwide goods-and-service tax (GST), intended to streamline the myriad state and central-government levies currently encumbering business in the country.   Under the prevailing tax regime, multiple layers of tax are imposed on the same good, and interstate trade is complicated by varying tax rates between states. Transporting goods across state borders can entail long waiting times to resolve tax matters, and the plethora of obscure charges leaves ample r...