Bardonomics

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...

Image: YP/Reuters A version of this article also appeared in the South China Morning Post's Young Post on Thursday, April 28.  http://yp.scmp.com/news/features/article/103333/hong-kong-wealthy-city-yet-more-million-are-living-poverty Asia’s financial capital has a poverty problem. There is no doubting that. According to Hong Kong government figures, between 15% and 20% of the population lives below the poverty line, defined as half the city’s median annual income of about HKD 180,000. In Hong Kong, sky-high rents and limited space mean that poverty poses particularly acute difficulties. With insufficient public housing, many of the impoverished live in dangerous, and often illegal, subdivided flats. Others still are forced to live in cage homes.  Hong Kong’s social welfare program, the Comprehensive Social Security Assistance (CSSA), is notoriously ungenerous. Payments are as low as HKD 2,000 per month for a single, healthy adult. That’s a mere one-seventh of the ...

Image: AFP/YP A version of this article also appeared in the South China Morning Post's Young Post on Thursday, April 21.  http://yp.scmp.com/news/features/article/103282/how-hugo-chavezs-chavismo-ran-venezuela%E2%80%99s-economy-ground The precipitous fall in global oil prices wreaked havoc on many oil producing countries. The crash put immense fiscal strain on the Gulf states and countries like Russia, which rely heavily on oil exports as a source of foreign currency. Yet, arguably no economy has been hurt quite as badly as Venezuela’s.  Venezuela has the world’s largest proven oil reserves; the commodity comprises 95% of the country’s export revenue and 50% of GDP. But whereas Middle Eastern nations with sizable oil reserves converted the valued resource into riches, Venezuela never saw such prosperity.  Years of economic mismanagement meant that the country’s economy was teetering at the best of times. Inflation ran into the double digits even wh...

Image: AP/YP A version of this article also appeared in the South China Morning Post's Young Post on Thursday, April 14.  http://yp.scmp.com/news/features/article/103221/sorry-break-it-you-bernie-sanders-man-flawed-plan Bernie Sanders, the septuagenarian presidential candidate, has captivated millions of mainly young, middle and working class Americans with his vision for economic equality. It is indisputable that economic inequality in America has risen dramatically over the past few decades. Today, the top 1% of American households control over 40% of the country’s wealth, a doubling of their share since the mid-1970s. Such a gaping disparity between the wealthy and the middle and working classes is not conducive to social stability. It also harms economic growth: the wealthy save much more, as a proportion of their income, than do the poor. Less money is put back into the economy by a millionaire than by a working class individual.   That being said, Sanders’ ...

A version of this article also appeared in the South China Morning Post's Young Post on Thursday, April 7.  https://yp.scmp.com/news/features/article/103157/why-are-university-textbooks-so-expensive If you want to learn economics, start with a textbook. It doesn’t even need to be an economics textbook. You can complete your first economics lesson without so much as opening the front cover, and here’s why. Textbooks are expensive. A quick scroll through the introductory economics books on Amazon shows that most cost between HK$1,938 and HK$2,326. Hong Kong’s Consumer Council has found that, on average, textbook costs amount to more than HK$2,200 annually just for primary school students. At many US universities, students can find themselves coughing up more than US$1,000 a year for required books. While digital books and websites have hit the traditional publishing industry, textbook prices have increased sharply over the years. University textbook costs have risen ...

Image: winteamb In Hong Kong, horse racing is nothing less than an institution. Every year, the Hong Kong Jockey Club conducts over 700 races, bringing in upwards of HKD 100 billion in betting turnovers. This makes the betting market ripe for some economic analysis. In this post, I will be investigating whether the market upholds the conditions for efficiency and rational behaviour. Economics, of course, assumes that human behaviour is consistent and rational.  This blog has scrutinised this assumption previously, but this analysis will be done with specific reference to data from horse racing in California and in Hong Kong. The findings that inspired this blog post come from California (refer to "Further reading" below).  To determine whether the betting market in Hong Kong displayed similar results, I analysed over 50,000 non-unique horses in more than 4,000 races spanning a six-year period from 2010 to 2015. (A detailed report on that analysis is in progress.) ...