If you buy a $199 iPhone in California, you might notice that the tax is $56.91, which implies a 28.6% sales tax rate. California sales tax should be between 7% and 9% (depending on the city), so what gives?
Cell phone carriers typically subsidize the retail cost of a phone in exchange for locking you into a one or two year contract. AT&T pays Apple a few hundred dollars for every iPhone sold. State law requires sales tax be paid on the non-contract, retail price of the phone, which means your $56.91 in tax is actually against an estimated $700 cost of the phone.
Somewhat related: cell phone service fee taxes are linked to the area code of the phone, regardless of where you currently live. This means you’re paying taxes to whatever city you lived in when you bought the phone.
“By 1935, when America set up its Social Security system, the official pension age was 65—three years beyond the lifespan of the typical American. State-sponsored retirement was designed to be a brief sunset to life, for a few hardy souls.”
“Neuroeconomics combines neuroscience, economics, and psychology to study how people make decisions. It looks at the role of the brain when we evaluate decisions, categorize risks and rewards, and interact with each other.”
From Wikipedia. This is right up my alley.
“[Neuroeconomics] measures brain activity while experimental subjects make decisions. Because the brains of all animals are “economic,” that is, they have limited resources to achieve necessary goals, neuroeconomics experiments are not limited to studies of human beings, but have also employed apes, monkeys, and rodents.”
“Government is just another industry, where countries offer services to citizens, but it has some unfortunate features. It is a geographically segmented monopoly, and since all land is taken, the industry has an enormous barrier to entry. To start a new government you have to beat an old one, which means winning a war, an election, or a revolution. And it has very high customer lock-in: there are barriers to emigration and immigration, and switching countries involves both high financial and emotional costs. These characteristics result in a horribly uncompetitive industry, so it is no surprise that existing firms tend to exploit customers instead of innovating to attract them.”
From Beyond Folk Activism by Patri Friedman
A bank is any institution that borrows short and lends long. (via Paul Krugman)
Banks provide an aggregation service: investing small bits of money that are in transit between accounts (paycheck deposited Monday, billpay goes out Friday) in long-term securities, producing
interest that pays the cost of managing that money.
I’m inclined to repost nearly everything that Megan McArdel writes, because she’s constantly writing excellent things. For example:
“In some sense, all of history’s progress from lives that were nasty, brutish and short to today’s splendiferous buffet of iPhones, nine-month courses of physical therapy, and year-round fresh broccoli can be summed up in three words: gains from trade. We live better than a tribe of chimpanzees roaming through the primordial forest because we specialize and then exchange the fruits of our skills with each other. Trade, as the ecoomists say, increases the size of the economic pie to be divided between us.”
ESR argues that while wealth differences (”the gap between the rich and the poor”, to trot out a tired phrase) are substantial in America, consumption differences are much closer:
“WalMart may seem rather tacky and depressing to an upper-middle-class Ivy League urbanite like Barack Obama or myself, but after they’re out of the store neither of us would have an easy time telling WalMart clothes from the stuff we might buy at Nordstrom’s. And so on. American society looks, dresses and eats in its egalitarian way because, across the 80% represented by the three middle quintiles and a half each of the top and bottom ones, consumption differences are the next thing to nonexistent.”
(This quote is from a followup post.)
The gig economy (via): big firms are becoming less competative and in its place, decentralized markets of actors forming small teams for the purpose of one-off projects. The Hollywood model, writ large.
Eliezer Yudkowsky provides a bullet-point list of what capitalism means as a value system. Some of my favorites:
- No company has a right to its continued existence. Change happens.
- In all ways, at all times, and with every deed, make the pie larger rather than smaller.
- A high standard of living is the just reward of hard work and intelligence. If other people or other places have lower standards of living, then the problem is the lower standard, not the higher one. Raise others up, don’t lower yourself.
- Create value so that you can capture it, but don’t feel obligated to capture all the value you create.
- The fundamental morality of capitalism lies in the voluntary nature of its trades, consented to by all parties, and therefore providing a gain to all.
World of Warcraft two-factor authentication fob. For $6.50, you can make your WoW account more secure than your bank account. Another demonstration of how true free market industries (e.g., video games) put heavily-regulated industries (e.g., banking) to shame every time.