Tuesday, January 27, 2009

Thoughts on the Stimulus

There's been a lot of debate about possible stimulus packages, both in Congress and amonge economists. I'm going to try to summarize the basic arguments for and against. I've read enough of this that I now confuse who said what, and where, and when, so I'm not going to link or even cite sources for all this (although I will cite when something sticks out in memory). I realize this is sloppy, and I apologize in advance. 

Why have a fiscal stimulus at all? Why not let the Federal Reserve conduct monetary policy? Gary Becker wondered how we all became Keynesians, relying on fiscal policy instead of monetary policy. Brad Delong's answer is that the Federal Reserve has already used up all its tools, and is now close to powerless. It can't push interest rates lower, and it has already dramatically expanded its regulatory powers. It has, at most, slowed the rate at which we slide into recession, rather than reversing it. 

This only partially answers Gary Becker's question, I think. That is, it makes sense to resort to fiscal policy if fiscal policy works. Why do we all think it will work?

Fiscal policy could work if government spending employs resources that would otherwise be idle. A multiplier effect could cause wisely-spent government funds to have a large impact, restoring potential GDP, shortening the recession. It is worth pointing out where these unemployed resources are: finance and construction (those are the biggest and most attention-grabbing areas, anyway--we're certainly shedding jobs in automobiles and other manufacturing, too). 

A critic (like Kevin Murphy) of a spending stimulus package would therefore suggest that the proposed areas to be stimulated are not the proper areas. That is, building and repairing roads and bridges will not employ out-of-work financiers (although it might employ out-of-work homebuilders). They will not put down their briefcases and pick up shovels. Arnold Kling would, I think, argue that the finance industry got too big, anyway, and that even a stimulus package that targeted finance workers would be a bad idea. We want that industry to shrink, shifting jobs elsewhere. That may not happen in the short run, stimulus or not. We might just have to wait for that adjustment to take place.

A related critique is that much of the proposed spending is either pork or irrelevant to fiscal stimulus. For example, expansion of environmental spending is probably going to transfer jobs from one area to another, rather than employ previously unemployed resources. James Hamilton says that he takes the large lobbying effort by special interest trying to get pieces of the stimulus package to be evidence that it is less about stimulus and more about rent-seeking. I think there needs to be more discussion of these Public Choice issues in this debate than there has been. 

A critic might also point out that the multiplier concept is a bit fuzzy. The multiplier is surely not constant, or we could just spend our way to prosperity and forget about economic growth. But if the multiplier declines as spending grows, then how fast does it decline? If it declines quickly, then the stimulus effect will be small. On the other hand, if the multiplier declines slowly, a stimulus package could have a large effect. 

Any borrowing to pay for stimulus will have to be paid back at some point, which will require taxes, which have deadweight losses (that is, they discourage production and consumption of the goods that are taxed). This is a general argument against taxes, and therefore against government spending. It might be worth it to suffer eventual deadweight losses if the short-run stimulus effect is large.

Speaking of borrowing, there is also the Ricardian Equivalence problem. If people know that big government borrowing means big future taxes, then they will reduce their expenditures even more now, in order to save money to pay for those future taxes. This will at least partially counteract the stimulus package. It seems to be the case that the tax cuts given last year had little effect, as they were mostly saved (perhaps for the reason explained above), resulting in little stimulus effect. Nonetheless some still argue that tax cuts would have a larger stimulus effect than spending cuts.  

Then there is the problem of crowding out. Increased government borrowing may increase interest rates, which causes a decrease in private investment. A business owner might have been considering building a new factory, but increased government borrowing might have increased the demand for loanable funds (or, in Mankiw's preferred form, decreased the supply of loanable funds) , which drives up interest rates, making the business owner less willing to take out that loan to build that new factory. Interest rates are so low right now, though, that I have a hard time believing that a modest increase in interest rates would affect investment.

It is probably the case that, if we waited long enough--perhaps a year or two--the economy would self-correct. It is worth pointing out that the unemployment rate is not really into frightening territory yet--7.2% is not that bad, by historical standards. On the other hand, it is thought that it will go up, possibly as high as 10%, which is pretty bad. There is also an argument that this measured unemployment rate is too low, and that a more useful unemployment rate (which counts workers who have given up looking for jobs, for example) is closer to 13%. One would need to show that this number has been rising more quickly than the ordinary unemployment rate in order for this to be relevant, I think. I'm not sure if that's the case, and I'm currently too lazy and busy to look it up. Keynes thought that this focus on the long run--the idea that the economy would eventually self-correct--was erroneous, since we live in the present, and that if we could smooth the business cycle, we should do so. 

So can we? I don't know. I am skeptical. To sum up, there are two basic kinds of objections: theoretical (even if we implement the best possible stimulus package, it won't do much) and practical (we are not likely to get anything close to the best possible stimulus package). For these reasons I think it might be best to simply avoid repeating the mistakes that caused the Great Depression to be more than just an ordinary recession (and I think we've already accomplished that), and let the macroeconomy do the rest. Still, this is in part a debate about magnitudes of effects. How big is the multiplier, and how fast does it decline? How much do people anticipate future taxes when they see current government borrowing? Will government spending target unemployed resources, or will rent seeking cause it to simply shift already-emplyed resources around? How fast will the economy correct itself if left alone? 

But I am not a macroeconomist, I dislike macroeconomics, and I do not really understand it, so it would probably be better for you go to read Brad Delong or Arnold Kling or Greg Mankiw or Larry Summers or Martin Feldstein anyone else.

Tuesday, January 13, 2009

A Strange Contract

At lunch today I had a great conversation with Art Carden and Patrick Gray. Patrick brought up a fascinating example of a strange contract. Warning: This gets pretty weird and uncomfortable, especially toward the end. My former Law and Economics students should enjoy this.

Apparently a woman from San Diego has decided to auction off her virginity. She has many takers, and the bid has gotten quite high. There are so many interesting questions raised by this that I don't know where to start.

First, why an auction? Why not a list price? One reason that auctions are used is that many markets are thin, rather than thick. That is, there are so few things for sale that there is no established market price. Auctions allow a seller to discover the best price to charge. Except for illegal prostitution markets, there is no established market price of virginity. 

Second, is this legal? The auction is being conducted by a brothel near Carson City, Nevada, where prostitution is legal. If someone within the state is the highest bidder, the transaction could be legal. On the other hand, the auction will be handled through the ranch's website (she tried running the auction on eBay, but eBay removed it). This means that someone from out of state could participate, which brings the Interstate Commerce Clause into play. In this situation I would guess the auction would not be legal. The arrangement could be considered criminal.

Third, should it be legal? An economist's default answer to this question is something like "if both sides enter the exchange fully informed and consenting, then both sides must benefit, and the transaction should be allowed to occur". If there were some third party harmed by the transaction (as in the case of, say, me selling you some gasoline, which you use to produce pollution), an economist might want some form of intervention, but there does not seem to be any such party in this case.

Fourth, leaving aside statutory law, would this be an enforceable contract? Suppose that this woman decides not to go through with it. The court could declare the contract "unconscionable", which means that they find it morally unacceptable or unfair, although I would also guess they would require her to return the money. To do otherwise would basically be court-mandated rape. In any case, even in contracts that are valid, courts rarely require specific performance. That is, if I pay you to paint my house, and you get halfway finished but quit, the court will usually require you to pay me some of my money back, rather than forcing you to finish painting my house. There are two reasons for this. First, you and I probably don't want to deal with each other any more after the unpleasantness of a court case. Second, you are likely to do a sloppy job. 

The more interesting question is what would happen if the seller and auction winner had sex, and the auction winner then refused to pay (assuming that pay was not demanded up front). If the court declared the contract unconscionable, the auction winner would not have to pay anything (which seems to be rewarding pretty awful behavior), yet if the court declares the contract valid and enforceable, they are in essence sanctioning future prostitution contracts. I have no idea what they would do.

Fifth, Patrick Gray had a brilliant suggestion. Some pro-abstinence group could bid, win, and then simply hold the option unused. That is, they would in essence own the woman's right to have sex. Granted, this might be difficult for a non-profit, given that the bid is now in the millions of dollars, but it's still an interesting situation. Suppose she breaches the contract, losing her virginity. What damages would the court assign? She would probably have to return the money, plus interest. Ideally the court would assign some form of expectation damages, so that the non-profit would be paid an amount that makes them indifferent between performance and breach, but it is probably impossible to determine what that number would be. That is, what is the value to the non-profit of the woman's virginity staying preserved? It is probably higher than the amount they paid (the difference between their willingness-to-pay and what they actually pay being their "consumer surplus"). 

Sixth, if one group does this, what would be the long-run result? Many women might choose to sell their right to have sex to such groups, establishing a market price--a price which would surely be lower than that paid to this first entrepreneurial woman. Would these organizations be willing to put their money where their mouths are, and pay many women not to have sex (presumably until marriage)? Such a program would probably not work for men, due to the cost of verifying that a man has not had sexual intercourse. 

Suppose that organizations offer a standard price for such contracts, say, $20,000. Some women are considered more attractive than others; they may find that there are men who are willing to pay them more than $20,000 for their virginity. Some might sell to such men, while others refuse and stick with the pro-abstinence organizations. Women who cannot sell their contract to men at this price (due, unfortunately, to unattractiveness) would sell their right to organizations. As a result, pro-abstinence organizations might find themselves overwhelmingly holding the contracts of unattractive women, who might be the least likely to lose their virginity in the first place.

On the other hand, this might not be true at all. I seem to recall from reading The Red Queen that people tend to sort themselves by attractiveness, choosing mates of similar levels of attractiveness. So less attractive women might be no less able to find a mate (a less attractive mate, though) than attractive women. 

Saturday, January 10, 2009

Watchmen, Fox, WB, and Adverse Possession

There is a process in the common law known as adverse possession, under which a person may come to own another's plot of land by simply using it for a long period of time. The requisite period is determined by local common law or statutory law, and so it varies by jurisdiction (it's usually something like fifteen to thirty years). Surprisingly, economists tend to think that this legal rule is efficient. This is suprising because economists are normally big fans of secure private property rights (for example, economists are generally skeptical of the Kelo vs. New London decision). 

The efficiency justification for adverse possession is that land should be put to its highest-valued use. If an owner is neglecting land, and someone else can use it in a productive way, then the land should eventually be allowed to transfer to the productive user, whether the original owner likes it or not. The long time interval is desireable because it gives the original land owner plenty of time to wisen up and use the land in a productive fashion. He or she can, at any point, kick off the trespasser and make use of the land. If the land owner does not, however, and the trespasser makes use of the land, then courts give the land to the interloper. 

This brings me to a recent dispute over distribution rights between Fox and Warner Brothers over the movie version of the Watchmen graphic novel. Fox argues, apparently correctly, that it still owns some of the distribution rights for a Watchmen movie, as a result of its 1986 purchase of all the movie rights, and a 1994 agreement with the current producer. During this entire time Fox did nothing with these rights; they have been squandered. Eventually Warner Brothers decided to make what looks to be a pretty faithful adaptation of the graphic novel, to much nerd acclaim. Last February, as production finished up, Fox filed a suit to delay the release and eventually receive some of the profits. 

This has understandably angered many people. Fox could have tried to make a movie at some point, but did not, and now they are trying to free-ride off of the work of WB. On the other hand, they are within their rights, if these contracts are real. 

Watchmen started movie development several years ago, and was picked up by Warner Brothers in 2005. Fox could have put in its claim for distribution rights at any point during these years of negotiations. It could have said something during the past three years of active movie production. Instead, Fox waited until the very last minute--until most of the film was completed--to make its claim. This strikes me as opportunistic, to say the least. 

Here's where the adverse possession argument comes in.  Perhaps distribution rights should be treated the same way as property rights in land. I think a court would be entirely justified in saying that Fox let its rights lie unexercised for too long; Warner Brothers has gained them by adverse possession. Granted, thirty years haven't gone by, but the entertainment world moves much more quickly than the land development world, so a shorter time period is probably reasonable. Finally, this is exactly the situation that adverse possession is intended to address: The original rights-holder is not making productive use of his rights, so they should move on to someone who will. A last-minute grab at those rights by the original holder should be denied on the grounds that the original holder has allowed them to go unused for too long. If Fox wanted to maintain its rights, it should have acted in a timely manner. 

The common law is very slow to change (with good reason) and I doubt that this argument would persuade a judge. Nonetheless, I think it makes some sense. 

UPDATE: Matt Freeman informs me that this is called a laches defense; the argument would be that Fox "slept on its rights". It's not clear if Fox actually did this, however. In this article Fox is quoted as claiming that they did in fact notify the producers before production began. Maybe one could still make the argument that they should have begun legal proceedings earlier, but maybe Fox is in the right after all. 

Friday, January 09, 2009

More on Game Console Economics

I had several interesting comments regarding possible explanations for game console manufacturers to repeatedly underprice their products.

Jeffrey correctly pointed out that some of the commenters may be missing the point of the puzzle. Bean is correct that charging a lower console price will cause more people to want to buy the console. If the company can sell all the units it wants, this low console price may be made up for by sales of peripherals, accessories, and games, which may be more profitable. This is basically a form of price discrimination. As benh57 said, the printer/ink model is another example of this--sell the printer for next to nothing, then charge a lot for the ink. This means that customers with the highest willingness-to-pay (those who will use the printer or game console a lot) end up paying more than those with a low willingness-to-pay.

But as Jeff said, this only makes sense if console makers can sell all the consoles they want at this low price. If there is a limit to how many consoles they can sell, and they still charge a low price--a price so low that there is excess demand--this is a puzzle. To put it another way, suppose Nintendo could sell just as many Wiis, and therefore just as many accessories, peripherals, and games, if they were to raise the price by $25. Why wouldn't they just raise the price? Even if they're trying to price discriminate, they're not following the optimal price discrimination scheme. Kudos to Jeff for seeing the deeper question.

Suppose Nintendo had initially sold the Wii for $400, and then lowered the price to $250 after making all possible sales at that price. Jeff proposes that bad will from quickly lowering the price could be important--buyers could be angered, and this might affect future sales. I doubt this, though. People were initially angry about the iPhone's rapid drop in price, but they got over it quickly. He has a point regarding an upgraded product, of course (he mentions buyers waiting for a new DS to come out, rather than buying the current one), but we're not exactly talking about that. We're just talking about a lower price for the existing product.

Pup mentions that SKUs never go up in price; that's probably true, although there are ways around that, and it still begs the question of why all the console makers seem to get the price too low in the first place. The prices of electronics probably have a hard time rising because of contracts with distributors and retailers. One way to get around this problem is to simply release a new SKU (Say, a new Wii in black with stronger wrist straps) and charge significantly more for it. It's true, this might make them look greedy, but for a couple hundred million dollars, couldn't they live with this? They've been accused of it before, for other reasons, and survived. Pup also mentions that shortages create news and buzz, but so does selling out--and what good is additional buzz if there are no consoles to sell? The point of generating buzz is to sell more product when there is more product to sell. If a company is already selling all it can, buzz doesn't do much good.

Ted Vessenes suggests (I think) that the idea of selling online at a higher price might anger retailers, who might refuse to stock the product. This is possible, and if retailers are organized it might succeed. There's a prisoner's dilemma problem here, though. Suppose I am one of ten retailers selling Wiis. If the other retailers decide not to carry it, it's in my interest to continue carrying it, as I'll get all the sales of the remaining retail Wiis, regardless of what Nintendo does online. Again, this might work if the retailers are sufficiently organized. He mentions the case of labor unions, which are very organized.

Ted has a very good point regarding specialization and economies of scale. It may cost Nintendo so much to set up a mechanism for selling Wiis online (on eBay or whatever) that it's not worth it; it's better to just let Best Buy and Target and the other stores do the selling, since that's what they're good at.

I'm sad to say that the explanations provided on my Econ 265 exams were mostly disappointing. One interesting explanation was that Nintendo (which, if i remember correctly, started selling the Wii in Japan before the U.S.) made a mistake when bringing the Wii to the U.S., relying too heavily on sales information from Japan (and on Japan's anticipated demand for the PS3). A couple students suggested the price discrimination scheme, but they did not see the problem with that argument. It's a difficult problem, and hard to think through during a stressful exam (especially since the exam was on Law and Economics, and this was an extra credit general economics question).

Why is Gerber Offering Life Insurance for Children?

Let me explain briefly how insurance works (because many people seem to wrongly think of insurance as a discount program or even a scam). Suppose the future has two possible states: One in which your house burns down, and one in which it does not. People who do not like risks (such as the risk of one's house burning down) would like to make that state of the world a bit better, and are willing to make the good state of the world (the one in which one's house does not burn down) a bit worse in order to do so.

Therefore such risk-averse people buy insurance. The agree to pay the insurance company a certain amount of money, in exchange for a promise that the insurance company will pay the insured if the bad state of the world should occur. The insurance company is, in a sense, taking a gamble that it will not have to anything (because the bad state of the world probably will not occur). In return the insured gets a reduction in risk--the bad state of the world is not as bad because it now involves being paid, and the good state of the world is not as good because the insured has to pay the insurer.

In another sense, however, the insurer is not really gambling, because it insures a large number of people. This makes the rate of payouts predictable. That is, if there is a 5% chance in a given year that a person's house will burn down, and the insurer sells insurance to 10,000 homeowners, then it should expect to pay claims to about 500 people.

Okay, that's insurance. What prompted this post was a reminder from Richard Phillips, one of my students, about a new program from Gerber Life, an insurance company. At least, I think it's new--they started advertising it on TV recently. They are selling insurance for children. That is, a parent can insure themselves against a child's death. When the child turns 18, they take over the policy, and can presumably decide who the beneficiary is.

This is puzzling. It doesn't really make sense for a parent to insure against a child's death. Why? Consider this: In which state of the world is money more valuable to a parent, the state in which the child is dead, or the state in which the child is alive? I would hope most parents would say the latter. Money is more useful, and more fun to spend, when one has children. Toward which state of the world does this policy redistribute income? Toward the later. This is backward. Money cannot make up for the loss of a child, and in fact money is less valuable after a child's death. It would make more sense to avoid paying the premium altogether (i.e. not purchase the insurance policy) in order to have more money in the state of the world in which the child is alive.

So why is Gerber Life offering this policy? I'm not sure. Here's a ridiculous and somewhat offensive explanation: Suppose some children are likely to die by, say, blowing themselves up in a crowded place. Doing so creates a lot of damage, and an insurance policy might be valuable to a parent in order to pay for some of this damage. This could create an adverse selection problem, however--only those parents whose children are likely to blow themselves up are likely to buy the policy. This makes it a bad bet for the insurer, and therefore the insurer is unlikely to offer the policy. On the other hand, if parents are unsure whether or not their children are likely to cause significant damage to others upon their deaths, the policy might still be offered profitably.

Another unlikely explanation might be that this policy appeals to evil parents who plan to murder their children. The adverse selection problem would still exist, though. And of course, the policy might appeal to people who haven't thought clearly about this and think insurance is always good (and who apparently have money to throw away).

What other explanations could there be? Will this insurance program last long, or will it disappear?

UPDATE #1: I anticipate one argument being that this allows the child to take over a substantial life insurance policy at age eighteen. I'm not sure if this argument makes sense. First, a healthy 18-year-old shouldn't find life insurance very expensive anyway. Second, a parent could probably do better buying a broad index of stocks, waiting eighteen years, and then selling the portfolio to buy generous life insurance. Finally, most 18-year-olds don't have any dependents who would need a life insurance anyway.

UPDATE #2: Matt Freeman commented on this on Facebook, and I'm pasting his comment here:
These types of policies have been around for a number of years. The cost is truly de minimis relative to insurance for adults (as you would expect) and the pitch is that it is for the child in the event that the child would develop a medical or other condition that would make them uninsurable (or would make the cost of insurance excessive). For this de minimis price, you can be certain they will have access to this insurance policy. There are some risk advserse people for whom this would have appeal. For me personally, I look at the exorbinant rates I get charged for insurance compared to LeAnn since I am type I diabetic (about 10x the price for term and even a higher % for permanent insurance) and there is some appeal to the notion that if my child develops type I diabetes or some other condition that they would have a policy that would not be based on those inflated rates. (Inflated because they lump lower life expectancy type II and normal life exp type I's together).

That answers most of my questions. This insurance is really insuring the child against the possibility that they have serious medical conditions, which might later make it difficult to afford life insurance. That makes sense, although again I wonder if it would make more sense to just invest the money. That way, when the child gets older, there would be money that could be used for a variety of things, one of which might be expensive life insurance. There could also be an adverse selection problem here, if parents have an inkling of whether or not it is likely for their children to develop such a health problem (which is probably not the case).

Matt raises another puzzle, though: Why would an insurance company lump policy holders with Type I and Type II diabetes together? Doing so means forgoing profits. If people with type I diabetes live much longer, then the insurer is giving up substantial profits. It could lower premiums, sell more policies, and not have to pay out much in claims. They have dedicated actuaries who do nothing but calculate this stuff all day--why are they leaving money on the table?

Tuesday, January 06, 2009

More on the Single-Beer Ban

There have been some more developments in the single-beer ban here in Nashville (I have blogged about it before here). Here is the text of the ordinance. The City Paper had an editorial on the subject. I think the editorial is mostly off-point, until the end, anyway. The editorial argues that the single-beer ban is unnecessary because there are already laws against littering. I think that misses the point; the ban is intended to stop litter before it starts. If it would reduce litter, most of the editorial's argument would be irrelevant.

I don't think it would reduce litter, however, and I don't think it would reduce public drinking. I sent the following to Erica Gilmore, my city council member, and to Diane Neighbors, the vice-mayor and president of the council:

I am a resident of the Salemtown neighborhood, an economist, and a concerned citizen. I am writing to oppose Ordinance No. BL2009-369, which would prohibit the sale of single cans or bottles of beer for consumption off-premises in specific parts of Nashville.

This bill also prohibits sale from an ice tub, although the reasons for this are unclear to me. If beer is kept cold, and the seller is licensed, why does it matter whether the beer is in a refrigerator or an ice tub? Perhaps this is related to a public health concern, although it’s not clear to me why standard tort law could not deal with problems here if any should arise. In any case, my concern is with the ban on sales of single beers.

The purposes of this ban, as I understand them, are two:

1) To reduce public drinking of beverages in certain areas.

2) To reduce littering.

I do not think this bill will achieve either objective. In fact, it could have the opposite effect in both cases.

Regarding the first argument: It is said that there are too many people drinking on street corners, sometimes in view of children. I do not see how this bill will stop this. Instead of buying a single beer at a time, people who want to drink will simply buy a six-pack, and drink them one at a time. Perhaps the concern is for the easy temptation of a single beer—but a person with a serious drinking problem is ill, not stupid. If they must buy six beers at once rather than one at a time, then they will buy six beers at once. In fact, groups of people often gather to drink and talk (outside the market at the intersection of 7th Ave N. and Garfield St., for example). This makes it even easier to circumvent the single-beer restriction. Six people need merely contribute enough money to buy a six pack, have one of them go in to buy it, and bring it out. Now they each have a beer.

It is true that there is increased inconvenience to obtaining a single beer, and that this may reduce usage. On a per-beer basis, however, a six-pack is usually cheaper than an individual beer. It is not clear what the net effect of this could be. People could end up consuming more beer, because the beers are cheaper per bottle or can. In other words, it is possible that this bill would increase drinking, rather than decrease it. Regardless of the direction of the effect, I see little reason to expect a large reduction in drinking.

It has been suggested that single beers are often dropped in the street, leaving broken glass and trash lying around. In light of the argument I have just provided, I do not see any reason for this to change. In fact, the amount of litter could increase, because six-packs come in cardboard packaging. Now we will have that lying around, in addition to the bottles. This is not an improvement.

To summarize, it does not seem likely to me that this bill will do anything other than provide a minor inconvenience to some people. I do not think it will achieve its desired ends, and it could actually make matters worse.

If you are not swayed, however, by these potential consequences, then let me make three other arguments. First, I do not think it is any of your business, or my business, or anyone else’s business, whether people buy six-packs, four-packs, or single beers. This is not a proper role for government. Surely there are more important problems to address. I understand that this is not a popular viewpoint, but it should be expressed. I don’t even drink alcohol (especially beer), but I do not want to infringe on the rights of adults to buy beer in a quantity of their choosing.

Second, suppose that this bill does nothing at all (that is, suppose I am wrong, in that it does not make matters worse, and its proponents are wrong, in that it does not improve anything). Or, for that matter, suppose that I am correct and this bill makes matters worse. How will you know? Where is the provision in the statute to measure its effect? Who will be keeping track of the change in litter? Laws that do nothing, and laws with bad effects, should be repealed This law will likely stay on the books, adding to a labyrinth of regulation, whether it works or not. If you really must pass this ordinance, let me suggest a simple change: Include a sunset provision. Set the law to expire one year from now, unless you vote to extend it. At least that way there will be a point at which the community can assess whether or not it has made any difference. I think this request is reasonable.

Finally, I find the geographic restrictions included in this bill strange. I understand that they are included because this bill is supported by some people within the specific geographic area. Nonetheless, banning single beer sales is a good idea, why is it a good idea only in these locations? Why is it not a good idea everywhere? I suppose this is not so much an objection as a cause of confusion on my part. I do not understand why single beer sales are acceptable everywhere else but not in these places.

Thank you for your time and consideration.

Having said all that, I am not optimistic that my words will change anything. Erica Gilmore's constituents are supporting her in this, and it is from them that she gets the votes that keep her in office. The other council members have no particular reason to care about whether this ban is a good idea or a bad idea. So long as they appear to be doing something, it may even gain them votes as well. Unless there is a large and vocal opposition to this ban--and I have seen no sign of one yet--it will probably pass, regardless of its merits.

P.S. I have not forgotten the post on Game Console Economics. I hope to summarize the responses given both in the comments and on the exam sometime soon.