Tim May wrote:
At 7:52 PM -0700 6/9/97, Igor Chudov @ home wrote:
Lucky Green wrote:
The answer is clearly no. By limiting the distribution of an individual picture, you increase the total number of pictures required to satisfy market demand. That means more children will be required to meet demand.
How do you justify that "clearly"?
I think that your analysis is incorrect.
This is a supply and demand situation. It is very simple to show (as any microeconomics textbook does) that a tax on the product reduces the amount of product sold and produced.
Your economics education must have some gaps. Look into "price elasticity." Look also at the markets for illegal drugs: despite severe "taxation" (in the form of price increases of some drugs, increased prison terms, etc.), some markets have increased even as prices have increased.
Closer to home, analyze gas consumption as gas taxes in American have risen nearly 400% in the past 25 years (roughly following the OPEC shock in ;73).
An interesting point, Tim. Your examples show that over time, demand and supply curves change. For example, despite taxation, there are more people driving and they have to drive farther because more people live in suburbs. I would not be surprised if, when a certain product is taxed, its consumption would increase over the long run due to many other factors besides taxes. The question that is more relevant is, what is the incremental impact of the tax, that is, what would happen if the tax changed and all things remained equal? (this may be called a short term impact of the tax) An example to look at is online [adult] porn. It is, for all practical purposes, not regulated. We see a humongous number of pornographic images being created, not surprisingly, even though Lucky's argument would suggest that there should not be such a variety if anyone can freely copy them.
With drugs, knocking out distributors has in many cases increased the selling price of the drug, making it actually more lucrative for street dealers to enter the market.
Yes, of course the price rises if a tax is imposed. The same econ 101 shows that if the demand is inelastic (as it is the case for drugs), the buyers pay the bulk of the tax. So of course, the punitive laws increased prices and made the business more lucrative. But the same laws have also made drug trade more dangerous, because drug dealers risk to go to jail and be shot by other dealers. I would not be surprised to see that when the drug tax diminishes, the drug use would go up. As a drug-free person, I do not care much about it as, since drugs would be cheap, drug addicts will not have to kill people to get a dose. And in the longer run, greater availability of the images of drug addicts would probably have a good deterrent effect. The cost of the drug tax to the society is all the inefficiencies created by it: for example, when thousands of hard working business people are locked up in expensive jails, it is a cost with little offsetting benefit. The shootouts between gangs is also a cost insofar as bystanders are involved. Also, in an efficient system where people could buy crack at a Walgreens counter, there would be less people involved in the whole business, because Walgreens is more efficient at distribution than the inner city drug dealers. As a result, these former drug dealers would be out of business and be gainfully employed in some more productive trade.
A complicated system, no doubt, but arguments based on "Econ 101" are usually flawed when dealing with complex systems (something Samuelson would almost certainly agree with me on).
Samuelson himself has "proven" some quite funny theorems.
Since a unit of product is probably one picture of a child, there are less units produced if they are taxed.
This is not at all clear. If the crackdown on child porn, or porn in general, causes the street price to rise to $10 a picture, say, then many folks not producing child porn now might be tempted to get into the market.
Tim, let's compare child porn (with images of persons below 18 years of age) with adult porn. In other words, 1) there is little difference, in terms of consumer utility, between pictures of 17 year olds and pictures of 21 year olds 2) The costs of producing these images, EXCLUDING TAX, are essentially equal. That should lead us to expect that without taxes, the number of 16 year old pictures would be about the same as the number of 21 year old pictures, give or take 50%. However, 3) There is a tax imposed on "child" porn. And we indeed observe that 4) the number of 16 year old images that is available is much, much lower.
If you look at your Econ 101 text again, read up on cycles of pork bellies and suchlike agricultural products. Every shortage is followed by a period of "overproduction," and vice versa.
The problem with cyclical products is high fixed costs and high exit costs. Agricultural products are very specific because their production cannot be easily changed when the future supply becomes certain. After all, you can't kill all the little pigs or raze the corn crop and plant potatoes in June, even if you know that due to the weather there will be a lot of it in the market.
What this all means for the porn trade is unclear, but looking at the drug trade is pretty revealing.
Could not agree more.
There's something wrong when I'm a felon under an increasing number of laws. Only one response to the key grabbers is warranted: "Death to Tyrants!" ---------:---------:---------:---------:---------:---------:---------:---- Timothy C. May | Crypto Anarchy: encryption, digital money, tcmay@got.net 408-728-0152 | anonymous networks, digital pseudonyms, zero W.A.S.T.E.: Corralitos, CA | knowledge, reputations, information markets, Higher Power: 2^1398269 | black markets, collapse of governments. "National borders aren't even speed bumps on the information superhighway."
- Igor.