Showing posts from July, 2023

Natural Resource Taxation

Markets are an excellent mechanism for organizing production and distribution, but they aren’t magic. They don’t generate prices ex nihilo . Market prices are circular. The price of a product depends on the prices of the inputs to its production. The price also depends on the supply and demand for the product, given the prices of other products. How is this circularity bootstrapped? In modern societies, prices are bootstrapped in an ad hoc way, without any design or plan. This makes market prices somewhat random. They depend on external conditions in ways that are unclear and unchosen. Prices are information. They control the physical economy, which consists of the physical production and distribution of products. Prices determine what is produced, in what quantity it is produced, and how it is produced. A product is produced if it can be sold at a price above the cost of production. The greater the profit (difference between the market price and the cost of production), the greater

The Demographic Tsunami

According to most estimates, the human population passed 8 billion in late 2022. Now is a good time to talk about the human population and how it is changing. It has not just increased in size; it has also changed in composition. Since about 1970, the population has been growing linearly, increasing by 1 billion every 12 years. Linear growth is unusual in nature. Populations normally grow exponentially until they approach a limit. This linear growth seems to be a fluke. During that period, the world had declining fertility, but the population was increasing. The result just happened to be roughly linear growth. Population growth has not been evenly distributed across countries. Some countries, such as Nigeria and Pakistan, grew very rapidly, while others grew more slowly. A few, such as Russia and Japan, now have declining populations, due to prolonged low fertility. Others, such as China, are still growing, but have below-replacement fertility and are projected to begin declini