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Header image of Hong Kong financial center courtesy of hleung on flickr.
Monday, February 8, 2010
Lucrative Land Sales of China's Local Governments
❑ The Ominous Signs of Robust Land Sales - China Real Time Report
WSJ (Hong, 02/08/2010) reports that land sales by China’s local governments generated 1.59 trillion yuan (around $233 billion) last year, up more than 60% from a year earlier.
The sharply raised value on land and housing have been caused by several factors, such as international “hot money” expecting RMB appreciation, domestic saving hedging on housing to prevent inflation, etc.
Hong argues that China’s intergovernmental fiscal arrangements is another reason for the property bubble. After the 1994 tax assignment reform, “most of the fiscal revenue is submitted to the central government for nationwide redistribution.” Local governments, “on the brink of bankrupt,” have to rely heavily upon “lucrative land sales” to “cover basic needs.” This explains the lack of incentive among local bureaucrats to cool the property market.
Friday, January 29, 2010
❑ Column: The U.S. is broke. Here's why. - Opinion - USATODAY.com
“For the first time in U.S. history, in 2009 every single dollar of revenue was committed before Congress voted on any spending program. Meanwhile, most of government's basic functions — from justice to education to turning on the lights in the Capitol — are paid for out of swelling, unsustainable deficits.”
In USA TODAY’s Opinion section (01/27/2010), Gene Steuerle presents what he called the “Steuerle-Roeper Fiscal Democracy Index” (see the graph below), which shows how much of current revenues remain after taking account of commitments by law to the programs and ideas of the past — even dead — policymakers.
Steuerle argues that the excessive use of federal mandatory spending is “bad economics.” With long-term political promises tying up our hands, we miss out on opportunities to use the money more wisely. “The hogtying fiscal democracy” is bad politics, too. The bind created by past presidents and Congresses has hamstrung President Obama, who have to “pay a political price up front” to take back some past promises to gain much-needed flexibility to address current needs.
Monday, January 25, 2010
The selfish pleasure of selflessness
❑ What Could You Live Without? - NYTimes.com
❑ Food, Sex and Giving - NYTimes.com
NYT columnist Nicholas Kristof has two recent articles about social giving, which provided interesting evidence for neurological traits of charitable donation.
A research team at National Institutes of Health finds that, when a research subject was encouraged to think of giving money to a charity, parts of the brain lit up that are normally associated with selfish pleasures such as food or sex.
The implications is that we do not care solely about our own utility, but are also hard-wired to be altruistic, at least to some extent. It is wonderful when we can help others, for generosity feels so good.
Wednesday, January 20, 2010
The pricing of online news
❑ New York Times to Charge Frequent Readers of Web Site - NYTimes.com
Starting in early 2011, visitors to the New York Times will get a certain number of articles free every month before being asked to pay a flat fee for access. NYT plans to take about a year of experiments to “get this really, really right.”
Neoclassical economists think that online news should be free to viewers since browsing incurs zero marginal cost for the website. Welfare economists consider online information positive externalities which may be subsidized by the government. Attention economists argue that viewers actually bring in benefits with their attention, as reflected by ads revenues.
For new institutional economists, Ronald Coase would say that, as long as the ownership rights are clearly demarcated, everything beneficial or detrimental to others could be priced just right, if the tractional cost is zero. For Steven Cheung, of course there will be “institutional cost” -- the term he prefers over “transactional cost” -- but he believes that smart “constrained maximizers” with lots of test-and-errors could reach appropriate contractual relationships, given circumstances, to minimize “rent dissipation.”
So it would be interesting to follow NYT’s experiments of this online news pricing.
Thursday, December 31, 2009
China ranks the second in 2009 Forbes Tax Misery Index
In the 2009 Forbes Tax Misery Index, China ranks second, only next to France. The United States have multiple rankings for different places. For instance, USA/NYC ranks 21, USA/Illinois 35, and USA/Texas 44. The USA as a while ranks 48. [Where would Minnesota be?]
Note that the Forbes “Misery” scores (see the chart) are calculated as the sum of five major taxes at the highest marginal percentage in each locale. Thus it measures tax burdens for the richest at different locales, as is Forbes’ intent to evaluate “whether policy attracts or repels capital and talent.” Another apparent caveat is that property taxes are not included in this analysis.
The “Reform” column reflects the change of misery scores since the last year. China’s misery score has increased by 7.0, and thus it moves from the fourth in 2008’s ranking to the current spot.
(I thank my father for noting this news to me. We had great discussions over phone this morning. )
Tuesday, December 22, 2009
Mileage Based Insurance Looks Promising
❑ Insurance Pricing Can Cut Gas Use - Brookings Institution (12/22/2009)
The Hamilton Project at the Brookings Institute estimates that a widely applied mileage-based car insurance will lead to an 8 percent reduction in miles driven, which means 5 percent less oil consumed and 2 percent fewer carbon emissions. The social benefits is estimated to be between $50 billion and $60 billion per year.
Such pay-as-you-drive car insurance can save drivers money as they spend less on gas. Regarding insurance premiums, roughly two-thirds of households would end up paying less amount -- this is a lot more equitable comparing with the current lump-sum car insurance, in which low-milage drivers (who tend to be low-income people) subside insurance costs for high-mileage drivers.
So the proposal is efficient, equitable, and environmental friendly. Some may be concerned about the reduced gas tax revenue for transportation funding. But the current gas tax system has been broken already and waiting a fundamental overhaul. A mileage-based car insurance, if applied earlier, may ease our move into a mileage-based transportation tax system.
Related articles:
❑ Pay-As-You-Drive Legislation is a Win-Win - Brookings Institution (02/12/2009)
❑ Pay-As-You-Drive Car Insurance - Brookings Institution (Spring 2008)
(I thank my colleague Ferrol for providing the link.)
Thursday, December 17, 2009
Two upcoming international PA conferences in China
In the summer of 2010, there will be two international public administration conferences in China that I plan to attend.
❑ The 1st Global Forum of Chinese Scholars in Public Administration (Ads in CAAPA Website), May 28-29, 2010, at Guangzhou, China
This conference is cosponsored by China American Association for Public Affairs (CAAPA), which is “a bridge between American and Chinese Scholars, institutions, and universities; an agent for the advancement of research on public administration and policy in China and its comparative studies in the US.” For the past several years, CAAPA has successfully partnered with several top Chinese universities in organizing annual conferences on China’s public administration.
❑ The 2010 Sino-US International Conference on Public Administration (5th), June 14-17, 2010, at Xiamen, China
This conference is organized by Chinese Public Administration (CPAS) and The American Society for Public Administration (ASPA).
This post will be updated later to provide more information about the two conferences.
Wednesday, December 2, 2009
NCSL's P3s Partners Project: Updates
In 2008, the NCSL Foundation for State Legislatures launched a 18-month P3s Partners Project to link legislators, legislative staff, and interested private sector entities to develop nonpartisan, balanced, and useful materials to help legislator’s decision-making on Public-Private Partnerships in transportation development, both in their respective states and as they consider state-federal relationships. The project plans to offer educational sessions, to prepare a Legislative PPP toolkit, to develop greater NCSL expertise on the topic, and to inform the NCSL Transportation Committee’s deliberation of PPP in the context of state-federal relations.
I began to track the progress of the P3s project on this blog-post in this August, at that time simply because of my shared interest in PPPs, without knowing that I would get the opportunity to serve as the “technical resource” of the project later. It is indeed a privilege for me!
❑ The project’s Concept Paper
❑ NCSL Legislative Summit, New Orleans, July 2008 (The P3s Partners Project approved)
❑ NCSL Fall Forum, Atlanta, GA, Dec. 2008 (Steve Cohen presented a recent GAO study on PPPs.)
❑ NCSL Spring Forum, DC, April 2009 (Pre-Conference Meeting on PPPs: with Detailed Meeting Summary and 11 PowerPoint presentations)
❑ NSSL Legislative Summit, Philadelphia, PA, July 2009 (PPP Partners Project Education Session: the Detailed Meeting Summary)
❑ ARTBA Public-Private Ventures Conference, Sep. 2009 (Conference information)
❑ NCSL Fall Forum, San Diego, CA, Dec. 2009 (Conference information)
More to come...
Wednesday, December 2, 2009
Making Space Out of Thin Air
❑ Transportation secretary hails Woodall Rodgers Deck Park
The Woodall Rodgers Deck Park is a new example of air rights development at Dallas, Texas. Supported on piers above the Woodall Rodgers freeway, the park is a 4.2-acre green space spanning over the freeway and provide a pedestrian connection between uptown and downtown.
The part is funded with money from the Dallas City, the Texas Department of Transportation (with $16.7 million federal stimulus funds), and donations. For more discussions about Woodall Rogers Deck Park, click here to see related news.
(I thank Professor David Levinson for providing the news link.)
Monday, November 30, 2009
Local Fiscal Crisis in China
❑ The Demise of Local Government Finance (In Chinese)
It is this best of time (for the central); it is the worst of time (for local governments). A recent issue of China’s “Outlook Weekly” focuses on local governments’ fiscal crisis that are looming large ahead.
Since the 1994 Tax-Assignment Reform, China’s central government has seen dramatic increase of fiscal capacity, while its local governments -- especially lower level ones, such as county or below -- are forced to maintain their services with unusual and unsustainable means, such as leasing public land, selling public assets, illegal exactions, or irresponsible borrowing.
(I would thank Wanghui and Robert Woo for providing the link.)