Jan 8, 2016

Unmeasurable Externalities: Advertising and Children

Most discussions concerning advertising to children demand government intervention to reduce it. I suggest that the issue will not be solved soon and parents need to take the issue into their own hands: if you believe that advertising negatively affects your child, avoid subjecting you child to it. This seems like pretty obvious advice; yet, many parents, while submitting petitions to the government, allow their child to watch television for hours a day.

Marketing to children has been growing in intensity since the early 1980s when it got its start due to working parents spending more money, and less time, on their children. This symptom highlights an issue with the structure of working life in Canada (and many other countries): we work more than we have to. But, paradoxically, we have to work a certain amount of hours due to hours-worked being tied to benefits. Marketers took advantage of this situation and the powerful new consumer group that it created. The processes involved with children's advertising have become more sophisticated over the years. Marketers have expanded beyond achieving an immediate marketing goal. If children grow up and become adult buyers, marketers can create lifetime loyalty. In fact, the goal of some advertising to children is not to get the child to purchase the product but to introduce the child to the brand with the intent that later in life the child will become a customer. As an example of this early-life advertising, there was a BMW commercial that aired a few years ago. It showed a young boy that goes to a BMW dealership. The salesperson allows the boy to go into the car, and later gives the boy a business card. The advertisement ends with the implication that the boy will but a BMW once he ages and has the means to. The intent is not to sell a car to a child but to introduce the brand to the children watching the commercial. Brands are instilled into a child at a young age.

There have been a few policy acts that purport to control the amount and type of advertising that marketers can direct towards children. There have been strict laws in Quebec, as wells as a few European countries, that directly concern, and prohibit, advertising to children. In 1978, the FTC attempted to ban advertising to children less that seven years of age claiming that children are often unable to distinguish between advertising and program content.  The general population has come to accept advertising to children as a normal activity. This acceptance leads to a circumstance where children are exposed to hundreds of commercials each day through TV watching.

Ethical consideration concerning advertising to children, I believe, is extremely important. Children are unable to see the fanciful elements of advertisements, As adults, we are able to understand that an advertisement portrays the product in an unrealistic way. We do not expect the product to be as "amazing" as the advertisement shows it to be. If children are being advertised to, marketers should not take unfair advantage of the child;'s inability to rationalize the advertisements. However, marketers are concerned about selling a product and will work within the boundaries of the law to do that. Thus, the government is expected to jump in, but the negative externalities related to advertising to children are extremely difficult to prove, and even more difficult to put a price tag on. Marketers and the Government are concerned about the economics of the situation. This allows children to be abused. As responsible parents we must be aware of the negative affects of advertising on our children and bare the burden of prevention.

Sandra Turner
Relaxing while my child watches her shows in Kelowna BC
July 2014

Feb 27, 2015

Lady Justice Sides With Cash: Legal Bias Against Low Income Persons

One thing we can all hope for is equal treatment under the law. If I kill someone, I hope that I will be thrown in jail just like the next guy. This consistency allows lawbreakers to know what the punishment will be, and hopefully this will persuade them to be not break the law. There are obvious human and systematic flaws in this system. I can speed down the same road day after day with no troubles, but one day just like any other I get pulled over and given an expensive ticket. This leads to the trouble I see with many drivers: they're not afraid of breaking the law, but rather they're afraid of seeing patrol cars on the road. The biggest flaw, however, with the punishment system is the effect of money. The lawbreaker with money faces lower punishment than the man without money. In an insignificant example lets look at our speeder: a $200 fine for a person who works for minimum wage is a larger punishment relative to wealthy gentlemen receiving the same. A more significant and important situation is one where a person's money allows them to receive a smaller absolute punishment. Money can allow us to purchase better legal help; money increases freedom, and this is not justice.

The justice system is ran like a for-profit business instead of on the principles it is supposed to be founded on. Another acquaintance of mine was found guilty of an assault with little evidence against him. The case rested solely on the persecutor's narrative. The defendant couldn't afford a lawyer and the liberal government in BC at the time had cut legal aid so he wasn't even given a lawyer to defend him. A relatively recent news article claims that most legal aid funds don't even go into legal aid. We don't actively consider that we may one day need legal aid. The rich don't think about this - they can hire better lawyers if need be anyhow. There's no demand for funds going into legal aid. The people that need it are deemed unimportant.

If lawyers have this make-or-break it power, then there is something wrong with the system. The textbooks are too complicated. People with low literacy skills flood jails. In the end the rich and the educated have more freedom. A potential solution is to nationalize lawyers and have the state assign them, but most competent lawyers would all move to more lucrative countries. A more practical solution would be to have an open source of information on the web that is easily accessible by everyone.

Feb 13, 2015

Pollution Management 101 and Political Alienation

The purpose of this paper is to analyze the two different methods the Government of Canada and the Province of British Columbia use to reduce carbon emissions and to select the best alternative.

Carbon tax and cap & trade are both methods that policy makers can use to reduce carbon emissions. Pollution is a negative externality; left to themselves firms with produce more pollution than the socially efficient amount because the private marginal cost of the firm is less than the social marginal cost. This occurs because the marginal cost of the pollution is not borne by the firm. This is an example of a market failure that causes an efficiency loss. Policy makers can correct the problem by internalizing the cost of pollution for the firm. Pollution abatement, on the other hand, is a positive externality. Free markets will not do enough to abate pollution because the social marginal benefit is higher than the private marginal benefit of the firm. The government can correct this by giving the firm incentive to do more pollution abatement.

It should be noted that the socially efficient level of pollution is still above zero. Even though some radical environmentalists would like to see Canada and its industries produce zero levels of carbon emissions it is in the public interest to pollute. The rule of thumb used in pollution abatement is that pollution should only be reduced as far as the costs are lower than the benefits. Pollution abatement is, in itself, considered to be a reasonable social objective as proven by the amount of media and international attention it receives. Numerous international organizations have pollution agreement sides, such as NAFTA. Canada has agreed, in these treaties, to reduce green house gases by specific amounts. It is, however, hard to put an economic price tag on the social benefit of pollution abatement.

There are four basic solutions to all externality problems.
  1. Internalizing the externality
  2. Quantity controls and standards
  3. Taxes and subsidies
  4. Market creation
The first method is impractical in most situations. The second method is the one that Canada has been known to adopt in the past. Economists prefer the latter two methods because they both utilize economic incentives; they are the two methods that will be examined in depth.

Taxes and subsidies - Carbon Tax
Carbon tax achieves the socially efficient level of pollution by raising the firm’s marginal cost to the social cost. Taxes raise the private marginal cost by the amount of the tax. This is shown diagrammatically in figure 1 in the table of figures. By raising the private cost to the social cost the firm will produce the socially efficient quantity, shown in the figure as Q-optimum. Taxes work well because they offer incentive effects for pollution abatement and they take advantage of some market forces. Taxes are easily incorporated by the firm into its normal cost of doing business.

The firm will abate carbon emissions as long as the marginal abatement cost is lower than the cost of the tax. When the marginal abatement cost becomes higher than the tax the polluting firm will choose to pay the tax and pollute. This situation is shown in figure 2. The cost of pollution abatement to the left of the cap line is shown by the area B, the tax cost is shown by the area A and B. Thus it is cheaper for the firm to abate pollution up to the point of the tax line when the abatement cost become the area C and D, more than the tax cost.

Taxes are an enticing form of pollution abatement for the government because it provides a clear source of revenue. However, when compared to standards and cap & trade, the government has less control over the quantity of emissions. Taxes affect the cost of doing business and the market determines the quantity of emissions and the amount of pollution abatement activity. With sophisticated forecasts the government can have a fairly good idea of how much a tax will affect the quantity of emissions. Taxes require accurate monitoring technologies to ensure appropriate tax amounts are levied. Having known schedules of future tax hikes will positively affect the behaviour of the firm towards future abatement practices, such as investing in more efficient equipment.

One of the main problems associated with taxes is public relations. Many citizens and firms are strongly against raising taxes. Taxes may also be more susceptible to lobbying parties than the cap & trade method which may deter sufficient tax levels being set. British Columbia adopted the Carbon tax in 2008 . It did this to address the problem of carbon emissions and to bring in additional revenue.

Market creation - Cap & Trade
Cap & trade is a policy example of quantity control and market creation. It also works to limit pollution to a level equal to the socially efficient quantity. It does this by internalizing the cost of the externality through permits. A set amount of issued permits allows the government to limit to the amount of carbon emissions.
In the Cap & trade method the government issues out carbon permits to polluting firms. Each permit gives the firm permission to emit a unit of carbon. There are various ways of handing out these permits. One way is to give more permits to high pollution abatement cost firms. A second is the give each firm the same number of permits. The third, and probably best way, is to auction off the permits. In the first two methods the permits can be re-sold in a secondary market. All methods allow the forces of the market to decide the price of pollution. If the firm’s marginal abatement cost is lower than another firm’s abatement cost it would propose a trade. The abatement cost to the firm is reduced by the amount is saves by selling the permits. This is shown in figure 3. The low marginal abatement cost firm saves the costs shown by the areas C, G, and K by selling the permit to the high marginal abatement cost firm. The government has less control over the price of emissions in this method compared to the tax method but cap & trade utilizes market forces to set a price that more accurately reflects the actual value of pollution relative to the limit the government wishes to set.

The fact that the government is able to set a cap on the quantity of emissions through the amount of permits it releases may be one of the reasons the Government of Canada wants to adopt a cap & trade method; it will enable them to reach its international pollution abatement goals with more certainty than a tax would. It’s a better approach then simple quantity controls and standards because it allows the market forces to determine the price of pollution, giving low marginal pollution abatement cost firms incentive to reduce pollution and high marginal pollution abatement cost firms the ability to ‘buy’ more pollution.

Policy makers can use either the tax method or the cap & trade method to reduce pollution to the socially efficient quantity. Both methods increase efficiency and prevent the market failure associated with externalities. Economists prefer tax and cap & trade over standards and quantity control because they both utilize market forces. The main difference between the two methods is how they are administered and how the costs are distributed. The cost to the firm can be lower for the cap & trade method, depending on how the permits are distributed. If the permits are auctioned off cost to the firm may be very similar to that of the tax method . Both methods give the firm incentive to reduce carbon emissions and to abate them through new technology investments. The government receives revenue through taxes but using the auction distribution method of cap & trade the government can also receive revenue. Neither method is universally or significantly better than the other. The best selection depends on the specific situation and needs of the policy maker.

I feel the best method for Canada and the Government of British Columbia is the cap & trade method. The main goal of pollution abatement is reducing the quantity of pollution to the socially efficient amount. The cap & trade method allows more certainty at meeting the reduction goals than the tax method. The cap & trade method also helps at reducing the power of lobbying parties as the cost of pollution is set by market forces and not by a policy maker. By using the auction method of permit distribution British Columbia could achieve much needed revenue.


I wrote this article a few years ago and unfortunately Harper's Government in Canada doesn't seem to want to address the issue. They posted a video on their YouTube account claiming that we should "REJECT this expensive new tax hike". Comments are closed so we can't hold an open discussion on that channel. Harper recently claimed that  "nobody in the world is regulating their oil and gas sector" which is misleading at best and probably just false. Countries like Norway and Mexico use techniques that I mentioned earlier and the European Union has a cap and trade program that covers a range of industrial facilities.

Nothing I mention here is new or revolutionary. I would like to get more info on why Harper is so against enforcing policies that I feel would help control waste emissions.

I hate politics. I feel so alienated by it all. And when the ruling government posts shit like this image, I just want to die. Even someone non-partisan, a non-Canadian, should be offended by this. This isn't sharing knowledge. It isn't helping me make a critical decision come election time. It's crap that makes people not want to vote - and that's what allowed Harper to gain power.

Sep 19, 2014

Self-Esteem: The Reflection of Our Actions by Isaac Snow

Self-esteem, being our evaluation of the self, is the highest thing we can hope for, and thus it is important to analyze where our notions of self-esteem lie. Self-esteem is set by the rational reflection of the self's power of acting. It is affected by the praise and blame from others, as well as the self's notion of what right actions are and the ability to abide by those notions. If one allows external elements to affect his opinion of what constitutes correct actions, he runs the risk of shying away from the activities that are truly meaningful. Submission to outside influence causes a person to place emphasis in his evaluation of self-esteem in actions he does not consciously agree with. Thus, if he is not excellent in those actions, he diminishes his self-esteem meaninglessly. Even if he does excel in those action the disjointedness of the external pressure and internal, unconscious rejection prevents authentic happiness. This essay seeks to determine how a man living in our society can attempt to gain control over his own happiness by placing the authority of the definition of meaningful actions internally.

Aristotle speaks of happiness as a consequence of acting in accordance to virtue. Happiness is thus an activity and not an end state. A person can only be happy, as a consequence, when they act in what he and others believe is a virtuous manner. In the absence of a teleological end-purpose, man is given the ability to define his own meaning within the limitations of his immutable psychology and physiology. Therefor a person has the ability to define is own meaning of virtue (and hence the actions that will lead to his happiness), but to the extent that he is a social animal, he lacks a comprehensive control over his ability to craft his own notions; therefor, man is reliant on society for even his abstract happiness.

This inability to define one's own meaning of virtue conflicts with the typical Canadian view (and possibly other groupings of people I don't have direct contact with) as many see their jobs as solely a source of income, and the income as a means to achieving happiness. The truly happy people are the one's who balance a job that they love with a fulfilling personal life. But these people are only happy by chance. It is by chance that their perceptions of fulfillment align with what society forces them to do. The easy way to happiness within a strict society is to simply line up your will with what society demands of you. If society says the virtuous man works hard, work hard. However, in deeper reflection these people of false assimilation may be found to not be truly happy at all. The happy man is the man who, on his deathbed, can look back on his life and say, "that is what I wanted to do as those actions are what I felt meaningful, and I excelled in my performance." What the Stoic's prescribe is falsity; and dishonesty to one's self necessarily distorts and diminishes one's self-esteem.

The external show of happiness itself becomes an important part of a person's assimilation in society, as few people tolerate an outwardly unhappy person. This unhappy person, although more honest than if he were to assume a 'happy' countenance, is unlikely to obtain the career positions and social relations that would allow full assimilation into society. Thus, if he refuses to fake his true feelings, he will maintain his position as a reject; and, furthermore, this will hamper his ability to achieve the real emotion of happiness. The person that rejects the social definitions of virtuous actions, yet attempts to perform them anyways, going so far as to accept the external evaluations, will stimulate in himself a negative self-esteem, even if he is judged positively as those positive evaluations are of actions he rejects as unimportant.

External evaluation effects self-esteem, although it is different to it. Eternal evaluation effects self-esteem to the extent that, as social animals, we are conscious of the opinions others hold of us and reflect this in our self-esteem. Our view of the external opinions may, of course, very likely be inaccurate.There is an element of our own will when determining how other feel about us.

We have, as a capitalist society, a seemingly objective way of performing our analysis of external evaluation through our monetary worth. It is not uncommon to evaluate people based on their perceived potential to generate monetary value for the evaluator. Using this measure, the worth of the individual is necessarily reduced as the immaterial parts of ourselves are not able to be valued. This type of behaviour is destructive because it necessarily scorns those things that have no apparent monetary value. Erich Fromm gives an example of this under-appreciation. The employees of a department store underestimate the worth of the individual. The individual is not valued because he is only important as far as he represents the universal customer. If he is being mistreated, the store is not worried about his individual mistreatment, but solely that his mistreatment "would indicate that there was something wrong and it might mean that the store would lose other customers for the same reason." Fromm summarizes: "as an abstract customer he is important; as a concrete customer he is utterly unimportant." No one at the store cares about the individual person, but only his utility and his representation as a general customer. Thus, we need to be weary of allowing any sort of outside evaluation enter into the reflection of our abilities that produces our self-esteem.

Everyday the individual is considered differently, and thus valued differently, by the various parties that we interact with. At work I am valued at the value I deliver to the company, at school I am valued at the value of my scholarly input, and even in social relations I am the value that I deliver to that person. With these reference points in mind, we base our self-worth on our ability to market ourselves. We are worth what others say we are worth; and one of our most important 'virtuous actions' is the ability to simply appear valuable to others; even if that means deceiving the other person or assuming a false personality. This is a type of circular reasoning that distorts our self-esteem, and ultimately leads to a temporary, positive self-esteem that is actually empty as it is not built on our ability to perform meaningful actions.

There are only two parties that could possibly put the full value of our self in view: the self itself and the people who truly love us. As true love is hard to achieve, and may be impossible; especially if we begin with a lack of real self-esteem, we must achieve the confidence required to evaluate ourselves (without pride, the overestimation and distortion of our true abilities) and accept our results. The results, if accepted, will either allow our self-esteem to flourish, or indicate areas where we need to improve. I am not advocating a complete disregard of external sources of valuation, only that they are inadequate and must be viewed abreast to our own evaluation - to either support it or point out flaws in our reflection, but never to replace.

Many people in first-world countries suffer from depression. People view this as a purported paradox: How can people living in comfortable conditions with relatively high incomes be less happy than those living with poverty in hostile environments? The question is confounded further when we acknowledge that many statistics use purchasing power as a proxy for happiness. The answer to the 'paradox' lies in the individual's ability to align his actions with the virtues that he deems to be fulfilling. The wealthy man is unhappy because he spends his time engaged in meaningless activities. The poverty-stricken man in contrast spends his time engaged in meaningful activities; these activities are meaningful if only because they contribute to the perseverance of self. The man living in a wealthy country with social programs has his basic physiological needs met; thus, he needs to create meaning in higher-order actions. This is a difficult task, and many fall victim to the errors discussed previously.

As an example, it can be said that the archetypical Canadian father is at work 40 hours per week; yet, research supports the hypothesis that a father is with his children only 6.5 hours per week. Being with your child is more likely to rank as a more meaningful activity than work. A person who seeks a positive self-esteem will find a better balance of work and family; sacrificing a higher income if need be (this is justified if spending time with your children is more important than the extraneous products and services you could otherwise afford). Within a first-world country a person with a young child has many options concerning the child's care and has the ability to choose to accept certain services like warfare in light of the work-family balance. A person in a third-world country may consider work as a means for his child's perseverance as meaningful enough, and opt to spend less personal time with his family. The point is that our self-esteem is affected by our external conditions as our evaluation of virtuous actions are contingent on what is possible.

Self-esteem is a joy that arises from considering our virtues in a positive way. The idea of our weakness is a sadness. Thus it is important to be able to consider ourselves in a positive way, but this is only possible if we have an appropriate sense of what virtues are important. If we lack a strong self, we run the risk of valuing ourselves based on the virtues that those others posit. My boss considers me virtuous when I over-work myself. The store owner sees my virtue in my extraordinary spending habits and ability to support the payments. If these are among the only affects on my identity of virtues, I risk skewing the criteria for my self-esteem. My self-esteem will be based on the consideration of virtues that are inappropriate. And this will be a difficult habit to break out of. Once I've built my self-esteem on inappropriate virtues I will lack the strength to dismiss those virtues for more appropriate ones. With confidence in our own definitions of virtues and our valuations of our actions in accordance to those virtues, whilst taking into account, albeit with skepticism to its accuracy, external valuations, we will be able to achieve positive self-esteem and true happiness.

Isaac Snow
Prideful in Kelowna, BC
June 2014