Junk fees are in the news from the 2023 State of the Union address, get picked up by Matt Yglesias, and Zvi responds in Junk Fees, Bundling and Unbundling. Matt and my former colleague propose an economic framing of "bundling versus unbundling", and Zvi identifies four win-win advantages of bundling, and four 'advantages' of unbundling (two win-wins, one (company win)-(customer lose), and one mixed win-lose).

I think Zvi is broadly right on the points he makes, but he and Matt both skip over the basic, conventional econ-101 analysis of bundling goods on prices and customer welfare. I think that, for a broader audience, it's worth covering the "naïve microeconomics" perspective as background for the customer-behavioral story (which, admittedly, is more juicy and fun). Rather than responding to the whole conversation, this post will restrict its focus to the econ-101 microeconomics story of bundling, and ignore the behavioral / political / moral dimensions that Zvi, Matt, and others are discussing.

I'm going

Jeff Kaufman discusses an interaction between price controls and emergency preparedness:

Let's say you see a potential pandemic coming, and you produce a product that could be critical. Maybe you make respirator masks, maybe you make ventilators, maybe you make PCR test reagents. You can see that if you and your competitors don't ramp up production and the pandemic happens, there will be a shortage. What do you do?

[...]

[One] option is to ramp up production now, speculatively. Start paying workers extra to work longer shifts and run your assembly lines around the clock. Train extra workers. Find what you're bottlenecked on and figure out how to get that ramped up too. If the pandemic fears were overblown you lose a lot of money, but if the pandemic happens people need what you have so much that you can charge high prices. How much

Hannes Malmberg commented on my review of Saez and Zucman in response to a point I made about the elasticity of capital supply:

I think you are confusing demand and supply elasticities of capital.

The revenue calculations hinge on the elasticity of capital supply, i.e., how fast capital supply rise with the interest rate (how much more do people decide to save).

The Piketty spiral, in contrast, hinges on the elasticity of capital demand, i.e., how fast the interest rate fall with increasing capital (i.e., how fast firms and companies switch away from using capital when it gets more expensive).

There is nothing theoretically preventing us from having an almost horizontal capital demand curve, and an almost vertical capital supply curve. In such a world, a capital tax raises a lot of revenue, but increasing the savings propensity increase the capital stock without reducing the interest rate. (...)

I think he is basically right, and I'll partially retract section 3A of my

Or, the coming debate on moral incidence of taxes

You're going to hear a lot about the triumph of injustice in the next 6-12 months. Or rather, you're going to hear a lot about The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay, by Emmanuel Saez and Gabriel Zucman (2019).

For one thing, the two economists have signed on as economic advisors to 2020 presidential candidate Elizabeth Warren, who has for years been putting questions of economics and notions of justice front-and-center. But more generally, economic justice is having a moment, and I prophesy that you'll hear more about it before you hear less.

So this is my first real attempt to understand exactly what kind of moment it is, in the best way I know how -- by writing. Specifically, by writing a review that unpacks TToI for non-economists. (I am an economist, but not the kind that helps p— I mean, not a macroeconomist.

As always, there's a lot more stuff that I enjoyed reading this month on Reading Feed. Do check it out!

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Leah Libresco is the single person who I believe has the best practical ideas about how to be a human being in this world.

(This video -- of her speaking about her new book -- isn't embeddable, but if you click, it will open in a new tab.)

It is something of an issue for me that certain significant bits of her deeply-considered epistemic beliefs disagree with my much-less-deeply-considered epistemic beliefs. When I put it that way, it sounds like there's an obvious, easy fix, and when you dereference what it is that I'm talking about, calling it "an obvious, easy fix" sounds...odd.

This was the beginning of a much longer post, but I realized that I have absolutely zero idea where that post is going, so instead: Here, have a great video by a math nerd explaining her experience converting to Catholicism. Even if

(0a)

Scott Alexander, writing at Slate Star Codex, has some words:

So presidential candidate Bernie Sanders has proposed universal free college tuition.

On the one hand, I sympathize with his goals. If you can’t get any job better than 'fast food worker' without a college degree, and poor people can’t afford college degrees, that’s a pretty grim situation, and obviously unfair to the poor.

...

But, well, when we require doctors to get a college degree before they can go to medical school, we’re throwing out [$5 billion], enough to house all the homeless people in the country... Senator Sanders admits that his plan would cost $70 billion per year. That's... enough to give $2000 every year to every American in poverty.

At what point do we say "Actually, no, let's not do that, and just let people hold basic jobs even if they don't cough up a a hundred thousand dollars from somewhere to get a degree in Medieval