ZeroHedge has a post on the effects of Philadelphia's HUGE soda tax (50% on the receipt to the right) which has lead to layoffs within Philly, but only a small reduction in soda consumption, as residents have started buying soda outside the city limits. 
Former student John Tamny has a critique of Keynesian Economics with reference to the Rio Olympics.
The Boston Globe takes on the zero-sum fallacy by essentially praising inequality:
To begin with, all eight men earned their extraordinary wealth. Through ingenuity, talent, and immense effort, they created enterprises that provide hundreds of millions, even billions, of human beings with goods and services that make life better, healthier, safer, and more affordable.
Moreover, the Oxfam Eight didn’t grow their fortunes by preventing other people from growing theirs. Their wealth may equal that of half the people on Earth (though Oxfam’s methodology is dubious), but the world’s poor have been climbing out of poverty at the fastest rate in human history. Byanyima rightly bewails the fact that “1 in 10 people survive on less than $2 a day” — what she omits is that over the past 30 years, the number of people living in such extreme poverty has fallen by nearly 75 percent. Johan Norberg, writing in Spiked Review, provides hard numbers: Worldwide, an average of 138,000 people climb out of extreme poverty every day. Since 1990, the world’s population has grown by more than 2 billion, yet the ranks of those in extreme poverty has shrunk by more than 1.25 billion.
Philadelphia Soda Tax Leads To 30-50% Plunge In Sales, Mass Layoffs
ReplyDeleteMayor Jim Kenney of Philadelphia, PA proposed a tax on sugary soda drinks that has effected the sales of the drinks in retail stores across the city. The result has been a significant drop in sales of sodas, particularly at Shoprite stores where on owner claims “people are seeing sales decline larger than anything they’ve seen up to this point in the city.” The result of the lack of sales has been anticipated layoffs for workers at Shoprite, Canada Dry Delaware Valley, and Brown’s Super Stores where sales were said to down 50% since January 1, 2017.
When taxes as an economic input are added to the cost of a good such as a sugary drink of any kind, a substitute can be easily found by consumers. It has been mentioned by beverage consumers in Philadelphia that store owners are also going up on the price of drink alternatives, such as sugarless drinks. By increasing the prices of substitute drinks retailers are compromising sales of all beverages and the additional tax is having a negative ripple effect on the local economy in Philadelphia. Mayor Kenney may have had good intentions by proposing the soda tax in the first instance, but by not having a clear understanding and grasp of the economic consequences of the tax he has hurt his city’s beverage retailers.
Substitute goods have a positive cross elasticity of demand because the increase in price of the sugary drinks causes an increase in demand for drinks that may be sugarless, water or some other drink consumers may buy as an alternative to the sugary drinks. So the economic effect of the tax policy has resulted in a “plunge” in beverage sales and an economic lesson to the Mayor of Philadelphia as consumers travel out of the city to purchase the higher taxed beverages.
References:
Dorfman, Jeffrey, Soda Tax Teaches Philly Mayor An Economics Lesson That Trump Needs to Learn”. Retrieved 2/27/17 from: https://www.forbes.com/sites/jeffreydorfman/2017/01/12/soda-tax-teaches-philly-mayor-an-economics-lesson-that-trump-needs-to-learn/#673b925236c7
Durden, Tyler, “Philadelphia Soda Tax Leads to 30 – 50% Plunge In Sales, Mass Layoffs”. Retrieved 2/27/17 from: http://www.zerohedge.com/news/2017-02-22/philadelphia-soda-tax-leads-30-50-plunge-sales-mass-layoffs