Lecture Extender Examples 521
Chapter 5 Public Spending and Public Choice
Trying to Lay Claim to Trees That Sop Up Pollution
American Electric Power (AEP) owns power plants around the United States that together release about
3 percent of U.S. CO2 emissions every year. The company has entered into a voluntary agreement with
the U.S. government to cut its CO2 emissions by 1 percent every year. AEP has determined that it would
cost between $50 and $75 per ton of eliminated emissions to build cleaner power plants. In contrast,
planting a sufficient number of CO2 absorbing trees would cost only $1 to $2 per ton of emissions.
AEP faces two problems in utilizing trees to reduce the polluting effects of its power plants. One is
uncertainty about how much CO2 trees absorb from the air. The company has already spent more than
The Global Financial Crisis
In 2008, the Federal Reserve lowered interest rates and the federal government implemented a tax rebate
program as the U.S. economy began to show signs of entering a recession. Later in the year, the Federal
Reserve provided very large amounts of money to the financial markets and banking system as the
Hydrogen-Based Fuel Cells
In his State of the Union address in 2003, President Bush supported the idea of changing from the use of
internal combustion engines to fuel cells based on hydrogen as a way of reducing air pollution and the
emission of greenhouse gases. Fuel cells are nonpolluting because they only emit water vapor. President
Bush proposed having the government subsidize research and development of hydrogen fuel and fuel cell
technology. The president did not propose raising taxes on gasoline as a way of encouraging the use of
fuel cells and reducing greenhouse gases.
522 Miller Economics Today, Nineteenth Edition
Office of Homeland Security
After the events of September 11, 2001, an Office of Homeland Security was set up to try to coordinate
the antiterrorism efforts of various agencies of the federal government. In 2002, the Homeland Security Act
was passed, creating the Department of Homeland Security. Two components of the mission of the
Department of Homeland Security as
Private Property Rights in China
y the
government. For nearly 30 years, the Chinese government made all decisions concerning the production
and distribution of goods and services. Beginning in the 1980s, the Chinese government embarked on a
gradual program of business privatization. This policy resulted in an increase in economic growth.
Microsoft Antitrust Suit
In 2002, a four-year-long lawsuit against Microsoft by the Department of Justice was settled. The Department
of Justice alleged that Microsoft had illegally maintained a monopoly in the operating systems market and
had used that monopoly to attempt to monopolize the Internet browser market by tying purchases of
Internet Explorer to purchases of the Windows operating system. The company was found by the court to
Lecture Extender Examples 523
Canada Opts Out of Paying for North American Missile Defense
The North American Aerospace Defense (NORAD) system uses satellites and ground- and air-based
radar systems to detect attacks aimed at the United States and Canada. In the past, both countries paid for
Property Rights Resolve the Airport Wi-Fi Spillover
To encourage U.S. travelers to use their facilities, various U.S. airports have installed Wi-Fi systems that
allow travelers to use Blackberries and laptops to access the Internet and e-mail accounts. Several airlines
had set up their own wireless communication systems to process passenger tickets and to track luggage
before the airports had installed their WI–Fi systems. When the airport Wi-Fi systems started operating, their
radio signals interfered with some of the airlines wireless communications systems, causing ticketing and